Prashant Parekh, SAP Analytics Practice
Most multinationals default to one ERP instance per country to satisfy data residency law, and it’s usually an expensive answer to the wrong question. Residency regulations generally govern where specific categories of data are stored and who can access them — not where the application processing that data has to physically run. A purchase order or a material master record typically isn’t personal data; an employee’s home address or a patient record is. Architect as if every field carried the strictest constraint, and the result is five to seven ERP instances, each with its own governance, master data definitions, and month-end reconciliation overhead.
A cleaner alternative separates the two questions: one global SAP S/4HANA landscape for non-sensitive operational data and reporting, regional SAP MDG instances that keep country-specific personal or health data inside the relevant jurisdiction, and an SAP BTP integration layer that classifies, routes, masks, and encrypts data automatically between the two. Reported outcomes for this pattern include meaningfully lower total cost of ownership versus multi-instance builds, and the ability to onboard a new country through configuration rather than a fresh ERP implementation.
This isn’t universal — a handful of jurisdictions genuinely require local processing rather than just local storage, and single-market or newly-merged companies have different priorities entirely. But for most multinational manufacturers, the share of data that’s actually legally constrained is a single-digit percentage of the whole estate, and an architecture built around the exception rather than the rule is usually where the budget is quietly leaking.
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