Single instance ERPs lend themselves to greater standardization and control, but can often lead to the local country or regional 3rd party applications cropping up and IT departments supporting large numbers of interfaces to the ERP. Alternatively, multiple instance ERPs allow for certain deviations, but are more costly to maintain and overall governance and control of the instances can easily result in a situation where global efficiencies are diluted.
In a recent PeercastTM in the Shared Services Leadership Research Area, members discussed the relative “pros and cons” of single versus multiple instance ERP’s. Members were polled as to the level of standardization of their current ERP systems within their company [1]:
The PeercastTM featured two member Shared Services [2] organizations that have strategies to migrate to the optimal number of ERP instances. In both instances, the companies have made excellent progress migrating the vast majority of their processes to global standards enabled by a primary single instance ERP. However, both indicated that for certain geographies and/or business lines, legacy or custom-designed processes and systems were chosen to deviate from the standard. These decisions are based on fact-based analysis that indicated the global standards would be either too restrictive of costly to modify for those locations or business segments.
The collaboration among member companies agreed that the approach to finding the least number of instances leads to the greatest benefits and that the decision process for any exceptions should be stringent and made at the highest levels of the organization and not an individual region or business line decision.
The benefits of a single instance ERP that were discussed include:
- Reduction in Information Technology Support Costs
- Staff Reductions (infrastructure, applications, elimination of homegrown or legacy systems etc.,)
- Concurrent user licensing
- Shared and Standard Maintenance
- Fewer Interfaces
- Upgrades “One and Done”
- Single Business Continuity Plan
- Enabler of Strategic Vision
- A platform for Shared Services and End-to-End Process Optimization [3]
- Portability of Work (between internal and external organizations and geographies)
- Standardized and Consistent Data Leading to Improved Analysis and Decision Making
- Enabler of Business Process Management, Business Transformation, and Continuous Improvement
- Global Benefits from each Project Initiative
- Internal Benchmarking and Best Practices Enablement – Quickly
- Master Data Consistency equates to Quality Information – Quickly
- Transparency of Information
- Centrally Managed/Leveraged Capital Budget for Modifications – Less Local Investment
- Transferability of Resources
Some of the negatives mentioned (and they were all viewed as items that can be mitigated):
- System Implementation Costs
- Risks Associated with New ERP Implementations
- Loss of Flexibility for Unique Business Requirements
- Reduced IT Staff with Local/Industry Business Knowledge
- Resource Allocation Potentially Slows Regional/Local Improvement Initiatives
- Greater Reliance on Business Continuity Plan [4]
The PeercastTM continued with participants sharing some of their insights on how to drive a single-instance initiative within their companies and how some of the barriers were or are being addressed and overcome.
How successful is your organization in moving toward a single instance global ERP?
Who are your peers and how are you collaborating with them?
1 “PeercastsTM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion. Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content. Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member. Using Peeriosity’s integrated email system, Peer MailTM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees.