This continues a series of columns from practitioners I respect. The category "Real Deal" describes them well.
In the 90s as AS/400s and LANs took off, many multi-nationals adopted two-tier ERP strategies – a mainframe based application for corporate and domestic subsidiaries, decentralized versions for international subs.
Paul is currently a Senior Director at NetSuite, but has spent a lifetime in and around financial systems at Hyperion (now Oracle), Callidus Software, Xerox, Electronic Data Systems, Citigroup, Standard & Poors and more. And done so around the world with a fine start with a first class honors BS in Computer Science from Lancaster University, England.
He writes about a new wave of cloud based two-tier ERP implementations.
“In the first wave of two-tier ERP you ended up with solutions like Microsoft Great Plains – but often with tens, or even hundreds of separate GP instances, and you had to hire local IT resources to manage each one. Or more recently, we are seeing warmed up on-premise solutions repackaged as hosted/cloud solutions.
I see seven ways cloud ERP redefines the term “two-tier”:
1. Accelerates entry into emerging markets and products. Fast-moving “companies within companies” can’t wait. Cloud ERP paired with global language, currency and regulatory support make it the ideal platform for supporting emerging and growing businesses.
2. Quickly deploys to meet the needs of M&A, divestitures and joint ventures. Cloud ERP provides a fast, flexible, cost-effective and repeatable ability to run the new business while shedding the infrastructure complexities typically inherent in the prior applications, avoiding lengthy ties and financial commitments to the prior parent.
3. Faster consolidation and better corporate visibility. Two-tier ERP doesn’t mean less visibility—it means more. Cloud ERP solutions like NetSuite OneWorld support all subsidiaries’ charts-of-accounts within a single instance. Consolidated financials can be pushed or pulled into the corporate ERP’s financials for final consolidation.
4. Eliminates the need to put IT boots on the ground. Cloud delivery enables deployment of mature, full-featured ERP without having to hire local IT resources. The whole subsidiary deployment process can be managed from the division or from corporate—cutting costs, speeding deployment and reducing your infrastructure footprint.
5. Customizes while staying up-to-date. True cloud ERP supports extensive customization that enables subsidiaries with different go-to-market needs to tailor to their requirements without being forced into deploying a separate instance or saddling the subsidiaries with version-lock.
6. Integration to corporate systems. It’s key for any cloud solution to integrate with on-premise systems in a two-tier model - so it ties back to the corporate Oracle and SAP instance. Done right, cloud ERP solutions provide an always-on web services based platform that can be accessed 24/7 by enterprise integration tools like Informatica, IBM Cast Iron, Dell Boomi or Pervasive Software to provide on-demand access to subsidiary financial data.
7. Elastic growth. Cloud ERP solutions like NetSuite enable dynamic growth as divisions and subsidiaries demands increase—there’s no need to provision resources in anticipation of demand.”
Paul can be emailed at pturner at netsuite dot com