International ERP engagements, those conducted outside North America, can be a game changer for any company. Such projects require different emphases on certain factors in comparison to projects conducted nationally. Oftentimes, the risks are higher in international ERP projects. Ultra Consultants’ “Five Factors of Success” are a differentiation point, both in the USA and internationally.
Key Considerations for International ERP
All ERP system selections are fraught with uncertainty, risks, project timeline starts and stops, people changing, change management, etc., and these factors are heightened when you involve international companies, subsidiaries, and locations. All ERP projects are costly and come with high expectations to improve underlying business dynamics and processes – this is especially true with many foreign startups who use paper and Excel as their primary ERP systems.
From our experience with international ERP projects, below are some key considerations to keep in mind:
- Features and Function: ERP selection projects must keep their focus on the ability of the software to meet the functional needs of the organization. These feature function capabilities can quickly bring about a short list when considered correctly, for example, International Tax Laws (VAT), Landed Costs affects upon Inventory, Tracking goods in transit, specific product regulations when shipping (e.g., hazardous materials), planning production, and purchasing long lead time goods.
- Cost and Contracts: An ERP system represents a major investment in capital expenses and resources. Given the magnitude of both direct and indirect costs (software, training, implementation and services), companies expend a significant amount of time understanding and negotiating costs and contracts. These contracts may be very different with different legal systems. Also, the implementation costs may change widely, which in turn affects travel costs and the consulting organizations to support these efforts. Planning in full week increments can help with this issue.
Finding Your ERP Vendor
Once an organization considers these initial criteria, the selection team will typically narrow the number of vendors to a short list of top contenders that can deliver appropriate features and functions, as well as deliver acceptable cost and contract terms. The following risk factors make up the final determination:
- Vendor Background: Who is the ERP vendor you are buying from? Will they make a good partner? How many years have they been in business, and how many years has the application been sold in the market? What are the sales of each product they represented last year, in dollars and numbers in your country? How much money is invested in R&D? What are their prospects long term (are they positioned to be purchased or will they purchase another vendor)?
- Technology Platform: What is the underlying technology such as the database structure or delivery model? What direction is the vendor taking with this technology platform in the coming years? Are they staying current? Do they perform well in the key areas of User Interface and Role Centers, Work Flow, and Business Intelligence? What is their cloud offering? A vendors cloud offering (SaaS) is critical for the future of international business as multiple implementations by country is expensive, and leads to islands of business processes as each country develops their own methods of transacting business.
- Implementation/Service: Will the implementation be led by a partner or directly by the vendor? Do they have experience in your industry and country? Who do you call when you have a problem during implementation? What is support like after “Go Live?” Careful scrutiny is needed here. A vendor might deliver excellent software at a competitive price, but is destined to fail if it is not implemented effectively.
We find implementation and service is the most important factor for international businesses. A vendor may have a great team in North American but have minor or less capable partners internationally. The ability to manage change in international ERP projects is critical, and therefore, it is important the consultants understand each country’s differences in business practices, etiquette and business relationships.
If you are a company abroad looking to find the right ERP vendor for you, contact Ultra today.