The Highest Common Denominator

Feature Article | June 23, 2008 by Detlef Mehlmann

It is absolutely essential for global enterprises to clarify the status of the overall organization and individual locations in a straightforward way. Management often needs a consolidated balance sheet quickly showing all business key figures. Today, this balance sheet may need to show sales and order receipts from branches in the Czech Republic, Poland and China, while tomorrow a profit and loss calculation might be needed that consolidates all the relevant countries.

The fact is that the basic challenges facing organizations with international production and sales locations are very similar both for SMEs and for large enterprises with 150, 1,500 or 150,000 employees. Both large and midsize companies need to deal with different languages and cultures, currencies, time zones, intercompany processing, or transfer prices. They have to draw up individual financial statements according to local accounting rules, and also create consolidated interim and annual reports using international standards such as the International Financial Reporting Standards (IFRS) or US GAAP.

Without a suitable IT infrastructure, these tasks are extremely difficult, if not impossible. Enterprises need ERP solutions that are as standardized as possible and can be run centrally for all companies.

There are other factors particular to the SME environment that also need to be taken into consideration. For example, midsize manufacturing companies are often heterogeneous organizations. Comparatively large production plants, with their deep and broad business processes, exist alongside smaller units that perform sales and service tasks, and only have a limited amount of personnel and a flat organization. This heterogeneous structure needs to be mapped in full with a single solution.

Central standards, local “specialties”

The Bruker Group, a provider of analytical instruments for the areas of life science and materials research, can vouch for this through its own experiences. The group consists of a total of 50 companies with a midsize structure, each with between 80 and 200 employees. The main locations are in Switzerland, Germany, France, and the United States. “For us, it is important to have our own SME approach for end-to-end IT structures. Our aim is to harmonize the local needs of our production and sales companies across the world with the requirements of the Bruker head offices,” explains Kirsten Müller, Head of IT at subsidiary company Bruker AXS, based in Karlsruhe, Germany.

Bruker therefore built up a global ERP system for the logistics processes based on All for Machine, an SAP Business All-in-One industry solution from SAP partner All for One. Previously, the group had implemented SAP-based processes for accounting step by step in the individual location. Kirsten Müller has so far been responsible for or assisted 15 of these rollouts.

One system for all

An international rollout project is not the same as a “normal” ERP implementation. It is far more complex and time-consuming to create a standardized data basis with which all the companies and locations can always “speak the same language.” When the template is created, numerous requirements have to be taken into consideration and constantly compared to ensure that master data and numbering systems, for example, provide clearly assigned results in all companies and organizational units.

As a result, rollout projects cannot be done “on the side”. IT expert Müller explains one important area of tension: “In an international ERP rollout, it is good on the one hand if uniform standards are defined centrally and implemented globally. On the other hand, however, local requirements and factors always have to be taken into consideration. It is impossible to take an ERP system configured for Germany and apply it one-to-one to the United States.” Instead, she advises companies to “form the highest common denominator. All companies, all countries, all processes and ultimately all users should be taken into account in an enterprise-wide system.”

For this, it is necessary to develop a template that takes account of the different requirements. This requires exact knowledge of business processes and local needs. Those responsible must therefore also be on site at the various locations, in order to correctly communicate the requirements of the head office on the one hand, and correctly evaluate the importance of local needs and business practices on the other. Personal communication and detailed template documentation are the keys to success.

Assistance for technical questions

In addition, the technical preparations need to be carried out before the rollout can take place. One big advantage here is the outsourcing of operation to an external computer center, because tasks such as the setup of long-distance connections (WAN) to connect up the individual locations or the setup and monitoring of development and test systems are often too much for the internal IT department to handle. Global operation of an SAP solution also usually requires 24-hour service desk support. As a result, operation of the global Bruker systems was transferred to the outsourcing service center of All for One from the implementation phase onwards. Kirsten Müller and her team are therefore able to concentrate on their core tasks and contribute their process expertise.

Abroad, globally active companies can still work together with their IT service provider. Many SAP partners also offer services locally. In addition, the international network of united VARs (value added resellers) guarantees customers local support abroad. All for One, for example, currently works with more than 20 united VAR partners that offer services in 34 countries.

Focus on “soft factors”

In addition to technical issues, cultural aspects – or “soft factors” – are decisive in an ERP rollout. For example, a shake of the head in India is the equivalent of a “yes” – so misunderstandings can arise quickly. In addition, each country has its own peculiarities with regard to working speed, style, and method. It is important to know all this in order to plan projects realistically.

At Bruker, Kirsten Müller had good experiences with providing those involved in the subsidiary concerned with information at an early stage. “It was always beneficial to involve management and employees in the location with regard to the future changes. On the one hand, to convince them of the advantages of a new ERP system and standard processes, on the other to take account of their outlook, wherever it made sense to do so,” stresses IT manager Müller. She is well aware that, “if too little time is spent on this, or local, cultural business practices are ignored, this can have negative consequences and delay the project.”

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