Q: My ‘Group’ has multiple wholly owned ‘Subsidiaries’. Each with their own ERPs of different make and vintage incl. some on SAP ECC. How can I ‘consolidate’ them all into SAP S/4HANA?
A: Tall Order. A multiyear project.
First ‘consolidate’ is not the right word here. Perhaps standardization of ERPs is a better word. The holding/group company rarely ‘does business’. Rather should not. Which means buying, selling, producing, servicing, hiring, reporting financials should largely be done by the subsidiaries. Ideal case. Free world case.
However, at a Group level, you need another ERP to do the following, IF YOU MUST.
– Consolidate the Financial Reports from subsidiaries.
– Run shared services like Payroll, Hiring, IT Support. Economies of scale exist in some cases.
– Run some amount of group procurement. At least facilitate negotiation.
– Run some amount of Logistics, Warehouse and Facility Leasing etc.
– Tax and Legal Compliances for subsidiaries.
– Charge ‘Royalty’ / consulting fees to subsidiaries.
It is however important to establish a service provider – service seeker relationship between the ‘Group’ and its subsidiaries.
In SAP speak.
– Group as a vendor of the Subsidiary. What do subsidiaries buy from the Group
– Subsidiary as a customer of the Group. What does the Group sell to the subsidiaries.
Any such SAP program needs detailed discussion wrt.
– Purpose of standardization of ERPs into a ‘single’ ERP. (if not a single ‘box’)
– The ERP Access controls – client level, company code level, organizations, language, authorization objects.
– The business activities of the Group. (What’s the purpose of the group company)
– The extent of shared services enforceable and guaranteed by the group.
What’s the big deal?
– Writing down the vision and business objectives. This is the hard bit. This needs to be detailed enough.
– Do not rely on random SAP consultants to write this for you. esp. from BIGG consulting companies. This needs to be facilitated by a Business or an independent Technology Consultant who earlier worked as CFO or CTO of a large Group with multiple subsidiaries. e.g. Tata Group, Birla Group, Kingdom Holdings Group.
-The motivation for Group level controls varies from region to region. Culture to Culture. Country to Country. e.g. some like ‘centralized controls’. Some promote decentralization
– Keep room for future mergers and divestitures. You never know which subsidiary is an acquisition target of another company or venture fund. Keeping ‘ERP systems’ separate helps. Else separating that entity will be another big project.
