For many U.S.-based companies, making the decision to take their ERP implementation global comes with many potential benefits, but can also seem quite daunting when faced with the initial decision.
Many factors can drive the decision to “go global” with your ERP system. It could be that M&A activity in other countries is necessitating that systems are merged or maybe you’ve simply made the decision to create legal entities in each new location where you are doing business. In any case, a balance needs to be struck to ensure that you are getting the best of a while maintaining the flexibility to meet the local regulatory, tax, and market conditions of each country you operate in.
To learn more about how to plan your global implementation of Dynamics AX or Dynamics 365, watch our OnDemand webinar
One of the benefits of choosing to go global is the ability to handle the various international standards for accounting procedures and financial reporting. Many non-US countries use the IFRS (International Financial Reporting Standards) whereas, the US aligns to GAAP (Generally Accepted Accounting Principles) standards. Some countries, especially in Europe, have country-specific guidelines and financial reporting needed to operate in compliance with local regulations.
Previously, it was typical for companies to deploy country or region-specific ERP instances in order to handle this diversity of needs. This made consolidated reporting across the whole company very complex, time-consuming, and expensive. In addition, business users that worked across multiple countries or regions might not have access to all of the information they needed. For example, it might be difficult to view real-time inventory from another country that you could sell in your home market if that other country was using a different ERP application. In addition, and to perform daily finance and operations tasks in multiple systems.
Dynamics 365 solves many of these issues. It can be configured to provide a global chart of accounts using financial dimensions and masking enabling firms to create a consolidated, global roll-up of their ledger. The Microsoft business model has always been to have approximately eighty percent or more of the requirements for global companies handled in the out-of-the-box application and then to have available or localization products (written in the same development language) that meet the very specific country requirements. Some of the most common accounting procedures and reporting that need to be handled at a country-level are taxes, tax reporting, depreciation of fixed assets, as well as how gains and losses on assets are reported. In most cases, the localization capabilities are available as part of your Dynamics licensing and this enables Microsoft to create a global offering for customers that goes beyond the limits of their broad application to cover all of the hyper-local needs. You no longer have to buy a French software product to do French reporting or a Chinese product to cover China which would result in disparate charts of accounts and siloed information.
Another strategic functionality within Dynamics 365 is the ability to have global master records. Customers, Vendors, and items can be shared across entities worldwide. Inventory can be transferred from one entity to another, and the underlying financial transactions are handled automatically. In many other ERP systems, these requirements are handled by duplicating master records across companies and manually creating orders between entities.
The most are the ones where key people are included throughout all phases of planning, testing and implementing the new system. This includes critical business users in finance, operations, and other departments – both at headquarters as well as involvement from the people in the trenches or in the regions.
Getting stakeholder buy-in is critical to ensure the balance is kept between global requirements and country-specific needs. A financial controller at headquarters may want to standardize reporting in a way that will not provide enough flexibility enough for the regions. Users in each country might not have the longer-term perspective of the business, such as what new markets are the company entering where a global ERP system could accelerate that expansion. Also, high-level managers will want to keep an eye on what localizations are needed for statutory reasons and what asks are being made by the regions that are not required and might add unnecessary complexity to the system or make global reporting difficult.
This team of stakeholders should make basic structural decisions, such as whether to make the chart of accounts global. Can financial dimensions be standardized, such as company number, legal entity number, common departments, business units and cost centers? How will taxes be handled? Everyone has to buy-in on what will be a global requirement and what won’t. Once those decisions are made, each country needs to validate that they can operate within the global chart of accounts and that their ‘last mile’ reporting in each country can be covered.
Finally, once decisions are made, it is important to document all of them and to adjust their business processes to successfully adopt the new standards.
Western Computer has helped many companies go global with Microsoft Dynamics AX, NAV, and Dynamics 365. To learn more about how to plan your global implementation of Dynamics AX or Dynamics 365, watch our OnDemand webinar
If you need further ERP assistance, feel free to Western Computer's team of experts today!
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