Some twenty-some years ago, the ERP revolution swept away

everything in its path. Today, all major groups have an ERP in

place. They have become unavoidable. To be convinced of this,

the implementation of these tools for S&P 500 companies can

increase their valuation by 10 to 15%. Hard to imagine going

without it. You still have to be sure you have at hand the right

solution. To get a clear picture, let's rewind time. At least until

before globalization. Back then, business organizations were most

often characterized by vertical decision-making structures.

In other words, they were very hierarchical. While each location,

each company in a group had a certain management autonomy,

they also had to have multidisciplinary knowledge. Then, the

explosion of trade, the acceleration of telecommunications, the

emergence of international bodies governing commercial acts

gave rise to a profound change in organizations.

Hierarchical or Matrix

The hierarchical structures that prevailed until then have given

way to matrix-type structures. In this context, the dialogue

is established with several referents who have common interests

but also their own, different. Take, for instance, a national logistics

director within an international group. His manager can be the

General Director of the company. He/she coordinates the

company’s activities to ensure that the logistics are in line with

the sales made in the country, that all the departments are

working together to achieve the objectives and are in line with

the business strategy for that country. On the other hand, within

a matrix organization, the logistics director will also work with his

counterpart at group level, the "Americas" or "World" director, for

instance. From then on, we will be able to align the global needs

in the group and deploy business strategies that depend on the

seamless coordination of several countries. In this case, the scope

is broad, spanning several continents. But the problem can be

similar in an American company with several subsidiary

companies spread throughout the 50 states. Also, when

considering the implementation of an ERP, the question must be

asked. Beyond performing the desired functions: issuing invoices,

managing collections, ticketing, shipping the product ... Is the

chosen ERP adapted to the organization?

The Microsoft offer: to each his own ERP!

Historically, Microsoft has based its service offerings on two distinct

ERPs. One made to adapt to the needs of SMEs, the other to meet

the expectations of large groups.

• Microsoft Dynamics 365 Business Central
• Microsoft Dynamics 365 For Finance and Operations

The successor of Microsoft Dynamics NAV, Business Central is

typically the ERP of the PME/PMIs, even international group

subsidiaries. This is a tool profiled for hierarchical et not matrix

-type organizations. This ERP is more easily deployable in contexts

where the processes are different in each country. To simplify, let’s

take the case of a company where the process diverges from a

country to the next. For instance, let’s imagine that in France

logistics prepares shipments following steps 1, then 2 and 3, while

Germany does the same following steps A then B and C. In this

case, the ERP can be implemented with important blocks while

limiting maintenance. Many reasons can explain these process

differences, among which external growth logics generating

different activities. The strategy being not to necessarily develop

a group doing the same business approach.

Microsoft Dynamics For Finance and Operations, formerly known

as AX, is typically the ERP for large companies. With the rise of the

cloud, start-ups are also affected by this ERP insofar as they

intend to become large groups. Unlike its little brother dedicated

to small-er structures, this ERP is designed for matrix

organizations, transverse between the companies of a group.

The objective is to deploy common business processes between

subsidiaries on logistics, sales, finance, HR or other aspects. The

idea is to allow local units to focus on achieving business goals.

Thus, the logistics director will have both the support of the group

with its proven processes and that of its managing director for the

achievement of local objectives. Of course, it will be necessary,

first, to define what it is necessary to standardize and what is not.

Two scenarios

Is a Dynamics 365 For Finance ERP to be considered in the

following case? Two host countries have different business

models. France is developing a single model, for example Buy

& Sell, when the United States adds to it Buy & Rent activity.

These differences are not a problem.

 

On the other hand, if the both countries offer rentals but do not

manage returns at the end of the contract in the same way, the

limits of the ERP become apparent. An investigation about the

impacts will be unavoidable and it will be needed to come to

grips whether to align the methods between the countries or to

keep the differences but according to the following alternative.

 

Either keeping these differences because the ERP can manage

it without too many constraints and they can be assimilated by

carefully thought specific developments upstream to optimize

maintenance. In this case, a specific development costs less in the

short term than a standard solution but is more expensive to

maintain in the long term.

 

Or these differences in activity between the two countries are

maintained because management demands it and urges for the

deployment of the ERP. The study of the context and its impacts

is very clearly lightened. One must move forward as best as

possible and “because we have to” within a logic that boils down

to the Quick & Dirty. In this context, the complicated and

expensive maintenance that can be expected can be easily

imagined.

Contrary to what one might think at first glance, the choice of

ERP is not necessarily linked to the size of the company, but to

its organization. Not long ago, a company of several thousand

people with a turnover approaching one billion dollars clearly

made an ERP mistake by opting for Finance Operations when

Business Central was much more suitable. Indeed, the company,

developing through external growth, did not have a group

strategy identified with process standardization objectives.

Here the strategy was to maximize local profits without a shared

global vision. And, above all, without first setting up a matrix-type

organization which then makes it possible to harness the full

potential of a tool such as D365FO. One must also ask whether

a threshold effect can be considered to measure the cost of

installing / maintaining an ERP such as Dynamics For Finance

and Operations. In practice, it is generally estimated that the

overall cost should not exceed 1% of the annual turnover.

For FiveForty°, an expert in Microsoft Dynamics For Finance and

Operations, this tolerance threshold is rather set between 0.5 and

1%.

Why FiveForty°?

 

Our clients call on our team of Dynamics 365 FO ERP experts

in the following cases:

 

• An ERP deployment project
• Following the deployment, they are faced with a work overload
• Economies of scale are slow to be measured

In addition, the uncontrolled volume of incidents is one of the

main concerns of our clients.

 

After our intervention, our clients report that the volume of

incidents has been divided by three, which has reduced by about

30% the number of hours worked by finance teams. 

 

Lower productivity gains than forecasted are 

 

Our clients tell us that following our action, the improved

cooperation between the IT and finance departments makes the

processes more fluid.

And they estimate the time savings to be 30%.

It will be understood that choosing the right ERP is essential to

be certain of optimizing financial operations, monitoring

performance in real time, anticipating results and facilitating

exchanges and collaboration between departments. The well

-adapted ERP offers a real chance for the expression of the talents

of the teams to enable the company to move forward by

unleashing all of its potential. On one condition, to have clearly

identified all the issues to be taken into account before deciding.

Please do not hesitate to contact us.°

By J.Lascaux, FiveForty° founding partner

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