Consolidation or standardization of ERP systems, that is implementation of the same system (e.g. Microsoft Dynamics 365 Business Central ) in multiple subsidiaries, brings a number of benefits to global companies. We work under the assumption that data, processes and functionalities should also be standardized. In this post, I would like to deliberate on some of the most important advantages.
Benefits of global Microsoft Dynamics 365 Business Central standardization
Assumptions
What do we understand by Microsoft Dynamics 365 Business Central (former Microsoft Dynamics NAV) standardization and global roll-out?
- implementation/upgrade to the same version of Dynamics 365 Business Central in all subsidiaries,
- having a single Global Template including a database, most of settings for all subsidiaries and project documentation which will be used by various members of the group,
- having asingle global ERP partner with a very limited assistance of local partners,
- rollout of the standardized solution based on Microsoft Dynamics 365 Business Central to all subsidiaries worldwide.
The Benefits
Cost reduction
- Roll-outs – their average cost goes down as the project of ERP global consolidation progresses. Additionally, the implementation of an ERP system (Microsoft Dynamics 365 Business Central), during whichsettings, processes and functionality are prepared already at the Global Template stage is also cheaper than a typical implementation. More information about cost reduction during global roll-out can be found in the post: One or multiple teams in charge of global Microsoft Dynamics NAV roll-out?
- Support – 3-level helpdesk services optimize costs of support in a global company using Microsoft Dynamics 365 Business Central. More details about support services for key users can be found in the post:Helpdesk for global companies – 3 levels of support.
- System development – implementing any change in an ERP system used by aglobal company is much cheaper if the system has been standardized (i.e. subsidiaries work on the same system version, have consolidated data, standardized processes, settings and functionalities).
- Economies of scale.
- Avoiding the „reinvent the wheel” effect – the same modifications made by different partners in different locations;
- Decreased license and management costs.
- Global software rollout is a good time to do some serious housecleaning and consolidation within the hardware and software used in subsidiaries around the world;
- Streamline global supply chain management;
- Reduced management costs with more stable and simple IT systems and infrastructure.
- Reduced support costs – subsidiaries use the same systems so it is easier to support the end users.
Company objectives easier to meet
Global objectives of the company are easier to meet. According to NAV Global Standardization and Roll-out Methodology, they are defined at the stage of Strategy and then implemented with the ERP group solution at the stage of Global Template. To find out more about the stages of a global project carried out in compliance with NAV Global Standardization and Roll-out Methodology, visit our website.
Data quality
With Master Data Management System, we have control over data and the ability to manage it. Based on project assumptions, master data is not modified locally. The only changes can be made in the central database. With improved master data management, you may reach the goal of data consistency.
Business Process standardization
- Drawing on the valuable experience of the best subsidiaries in the group.
- Easier creation of new subsidiaries or adding newly acquired companies to the organization.
- Transparency when comparing the performance of respective subsidiaries – easier management, control, comparisons across subsidiaries;
- Reducing average costs and improving quality – the ability to prepare the process for a greater number of entities. In global projects, multiple analysis and modelling of the same business process are not needed. If we prepare one process for all companies, its implementation cost is reduced.
- Reduced risk of errors during implementation in subsidiaries.
- Transparency of the supply chain –especially the relations between companies within the group.
Change friendly organization
Easier and faster introduction of changes into the organization – both upgrade and processes changes are easier, when you use the same version/functionalities/processes everywhere. It is easier to modify Microsoft Dynamics 365 Business Central in all subsidiaries, if it was implemented with the same template (global template or core). With the collaboration and workflow capabilities, the company gains the ability to act faster as an organization.
The flow of information in a global company
Integration allows information to be shared in a standard format across many departments in the home country as well as across the national borders regardless of language and currency differences. The quality of data at the system level is much improved – with master data management, or internal EDI. At the level outside the system – with standardized data, processes and settings – users are able to communicate more easily and effectively. All subsidiaries use the same tool. Thus, ERP systems are no longer an obstacle to successful communication. Problems with differences in item numbering or processes are gone. Work environment becomes more consistent. The same analogies apply to people. Employees have identical tools regardless of the department, participate in the same trainings and use the same documentation.
Infrastructure optimization
Servers and their processing powers are used better with a standardized ERP system. The license costs of SQL Server are reduced. The entire environment is managed from one place by one company. The global company does not pay the same costs of system installation in a subsidiary over and over again. As a reminder, requirements in this area are bigger and bigger with each new Microsoft Dynamics 365 Business Central version. As maintenance costs are shared by all entities, they are correspondingly lower. One stable environment for all entities is developed. There is no need to create separate environment for each location at which a consolidated ERP Microsoft Dynamics 365 Business Central is implemented.
License optimization
Better use of the Microsoft Dynamics 365 Business Central license. With consolidated ERP system, it is possible to reduce the number of concurrent users per license, if there is one database environment (multiple database servers in one place, not necessarily with one single database for all companies).
ERP affordable for small offices
The ability to deploy the system in large and small entities alike preparing a global template for Microsoft Dynamics 365 Business Central requires some investment at the beginning of the project. However, once the template is ready, the cost of implementing the system in the subsidiaries (rollouts) is much lower than in the case of typical implementation projects. Thus, much more locations in the group can afford to purchase the system.
From the accounting perspective….
Eliminating unnecessary accounting complexity ensures improved efficiency of company’s accounting procedures and visibility to internal auditors, as well as simplified processes of group reporting and financial consolidation.
Synergy effect
And finally, synergy which means you get more out of your ERP systems if they are globally standardised.
What are the final project deliverables of a project based on the NAV Group Project Methodology?
- Microsoft Dynamics365 Business Central implemented according to all legal requirements in all countries.
- The platform for other subsidiaries involved in the roll-out project (i.e. Global Template). As a result of the system roll-out in all subsidiaries, the customer is delivered a template of a solution which enables faster and easier implementation than the typical implementation of an ERP system. Within its processes, setup and functionalities, the solution incorporates the group’s policy and know-how.
- Standardized business processes within a group – all subsidiaries operate within standardized business areas (typically, in the manufacturing and logistics areas), with possible autonomy in locally managed areas (primarily, in sales).
- Technically and functionally consistent environment in all subsidiaries – the possibility of efficient and low cost implementation of changes and upgrades.
- Reporting from subsidiaries in a standardized form which contributes to facilitated consolidation process.
- Master data consistency (firstly, inventory, customer and vendor data) which means that each product is identified with the same unique number in all countries.
- Documentation (incl. acceptance tests) delivered to support employees in their daily work.
