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Has Your Two-Tier ERP Model Become a Liability?

Blog | March 21, 2017 by Toby Davidson

Competing in the current global digital business environment requires agility, flexibility, and above all, innovation. So you’re doing everything you can to keep your business competitive and on the cutting edge – shifting to all-digital, real-time operations.

In a sea of streamlined, digitalized process, one thing is sure to stick out – your two-tier ERP model. It served you well for years, but now it’s probably hindering progress and true digital transformation.  As you build a software strategy to serve an extended global enterprise, relying on a two-tier ERP model is like rowing against the tide.

Relics of the Past

These models were built during an era when only limited connectivity back to the head office was required. The top three goals were focused on:

1. Consolidation: Organizing financial, inventory, and other basic operational data across the enterprise
2. Cost containment and operational efficiency: Managing costs across global operations
3. Flexibility and innovation: Giving subsidiaries autonomy and allowing them to make individual choices on their own systems

But this is an antiquated view of operations – they now require greater levels of functionality and support for innovation. The result of continuing business with two-tier ERP is a slow, inflexible, and complicated landscape.

“N” to the Rescue

The way forward is clear – adopt a new n-tier model that allows subsidiaries to run in real time while staying closely integrated with the headquarters’ system. A recent report from Enterprise Applications Consulting highlights how SAP S/4HANA Cloud helps companies achieve this by offering both cloud and on-premise versions. Organizations can benefit from:

  • Consistent code line and data structure extending from a fully functional headquarters system running SAP S/4HANA software on premise
  • Flexible and adaptive subsidiary solution, also based on SAP S/4HANA, running in a public cloud

Using the same product family in the n-tier deployment model means you can envision a better way to support a high degree of operational integration between headquarters and subsidiary operations –without sacrificing the autonomy and local requirements essential to many subsidiaries.

Shared data structures and an extensibility platform help you unleash a degree of integration and business orchestration between headquarters and subsidiary operations that goes well beyond what has traditionally been considered two-tier ERP – so you can move full speed toward global digital transformation.

For a deeper view of the new n-tier architecture, read the entire report.

 

Toby Davidson is vice president of  Solution Management for SAP S/4HANA Cloud

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