The global economy is constantly moving towards integration, and as a global business executive, you must face a constantly changing business environment – especially in important markets like China. In this situation, as a senior executive of a Chinese subsidiary of a foreign enterprise, you may face a series of complex questions: should you choose a single-layer or double-layer ERP architecture in the company’s development process? How to balance the management needs and operational costs between the headquarters and overseas subsidiaries? How to achieve the optimal ratio of input to output in digital transformation?
If you are struggling with these issues, take a look at many foreign companies with multiple subsidiary companies in China. They have chosen SAP S/4HANA Cloud’s dual layer ERP architecture, which is playing a positive and important role in controlling overseas headquarters and independent business growth of Chinese subsidiary companies, helping foreign companies in China effectively solve multiple common problems and challenges in operating foreign companies in China. Today, we will analyze the reasons from the perspective of global digital experts.
Some foreign companies in China tend to adopt a single-layer ERP architecture when choosing digital management software and digital operators due to their strong headquarters control. That is to say, whatever the headquarters uses, Chinese subsidiary companies will use it. Although a single-layer ERP architecture may seem simple, when your business tentacles extend to multiple overseas countries, especially in different regions and time zones, this architecture may bring the following problems:
● High IT investment costs: maintaining a single system operating in multiple countries may increase IT costs.
● Insufficient flexibility: Promoting the management ideas and processes of the headquarters in a single architecture may not be suitable for the local business environment.
● Technical support challenge: It is necessary to have the ability to support IT resources from multiple countries and regions, which is a huge burden in practice.
Returning to the initial topic, why are most foreign companies keen to choose the SAP dual tier ERP architecture for their operations in China? The performance difference between single layer and double layer ERP is that the double layer ERP architecture is more flexible and cost-effective, and can be quickly deployed and integrated. It allows overseas subsidiaries to quickly adopt cloud applications and effectively connect with headquarters, while also maintaining a certain degree of autonomy, enabling them to better adapt to the local market.
Let’s delve deeper into the dual layer ERP architecture of SAP S/4HANA Cloud to understand:
● Quick deployment and cost saving
This is an advantage that managers find difficult to reject, and SAP S/4HANA Cloud provides a fast deployment method that greatly reduces IT costs. Of course, there are also advantages such as simplicity, ease of operation, regular safety, technical updates, and complete worry free.
● Assist subsidiaries in improving business efficiency and growth
On the one hand, SAP S/4HANA Cloud provides industry best practices for foreign Chinese subsidiaries, ensuring consistency in business processes and operational efficiency between headquarters and subsidiaries. At the same time, flexible digital platforms and technologies enable enterprises to be more competitive in the local market and help them adapt faster to market changes. Whether it is financial management, supply chain, or customer relationship management, the SAP dual layer ERP architecture provides comprehensive functional support; Data analysis and real-time reporting bring system driven insights to help foreign executives in China make wiser business decisions.
In fact, the advantages brought by the dual tier ERP architecture of SAP S/4HANA Cloud go far beyond these, such as providing transparent subsidiary management for overseas headquarters and achieving comprehensive and detailed business monitoring; Centralized management and optimization of resources ensure a high degree of synchronization and efficiency throughout the organization, thereby reducing costs and improving efficiency, leveraging the competitive advantage of subsidiaries for the enterprise.
Whether it is the unified management of IT systems and processes by headquarters or the independent selection of overseas subsidiaries, there is actually no fixed answer. The key lies in the specific business needs, organizational structure, and cultural integration level of your enterprise.
To gain a deeper understanding of how the SAP S/4HANA Cloud dual layer ERP architecture provides comprehensive and detailed assistance for foreign enterprises operating in China, and how to unleash the global potential of your enterprise’s operations in China, click on the link below for more professional content and consulting support.
This article "Why are most foreign companies operating in China keen to choose the SAP dual tier ERP architecture?" by AcloudEAR. We focus on business applications such as cloud ERP.
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