Abdul Bijur V

Major erp migration happening at work. We are switching from one ERP (Oracle) to another ERP ( MFG Pro) over the weekend. The two ERP’s are very different and the decision to change has come across after the erstwhile Gemplus (running Oracle) “merged” with Axalto (running MFG Pro) to be called Gemalto.

Now the merger took place in Aug 2006 which means that ever since then , there are a zillion processes going on within the organization to iron out the differences between the two companies and get the single organization a single operating Unit. I’d faced similiar situation when Oracle had merged with Peoplesoft which had quite a bit of effect on Oracle and more catastrophically for Peoplesoft.

One of the major aspects of merging two companies is the process of merging the processes of the two organizations. I am not really sure how much analysis had gone on before the merger about the similiarity of processes between the two companies. Even though both Gemplus and Axalto sell almost similiar products, they are miles apart when it comes to processes are concerned and that is where an ERP system comes into play.

An ERP system is chosen by an organization to bind all of the companies processes together. The more an organization has rules about process compliance and compliance to various other guidelines like SOX etc. the more tightly compliant ERP they’d need.

Why do they need to be all this compliant? Well its simple, lets take the case of a customer for these companies like MasterCard or Visa. These customers would have benchmarks and regulations which govern their criteria of selecting their vendors for Card manufacturing. Any company would rather prefer a partner who is more governed under compliant processes than a supplier who doesnt. These compliancy and guidelines are sort of benchmarks for their customers showing them how credible they are, how reliable they are, and how strong a set of processes they have. This would in turn directly affect their turnaround time and how dependable the turnaround dates provided by that particular organization are.

When two organizations are merged, there is a dire need to merge processes and hence depending on the management pick on “median” processes, they have to finally decide on which ERP system to choose.

Oracle is a very tightly bound system. It is high on the compliance benchmarks and tries to make sure that SOX compliances etc are very well adhered to. MFG Pro on the other end is basically a system for medium scale industries. It hence is a lot more loosely bound and hence is easier to modify manually. This means that compliance levels are low. A company has to evaluate its available processes and if they decide to move from a tightly bound ERP system to a loosely bound ERP system they would be cutting down most of their processes which would affect their credibility with their customers. Hence the choice of which ERP to follow would be a key decision for any merger/acquisition to succeed.

They say its easy to sign a merger or acquire an organization, its difficult to get them both working together as one. Even though the choice of ERP might not be the most important of those decisions, it certainly is up there on the list.

Tags: ERP, MfgPro, Oracle, Strategy, Technology consulting