Optimizing ERP at a Global Company – Challenges for Project Managers

August 23, 2016
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By Doug Howardell and Robert Ratcliffe

ID-10059969We were recently hired by a large global company to manage a set of projects to improve utilization of their ERP system. The effort included 15 different sites in three countries with executive management half a world away. Managing a project on a global scale has many inherent challenges that go beyond the basic task the project is designed to address. To be successful, project managers must be aware of these challenges and know how to address them.

Here, based on our experience on this project and other work around the world, are some of the challenges project managers face on this kind of global project. Anticipating these challenges ahead of time can help ensure your project’s success. These challenges fall into two broad categories: the challenges that come with a global ERP system and the challenges that come with a global workforce.

 Global ERP Challenges

 Global or Local Business Processes. Our client has sites around the world. Some of those sites were acquired from other companies. This leads to very non-standardized business processes. A global ERP software implementation usually provides the chance to standardize processes across sites, but it can be difficult to define a one size fits all set of processes and even more difficult to ensure process discipline once the processes are defined. The right balance between global and local business processes has to be reached. Experienced ERP project managers know the best approach is to define a global best practice that includes options based on local business variants. The local business variants need to be based on real business needs, not just local preferences or precedents.

 Global Financial Systems. Different currencies and fluctuating exchange rates are the initial challenge to a global ERP system, but there are other issues as well.  Tax laws are different and so are Financial Accounting rules.  Some countries in the Middle East (e.g. Kuwait) use currencies with 3 decimals in their ERP systems and General Ledger systems. A global ERP system has to have the flexibility to take all these differences in to account and when optimizing the system, the local laws and rules must be part of the allowed local business variants.

Master Data Management. Master data is an important aspect of an effective ERP system. Global companies need to define how it will be managed. For example, will local entities have the flexibility to have their own chart of accounts, or will changes require global governance? The same needs to be decided for other types of master data, including customer, supplier, and inventory master records. Knowledgeable project managers know that a clear, written set of rules is the only chance for success with global Master Data Management.

 Business objectives. When working in the U.S. it is natural to think of reducing costs, sometimes in the form of manpower, being tightly monitored and controlled or even replaced by computer systems or machines.  However, in some countries labor may be less expensive and therefore not a primary object for reduction. We ran into this when addressing the implementation of a direct labor tracking system for the factory floor. Several of our sites were in low wage countries so they did not feel the same sense of priority to closely report direct labor. The successful project manager must skillfully address  different priorities resulting from local business needs while still meeting the global business objectives.

 Global Workforce Challenges

 Language. Obviously different languages are a challenge, and conversing with a person to whom English is a second or even third language will result in communication issues.  Experienced global project managers know to keep their English simple and direct and to stay away from more nuanced English. In this project we consciously raised communication as something everyone needed to be aware of by encouraging everyone to ask for an explanation of anything they didn’t understand. Sometimes we’ve had to ask for the topic to be dealt with in writing  when verbal communication was not clear due to either language skills or accent. Along the way we had a lot of fun laughing at each other’s colloquialisms as we challenged each other to communicate clearly.

Work Schedule. Time zones are an obvious challenge but more than that, the work week varies around the globe. We Americans don’t often think about it but weekends are different in various countries.  In the Middle East, Egypt has Friday and Saturday off, and other Middle Eastern counties have Thursday and Friday. Every country has their national and religious holidays that differ from the United States, examples being France that, by tradition, everyone has vacation in August, the same applies to Australia in January.  But in addition to this, we need to make other countries aware of the holiday season in the U.S. where Thanksgiving and Christmas weeks are a challenge logistically because so many people take off work. Knowledgeable global project managers are aware of the various work schedules that effect business and build those schedules into their plans.

Attitudes about time. In the U.S. we tend to be fairly rigid about time. We expect the work day to start on time; we expect meetings to start at or very near the time scheduled. Attitudes can be a little more relaxed in other countries. The successful project manager knows to temper his or her impatience accordingly when waiting for a limo pick up or people to arrive for a meeting.

 Managing a global ERP project indeed has inherent challenges. To ensure success, your project managers should be knowledgeable, experienced and skilled with running large scale projects in a widely varying work world.  Make sure your project managers are aware of these challenges and know how to address them.

To learn more about how the ACA Group can help you improve your ERP utilization on a local or global level, click here ERP Utilization or contact Doug Howardell at DH@TheACAgroup.com or at 626.390.6935

 

Image courtesy of Nutdanai Apikhomboonwaroot at FreeDigitalPhotos.net

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