Governance for a Multinational ERP Program in a Decentralized Organization

(a) Situation faced: In 2019, Arbonia Doors, the door division of Arbonia Group (a multinational building supplier corporation), decided to implement SAP S4/HANA to realize global harmonization and integration across four highly autonomous local subsidiaries. In the early phase of the program, it became clear the program can only succeed if the gaps that exist between the aims of the four local subsidiaries and the aims at the division level can be bridged or even closed. This called for governance measures that address the tensions evoked by a decentralized organizational context. (b) Action taken: Armed with an understanding of governance as a means of control and coordination to deal with contrasting objectives within a program, the program manager and program sponsors decided that the identified tensions should be tackled through a set of appropriate governance measures. From the outset of the ERP program, Arbonia Doors set out to design, implement, and evaluate nine “glocal” governance measures ranging from program structures to community building measures. (c) Results achieved: Through the “glocal” governance measures, Arbonia Doors enabled both local differentiation and global consistency. Not only was it possible to define a consensual degree of process harmonization, but a boundary-spanning sense of community and collaboration was also established. This is expected to be valuable for future digital transformation programs in the group. (d) Lessons learned: A joint reflection with the program team on the designed “glocal” governance framework resulted in seven lessons learned that promise to be projectable to digital transformation programs in general: (1) Continuously frame an ERP endeavor as a major step in the digital transformation journey rather than as a large, complex IT program. (2) Actively strengthen the understanding and handling of tensions as a both-and rather than an either-or decision. (3) Start early and allow developing of governance measures by trial and error. (4) Foster co-creation of governance. (5) Cover formal as well as informal governance mechanisms. (6) Develop a clear strategy on how to include external partners. (7) Systematically demonstrate the effects of governance measures.