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Chapter 10 • Global, Ethics, and Security Management 273

of local requirements—whether they are currency related, regulatory, resource, or employee
constraints (e.g., the high number of bank holidays and shorter workweeks in some European
nations). Global ERP systems are equipped with handling foreign currency exchanges and value-
10
added tax (VAT), two critical areas that enable financial consolidation in complex organizations
with multiple company codes. Employees in different countries also have different views on “best
practices,” and their belief in its effectiveness can impact the amount of justification required to
support the change in business process.
Finally, different countries have varying desires to change. More-developed countries have
business operations that have worked for decades, whereas many developing nations have less-
mature operational models. Local culture and available resources will dictate how willing the
organizational unit will be able to embrace the change required by the new ERP system.
Completely localizing an ERP system increases complexity and customization, while defeating
the purpose of a global solution. Corporate and local office management needs to be clear in the
message for global change.

GLOBAL ERP VENDOR SELECTION In order to create a successful outsourcing or offshoring
project, companies need to perform due diligence in vendor selection. When evaluating an
outsourcing partner, ERP selection teams should consider financial status, technical certifica-
tions, licenses, qualifications, and related work experience (e.g., familiarity with the industry).
The employees of the offshore provider are also critical: What are the working conditions like,
and what kind of retention policies are in place? This is a very critical issue for security where
personnel could suddenly leave the offshore service provider and go to work for your top
competitor without your knowing or approval. “In the U.S. [there are] strict controls on intellec-
tual property rights and noncompete clauses, but if you’re hiring overseas much of that goes out
the window. Your competitor can outsource with a firm that works down the street from your
outsourcer and advise them to hire the 10-person team that works on your projects.” 11
Companies also need to be prepared if the offshore experiment is a disaster: What do you do
about it? Can you bring the project in-house? For this reason, a careful risk assessment needs to
take place before any offshore services contract is signed.
One of the biggest challenges facing companies that offshore their ERP initiatives is culture.
Making sure that your company culture meshes with that of your offshore partner ensures a
successful implementation. Cultural differences include such tangible discrepancies as time zone
and language or such intangible differences as nationalism or corporate pride. Dion DeLoof, CEO
of Anteo Group, a project-based IT staffing and consulting firm in Atlanta, said “many of his
clients have sent IT projects to India only to find out that hard-to-quantify attributes like innova-
tion and creativity are lacking and that people there do not have the freedom to speak up or the
entrepreneurial culture that rewards them if they tell their boss what they’re really thinking.” 12
Companies that decide to offshore their ERP projects should be prudent about the total cost of
outsourcing. Securing cheaper rates for SAP or Oracle developers in India might look good on
paper, but when savvy managers factor in time required for contract setup and management, time
differences, travel and communication costs, and reduced productivity due to language and cultural
differences, the total cost of outsourcing may not be as attractive as it was initially.

10 http://en.wikipedia.org/wiki/Value_added_tax (accessed February 2001).
11 www.projectsatwork.com/article.cfm?ID=223467 (accessed February 2001).
12 Ibid.