I came across an article “Multi-vendor ERP strategy fixes $2 billion problem” which outlined a few interesting insights around how Land O’ Lakes Inc. had the following challenge(s) on its hands: properly handling a central ERP system with numerous subsidiary and/or partner business units who were on an alternative ERP system. Some interesting quotes from the article:
IT orthodoxy has long held that large companies are best-served by a single-instance, single-vendor ERP strategy for the core financial and other back-office processes that govern, operate and support their businesses. A single ERP system deployed across all business units can deliver many advantages, from the productivity gains realized by having standard business processes, to improved regulatory compliance.
The above quote is so true — when your business gets big, you desire everything to be centralized for consistency and efficiency. With this, though, comes the below challenge:
“These small businesses in a big company portfolio tend to change a little bit faster and come and go a little bit faster than the core businesses,” he said. “Forcing them into the mold tends to stifle their growth and innovation — the very reason you bought them.”
The last thing a technology platform should do is get in the way of business — which can often be the case with massive ERP implementations that span multiple years and multiple business units. Small, nimble businesses no longer behave this way and like the above quote mentions, you lose competitive advantage if these are the reasons they were acquired.
Instead he opted for a two-tier ERP strategy, using the Oracle JD Edwards EnterpriseOne platform at corporate headquarters, and choosing NetSuite OneWorld for the smaller business units.
I found this to be quite interesting — if this is an emerging trend in the systems that run businesses, I wonder how this trend will make its way into the e-commerce space (if at all).
Two-tier e-commerce strategy? Or single platform that is easily extended?
The ability to adapt to changing consumer needs quickly and efficiently is paramount in e-commerce business, so it begs the question if there will be a two-tier e-commerce strategy in the future for businesses. Nearly all e-commerce platforms boast flexibility and adaptability, but perhaps the dual-platform approach is unnecessary if the e-commerce vendor appropriately scales and supports an app-style paradigm that allows a platform to be extended beyond core functionality, quickly and efficiently.
Can e-commerce functions be standardized across businesses?
A single e-commerce platform strategy that must support multiple go-to-market models in the digital world is no small endeavor. That’s not to say it can’t be done either. It really comes down to the business strategy and how consumers in B2C environments, or customers in B2B environments behave and require e-commerce services. If there are enough similarities and overlap in what’s needed to operate an online business, then a single platform could work.
If your e-commerce business is similar to the challenges in the article above where there’s a base business, but several outlying businesses that require a considerably different way to operate online, then a dual-platform strategy may be in the cards.
The next few years of e-commerce and digital platforms should really be interesting, particularly as more businesses go online within well-established organizations. We’ll definitely see the IT-centric philosophy play out where a one-size-fits-all approach is the starting point.
No tags for this post.
A real-world example where the consumer-facing platforms will need to be evaluated in an acquisition where a smaller player (Zipcar) is joining a much larger conglomerate (Avis): http://blogs.hbr.org/cs/2013/01/the_zipcar_acquis…
As the HBR article points out, the technology platform is a significant consideration — technology has been the enabler for Zipcar to be able to differentiate itself in the market.