It's Time To Clarify Your Global ERP Strategy

October 19th, 2010

George Lawrie Vice President, Principal Analyst

With contributors:

Mike Gilpin , Paul Hamerman , Sander Rose

Summary

As enterprise firms restructure through mergers and acquisitions and expand their global presence, they face huge IT and master data synchronization costs in supporting multiple legacy and disparate enterprise resource planning (ERP) applications. Corporate sponsors of enterprise ERP business transaction "hubs" advocate standardizing and reducing the cost of ownership, but business units in smaller niche markets or remote geographic locations place higher value on lightweight local solutions, or "spokes." Some firms have found that the simplest ERP standardization approach, which minimized IT costs, was not the best for achieving enterprise goals. To reconcile potentially conflicting enterprise and business unit requirements, firms should adopt one of three ERP hub-and-spoke deployment models, either requiring all business units to use a single common instance, mandating enterprise hub and business unit spoke applications, or allowing business units to choose from an approved list of spoke solutions. Which ERP deployment model is best for your firm depends critically on your operating model and on the role of business units in your overall enterprise strategy.

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