Corporate ERP in International Business : Corporate Strategy

Posted on | March 10, 2012 | Comments Off

Corporate ERP in International Business

Modern mid-market companies often cross national borders and go internationally both in marketing and production outsourcing. ?If you are saving on cheaper manufacturing, the unexpected cost might be in the Corporate ERP selection for your foreign facility. ?When you were building and growing your company in the United States and selected your ERP and Accounting application platform in the past, the decision was unlikely based on the future plans to go internationally. ?Let?s review possible issues, see popular combinations of ERP platforms and see pluses and minuses:

1. ERP system localization concept. ?It includes two sides: local languages support and compliance with business related legislation. ?Let?s talk about language first. ?If you are using something like Dynamics GP in the USA, you might be surprised that Microsoft Business Solutions doesn?t have it translated into such popular languages as Chinese, Brazilian Portuguese, Russian, German.

?It is possible to translate some forms and reports into these languages (Chinese would be the toughest one to deal with, as Great Plains Dexterity doesn?t support Unicode, required for hieroglyph based alphabet), but it is extra cost to be absorbed, plus each new version translation would require some work to be redone. ?Foreign country legislation compliance: this is even more difficult issue, especially in regional powers, such as Brazil, Russia, China. ?Even if you translate your domestic system into Chinese, it would be very difficult to align it to the required business regulations. ?In smaller countries the regulation might be a lesser issue and international GAAP is place. ?Having said these words about localization, we would rather recommend you to pick ERP, which is already localized in the targeted foreign country

2.

The magnitude of the foreign operations. ?You may use high-end ERP and MRP platform in US, which is also available in the country, where you bought or built the facility. ?However you may now meet the dilemma to think about implementing it internationally with the cost, which is not proportional to the magnitude of the operations (this might be just smaller research or production facility, where in USA you are using Oracle Financials). ?It might be more feasible to pick something that is rather small to mid-market ERP, available in the country of destination

3. Consolidation options. ?If you decide to choose different platforms in Headquarters and international subsidiaries, there is apparent need to consolidate financial reporting, plus have reasonable managerial control. ?Here you may consider two approaches: Consolidation on the reporting level and consolidation in General Ledger. ?Let?s talk about the first option. ?Popular Financial Reporting packages, such as FRx and Microsoft Management Reporter allow you to consolidate your Headquarter (Dynamics GP, AX, SL, NAV) with Trial Balance exported into Excel. ?This is very popular approach, it might be simple enough, but it gives you very limited information about foreign subsidiary financial transactions details. ?Second approach is also traditional, where you create GL level only company copy in your Corporate ERP in Headquarters and then schedule automatic posted GL Entries export, transportation (via Internet) and import into the Headquarter based company shadow copy

4. Popular combinations. ?Let?s assume that you are deploying Microsoft Dynamics GP (formerly known as Great Plains Dynamics or eEnterprise) in US, and you are expanding to Brazil, Russia or China. ?Look at the following opportunity. ?You are deploying GP on the same SQL 2008 Server, where you are also installing SAP Business One 8.81 and open SB1 user interface to the users in China, Brazil, Russia. ?SAP B1 is localized in the mentioned countries, you have control over all the companies by installing English SB1 interface for your Accounting, AR, AP department in the Headquarters (actually interface doesn?t need to be installed on the preferred languages, you can switch between languages in the user menu). ?You export SB1 GL transactions from the same SQL Server (into Excel) and import them every night via GP Integration Manager (from Excel trial balance, or consider more sophisticated way of opening Advanced ODBC connection in Integration Manager to read entries directly at the source). ?In our opinion this approach is very cost elegant, as it allows you to eliminate IT services cost to support ERP servers in several countries and provide IT support directly from Headquarters, and by doing so you are exercising additional control over possibly looking for some independence foreign operations. ?The combination of tandems could be discussed, as most of the mid-market packages have reasonable integration tools and flexibility

5. Special Recommendations for Brazil. ?In this country SAP B1 is very popular and well known. ?Here in North America we are generally considering SB1 as dedicated to small business, but in Brazil it is considered as mid-market accounting and MRP application. ?Localization add-on is about k to budget (as addition to Business One user licenses and implementation cost). ?If you have large manufacturing facility there, consider Dynamics AX (former name was Axapta). ?Among the locally coded ERP take a look at Microsiga

6. Special Recommendations for Russian Federation. ?SAP BO is localized and translated into Russian. ?For larger operations consider AX Axapta. ?If your concern about local tax code compliance is high, request 1S Accounting (1S Bukhgalteria) presentation and do your homework

7. Chinese recommendations. ?Here both AX and SAP B1 are localized

8. CRM platform. ?We recommend Microsoft CRM (also referred as Dynamics CRM), as it is marketed and sold in all the countries

Andrew Karasev is Great Plains Certified Master, MVP, help@efaru.com 1-866-304-3265, 1-269-605-4904. He is also the initiator of eFaru project http://www.efaru.com and founder of Alba Spectrum information space

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