Finding the right balance between global efficiency and local responsiveness can be difficult for organizations where operations span different countries or regions. One approach that is gaining traction in managing these challenges is that of a two-tier ERP strategy. A typical example of this strategy is where there are multiple ERP systems deployed in a single organization—a centralized, stable system at the global level and one or more ERP systems serving subsidiaries. Organizations embrace a two-tier ERP strategy for multiple reasons. One can be where an acquisition needs to get up and running quickly, and the two-tier strategy helps maintain governance and compliance. A second reason for using a two-tier strategy is to maintain autonomy . While a centralized single ERP system is necessary for running the business, it may be important to allow different subsidiaries to make their own decisions. A third reason for a two-tier ERP strategy is functional fit. In many organizations, different business units may be different types of businesses and the ERP system running at a global level may not align with the processes being used at a subsidiary. At Pitney Bowes, the third approach has become a cornerstone of digital transformation, enabling the company to maintain centralized governance while empowering regional teams with the flexibility to move faster and smarter. According to Linda Paoletta, Vice President of Applications at Pitney Bowes, the European subsidiary did not need the complexity inherent to systems running in the much larger American and Canadian operations. This allowed Pitney Bowes to use a two-tier ERP strategy and receive significant benefits in the process.

A Strategic Shift from Monolithic to Modular

Ten years ago, Pitney Bowes embarked on a major ERP consolidation journey. The initial vision was to deploy a single global instance of SAP across North America and Europe. But as priorities evolved and regional needs became clearer, the team pivoted to a more nuanced approach. “Europe is a little microcosm of our North America business—smaller, fewer transactions,” Paoletta explained. “We realized taking Europe onto the mothership might bring complexity when we needed a very minimal solution.” That realization led Pitney Bowes to embrace SAP S/4HANA Cloud Public Edition for Europe, establishing a two-tier ERP environment that kept core functions centralized in North America while enabling agility and speed in international markets.

Three Big Wins: Simplicity, Speed, and Savings

According to Paoletta, the results of this strategy have been impressive. “We really simplified the businesses from our products, our pricing, our offers, our orders, supply chain, all the way down to finance,” said Paoletta. “Simplification was major.” The deployment itself was swift. Despite a few delays due to seasonal business cycles, Pitney Bowes went live in nine months across the UK, Ireland, Germany, and France. “Our TCO—I think our payback is under two years—included cleaning up all the old systems and launching a new cloud solution,” Paoletta added. “We were able to get everything out of the data center.”

Adopting the Cloud Mindset—and Sticking With It

One of the greatest challenges wasn’t technical—it was cultural. Shifting from a heavily customized legacy environment to a standardized cloud solution required a different mindset. “Our biggest goal of the program was to stay out of the box and follow best practice models,” said Paoletta. “That approach is really paying dividends now. Once you’re in that project delivery it’s easy to tweak and customize configurations, and when new releases are available in February and August you want those to go through quickly.” This “vanilla” approach minimized disruption and ensured the business could take full advantage of SAP’s continuous innovation model.

Training, Change Management, and Empowering Talent

To support adoption, Pitney Bowes took a hands-on approach to training. Rather than rely solely on documentation, they got users involved in testing early. “We ended up getting our team involved in systems integration testing and UAT,” said Paoletta. “It was intuitive. We ended up scrapping many of our training plans and put users on the platform to learn.” This experience also sparked new energy across the organization. “It energized our team. Now they’re learning new skills, new muscle, and innovation,” she added. “It’s really rejuvenated the talent.”

Looking Ahead: Connecting the Tiers

With Europe now fully modernized, Pitney Bowes is turning its attention back to North America, where SAP ECC is still used. The goal is to create a more connected and synergistic environment between the two tiers. “There’s an opportunity to really figure out how we build a more connected two-tier environment,” said Paoletta. “Common data layer, SAP BTP, common AI. I think there could be a lot of opportunity ahead.”

What This Means for SAPinsiders

• A two-tier ERP strategy is about enabling business flexibility while preserving global standards. For Pitney Bowes, the two-tier ERP strategy was about more than IT efficiency. The journey from a monolithic ERP vision to a nimble, cloud-based architecture shows how large enterprises can pivot smartly in a rapidly changing world. For Pitney Bowes this became a really great experience and a proof point for what is possible.
• Organizations do not need to embrace SAP S/HANA Cloud across the business in a single step. Even though Pitney Bowes decided to move to SAP S/4HANA Cloud Public Edition for their European operations, a deployment that was more aligned with the reduced complexity of the operations in those regions they are still running SAP ECC for operations in the United States and Canada. Their original plans started a decade ago with modernizing systems in North America and was delayed in Europe for years by other priorities. This allowed the company to make a much more informed decision when it came to what to do in Europe. The mix of versions was not an issue and shows that SAPinsiders can take a gradual approach in moving to cloud ERP.
• Take time to understand the benefits that new technologies and deployment models can provide. Pitney Bowes had significant technical debt in Europe in the form of an ageing SAP ECC 5.0 system. Moving to SAP S/4HANA Cloud Public Edition achieved significant simplification from the complex, existing environment. Many smaller systems were consolidated into a single ERP system in the public cloud. However, this not only simplified the technical landscape it also simplified business processes from a products, pricing, offers, orders, supply chain, and finance perspective. Taking the time to thoroughly evaluate available technologies when making decisions has the potential to realize unexpected benefits.