Cloud ERP - several benefits for Nordic companies

Using modern cloud-based ERP systems involves several benefits for Nordic companies. Having a service provider that takes full responsibility for the operation and maintenance of the system, gives customers the opportunity to focus on their own business.

The previous problems with upgrades have been greatly reduced, and more and more suppliers are now switching to small and continuous improvements and upgrades, that to a small degree, are noticed by customers.

• The use of modern APIs and interfaces enables the integrations to surrounding solutions better and more secure.
• Access to and use of "big data" is made possible in a completely different way.
• Customers can shop apps or links to surrounding solutions which will help build an ecosystem as one grows and the business changes.

There is no doubt that most Nordic companies are best served by a cloud-based ERP solution, in contrast to the previous on-prem models which required more focus, time and resources to manage their own solution.

Growth and complexity are intertwined

Modern cloud ERP solutions have partially changed some of the principles for setup and customization for each individual customer. In the vast majority of cases, these solutions are based on a template-based implementation and a best-practice library, and to a very small extent customer-specific adaptations. Customers with several companies within the same company structure can use the template when they want to copy out more clients. And if the customer has a relatively homogeneous business structure, this is a fast and painless process that requires little involvement from the supplier, beyond partially confusing and complex price structures for payment of the service itself.

With over 20 years of experience in the ERP industry and several board positions in various industries, I see that the Nordic companies are mainly becoming larger and more complex. Of course, this does not apply to new establishments or customer that can be defined in the SME segment, but the larger Nordic companies mainly have a strong growth ambition.

Growth can come organically, but many companies also have specific acquisition plans to achieve the growth goals. We also see multi-company structures (within the same ownership platform) that run very different businesses. In addition to a pure operating company, there are many examples of customers who have their own real estate portfolio or investment companies. How does this development fit with the idea that the supplier industry has for a modern cloud-based ERP system?

Use a financial model to solve complex company structures

The solution for businesses that have a differentiated portfolio of companies is not to move away from the cloud and back to the more adaptable on-prem solutions. The solution is not to fully trust that best practice and a template-based implementation will be correct and cost-effective either.

In order to solve complex company structures, one must rather use the financial model in the systems in a good way. By financial model, I mean the foundation of the system that consists of account and free accounting dimensions, as well as relationships / reporting structures that can be built on these. Those who are considering a new cloud ERP solution, must look at the number of dimensions available, whether these are "free" and can be used differently from account to account, and whether it is possible to build a financial model that can be managed efficiently and change as customers grow . An acid test is whether it is possible to consolidate the companies in a good and efficient way.

There are a few suppliers who have solved these challenges in a good way, but the vast majority have probably developed solutions that assumes a homogeneous and stable business operation with organic growth that does not deviate much from existing business.