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Many customers do not short list SAP when it comes to run their subsidiaries with their own independent ERP systems.

Often this is explained, because SAP is so successful in running the biggest and most complex ERP systems in the world, that for many headquarter also include many subsidiary operations as well. However this perspective neglects very important facts and developments:

  • SAP is very successfully supporting business of all sizes from small to big even today for multi national and national companies in various deployments

  • There are excellent reasons, why also independent ERP systems within subsidiaries offer distinct value

  • SAP S/4HANA Cloud is combining properties to make it a perfect fit as an ERP for subsidiaries

Allow me to go through these three bullets one by one. SAP very successfully delivers already to all market segments if you consider SAP installation numbers for SAP Business One and SAP Business By Design product line. Specifically SAP Business By Design was designed as a cloud solution and is very successfully also covering the requirements of 2-tier ERP deployments in more than 1000 of subsidiaries across the world.

Second, while it often makes a lot of sense to manage your subsidiary operations from your central headquarters ERP system, there are as many excellent reasons, why it might not be the best solution. Headquarters often run a multitude of countries and business processes in their central headquarter ERP systems which naturally increases the complexity and cycle times for change and test. Subsidiaries do often support one dedicated business focus in one geography and therefore could implement change and innovation much quicker, if there are quicker and less restrictive governance processes implemented locally.

Running an idependent subsidiary, a sales office, a distribution center or some light manufacturing site are examples for those focused subsidiary operations, that have the need to run an independend ERP system.

Still there is more to consider. While you implement independent ERP systems, there is the need to integrate some scenarios with your headquarters SAP system. It is obvious, that a multivendor approach, leveraging different products with their own upgrade timeline will add complexity and cost. The closer the data and process models can be, the easier the integration will be. If you know, that S/4HANA cloud is leveraging the same S/4HANA code line this this becomes an obvious advantage.

Third, beyond this unfair advantage, the new SAP S/4HANA Cloud product offers all the cloud qualities that  public cloud can bring to the table: Consumption based pricing without big upfront payments, Software as a Service - no worries about hardware or software liefeycle management. This approach allows you to always consume newest innovations, as the public cloud systems gets upgrades automatically. Not forgetting that this product is based on and designed to leverage SAP HANA  in-memory database technology, providing the digital core to prepare your subsidiary for digital transformation and to support the business of one.


For more information on SAP S/4HANA Cloud, check out the following links:

Follow us via @SAP and #S4HANA, or myself via @MHaendly