Companies are now seldom completely independent units, what with holding companies, property investment companies and the like. Even SMEs with 50 employees are typically more than just single entities and under French law, every company must have its own accounts. For groups with subsidiaries, it can all be quite complicated. When it comes to getting management software, these groups tend to focus solely on multi-company ERP software. But the "multi-company" label can apply to a mixed bag of solutions.
When multi-company ERP solutions are a headache
Don't fall under the "multi-company ERP" spell. For some vendors, managing several companies means:
- Grouping companies together in one piece of software but dividing data between various databases.
- Centralising data but restricting access from one company to another depending on authorisation levels.
While these niggles won't bother most staff, who, in actual fact, work for a single company, they will spell serious problems for finance teams and IT departments. Just think about how much time it takes to create profiles for each accountant or hotline team member. And let's not even go into cross-company accounting entries going through multiple environments.
What’s the solution?
Don't sign on the dotted line unless you know how your data will be organised within the ERP solution. Is the software as multi-company friendly as you'd hoped? Ask for a single database so you can manage your group using a single source, or even a single accounting system so you can prepare the profit and loss account and the consolidated financial statements.
Too much of a good thing?
Your software company has promised to centralise your billing system. But what can it do about your company's other key operational data? A multi-company package should, in theory, help you manage all the data your staff needs every day, including customer databases, supplier databases, and catalogues of services and products.
Even then, is the package as good as it seems? Depending on the solution you choose, some features may or may not be available. You could find that you have duplicate entries in all subsidiaries for some customers, and that will hit your CRM module's efficiency hard. At the same time, calculating your turnover by product at group level could become a real paper chase: to consolidate all the data, you'd have to go back to your Excel spreadsheets and Access databases.
What’s the solution?
When companies don't have an ERP solution, they typically use a selection of management software solutions, scattering data everywhere and duplicating entries under CRM, billing, consultant tracking and accounting. But with a multi-company tool, duplicates and multiple entries are a thing of the past.
Your tool should pool customer, supplier and staff data from your various companies – or let you to limit access, company by company and user by user. Pooling resources is a must for overall group management – you could even establish the key joint analytical areas for all of the companies that use the ERP solution.
Staff or subcontractors – or both?
Your solution's silos don't factor in that some members of staff at one company may provide services at another. That means you have to identify the staff involved and, for example, set them up as subcontractors for the other subsidiaries. Forget about automatic chargebacks for intercompany subcontracting. And when it comes to the summary statements for these transactions, be ready to roll up your sleeves.
What’s the solution?
In corporate groups, staff tend to work for companies other than their own every now and then. A multi-company solution should support intercompany subcontracting and manage workforce exchanges, and that should also help you recognise the types of relationships staff have with the companies in your group. What’s more, the solution should produce intercompany invoices and management reports.
Do you have easy access to the growth prospects through mergers and acquisitions? Do regulatory constraints mean you have to publish your financial position? Do communication challenges or the group's management mean you have to have more regular cut-off dates? If so, make sure that your multi-company ERP solution offers a single database, shared resources and easy management of intercompany subcontracting.