Business systems on a roll: creating a hub-and-spoke environment to support organizational change

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Hub-and-spoke architectures are a proven solution for combining the ERP and business management systems of several companies into one streamlined entity. When construction companies merge or are acquired, you have many options for creating a hub-and-spoke ERP environment that fits the changed organization’s needs and goals. Sikich consultants will work with you to plan, deploy, manage, and support hub-and-spoke ERP that pays off for your business.

M&A drives the construction industry

In construction, acquiring or merging with another organization is an effective way a company can generate growth, access new markets, remain competitive with larger firms, and ensure the long-term health of its business. Construction companies may also merge in order to reduce their overhead and expenses, or to operate more efficiently while serving more clients with a larger or more versatile workforce.

Construction industry analysts and media usually lump in construction companies as one type of business comprising the architecture, engineering, and construction (AEC) segment. Thus, reporting on mergers and acquisitions (M&A) generally applies to AEC overall, not just construction firms. However, we must assume that construction companies are an important part of the mix when we hear, for instance, that M&A activity hit a record in 2018 and has continued at high levels since then. These endeavors can be risky, especially when planning and execution leave out critical systems and process considerations. Researchers find that fewer than half of the AEC industry’s M&A undertakings truly generate value.

Consolidating systems without locking them in

When two or more construction companies become part of the same organization, they need to consolidate their business systems as soon as they can. If they can’t achieve this, the organization might end up with partially redundant systems that are error prone and confusing for users who have to navigate them. IT will likely find that kind of technology environment difficult and laborious to manage.

Unless one of the companies lacks a strong business management system or runs on one that is outdated, bringing systems together is not a question of removing and newly deploying complex software programs. More often, IT managers need to find ways for several existing solutions to work together and share data. The challenge becomes powering the company’s processes and data flows without compromising team and business group autonomies that a company might want to maintain. Technology managers will also want to avoid meshing and customizing systems to such an extent that they are inflexible when other changes need to happen.

Hub-and-spoke architectures have been used for many years to simplify systems consolidations. Typically, one of the companies runs on a powerful ERP system designed for larger businesses. Another, smaller firm uses another ERP software. To avoid functional and data silos, companies will integrate the two systems. They may decide, for instance, to manage all financials, analytics, master planning, and HR at the all-up corporate level, while the smaller subsidiary continues using its system to manage production locally.

Mapping the ERP journey in a hub-and-spoke environment

Designing hub-and-spoke ERP environments takes a deep understanding of the businesses as well as the technologies involved. For construction companies and other firms, Sikich has planned and implemented hub-and-spoke architectures that involve such industry leaders as Microsoft Dynamics 365 for Finance and Operations, SAP, or Oracle as the hub. When companies are being acquired, we often recommend Microsoft Dynamics 365 Business Central as the spoke. It has an extremely versatile and robust integration layer that is of great advantage in setting up hub-and-spoke environments.

When we work with you on a hub-and-spoke ERP deployment, we take the time to understand how you want workflows and data streams to take place, what your master data management and other policies are, and what state of the business you want to get to. For example, if your goals involve spinning off a business group or merged company in the near future, we will approach the project differently than we would if that’s not the case.

Hub-and-spoke becomes more flexible in the cloud

Sikich consultants collaborate with your business and technology stakeholders to find the most resource-efficient and dependable way to put your hub-and-spoke architecture in place. We also ensure that it’s easy for your IT team to manage it and keep it secure. With today’s cloud-based ERP solutions and automatically distributed updates, keeping systems current and secure doesn’t need to be a challenge. The cloud also makes it easier to deploy a hub and multiple spokes in a modular manner and keep the infrastructure flexible to accommodate future changes, including spinning off entities to operate on their own or transition into another organization.

We use a variety of approaches to connect the ERP hub with its spokes. Many times, we can use pre-built connectors or configurations for this purpose, and only in some situations we need to build a custom integration.

Simplifying your ERP environment

Some scenarios that would seem to fit with a hub-and-spoke deployment don’t necessarily do so. When we discuss your business with you, we can recommend for or against this architecture. The multicompany and multilanguage functionalities in Microsoft Dynamics 365 Business Central are very capable of scaling to accommodate many distinct business entities.

For example, one of our clients manages 55 companies all within the same instance of Business Central, and is completely satisfied with the efficiency and ease of managing them. Sikich construction clients also find that they can reduce the complexity of onboarding and managing international companies and business groups on Business Central with the right flows of data and activities.

Prioritizing business needs before diving into technology

Often, a critical step needs to come before you consider any technical details. For many of our clients, it makes best sense to assess the productivity and value of their existing business processes before deciding on software architecture and capabilities. You don’t want to make any inefficiencies and productivity hurdles pervasive in your ERP. We can perform a structured Sikich Business Process Assessment or consult with you informally to identify opportunities for process improvements that should come before you deploy new software.

Technology providers sometimes forget the people factor in large software projects. Especially during M&A activity, your teams may already face changes in the business culture and how work gets done. On top of that, they may quickly have to get to know their new colleagues and find the best way to be effective in a new team structure. Your Sikich consultants have experienced these situations first-hand during their careers in the construction industry. That gives us the perspective to be empathetic and effective as we help you mitigate the risk of disruptions associated with organizational change and a major software deployment.

Collaborating with Sikich construction experts

Depending on your business needs, we can deploy our own construction management solution within your hub-and-spoke ERP environment. Sikich HEADSTART for Construction provides a strong business management foundation with Microsoft Dynamics 365 Business Central, which it combines with ProjectPro, the well known construction software. ProjectPro gives you key construction business functionality, including job quoting, project accounting and management, subcontractor management, and more.

HEADSTART for Construction lives in the cloud, allowing team leaders and workers at project sites and business managers working at company or home offices to access information and functionality anytime. You can benefit from the practically endless scalability of cloud resources, simplify administration with automated software updates, and enhance ERP security with the strong protocols in Business Central.

To explore the opportunities of collaborating with Sikich:

  • Contact us and get your questions answered or set up a demo for HEADSTART for Construction.
  • Visit the Sikich construction page with news on our services and industry solutions.
This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

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