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Enterprise Resource Planning System Implementation & ERP Benefits

As noted in "The Proformative Community Guide To ERP Selection & Implementation," to stay competitive, companies at every growth stage must continually reassess accounting and ERP programs. Often, the need for change arises sooner than expected. As the time for an upgrade approaches, answers to eight questions can help companies define ERP goals and frame expectations.

  1. Is identifying top accounting/ERP priorities, a priority?

  2. At companies focused on business financial and an end-to-end reporting process, urgent goals vary. Nuanced priorities tailor weight assigned to sources of income and expenditures. Steady cash flow might warrant better command of accounts payable, payroll or tax management. Where cash fluctuates, working capital or distributions to stakeholders might top a business’s agenda. New products, new services, new regions and new rivals can drive priorities. State-of-the-art financial function begins with an inventory of all current and foreseeable priorities. Then it arms managers with flexible tools and contingencies for the only constant — change.

  3. Does a fragmented approach to financial results hamper decision-making?

  4. ERP software solves a challenge for companies beyond the mom and pop stage. As companies grow and change, fragmented approaches creep into and clog the budgeting process. Best short-term fixes pave the road to poor long-term decisions. As Computer Weekly reported, “The idea behind enterprise resource planning (ERP) is to provide the business with a single product that provides software to support the main business functions in a company.” Fragmented systems lack consistent processes and objectives across all operating platforms. Absent a uniform ERP solution, piecemeal approaches multiply hidden costs and deprive managers of a big picture needed for pivotal decisions.

  5. Do delays slow closing the books at the end of each period?

  6. Enterprise Resource Planning System Implementation & ERP Benefits

    In the realm of financial preparedness, speed rules these days in tandem with quality control. Decisions rest on accurate up-to-date information. Timely closes are not cosmetic. From frequent trial balances to final reports to shareholders, companies slow on the draw do not have information they need to make the smartest decisions. Companies that cannot make the smartest decisions fall prey to bad luck and nimbler rivals. The pace keeps accelerating and stakes keep rising in the wake of Sarbanes-Oxley. Poor information nowadays can land executives in hot water with boards of directors if not with prosecutors seeking jail terms. Conversely, sound financial function along with ERP solutions, accelerate closings and improve decisions, two objectives with huge combined impact on success or failure.

  7. Does the current accounting/ERP system speak a language understood by business units whether furnishing data or reviewing results?

  8. The Tower of Babel described in the Old Testament supplies a useful image for companies in the 21st century. Workers who lack a common methodology for computing and interpreting financial data may as well speak different languages. Confusion reigns. Properly implemented ERP replaces language barriers with intuitive, reader friendly guidelines that ease data input and improve quality control. That means finance departments spend less time on help desks and more time analyzing key performance indicators.

  9. Can your ERP system consolidate and aggregate financial and operational data from all sources?

  10. Don’t answer too quickly. Besides internal business units, this question encompasses data originating with suppliers and customers whose customs and best practices may differ from yours. Even with internal stakeholders attuned to the same ERP language, Input coming from diverse sources poses a challenge for finance departments under pressure to deliver timely results with fresh insight and outstanding quality control. Once rules are in place and users are trained, a well-oiled ERP system consolidates and aggregates data seamlessly from all sources and generates results and reports for distribution.

  11. Is your accounting/ERP system scalable as business expands?

  12. The mantra for small businesses nowadays is grow or grow old fast. The former requires great need for accommodating data that multiply exponentially as companies expand, even while doing exactly the same things — just more of it. A growth climate bestows many challenges along with expected benefits, particularly in the capacity of a finance function along with an accounting/ERP system to gather, house and mine mountains of data that govern strategic decisions. Without a scalable accounting/ERP platform, conscientious due diligence seldom keeps up with the pace of success, a shortfall that endangers further growth.

  13. Is your accounting/ERP system agile enough to adapt to changing business objectives?

  14. Tales of successful companies that alter business models fill the annals of business. Opportunistic companies find daylight between the opposition’s blockers and tacklers. Today’s budgeting system must not constrain new business objectives tomorrow. Instead of bogging nimble companies down, finance function should ease navigation in territory that features new products, new services, new strategic directions and new partners with a suitable accounting/ERP platforms. Opening new pathways and sustaining momentum calls for robust ERP platforms that won’t impede strategic options or shudder when complex challenges arise.

  15. Do you make satisfactory use of Open Source and Cloud software?

  16. Much as these two hot areas look like the future of financial software, don’t jump before evaluating their pros and cons. Lots of evidence points to wider use of non-traditional budgeting platforms, whether on premises or in the Cloud. But appeal is not universal. Key advantages of open source software feature solutions at low cost or even no costs; open architecture that eases the exchange of information across borders and barriers; centralized hosting with economies of scale; and means to adapt to changing scenarios and climates. The U.S. Department of Health and Human Services also warns that key disadvantages mirror advantages. On the downside, open source solutions may not understand business logic enough to make code adjustments for unique work flow; “ownership” instead of proprietary licenses may curtail upgrades, enhancements and reconfigurations; certification and validation by experts may be lacking; training materials may be rudimentary or not exist at all.

    Likewise, the Cloud may be ready for prime time but not suited to all users all the time. Much touted advantages include low cost housing of data, fast start up, a low cap on capital expenditures and painless updates to state of the art. On the flipside, the publication NetworkWorld warns that bandwidth can bust budgets; apps may not deliver optimal performance; care must be taken to send only cloud worthy data to the cloud; and if operators lack the skills, experience and temperament needed for such a new dimension, payoff may be pie in the sky.

Now that you have a solid foundation for making your technology decisions, feel free to explore our Enterprise Resource Planning product listing, where you will find filtering capabilities and product reviews from financial professionals.