Globalization of ERP for small business

Enjoy the best of both globalization and localization

By : OnCloudERP Team | Posted : 29-May-2019

" Arguing against globalization is like arguing against the law of gravity. "

Kofi Annan

Any SMEs, in today’s business landscape, has no choice but to think global. With most organizations having units, clients, or operations spread across the globe, managing enterprises at a global level has incredible challenges, given the need to expand globally but implement locally at every operational destination. What changes have enabled this exponential globalization? Why does every global expansion need to focus on local needs as first priority? How can a glocalized ERP solution come as an ideal support in this scenario, especially when you seek ERP for small businesses? Let’s find out.

Businesses turning globally local

Brilliant innovations in technology, communication, and business models have led to elaborate business expansions well beyond national borders. With clients, resources, and enterprises being integrally connected by the digital world, SMEs no longer shy away from exploring markets across the globe or partner with global organization to deliver services. Hence, you can easily find SMEs playing the globalization field in today’s business landscape, from being outsourcing partners of large-scale enterprises to expanding client base globally. However, the globalization story is not a fun fairytale; rather, it has many giant hurdles and challenges that SMEs often struggle to overcome, especially while implementing ERP for small business across their enterprise. What are these challenges? Let’s find out.

Challenges faced in ERP implementation because of globalization

Yes, globalization has indeed shrunk the separation between countries; however, this move has by no means wiped out the gross variances in business practices, regulatory norms, language, and currencies. Hence every attempt at incorporating globalization in an ERP solution requires intense R&D and implementation of local business practices and operational norms.

Examples of region-specific or local variances that influence ERP implementation

A simple example is in applying different indirect taxation policies across different businessunits of an organization located in different countries. Many countries follow VAT, revenue tax, and other taxation formats, while many other countries follow GST. Hence a critical aspect of globalization is to ensure that the solution they apply is tailored accurately to the local indirect taxation practices. Hence, assessing and determining such innumerable variances and incorporating them in the overall solution can be quite a challenge.

Another example is in determining and accounting for the variances in product performance assessment across various geographies. Applying the same measuring scale across sales performance across different countries would mean ignoring their different sales parameters, financial models, and related data. This approach leads to skewed metrics and faulty insights.

Yet another common example is in managing varying regulatory requirements across geographies. Ensuring compliance across locations, be it financial regulations, security and privacy requirements, or other forms of compliance such as tax compliance, can be a challenge when you work with partners or divisions spread across the globe. In such cases, enterprises that do not have the technological capability or an enterprise-level a solution to audit compliance and detect and correct deviations or fraudulent activities in terms of region-specific regulations often face disastrous consequences

At a simpler level, incorporating differences in currency and time zones may appear to be simple points that do not require attention. However, it’s often these small details that eventually pose huge roadblocks.

Thus, adopting a centralized and disconnected approach by using legacy ERP solutions in a globalized ecosystem can lead to ignoring critical region-specific or local variances. This dangerous approach increases scope for inefficiencies, inaccuracies, and excessive burden of manual corrections. Hence you can no longer look at traditional ERP solutions that follow a common one-size-fits-all approach across all geographic locations. You need an intelligent ERP solution that is glocal. This glocalized approach takes into account region-specific variances, from currency to regulations, and seamlessly integrates these variances within the entire solution.

What’s globalization all about?

The term glocalization has been making rounds in the ERP ecosystem for quite many years now. The term originated in the 1980s to indicate the co-existence of globalization and localization. This concept essentially means integrating a centralized approach to building ERP solutions with geography-specific characteristics that accommodate enterprise-critical local practices, from time zone to regulatory compliances. This approach has popularly been called infusing the global approach infused with localized configurations. Almost every player, from Amazon to SMEs, in our business landscape has successfully experimented with this concept not just in terms of implementing ERP solutions but also across every operational aspect of the organization.

How can globalization of ERP solutions work for SMEs?

Globalized ERP solutions are the best bets available for organizations that have units functioning across different geographies that follow different practices. These ERP solutions help study, map, implement, and audit these variances across operational units, from payroll to HR and finance, giving the enterprise a competitive edge in this tough business landscape.

Cloud ERP solutions help deliver this critical balance between local and global by building every customization around the core workflow. Hence the solutions can be configured at a local level, incorporating every critical local variance, from VAT or GST to legal practices. This approach can exponentially increase data and functional accuracy, simplify operations, and drastically increase scope for a smooth adoption of the solution.

So what are the key points you should note when you seek an ERP solution that delivers glocalized solutions across your global customers, vendors, partners, and other stakeholders?

1. Check whether your cloud ERP solutions provider invests in identifying the need for localization – be it multi-currency, time zones, or even accounting standards such as indirect taxation formats – by taking into account all these diverse requirements. Ensure that your ERP solutions provider invests the required attention and time to understand all the essential variances and incorporate the differences in a tailor-made manner that suits your convenience

2. Focus on achieving a well-integrated and seamlessly functional operational landscape across all locations and countries by incorporating these unique best practices and regulatory requirements with an ERP framework.

3. Ensure that the solution builds enough scope to modify or scale up these variances in an effortless manner.

4. Check whether the ERP solutions provider uses AI and related intelligent technology to capture even intricate variances and updates in preset parameters and trigger updates through cloud ERP.

5. Choose the ERP solutions provider who can provide you with all the benefits of glocalization at a reasonable cost by offering solutions such as a SaaS-based ERP package.

Conclusion – Embracing glocalized ERP for small business to enjoy the best of both worlds

ERP has indeed become an integral essential of any SME’s wish list for achieving growth and prominence in this globalized business landscape. But with globalization comes the challenge of incorporating critical localized variances – be it in finance, HR, legal, and other operational aspects. Hence, the only way to succeed in this contradictory scenario is to bring together global application with local configurations. This glocal approach will definitely be an exponential advantage in this competitive landscape, which becomes more tough to compete in as you expand globally.The key is to go global but with a granular level detail into local variances and incorporating them seamlessly into the ERP solution at an affordable cost model.