Devising and implementing a two-tier ERP strategy
The process of devising a hybrid ERP strategy entails business needs assessments, a thorough review of the solution landscape, and contextualizing the choices within the technology framework of the larger enterprise. It will be worth noting that tier-2 ERP solutions are often, also provided by tier-1 ERP providers.
Consider the following scenario:
A two-tier ERP in the SAP/Oracle ecosystem
In the SAP ecosystem, a global manufacturing enterprise will typically leverage the S/4HANA platform. In the Oracle ecosystem, a global enterprise could be running on an on-premise Oracle NetSuite deployment. However, its regional sites can leverage the SAP Digital Manufacturing Cloud solution to remotely manage and control shop floor activities and build a connected factory that relays supply chain data and financials to the tier-1 ERP. On the other hand the tier-1 ERP can share PLM data with the regional sites.
Similarly, manufacturing enterprises operating in the Infor ecosystem will deploy Infor XA for larger business units, given its ability to handle all types of manufacturing engineer-to-order processes, whereas smaller units will run on the Infor CloudSuite Industrial, which provides comprehensive and configured business processes for specific needs of discrete manufacturers.
In devising a two-tier ERP strategy, here are some of the key considerations that must be made:
- Consider who gets to decide which tier-2 solution to pick
While the subsidiary or the business unit in question will be better informed about their needs and the potential solutions to be deployed, such a strategy may lead to multiple units employing different solutions to support their own needs.
- Consider tier-2 solution’s fit with the larger organization
Interoperability of the tier-2 solution with the tier-1 ERP will be crucial to unleash the key benefit of a hybrid ERP strategy: that is, the agility and flexibility of a tier-2 solution combined with a digital integration into the financial and operational workflows and decisions of the organization as a whole.
- Consider rolling out a hybrid ERP strategy with an implementation partner
When each child organization implements a tier-2 solution with different implementation partners, they effectively inject varying philosophies into the hybrid ERP system. This can result in unnecessary and difficult-to-maintain customizations in the tier-1 ERP, and subtract from the RoI of the undertaking.
Typically, a selection of tier-2 solutions is offered to the subsidiary or a business unit by the board after making these considerations, and picking the specific solution is left to the business unit in question. However, fostering collaboration between the parent organization and the business unit will be crucial to build a synergetic system that results in mutual benefit. Implementation partners are usually well-suited to play this role, as they collaborate with both the units, understand the technology landscape from either perspectives, and brainstorm options with the CTO or the CIO.