SAP on the Cloud
SaaS and OnDemand
Posts Tagged: subsidiaries
September 19, 2012 by justin
I was struck this week by a brilliant blog post by Dave Roberts on GigaOm. In the past, I thought the wait-and-see approach to not adopting cloud could be a smart one, but his post has got me thinking differently.
He opens the post by telling the parable of Amazon vs Borders. Amazon, an upstart in 1994 with a vision to sell books on the internet and Borders already a multinational bookseller, largely ignoring the internet until outsourcing the ecommerce operations to Amazon in 2001. In 2008 they realised it was too strategic and pulled it in house yet by 2011 they were bankrupt.
The parable tells a clear story, failure to adopt a new technology led to its disruption and ultimately, its demise. A classic tale of Innovators Dilemma you might argue. Dave outlines the lessons: (more…)
Tactics, Options, and Tradeoffs in Modernizing SAP Installations for In-Memory and Cloud – a helpful pre-conference seminar at SAP TechEd Las Vegas 2012
September 17, 2012 by Greg Chase
“How will adding HANA change how we manage our SAP landscape?”
“How can we get our SAP systems virtualized, or add them to our cloud infrastructure?”
These are just some of the questions being answered in a special half day preconference seminar for SAP administrators, enterprise architects, database administrators, and consultants about how to modernize your SAP landscape for the future at SAP TechEd Las Vegas.
The business is demanding the benefits of agility and insight provided by cloud computing and big data. Meeting these requirements will profoundly affect the architecture and operation of the data center. Find out how you can help your company navigate this change while leveraging the SAP investments
June 26, 2012 by Michael Morel
I am passionate about the need for large enterprises to develop structured approaches to managing their subsidiary ecosystems. I wrote an article a while back that talked about some of the business benefits possible. Here is a quick summary:
Large enterprises need to increase the velocity and efficiency of their order-to-cash cycle within their subsidiary network, which can each reach a count in excess of 1,000 subsidiaries for Fortune 500 companies. These subsidiaries include international and local sales and distribution offices, small operating divisions, customer service units, and joint ventures. While most large manufacturing enterprises have implemented ERP systems at corporate and larger divisions/operations, a vast majority of subsidiaries in these companies still use manual or legacy systems to manage their operations. These manual or legacy systems cause various business processes in their order-to-cash cycle to be inefficient and error prone. By improving the metrics in the entire order-to-cash cycle across the subsidiaries, these organizations can free up valuable cash that can be used to fund growth. Such improvements come from: (more…)
June 18, 2012 by Michael Morel
In addition to meeting the functional needs of a subsidiary, a Cloud-based solution for 2-tier ERP should meet four key requirements:
- Integration with Corporate ERP system: A subsidiary system must integrate with the HQ ERP system in order to better coordinate and manage activities between them; to implement a shared corporate services model; to provide HQ visibility into its operational metrics and regulatory compliance; and for financial consolidation. Key integration scenarios include:
- Data Exchange to support financial consolidation.
- Process integration to support scenarios such as a subsidiary buying from (or selling to) headquarters.
- Master Data integration to enable maintaining and synchronizing key master data, such as customer and product information among the corporate and subsidiary systems
- Analytics integration to enable HQ to compare performance across subsidiaries
- IT Management integration to reduce the pressure on subsidiary IT resources by distributing subsidiary incidents to corporate IT
June 7, 2012 by Michael Morel
As companies of all sizes expand their businesses to grow faster and achieve strategic advantages in their industry, they are increasing their investments across the globe to take advantage of growth opportunities. They are also acquiring smaller companies to gain access to new technologies, products or markets. Such activities increase the number of subsidiaries within their corporate hierarchy – international and local sales/distribution offices, small operating divisions, emerging businesses, planned divestitures, customer service units and joint ventures.
Along with increased global investment comes an increased need for application solutions that can help support and manage this expanding subsidiary ecosystem. The IT solutions at these subsidiaries have to:
- Support the current business requirements in an efficient manner, while implementing best practices and standards
- Ensure flexibility to adapt to the changing market conditions
- Be scalable to support future growth
- Provide operational visibility and compliance transparency to the Headquarters (HQ)
- Support intra-company transactions such as buying and selling between corporate/subsidiaries
- Leverage shared services such as centralized purchasing
- Supply data to corporate for financial consolidation and reporting
Many companies are finding that it does not make business sense to implement the HQ ERP system at all their subsidiaries because of many reasons – a) IT resources and budget available at the subsidiary are significantly less than what it would take to deploy and support a corporate ERP system at small subsidiaries b) As new subsidiaries are added, the window of time required for implementation is lot less than what a HQ ERP system would take c) The subsidiaries need systems to drive standards adoption, while the HQ systems are designed to support complex business scenarios and one-off customization. As a result of these conflicting requirements, many companies are turning to a different ERP system for their subsidiaries. When HQ and its subsidiaries have different ERP systems by choice, it is called a two-tier ERP model.
An increasing number of SAP’s Fortune 1000 customers are choosing a two-tier ERP model and selecting cloud-based SAP Business ByDesign as their subsidiary system. The SAP Business ByDesign is a comprehensive and functionally rich system, but is also well integrated with the HQ SAP ERP system. So it meets both the subsidiaries’ and HQ’s functional requirements listed above. In addition, it is less expensive, quick to deploy, faster to adopt, easier to change and simpler to manage. SAFECHEM, a subsidiary of The Dow Chemical Company, needed to start its North America operations with very limited time and funds. Installing the parent company’s existing SAP ERP software would have been time consuming and costly. SAFECHEM opted for a two-tier ERP model and selected SAP Business ByDesign. “The solution is one we feel we can successfully deploy to other future subsidiary businesses”, said Dennis Stahl, Financial Systems Architect, Dow Chemical Company.
June 6, 2012 by Brad Smith
Guest Blog Post By Alyssa Sittig, Arena Solutions
Timing is unique for each company and each industry, so there is no hard and fast rule on when the time is right to buy ERP. Our Partners at ERP Logic have seen companies in stages across the board decide they will benefit from ERP. Whether a company is just starting out, ramping up its sales or even in decline—it can use ERP to establish a clear vision and better understand its financial health.
While ERP isn’t a “cure all” solution, there are three common situations that can be resolved with the right ERP system.
- Executives no longer trust the numbers.
- Operations and Finance can’t agree on a singular set of numbers.
- A company needs predictive performance.
December 14, 2011 by Sven Denecken
Since publishing our three part series on two-tier ERP, we’ve had numerous follow-up discussions with analysts and colleagues. Today, we would like to share with you two viewpoints that we found particularly thought provoking.
Cindy Jutras (http://mintjutras.com; twitter: @ERP_CindyJutras), the noted industry analyst with over three decades of experience in this domain, conducted a survey earlier this year on centralized versus decentralized ERP. Cindy divided the respondents between World Class and other. I believe “other” in this context is a politically correct way of saying “not World Class”J. What she found is that World Class companies favoured a two- or multi- tier approach (55%) over a single standard ERP (45%) while other manufacturers favoured a single standard (73%) over the other alternatives (27%).
November 22, 2011 by Sven Denecken
In our last blogs, we have discussed the pros and cons to a decentralized and to a centralized approach.
However, rarely is either extreme the optimum. Instead, managers are often called upon to think globally and act locally. In other words, we should somehow marry the best aspects of centralization and decentralization. While this may sound like a paradox, in this blog we will discuss specific use cases in ERP of how global and local, or central and de-central, can be combined for an optimal result. Thanks to modern developments such as Service Oriented Architectures (SOA), cloud computing and orchestration, multinationals today are able to deploy ERP strategies which harness the advantages of both centralization and decentralization in real time.
So today, we explore how technology can enable a synthesis of the two strategies preserving many of the strengths and minimizing the weaknesses of each extreme.
November 19, 2011 by Sven Denecken
Sapphire Madrid has indeed sparked some great discussions worth the follow-up. Therefore, as already announced by Dick Hirsch (http://blogs.sap.com/cloud/2011/11/18/interested-in-saps-cloud-strategy-join-us-for-a-sapchat/ ), we will participate in a tweet chat on December 7, 4:00-5:00 P.M. CET (10:00 A.M. EDT) , please feel free to join us!
The chat will give us the opportunity to talk over the SAP Cloud Strategy (short overview: http://blogs.sap.com/cloud/2011/11/17/sap%E2%80%99s-cloud-approach-%E2%80%93-supporting-hybrid-landscapes-to-do-serious-business/ ) with further details about the topics Dick mentioned in his blog. In addition we will give some background to customer and partner experiences, especially from our co-innovation program where we involve them from day 1 of starting a new project.
We would also like to highlight some of the increasing demand we do have for subsidiaries, especially for OnDemand products, the 2 Tier ERP Approach.
November 13, 2011 by Sven Denecken
Now coming back from Sapphire with a lot of good talks to customers, experts and analysts – as promised our further thoughts on 2Tier ERP. And this one purely reflecting on the business practices and challenges, business first. Enough technology this week.
Last week, we explored the many reasons why half of the companies surveyed by Ray Wang are seriously considering a two-tier ERP strategy. Today, I’d like to explore the other side of the coin: Why do so many companies resist the temptations of decentralized ERP?
Despite the multitude of arguments in favor of decentralization, the fact remains that the majority of Large Enterprise companies strive for a centralized ERP strategy. In a recent survey conducted by Gartner Research, 70% of the companies polled with over 1000 employees wanted to operate a single global ERP system.
Centralization has come into increasing favor as technology has broken down communication barriers and corporate strategy has identified the value of leveraging synergies across the enterprise. Gone are the days of conglomerates that consciously invested in unrelated businesses to diversify their risk. Today, investors achieve diversification thru their stock portfolios. Each stock, in turn, is expected to invest in core competencies which, when combined in novel ways, can provide unique competitive advantage. C.K. Prahalad and Gary Hammel have published extensively on this topic. For the purposes of this part of our blog series, we will focus on the technology component of centralization up to and including business processes.
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