Remember the comic strip, “The Born Loser”? I used to love reading this strip because it reminded me of how lousy life can really get for some folks. Whenever I start feeling picked on because my stapler comes up empty or the last beer has disappeared from my fridge, I simply remember the “The Born Loser” and it usually makes me laugh away the minor disaster I’m facing.
Here’s a real life scenario that I just know has occurred sometime with someone.
Imagine, that the day after you and your colleagues celebrate the completion of the implementation of a new ERP system, it’s announced that your company will be merging with the guys down the street. You instinctively know that one of two things will now happen.
- Option 1: You will be asked to start the implementation process of the newly acquired company onto your new system, or
- Option 2: You will be asked to start converting your company to the new company’s ERP solution of choice
Either way, you feel like Sisyphus and his famous rock.
Before you start pushing the big stone up the hill again, consider a couple of alternatives.
There are really more than the two choices listed above.
Option 3: Do Nothing
The least obvious and frequently most cost-effective solution just might be to do nothing. Lots, probably most, large enterprises maintain multiple ERP systems, each tailored to the needs of the business unit hosting the solution.
This is especially appropriate if the company in question is a subsidiary with many sibling companies owned by a single large holding company. The individual members in the corporate family are typically focused on a specific type of business with unique manufacturing requirements, processes and markets. The parent is concerned with making money from the subsidiaries either through operational profits or the reselling of the business itself. In other words, the parent is not manufacturing anything at all.
Let’s say your business unit is process based, serving the food and beverage market with assorted brands available via grocery chains. What do you really have in common with your corporate sibling that manufactures precision mechanical timing devices for the team sport market? Or perhaps yet another business unit makes steel pipe lines for the oil exploration industry. Again, not much in common with these guys either.
Other factors that differentiate one business unit from the other might be size. A one-shift operation that turns out five units per day employing 50 people will have markedly different needs than a three-shift factory running 24/7 with a thousand employees turning out millions of units per year. Large footprint solutions tend to have large price tags. The cost benefit of dropping a $3 million dollar ERP software solution onto a business that grosses $20 million per year is going to be tough to prove.
The point is that each of these business units is likely running an ERP variant that works well for them. What would be the benefits of forcing each onto some “corporate standard” platform? There is certainly no reason to rush into a migration solely based on a change in ownership.
Option 4: Integrate
The conglomerate is typically in the business of owning companies, not in the business of closely managing the day-to-day operations. The needs of the parent are more often tied to performance measurement and results tracking.
A better solution is to look at ways to make the ERP instances located in the assorted subsidiaries feed information upstream to the Enterprise ERP at the corporate level. This may require some out-of-pocket expense and limited modification to one or both systems.
But, before you start clutching your chest and hyperventilating about code modification and future upgrades, consider this. Almost all ERP systems contain some imported code. There are only a handful of ERP solutions that are written top to bottom, front to back as a single seamless system. The vast majority of ERP systems on the market are built around a modular architecture. Some of it written in-house, some of it acquired.
But, the core functionality is likely extended through the use of acquired or separately created blocks of code. In many cases these may well be free-standing products available from multiple sources.
In other words, the system is designed to be modular. It is built to be extended and attached. Feeding data out of one ERP into another one is not the kind of technology one associates with Area 51 or even corporate R&D. This is basic connectivity, closer to linking up a home wireless network.
Your ERP vendor is likely able to help extend or connect your system to the parent system. This is a good thing.
The advantages are numerous. The subsidiary gets its best fit ERP, the corporation gets its enterprise financials and everybody is happy.
Finally consider the fact that just maybe, your EPR is better than the other guys. Maybe they should consider changing and leave you out of it. Mergers are more and more common. It is not a time to rely on conventional wisdom; it is a time to open the mind to new and different ways of accomplishing things.
Just because you’ve been purchased or you’ve picked up a new subsidiary, don’t assume that everything must conform to the buyer’s methodology.
It’s still two different businesses and it will likely remain so. The point is, this is a time for deliberate, thoughtful action. This is not the time to jump into an action plan that won’t truly benefit anyone.