As businesses expand into multiple countries, geographies, and subsidiaries, company leaders need to ensure that their ERP systems are able to support and enhance their new business models. This means identifying the system that is not only right for your business today but also which will be able to support your business as it grows—whether as an integrated global company or as a more distributed organization with regional businesses. In this article, we take a look at some of the fundamental questions informing this decision.
What kind of financial consolidation will we need?
Financial managers at corporate headquarters need consolidated financial information to provide the complete business overview that shareholder and financial authorities require. Multiple locations give rise to multiple sets of reports—all of which need to be consolidated. A global ERP system makes it easy to automate consolidation and mitigate the errors that inevitably creep in when reports pass through multiple hands.
To get the best out of a global ERP system for financial consolidation, executives need to consider how the system will support the business model. This could mean a fully integrated model where all locations and subsidiaries run a single instance of the ERP system, or a regional model where a number of regional businesses run their separate systems and provide consolidated financials to the head office on a periodic basis to be reconciled, or a hybrid of the two. However, the problem with the second scenario is the mushrooming of a plethora of non-standard solutions around the company which will lead to lost time and productivity and increased risk of reconciliation errors—thanks to manual data transfers across multiple local systems. Bottom line, a global ERP solution needs to be flexible enough to support the expansion model that fits your particular business needs whether your business is undergoing geographic expansion, product line expansion, new subsidiaries, new channels, etc.