6 Things Every CFO Should Know About ERP

So, you’ve heard the buzz words in the industry: Everyone’s using it, so you should too: ERPs.

In business, a popular trend usually has some value for the industry, instead of just being a gimmick. So, it’s worthwhile keeping an eye on what others do. That’s definitely the case with ERP (Enterprise Resource Planning). But that doesn’t mean you should be too quick in joining the crowd.

Warning: Making the wrong decisions during planning, vetting service providers or implementing could lead to more problems, rather than this great technology helping you enhance your business.

So, we’ll break it down for you: The most important facts any CFO should know about ERPs. Read this before embarking on this exciting, (usually advantageous) journey.

How Does This Relate to CFOs?

No, you can’t leave these important decisions in the hands of the IT department, the office manager or a committee. An ERP will affect business processes and therefore influence the company’s growth. That makes it relevant to a CFO’s responsibility in the company and you must work together with other role players to ensure a desirable outcome.

Here’s what you need to know.

The 6 Important Facts

1) You Must Understand the Process

Don’t leave it to others who are more technically minded. You can easily miss important aspects—which will affect costs—if you don’t educate yourself. For this reason, consider the most important software concepts relating to ERP implementation:

  • Installation: What it takes to load software on hardware such as a server.
  • Configuration: Making sure the software works according to your workflows and security requirements.
  • Customization: Modifying software to suit your unique needs, often involving changing code.
  • Conversion of data: Importing data into the system. If not in a compatible format, it must be done manually.
  • Integration: How it communicates with other software platforms. (see more below)

2) You Must be Hosted on a True Cloud

Don’t be confused by unknown terms or technical jargon. The simple question to ask your service provider is whether the ERP is hosted on the cloud. This is the preferred method at the moment. It’s easier and more secure.

However it won’t help to simply be hosted on the cloud. Confirm that the solution has been rewritten for the cloud. This ensures it will keep up with future changes. As CFO you must ensure you invest in quality long term solutions.

3) Your Service Provider’s Vision & Longevity Determine Your Own Future

The next aspect that will affect whether this is a long term answer is the service provider’s own situation. You have the right to ask questions and research certain aspects of the vendors that offer you their services:

  • Does the vendor’s financial situation make it a viable option for the long term? This isn’t simply about making sure you get good service. If the vendor hosts your data on their servers or on the cloud you need to make sure you’ll have access to that information for years to come. That won’t happen if a company suddenly goes bankrupt.
  • The vendor you pick must be relevant to today’s market, but also stay relevant in future. We all know how fast the tech environment changes. It’s your prerogative to ask questions about how they plan to stay on par. Request information on their research and development plans to ensure they’ll keep on giving you a high end product for years to come.

4) Integration is Key

Your ERP isn’t the only system that will determine your company’s performance. You need all factors to work together well (integrate) if you want optimum results and frustration free days. This means you have to ask about integration with any aspects regarding:

  • EPM: Enterprise performance management
  • SCM: Supply chain management
  • HCM: Human capital management
  • CX: Customer experience

It’s vital that different platforms work together well, so you don’t have problems such as inconsistency of data between two systems.

Consider this before you pick a vendor and use the one giving the best support. You don’t want to face cumbersome processes where you and your team have to handle integration after the ERP is implemented. You also don’t want to deal with difficult processes of continuously keeping all the different platforms updated. They should function as one unit.

A specific risk—especially relevant to a CFO—is integrating ERP with EPM. You want your systems integrated, instead of doing a lot of work manually.

Luckily this is usually unnecessary in today’s market—you just have to pick the right vendor.

5) It Requires Teamwork

Your goal is to see the ERP deliver excellent results, helping various aspects of your business more effectively:

  • Supply chain
  • Manufacturing
  • HR
  • Payroll

That’s a lot of people that have to work together and you need to make sure all of them get on board and stay on board. A negative attitude towards the new system will prevent employees from using it effectively. This immediately affects productivity and your bottom line.

To ensure everyone’s buy in it’s important to:

  • Identify needs in all departments and making sure the ERP will meet these requirements. This way everyone will experience an enhanced workflow and see the value of learning the new system.
  • You won’t get departments’ buy in if their top leadership don’t believe the change is necessary. That’s why you need key role players and even your CIO (Chief Information Officer) to become part of planning & implementation.

6) Scalability = Success

The key to picking the right ERP is realizing that one size doesn’t fit all. You need an ERP that matches your unique requirements, not necessarily the one your greatest competitor implemented. And here’s why: Scalability.

If your ERP doesn’t cater for your size business, it won’t be effective. As CFO you’ll need financial planning tools that suit your business size, whether small, medium or large.

Apart from catering for your unique business needs, it must also be scalable to serve different employees well. As much as you need features to do financial planning, other role players in the business also takes part in these processes. The ERP must cater for their responsibilities too.

Conclusion

Yes, adding ERP to your business will take a considerable amount of time and effort. But, as a CFO, it’s essential you prioritize this process if you want to see positive long term results. Don’t worry. It will be worth it.