Written by: Ricky Klint
Enterprise companies find that deploying a single, global ERP system can lead to unmanageable IT complexity.
As all CIOs know, the more complex the technology environment, the more difficult and expensive it is to keep the entire operation running seamlessly. Yet over time, many companies find the complexity of their applications has gradually increased to an almost unmanageable degree. They’re paying very high prices to operate their core business, or they feel paralyzed by their systems. Some worry that they’re can’t easily support future change or execute on strategic direction. They’ve reached a point where IT complexity is preventing the business from realizing its potential, and they wonder how they got there…
In the 1990’s many companies embraced an idealized vision for enterprise IT, which was predicated on putting in place a single, global ERP system from end-to-end. But as many companies and many CIOs have discovered, this isn’t necessarily a practical vision. The world around us changes fast, and business requirements change right along with it. And monolithic ERP systems can have a hard time keeping up.
Organizations found that the reality of the global ERP vision failed to live up to its promise, for three reasons:
- One size does not fit all. The global enterprise typically comprises a huge range of businesses: large subsidiaries and small subsidiaries; emerging markets and established markets; products and services; manufacturing and multi-channel distribution. It can be difficult, if not impossible, to address specific local needs of your many businesses with a single, global system.
- Difficult deployment. It can take too long—years in some cases—to deploy a single ERP system across the global enterprise. And meanwhile, the world keeps right on changing. The resource requirements of a multi-year global ERP deployment can be a drain on the enterprise, taking time away from high-value IT projects or forcing you to play host to an army of highly paid consultants.
- Change management. Once in place, a monolithic global ERP can be very difficult—or very expensive—to modify. That means that your business is slower to respond to changes in strategy or changes in the marketplace. What you gain in visibility and process management, you give up in agility, trading off competitive advantage because you can’t respond to future changes.
To respond quickly to a specific business need in a single local office, most companies put in place a point solution rather than undertaking a major change to the global ERP. It’s a reasonable short-term response. But multiply that point solution by the number of offices around the world and the number of unique business needs that crop up, and an enterprise can one day find its ERP surrounded by dozens or even hundreds of smaller applications. Take into account the integrations between these small applications, individually as well as to the main ERP, and the enterprise IT environment will grow extraordinarily complex—ironically, as a result of attempting to “standardize” on a single, global system.
This is a story we’ve heard again and again, from some of our biggest enterprise clients. And we have a solution. Microsoft Microsoft Dynamics ERP solutions can strike the perfect balance: support for standardized industry best practices and the ability to implement global processes, while allowing rapid deployment and even faster modification and reconfiguration at the local level. By deploying Microsoft Dynamics business solutions across their operations, companies like Revlon Revlon and Dell Dell have consolidated hundreds of smaller applications onto a single, global platform, reducing IT complexity, saving millions in IT costs, and increasing the speed and agility of their businesses. Where they were once faced with overwhelming complexity, today our customers can actually act on their strategy and adapt rapidly, realizing tremendous return on their technology investment and saving significantly on IT costs while reaching new levels of strategic agility.
Microsoft is another great example. Ten years ago, if you had suggested that we would be operating retail stores and selling hardware in the year 2013, people might have looked at you funny. And yet, here we are, 10 years later, with a global retail presence, and we’ve transformed into a devices and services company. The world changed. And our business changed to stay relevant. And we wouldn’t be here if our business solutions hadn’t been able to change, as well.
What does the next ten years hold? It’s anyone’s guess. According to “Back to the Future,” by 2015, kids will be riding hover boards and we’ll all be driving flying cars (not to mention the Cubs will win the World Series). That may seem far-fetched, but one thing’s for sure: nothing stays the same. And you need business solutions that allow you to keep up with change.
Post originally written for Forbes.com: http://www.forbes.com/sites/microsoftdynamics/2013/04/04/how-did-we-get-here-reducing-complexity-in-global-organizations/