Two-Tier ERP for the new business
Microsoft has recently announced announced a new connector that accelerates two-tier enterprise resource planning (ERP) deployments between Microsoft Dynamics AX and SAP Business Suite. Check the press release here.
This new connector enables IT organizations to use Microsoft Dynamics AX across subsidiaries, divisions or branch entities to facilitate cost-effective business process integration and easily connect with SAP installations at the corporate headquarters location.
This connector will enable common business process integration scenarios for headquarters and subsidiary locations across -
- Financial consolidation.
- Intercompany supply chain integration.
- Plant automation.
The strategy has been in place for some time and we had seen traction for "Hub & Spoke" implementations where the "Hub" was a Tier-1 ERP with one of the Microsoft Dynamics Products being used in the "Spokes" to provide a "Flexible, Scalable, Nimble, Compliant, Lower TCO, Simple and Adaptable" system.
The reason is simple -
- Head Quarters systems are too complex or customized to meet needs of smaller subsidiaries / local units (called 'Local Entity').
- HQ grow inorganically and need to bring new entity into the overall business landscape; the model helps in maintaining a 'loose' technology link while ensuring a 'strong' business tie.
- Sometimes the business line and operations are specific to the Local Entity and it does not make sense to build each of these into the HQ system
- The vertical flavour needed in a Local Entity may not be needed in same manner across all entities while the reporting needs might be common
- The local entity may not have a stable business model, leading to a need for a 'flexible' solution that can grow and adapt as the business undergoes change
- The need for managing local tax, regulatory, and market requirements are better handled in a Local Entity seperately without affecting global business
- Needless to say the TCO is lower with greater local control and accountability.
This sure is a new area opening up new solution architecture for the enterprise...