Compact 2017 2
25
Crossing borders with the digital economy
Template rollout
for
international
ERP
implementations
The success factors,
considerations and risks
involved
While the implementation of a Global ERP
solution is usually a long and costly
undertaking, companies recognize the need
to take this step towards achieving
streamlined processes across local
entities, often using a template approach.
Based on the experience of several
template rollouts at global companies, we
offer some practical insights into the
factors to take into consideration before
and during the project for on-premise ERP
systems as well as cloud solutions, some
common risks as well as how these can be
mitigated.
While a lot of companies running operations at global scale recognize the benefits of rol-
ling out a global ERP solution, the implementation can be quite risky and costly. A suc-
cessful template rollout approach requires consideration of some crucial factors. In this
article, the risks and success criteria to address those risks are explained for on-premise
ERP solutions as well as cloud.
B. Luka MSc
is a member of the KPMG
Enterprise Solutions Advisory
Team.
B. Ozkale MSc
is a member of the KPMG
Enterprise Solutions Advisory
Team.
Template rollout for international ERP implementations 26
INTRODUCTION
Those organizations that have a global presence with
local sites might experience that operations are run
as individual subsidiary businesses where the general
managers are responsible for their local profitability. This
limits the level of central oversight and commonality
across the business, therefore achieving fewer synergies
in processes. These organizations usually seek a transi-
tion to achieve a global common platform where a single
unfragmented ERP solution oers visibility of operations
around the world. On the downside, going through such
a global ERP transformation can be quite challenging
and costly.
A template rollout approach oers a number of benefits
which make it an attractive choice for global companies
looking to make the most out of their ERP projects:
•
process harmonization across business units;
•
reduced implementation costs;
•
reduced operational costs;
•
easier enablement of corporate IT/governance.
To be sure of success, implementation parties need to
overcome technical, organizational and cultural chal-
lenges. It is of the utmost importance that adequate eort
is spent on building the template. In most cases a global
template is built and then deployed in one country, to
be then followed by several parallel deployments. This
ensures that the template is of good quality and is usable
in practice before the rollout on a large scale in multiple
countries. This is because poor design decisions in defin-
ing the template and insucient testing can result in a
lot of additional eort and costs as the deployment takes
place. Therefore, the technical solution requires a well
thought-out target operating model, eective master data
management across the organization and planning for
the dependencies with regard to interfaces.
In terms of organizational change, strong governance,
decision-making and change management activities
make the dierence between a successful ERP program
and a failure. Commitment at all levels of the organiza-
tion can ensure that the defined project milestones are
met, and the much feared delays we are rather accus-
tomed to hear about in most ERP implementation proj-
ects are avoided.
These factors are important in an on-premise ERP
implementation as well as in a cloud implementation. In
rolling out a cloud ERP solution however, there are some
additional factors that should be given consideration.
These factors that organizations should especially pay
attention to include:
•
avoiding requirements that are not standard features
of the cloud solution when defining the template;
•
incorporating the upgrade schedule of cloud solutions
in the project plan;
•
preparing the local sites for the outsourced IT model;
•
developing a training approach on a rolling basis fit
for the incremental releases of the ERP vendor.
Rollout strategies: predefined template versus
flexible template approach
When it comes to global ERP deployment, organizations
have a choice between two main approaches that dier
with regard to the degree of flexibility oered, the asso-
ciated risks and costs. The first approach, using a prede-
fined template containing target operation (TOM) and
application models as well as project management and
change management toolkits, is a common practice as it
is regarded that this reduces implementation costs and
standardizes business processes across business units.
The second approach oers more flexibility to account
for diversified business processes across geographies
and autonomous local entities, where rolling out a rigid
template can be highly risky. In this case, companies
might opt for more flexible template rollout approaches,
in which the template can be adjusted based on the addi-
tional requirements. The two approaches are introduced
below.
1. Predefined template: at one end of the scale, organi-
zations can opt to build a predefined template based
on the Target Operating Model. In other words, the
project team builds a so-called kernel, which consists
of a set of deliverables including project management
tools, technical and functional design documents and
a change management kit to be used in the rollout to
the local sites at the onset of the project. For local enti-
ties, rolling out a predefined target operating model
might mean changing their way of working. However
it is commonly preferred due to the fact that the over-
all implementation costs are low and operations are
standardized globally across the local entities.
The features of a predefined template are:
o
the organization benefits from the common processes,
data standards and system usage aer the deployment
and has more visibility of the global operations;
o
processes are very dicult to change once they have
been established;
o
only legal requirements are modified in rolling out
the kernel.
Compact 2017 2
27Crossing borders with the digital economy
2. Flexible template: at the other end of the scale, a more
flexible approach can be chosen where the initial tem-
plate is created based on the standard functionality of
the ERP system or the best practices. This template is
then adjusted based on the needs of local entities as it
is rolled out.
The features of a flexible template are:
o
the template is used as a suggestion;
o
many discussions with the local entities are necessary
during the rollout;
o
to avoid the redundancy of business requirements, the
local entities are charged for the costs of extra func-
tionality.
Besides the predefined and flexible template approach,
organizations might choose to use a combination of these
strategies to dierent degrees. For example, an approach
where an initial template is developed at the onset of
the project but evolved by minimal adjustments in the
course of the project provides a trade-o between the two
extremes. However, the predefined template approach
still seems to be the most commonly used strategy since
the organizations can benefit from low cost of implemen-
tation and visibility across the local entities aer go-live.
While implementing a single-country ERP system is a
complex undertaking in itself, in the case of a predefined
template rollout there are additional risk factors that can
influence implementation. The two risk factors Global
Business Diversity and Autonomy of Local Entities are
shown in Figure 1.
Typically, the risk is lowest in the case of an already
globally homogenous and centralized corporation. How-
ever, as either the autonomy level or the global business
diversity increase, the risk level associated with the
implementation will also increase. The more autonomy
the local business units have, the more dicult it might
be to bring them on board with the new implementation.
In some cases, organizations aim at achieving a trans-
formation towards a harmonized set of processes by
implementing an ERP system. However, an ERP imple-
mentation oen has to go in parallel with a transforma-
tion of the organization. In this respect, a serious and
committed approach to change management is essential.
Based on our experience, the scope and the industry are
also important to take into consideration when choosing
the right approach for implementation. One of our clients
in the manufacturing industry had a quite diversified
structure across local sites in terms of size and complex-
ity of the product. Rolling out a global ERP solution, we
have seen that a more flexible approach is required as the
diversity implied tailored manufacturing and planning
operations. On the other hand, for another client that
only required an implementation with a finance scope
we observed that the rigid predefined template rollout
approach was relatively easier to apply. The risk in using
the predefined template for this type of implementations
was, however, that the finance related legal requirements
were quite diversified across countries and the localiza-
tions needed to be incorporated in the solution.
KEY FACTORS FOR A SUCCESSFUL
TEMPLATE APPROACH
As addressed above, the predefined template approach is
commonly used due to the benefits of harmonized proc-
esses and reduced implementation costs. However, this
approach can bring some organizational, technical and
cultural risks with it. In order to mitigate these risks and
to reap benefits from a template approach, we have iden-
tified the following factors that are crucial for a success-
ful global ERP implementation based on our experience.
Note that defining the below factors we assume that the
predefined template model is used. The flexible template
use might require dierent considerations.
Template readiness
One of the crucial elements that organizations need to
take into consideration before initiating a global rollout
is to define a global operating strategy and business oper-
ations that are aligned with it. Having a clear vision and
strategy for the global rollout, an organization designs
the to-be state of things and the steps to achieve it via the
ERP implementation. In other words, the organization
Diverse Operations/
Centralized Corporation
Homogenous Operations/
Centralized Corporation
Homogenous Operations/
Autonomous Entities
Diverse Operations/
Autonomous Entities
Rollout Risk: Moderate
Rollout Risk: Moderate
Low High
High
Rollout Risk: High
Rollout Risk: Low
Global
Business
Diversity
Autonomy of
Local Entities
Figure 1. Risk of rolling out a predefined template.
Template rollout for international ERP implementations 28
should define a Target Operating Model, which is used
to create a common understanding globally across the
local entities. The strategic and operational drivers of the
project should be reflected in the Target Operating Model
which is part of the global rollout template.
The Global rollout template needs to reflect a common
understanding across the local entities and their buy-in
into the project can be facilitated by an adequate degree of
involvement in the template definition. In our experience,
the involvement of local sites is important in defining the
Target Operating Model especially when the local firms
are enabled to make autonomous strategic decisions based
on their local needs, market conditions and demands.
Strong governance
A clear vision and strong governance from the outset of
the global program is necessary to ensure that all stake-
holders know exactly what is expected of them and are
committed to play their part. The leadership of the proj-
ect as well as the organization itself also need to be aware
that changes will need to be dealt with as they arise.
Decisions need to be made at the right level and with the
Benefit
realisation
and
sustainable
performance
People
transition and
workforce
effectiveness
Organisational
integration
Involvement
strategies
Stakeholder
management
Change
leadership
Change
strategy
Change risk
analysis
Business case
and vision for
change
Global
behavioural
change
management
methodology
Figure 2. The KPMG Global Change Management Methodology.
right stakeholder involvement, to make sure they are
propagated through the organization.
Our observation is that companies where the local sites
act as independent entities experience problems in gov-
erning the original template. In cases where the gover-
nance on controlling the need of change requests is weak,
local member firms/business units might submit redun-
dant amount of cases for change (demand), with central
providing the role of a pure supplier. Typically a greater
balance is expected with more central push of the Global
Template as part of an agreed global business case.
To ensure strong governance, the global and local process
owners should have clear roles and responsibilities to be
able to leverage their decision making authority in order
to influence, strengthen and align global, regional and
local networks.
Proactive change management
ERP implementations, especially those on a global
scale, bring about transformational changes aecting
all aspects of an organization and its way of working.
Therefore, change management cannot be le as an aer-
thought of the ERP implementation, but needs to work
alongside project management in a leading role during
the project. When doing a template rollout, the experi-
ences gained and tools and materials developed in one
rollout can be used and improved upon in the following
ones. The KPMG Global Behavioural Change Manage-
ment Methodology shown in Figure 2, provides a basis
which can be expanded and customized to the needs of a
specific client. The main aspects of change management
are Analysis, Engagement and Delivery.
In order to achieve the benefits of a Global ERP system,
Sustainable Change Management needs to be set in
motion during the preparation phase and be a driving
force during the entire ERP programme. This is achieved
in close collaboration between the organization and the
(external) change management party, where each is
responsible for specific aspects of the change manage-
ment process. Throughout the ERP programme, change
management needs to ensure that organizations, leader-
ship and employees are:
•
clear on what the change means for behaviors and
ways of working;
•
aware of the reasons for and benefits of the change;
•
ready, willing and able to implement change.
A key element in the KPMG Global Behavioural change
management framework is communication: at all levels
of the organization and at all stages of the project. Trans-
parent and structured communication lines need to be
established within the regular and project organization.
Compact 2017 2
29Crossing borders with the digital economy
This is achieved by defining a communication plan to
provide timely and consistent information to the right
levels within the organization.
Employees will show a tendency to not commit if they do
not feel at least adequately informed about the upcoming
changes. It is natural that they do not feel confident about
using new ERP soware that brings major changes to
their daily way of working. They may not understand the
need to go through a transformational project if they are
not made aware of the benefits it will bring to the orga-
nization as a whole and are not involved in the correct
way. The change vision and case for change need to be
communicated as a step towards creating ownership of
the solution. The translation from vision to reality for the
people in the organization needs to answer the question:
‘What does this mean for me?’ and prepare them via
training for the new way of working. Adequate training
will improve the way employees feel about the change
and their acceptance of the new ERP system.
Skills, roles and responsibilities
Typically, complex global ERP projects last for long
periods of time and in some cases the ERP solution is
rolled out in parallel to multiple sites which are located
in distant countries. Therefore it is natural to expect
problems relating to culture, workload, communication,
responsibilities and skills to arise. Another key factor
in a successful implementation is to define an eective
resource plan that can accommodate a global implemen-
tation with the right skills and roles. While it might be
relatively easy to analyze what went wrong in retrospect,
it is not very easy to predict the dynamics within a team
and across teams in the program as a whole at the onset
of a global implementation.
In order to tackle these types of problems, clear roles and
responsibilities in the regular organization and program
organization, both central and local, internal and exter-
nal, need to be defined from the start as part of a shared
eort from the implementation team and the manage-
ment. When forming the project team common prac-
tices include a central implementation team with local
project teams or deployment centers. When doing this, it
is important to accommodate the people with the right
skills, define a clear RASCI
1
and to review and assess the
existence of duplicative Global and Regional resources
and look for ways to consolidate.
Quite oen, oshore resources are employed as part of
large implementation projects. In this case the cultural
gap as well as the communication across dierent coun-
tries or even continents should not be underestimated.
Making use of technology like video conferencing can
nowadays be a good replacement to long, time-consum-
ing and costly trips around the world.
Finally, within an ERP project, the business analysts con-
stitute around 70% of the team, it is therefore important
to choose a balanced team suciently flexible to adopt
non-traditional roles. The definition of ‘good’ extends
beyond technical skills and previous implementation
experience. This becomes even more important in the
case of a Global team, with a mix of cultural diversity
and backgrounds.
Common master data definitions
Data plays a vital role in every organization. When
deploying an ERP system, it is easy to fall into a ‘local
thinking model’. The consequences of this type of think-
ing oen only become visible much later on, as conflicts
arise when more countries join the system. The actual
eort to correct can vary broadly.
This can be prevented by having a clear vision and set-
ting up the necessary Master Data Governance structure
early on.
Clear roles and
responsibilities in the
regular organization and
program organization
need to be defined from
the start
1 A responsibility assignment matrix (RASCI) describes the par-
ticipation by various roles in completing tasks or deliverables
for a project where RASCI stands for R = Responsible,
A = Accountable, S = Support, C = Consult, I = Inform.
Template rollout for international ERP implementations 30
Managing dependencies with other integrated
systems
ERP systems are oen at the center of a complex system
landscape. An ERP system usually sets out to replace a
multitude of systems, and in addition it still needs to
communicate with other interfacing legacy systems. In
our experience, it is crucial to include management of
the interfaces in the overall deployment plan and facili-
tate the communication between the responsible stake-
holders for each system in advance. In rollouts where this
is not paid enough attention, there is a significant risk of
business disruption aer the go-live period.
ADDITIONAL CONSIDERATIONS FOR
CLOUD IMPLEMENTATIONS
The above named factors are crucial for on-premise
implementations as well as cloud ERP implementations.
When it comes to cloud implementations however,
there are other factors that require special consideration
including the design of the target operating model, the
deployment method and change management approach.
Pre-defined template approach is more fit for
cloud ERP implementations
When we compare the ERP cloud solutions to traditio-
nal ERP systems, it is important to note that the share
model of cloud systems provides an incentive to use
standard cloud ERP functionality rather than customi-
zation. Hence it is easier for the implementation parties
to present their own pre-configured templates to the
clients in order to enable them to rapidly set-up a new
TOM using modern industry standards, and translated
into ERP Cloud functionality. This provides clients with
the ability to speed up the validation and construction
phases of the project and come to a configuration in a
short timeframe.
The best practice suggested by ERP vendors of cloud
solutions is to move away from the traditional methods
such as ‘Solution Design’, ‘Requirement Gathering’ , ‘Fit/
Gap Analysis’ to use the packaged solutions as oered
by the vendors. Instead the suggestion is to make use of
questionnaires in order to understand business processes
and configuration requirements for the cloud solution. It
is also important to emphasize to the client from the pre-
sales stage that the ideal implementation that the organi-
zations can make the most benefit from is solution driven
and not requirement driven. In this sense, we believe that
the pre-defined template approach is more suitable for
cloud ERP implementations.
Consider the cloud upgrades and integration with
on-premise systems in your deployment plan
The nature of cloud implementations requires a fine-
tuned approach in terms of program management of
the rollout. To be more specific, cloud technologies are
relatively new and typically, the ERP vendors adopt an
approach to release new features incrementally over time
instead of a big-bang development approach. This will
have consequences for any cloud implementation project,
meaning that the project plan should incorporate the
periodical upgrades of the cloud system. Ideally, organi-
zations will want to avoid a go-live during the upgrade
for a stable environment. The suggestion by the ERP ven-
dors for the initial implementation is to typically plan a
go-live date aer a few weeks of a periodical upgrade so
that latest fixes and new features have been applied to the
updated release.
In addition, as in any cloud implementation, the integra-
tion with the on-premise systems should be planned in
advance. This is especially important in a global rollout
where dierent local sites might have a variety of local
systems interfacing to the global ERP cloud system. The
global system architecture should also account for these
complexities, and possible rollback strategies should be
included in the project plan.
A switch from the local to an outsourced IT model
requires proactive change management
Medium to large size corporations have usually settled
IT organizations where they manage their own network,
data-center, development of customizations to serve the
local business requirements and maintenance activities.
Switching to ERP cloud systems means bringing the
costs of operations down but this at the expense of inde-
pendent infrastructure management, non-standard ERP
functionalities and onsite maintenance. This change in
the IT organization is likely to create disruption and thus
resistance within the IT organization as well as among
the users.
This requires a proactive change management approach,
meaning the local entities should be informed from the
onset of the project addressing the global and local ben-
efits of moving to the cloud. The communication should
also inform the local organization how the governance
structure within the global organization will look like
including the outsourcing model of maintaining the
application and the infrastructure.
Training approach should be suitable for
incremental changes
As discussed above, the training strategy has an import-
ant role in preparing the users for the implementation
based on the role-based needs. As well as traditional
ERP implementations, this is also a crucial aspect of
Compact 2017 2
the change management. What dierentiates cloud
ERP implementations from the on-premise implemen-
tations, however, is the concurrent upgrade nature
of the cloud implementation. In other words, cloud
vendors oen follow an agile approach releasing the
new features, meaning there will be incremental
improvements over time. This also requires special
attention and eort, not only during the go-live but also
in the post implementation period. The ideal training
approach in this case is to train the users on a rolling
basis as the new features are released instead of training
every new functionality at once. This will also make
the change and user adoption process smoother.
CONCLUSION
A global rollout of an ERP system is a common practice
for the organizations that aim to benefit from harmo-
nized business processes and visibility of operations
across the local entities. However, it brings a lot of com-
plications as the local entities’ business processes might
be divergent and they might have non-autonomous
management policies. Depending on these factors, the
organizations can choose dierent rollout strategies.
They might opt for defining a global template at the
onset of the project and strictly rolling it out to the local
entities. As another option, they might allow for some
flexibility and define the template along the project
implementation based on the local business needs. In
practice, most companies choose for the first option as it
implies lower costs, however to ensure the success of a
global ERP template the following considerations must
be taken into account:
•
template readiness;
•
strong governance;
•
proactive change management;
•
skills roles and responsibilities;
•
user training;
•
common master data definitions;
•
managing dependencies with other integrated
systems.
Even though rollouts of cloud ERP solutions have sim-
ilar success criteria, there are a few additional factors
that impact the implementation and make the compa-
nies benefit from the advantages of cloud:
•
Pre-configured template used is suitable for cloud
solutions instead of designing new solutions based on
requirements.
•
Deployment Strategy should be in line with the
schedule of upgrades and releases for fixes.
•
Change Management should address the benefits of
moving to cloud in the outsourced IT model.
•
User training approach should be suitable for incre-
mental feature releases.
About the authors
B. Luka MSc is a member of the KPMG Enterprise Solutions
Advisory Team. She has been part of the Dutch ERP
Advisory team for over 5 years. She has fulfilled dierent
functional/operational and PMO roles in several large SAP
implementation projects in The Netherlands, France and
Norway. She has experience with business process optimiza-
tion, business case definition and analysis, working capital
optimization and data analytics projects for ERP process
improvement at several international clients.
B. Ozkale MSc is a member of the KPMG Enterprise Solutions
Advisory Team. He started working at KPMG in 2014. As
part of KPMG Enterprise Solutions Advisory Team, he has
been involved in a variety of international projects with a
focus on ERP based business process analysis and imple-
mentation of the Oracle ERP solutions. In these projects
he has taken on dierent tasks including PMO, business
process analysis, requirements gathering, configuration
and training of ERP solution. In addition to the above, he
has also executed a Quality Assurance project for a global IT
enabled business transformation program.
Crossing borders with the digital economy 31
