“Before we had all kinds of different offices and they were doing everything on spreadsheets.”
Name of Organization: Northrop Grumman Corporation
Industry: Defense and technology contracting
Location: Falls Church, VA USA
Opportunity or Challenge Encountered:
Northrop Grumman, a $25-billion provider of defense and technology products and services for the global market, has a variety of business units in numerous countries. Because of security concerns and lack of data integration, many business units have separate enterprise systems that take time to assimilate into corporate reporting systems. It was difficult to gain a real-time, or near real-time view of global business operations. As described in a recent case study, the company uses SAP as its ERP system for its US operations. However, the company’s international subsidiaries in the UK, Australia, United Arab Emirates, Saudi Arabia, Japan, and Korea, employ a variety of solutions that had little or no integration to Northrop Grumman and its SAP ERP systems.
Northrop Grumman didn’t use SAP in all of these locations due to security and cost concerns, since many employees are not US nationals. Every country has different laws and regulations. This lack of standardization prevented the company’s decision-makers from gaining real-time visibility into the status of customer contract deliveries.
How This Opportunity or Challenge Was Met:
To meet the need to better integrate its data assets across its internal operations, Northrop Grumman decided to divide its production and reporting systems into a “two-tier” ERP strategy. This consists of using the existing enterprise SAP backbone for US operations, combined with an easier-to-use and easier-to-support implementation of a secondary ERP system to manage the subsidiary operations, the case study reports. “A two-tier ERP strategy works well for companies with different lines of business that require different processes or accounting methods, have large and small independent divisions, or divisions that operate independently in different locations around the world.”
To build a second tier of ERP capabilities across its international business units, Northrop Grumman implemented Microsoft Dynamics AX combined with Adeaca Advanced Projects. The selection of Microsoft Dynamics AX was considered flexible enough to support various aspects of project management, since Northrop Grumman is a project management-intensive culture. The team rolled up Northrop Grumman’s financial and operational data into the SAP system.
Benefits from This Initiative:
The two-tier ERP strategy is enabling Northrop Grumman standardize and coordinate operations, ensure more expensive and timely visibility, and increase confidence in contractual customer deliveries across various nations. “The integration with Northrop Grumman systems enables more efficient information flows between the two operations, creating tighter strategic and tactical alignment,” the case study reports.
Northrop Grumman Information Systems UK was the first unit to launch this phase of the two-tier ERP system, with a rollout took six months, to support more than 200 users. “Before we had all kinds of different offices and they were doing everything on spreadsheets,” says Bissell Smith, director of the enterprise solutions group at Northrop Grumman. “Then they would feed that to the people in the United States, and the people in the United States uploaded it in SAP for them. Now they have a shared service organization that transacts, procures, and does accounting for them.”