Growing globally with JD Edwards: Running JDE in 1 or multiple instances
JD Edwards is growing. Businesses running JD Edwards thrive in the new world of digitalization, Internet of Things, Big Data and Mobile. As a result, they expand both organically and through mergers and acquisitions. Going abroad is no exception. But as their market footprint grows, their JDE system grows with them.
Many customers regularly ask us if they should run those foreign markets on separate instances or one global instance. Truth is, there is no right or wrong, but there a few questions to ask. Let’s look at some perspectives.
How is IT ownership organized in your company? Some globally operating corporates appoint regional CIOs to take responsibility for local systems. With one CIO in NA, one in EMEA and one in APAC, it would be strange to have one ERP system in all of those regions. How will the CIOs of the other regions be accountable for that system?
What is your master data management strategy? How do you look at data consolidation? One global system means better data cohesion. But what if you need to support 25 countries, and one of those countries keeps changing its fiscal requirements? Every time you update the way a sub ledger for that country is structured, it needs to be tested in a global system. What is the impact on the global user community?
ERP hasn’t always been about standardizing. There were years when corporations felt the need to diversify their product portfolio, to decentralize their management and to build resulting customizations into their ERP systems. The disadvantage is that it will be harder to leverage economies of scale, that could have followed from executing processes in a globally standardized way.
When you run a single instance you might consider you “put all your eggs in one basket”. The impact of one global system failing is higher than when a regional system fails. This can however be mitigated with the right Disaster Recovery (D/R) strategy where you have a duplicate production system running physically at another datacenter (either on-premise or in the cloud). Be advised that such initiatives require specific licensing to be in place.
Maintaining multiple instances means you will need additional resources (FTE) to support your instances. Sometimes those resources need to be based in different geographies as well. Also, with one single instance, there is an opportunity for server consolidation: you need fewer number of servers to support when you consolidate into one server. A disadvantage of single instance is that when you try to make a change to a global system, you may run into extensive approval/validation cycles, requiring FTE and therefore leading to extra cost.
Now that we’ve discussed some topics that require consideration, let’s look at two examples.
One global Retail / Property company runs three JDE instances (APAC, Europe and Americas). Their rationale for this is partly historic. They first implemented JDE in APAC. Since then they expanded internationally but rather than add the complexity of a European implementation with localizations to their APAC systems, it seemed easier for them to run separate systems. The business of this company, although being common, are very independent. For example, the average price of retail space in the USA is not comparable to Thailand. Moreover, the company deploys a three CIO model where each CIO is responsible for IT within their own Geography, reporting into an Executive VP who has P&L responsibility.
On the opposite, a global research company decided to consolidate 5 JD Edwards systems and one SAP system into one instance hosted in Europe. Being a research company they often do projects which cross multiple geographies. With their internal team being very strong on process, it is doable to guard the core model. In their model, they benefit from economies of scale. This is achieved through a globally standardized execution of business processes. Moreover, headcount for managing consolidated systems is lower than in the previous model where 5 instances were deployed.
There is no right or wrong in the decision of running JDE on a single instance or through multiple instances: depending on your situation you will evaluate the right choice. When evaluating, don’t forget that you chose JDE to serve your needs first. Whilst complying with statutory requirements is mandatory, make sure that management information exists to support your business first. Too many companies put the local legislative requirements first at the cost of easy to compare, easy to consolidate, real time business data.
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