Doing business internationally, even if limited to several countries, is a serious challenge. To counter this, multinationals use the SAP ERP system. The system is first implemented for the head office or the major entity in the group as the corporate SAP ERP template. Next, a prepared SAP template is rolled out in the remaining companies of the group – manufacturing and commercial ones – and then adjusted to a bigger or lesser degree to the characteristics of the local entities. This allows the group to unify its IT solutions and business model, therefore streamlining the global exchange of information.
Another quite popular model is to make central system terminals available to all branches. However, in this case, the local entity has no say as to the functions of the system – it becomes merely a user of the application.
Such standardization brings undeniable benefits. The exchange of information is smooth and takes place in the real time, reporting is simplified and unified, it is easier to consolidate financial data, and the processes are standardized irrespective of their location. In the long run, a single, centrally maintained and administered SAP solution generates lower costs. This approach has already become a valid and internationally-used best practice.
If Not an SAP ERP Rollout, Then What?
Rolling out an SAP ERP system from the head office to a new unit is challenging, time-consuming and costly – both in terms of internal costs engaging staff from the head office and the branches) and external service costs (implementation services, training). On top of that, there is the cost of SAP license fees for users in the entity where the rollout takes place.
All these costs are viable if the rollout is carried out for a large manufacturing branch or manufacturing and commercial branch. The complexity of business processes as well as hundreds or thousands of employees makes it necessary that the implemented solution can be used to manage all operations and activities from beginning to end.
Meanwhile, there are a great number of commercial branches in the organizational structure of numerous capital groups. The head count in these branches is usually from around a dozen to several dozen. The major activity of such branches is to sell and market the company’s products on the local market. Their business requirements regarding the system are therefore incomparably lower – focused around activities from the financial, sales and distribution areas. They do not need solutions like SAP ERP. In order to perform commercial tasks efficiently, a much simpler IT solution is required.
In the case of small-sized commercial companies, capital groups often forego SAP ERP rollouts, thus optimizing their IT budgets. They choose either to implement financial and accounting systems available in the local markets or to introduce a second, smaller ERP system not related to SAP into the IT environment to serve as the standard for smaller branches. However, both approaches have fundamental flaws.
In the first case (purchasing different, smaller financial accounting applications), it is difficult access to up-to-date management information. No matter how successful the integration of IT solutions by different developers, part of the company data will surely have to be delivered to the head office manually. Data is reported with delay, in an inconsistent manner and not without errors, which is inevitable in the case of such an approach. Consequently, business management at both the operating level (production planning, sales policy) and the strategic level (assessing the reported performance of companies) becomes problematic.
In the second scenario in question (a smaller system by another developer as the second corporate standard), it is easier to report the results and performance, but the costs of implementing and maintaining two separate technologies in the corporation as well as the costs of designing and maintaining interfaces between the separate systems grow significantly. Add to this the costs of companies moving from the smaller IT application to the corporate SAP standard – which will happen for sure when a given branch expands – meaning that implementation costs are incurred twice.
So how can business expectations and a viable IT budget be reconciled?
Strike a Happy Medium or Find the Best Alternative
The SAP Business One system is an alternative ERP solution for smaller companies in capital groups whose head offices use the SAP ERP system. It is a flexible solution for small-sized companies that SAP has constantly developed since 2002.
The SAP Business One system is a solution developed by SAP and aimed at small businesses. It supports company operations in the key areas – sales, customer service, procurement, warehouse management, finance and employee data management.
Practice shows that the functionalities offered in the SAP Business One standard meet the requirements of smaller businesses, and these include commercial branches of large corporations. This model is already used in practice by corporations all over the world. Currently, over 250 companies working on SAP ERP use the SAP Business One solution in over 1,500 branches. Why?
SAP Business One in numbers
- Over 250 large enterprises use SAP Business One in over 1,500 subsidiaries
- Over 35,000 customers worldwide
- Over 500,000 users
- Implementation projects in more than 130 countries
A Central Perspective
First of all, SAP Business One can easily be integrated with the SAP ERP solution used in the head office. SAP prepared a ready-to-deploy tool (B1iF – Business One Integration Framework) which allows for the quick and effective integration of both solutions as well as the exchange of data between their environments. Using ready-to-deploy tools, head offices can be certain that data exchange processes will be carried out correctly and with no delays. In the case of integrating solutions by two different developers, we do not have this guarantee – implementation projects can be prolonged and maintaining complex integration environments will generate higher costs in the long term.
As an alternative to the classic SAP ERP rollout, implementing SAP Business One in a subsidiary also means tangible financial benefits for the group. The local system installation requires a lower budget than the SAP ERP rollout and is much quicker to set up. System implementation takes anywhere from several weeks to several months, including training for key users. Also, SAP Business One licensing differs from the licensing for the SAP ERP system, so the solution can be financed using the local budget of the company. The B1iF (Business One Integration Framework) integration platform, on the other hand, is delivered free of charge, so the budget for integrating both solutions is much lower than for integrating the SAP system with a solution by a different developer.
Who can benefit from implementing SAP Business One in a corporation using SAP ERP?
- Commercial branches in countries where the business is smaller
- Commercial offices in countries where the major entity uses SAP ERP
- Regular business partners, for example including:
- Licensed service companies
A Local Perspective
In addition to the head office’s point of view, it pays to look at the local one too.
As mentioned already, a company receives a fully functional tool for managing its business. In addition, SAP Business One opens new possibilities for the company in terms of supporting its business.
One of these possibilities is remote access to the system regardless of the location – especially for employees who work outside the office. SAP Business One is a solution that meets current mobility demands. As an example, the system provides applications for iPhones and iPads free of charge. The management will surely appreciate the possibilities of the system for smartphones, as it allows managers to check reports, manage validation processes and review sales plans on the move.
Using SAP Business One solution also means the possibility to implement numerous complementary solutions developed by partner companies.
Moreover, according to key users’ feedback, the system is intuitive and easy to use, allowing for new users to become familiar with it quickly. In the long run, this aspect also means lower costs related to future maintenance of the system.
SAP ERP rollout or SAP Business One local implementation? In some corporations, this decision is made by the head offices. In other organizations, local branches have a major say in choosing the solution they are going to use. Whichever the case may be, it is safe to say that multinationals have just gained a noteworthy alternative in terms of planning IT strategy.