If a company is taken over by another, usually larger, company, the call is often made to take over the ERP systems newly affiliated companies. Normally, the smaller partner should take over the larger partner's system. By consolidating ERP systems, parent companies want to establish consistent processes and have reliable key figures in their central systems in good time. However, it is not always the best idea to impose a standardised group-wide system on a subsidiary.
Group-wide consolidation of ERP systems - a favourite goal of the bosses
If a new subsidiary is to take over a group-wide ERP system, a new client is created as an autonomous environment for the new addition. However, the ERP processes within this environment are usually based on those of the central system.
Of course, such an approach has great advantages. It saves effort in many places to coordinate the ERP system and often expensive and complex interfaces are unnecessary. The expertise of the IT or ERP department only has to operate one system. Any expansion naturally involves less effort. Maintenance, updates and rollouts can be handled by homogeneous organisations. Consolidation of ERP systems naturally also saves costs.
Few proven providers
If you analyse the ERP market to see which systems are actually suitable for the uniform integration of group subsidiaries, you will quickly come to an insight: Many are not. What initially appears to be a drawback also has its advantages. The corresponding software from SAP, Oracle, JD Edwards etc. is usually mature and correspondingly internationalised. The manufacturers behind it are the top dogs on the market and can therefore be regarded as safe investments.
Group-wide consolidation of ERP systems - the victims
For the performance of a group, there are therefore some good reasons for wanting to use a consolidated ERP system. For the individual group subsidiary, there may also be some disadvantages to such an approach.
If a company is to be taken over by a group, a certain attractiveness of the takeover candidate lies in the fact that it can do something that the group does not have in its portfolio. In other words, being "different" is exactly what you want. In addition to other products, competences, processes and knowledge, this includes a tried and tested infrastructure. An often highly specialised ERP system is not uncommon. Sometimes the expertise of many years and employees is embedded in such ERP software, which has often been developed with precisely such customers in mind.
There is often a well-coordinated team or/and service providers behind it who can quickly and efficiently adapt the integrated systems if necessary.
A standardised group-wide system, on the other hand, is rarely flexible enough to keep pace here. At the same time, the reason for a consolidated system would be reduced to absurdity if it were customised to meet all the special requirements of a subsidiary.
Declining performance and frustration on all sides is often the result of standardisation.
Partial consolidation of ERP systems - double-edged
As an alternative to the standardised consolidation of ERP systems, it is of course possible to integrate the ERP software of the subsidiary via interfaces. The operational business is mapped with the specialised system, which then only feeds the financial accounting of the parent system with the resulting postings.
The focus here is clearly on the advantage of the company subsidiary. Specialised and industry solutions can continue to show off all their advantages. Changes to the market or organisation can also be implemented quickly and flexibly in the ERP system. The employees and management of the subsidiary are at home in their specialised system and therefore more productive.
Of course, there are some disadvantages to such an approach. These include, of course, the formation of islands in terms of both technology and knowledge, which central organisations normally avoid like the devil avoids holy water. And either way, the effort involved in maintaining such a structure increases.
The ideal solution - it doesn't exist
So how to deal with the often controversial goals of consolidating ERP systems and the use of specialised ERP software by company subsidiaries? As so often in life: It depends.
It may make sense to forego some of the advantages of standardisation. Economic and strategic goals may speak in favour of this. This also makes it clear that a decision on the right ERP strategy is not an IT decision, or at least not just an IT decision.
Long-term strategies that replace the ERP solution of the company subsidiary with a centralised system in a longer, regulated process are also possible. Processes can be adapted slowly through a reorganisation of processes.
What is also required, however, is consistency. Although the hymn of the standardised ERP landscape is often sung, it is not necessarily put into practice. Deviating from the propagated template, which should not be deviated from under any circumstances, leads to special paths and shadow IT systems that are even more difficult to control than individual ERP systems.
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Group-wide consolidation of ERP systems
