Terry Smagh outlines four key steps to ensure your next ERP upgrade doesn’t turn into a nightmare.
First deployed in the 1990s, Enterprise Resource Planning (ERP) systems have become an integral part of modern business. Now, with many ERP systems reaching end-of-life, the challenge of efficiently replacing them is becoming apparent.
Because they sit at the heart of operations, any changes to ERP systems can have knock-on effects across a business. Careful planning and a detailed migration plan are therefore required to ensure any replacement project can succeed.
One of the most important groups to involve in this planning process is the accounting department. The accounting team has become heavily reliant on ERP and any plans for an upgrade should only be made after close consultation with them.
Unfortunately, however, accounting often does not take a seat at the planning table. This is usually because the team is already fully committed with the day-to-day activity associated with keeping the organisation running.
There are four key steps that can help an organisation overcome this challenge:
- Automate processes: To have the best chance of completing a successful ERP upgrade, it’s vital to involve the accounting team from the outset. The best way to achieve this is through the automation of work associated with activities such as transactional reconciliations and close management. Experience shows the month-end process can be reduced by up to 70 per cent through automation, greatly freeing staff to work on other things such as an ERP upgrade.
- Make use of the free time: Once workflows within the accounting department have been automated. Accountants, who are often the heaviest users of the ERP system and most knowledgeable about pitfalls, process and structure improvement opportunities, are the ones who can reap the most significant time reallocation. Many find themselves with up to 50 per cent more time that can be allocated to the ERP project. After the upgrade has been completed, they will then be able to allocate this time to activities such as business partnering, analytics, and further automating the financial close.
- Extract value from the new ERP platform: Accounting teams often don’t have the time or are reticent to make substantive changes in their new ERP platform to take advantage of the latest features and capabilities that it offers. There tends to be a concern that doing so would increase risk and there is little free time to test thoroughly. They also worry about ending up being stuck with having to reconcile new and old data, or missing a vital step in their new close process. Instead, they port over legacy structures, old approval workflows, manual processes and cryptic naming to the brand-new environment. This can be likened to an old car’s engine into a new car body.
- Continually reduce risk: Most accounting departments face enhanced financial close and reporting risk during the period of a substantial ERP upgrade. These stem from factors such as an unfamiliar user experience, altered approval workflows, immature integrations, old and new ERP data and structures, and having a new engine for processing billables.
It’s important to have in place tools and processes that reduce or remove this risk. The tools should provide preventative controls, continuous monitoring of accounts, and transactions, and controlled policy management. In such a preventative environment, a significantly higher population of automatic controls take place in real-time at the front end of the process as opposed to on the back end.
To ensuring nothing falls through the cracks from a policy perspective, there has to be a single environment to manage and approve close tasks, from corporate to entities, together with centralised policies and procedures. Moreover, there should be a direct connection to the underlying activities that need to perform whether on a daily, monthly, or quarterly basis.
By taking this approach, an organisation can ensure the deployment of a new ERP platform does not have a detrimental impact on ongoing administrative functions. Freed from a proportion of its workload, the accounting department can be closely involved in the process, which will ensure a tight fit with business processes.
Rather than being seen as a potential nightmare, a new ERP deployment can be positioned as a tactical step forward that will support the organisation in the years to come.
Terry Smagh is senior vice president APAC at financial automation software provider, BlackLine. This article is sponsored by BlackLine.