There's a double-edged dilemma in play for CFOs these days. On the one hand they know that investing in new technology — like having a fully modern, cloud-based ERP in place — is critically important for their enterprise to grow and thrive.
In fact, implementing an up-to-date ERP can be downright transformative, by centralizing information and leveraging sophisticated analytics, AI and machine learning to unlock hidden value in previously disorganized data.
On the other hand, implementing an ERP is a serious investment — not just in terms of capital, but in time and focus, as well.
On top of that, IT implementation projects are all too often a source of stress for finance leaders. CFOs must worry about the danger of cost overruns, difficulties with adhering to project timetables, the ultimate risk of project failure and of course the prospect of insufficient ROI if the right solutions aren't selected and implemented effectively.
Hence the dilemma that sometimes results in hesitation and inaction: The rewards are undeniable but so are the risks.
Evaluating ERP: How CFOs Can Get Past the Paralysis
Of course, it's understandable — and highly recommended — for CFOs to proceed cautiously when considering a new ERP, with plenty of time built in to look before you leap.
In fact, the time you spend looking — and whether you ask the right questions at that crucial juncture — can mean the difference between success and failure.
So, to help you make the most of that time, and keep you moving forward instead of succumbing to stasis, here are some key ideas and questions to consider.
To move confidently into the future, finance teams need access to the benefits of AI, machine learning, and cloud-based analytics, with the ability to comb through data for game-changing insights. Here's some of what a modern ERP can deliver.
- The growth of a business inevitably leads to complexity. In addition, acquisitions can lead to different parts of the organization using different systems — including multiple accounting software, legacy ERPs and spreadsheets. One of the greatest breakthroughs of transitioning to a cloud-capable ERP comes from rounding up all that previously scattered and siloed data, and consolidating it into a single source of truth. That's a big leap forward in itself — and it leads to further benefits.
- One of the most valuable payoffs that an ERP delivers is that it delivers data to you with greater insight and understanding behind it. Once your data is fully centralized, you can see not just the numbers themselves, but the context behind the numbers.
- It's easier to spot important trends and patterns when you've got all of your data in one place. By deploying the power of machine learning, combined with real-time financial data, you can make more accurate forecasts about everything from cash flow to customer demand.
- Automating Tasks. A cloud ERP such as Microsoft Dynamics 365 Finance boosts productivity and allows your team to focus on higher-level tasks by automating time-consuming repetitive tasks.
Top Criteria for Evaluating ERP Solutions
Certain considerations will be applicable across organizations of all kinds, such as how the solution can help you cut costs and improve operational efficiencies. For others, how you prioritize will depend on your priorities and your industry — such as scalability, risk mitigation, regulatory compliance, solving supply chain issues, predicting customer behavior, etc.
Here's a good starting list of questions for CFOs to answer:
- What are your objectives and goals for the implementation?
It's important to be clear at the outset about what you're trying to achieve. Are you just looking to modernize your system to take advantage of new capabilities and solve problems, or you looking for a system that scale up and empower you to move in new business directions?
- What value will the ERP deliver to your organization?
In many ways this is most crucial question of all. It's important to look at how it will help your organization execute its business strategy, in addition to things like driving down costs, improving productivity, speeding up the order-to-cash cycle and improving customer satisfaction.
- What's the total cost of ownership?
You'll want to try to nail down the clearest answer you can, and be diligent about the details. Some vendors — especially less experienced ones — will lowball you, knowingly or not, so it's good to leave some margin for error in your planning.
- What everyday benefits will the ERP deliver to users?
You need the participation and enthusiasm of stakeholders throughout your business to ensure adoption and get real value from your ERP. So, make sure you know how it will respond to their pain points and improve their working days.
- How scalable and adaptable is the system?
Think about this in terms of the future growth of your business. Ask not just whether the ERP is adequate to your needs now, but how it will serve your goals in the years ahead, as your organization gets bigger and operations diversify. As your business changes, can the ERP change with you?
- Does it have fully up-to-date cloud capabilities?
One place where you'll want to kick the tires is making sure that your ERP solution was written for the cloud, rather than just being hosted in the cloud. If you wind up with a legacy ERP vendor that has transitioned aging software to the cloud without a ground-up rewrite, you won't get the full benefits of a modern cloud ERP.
- How compatible is it with other systems?
You'll want to make sure you know how your new ERP will connect with other software and services you depend on, such as EPM (enterprise performance management), SCM (supply chain management), HCM (human capital management), CRM (customer relationship management) and CX (customer experience).
- Who will handle the implementation internally?
Putting together a core team of your best and brightest employees to focus on it will help make sure the process is navigated smoothly.
- How will you make sure the system stays up to date and well-maintained?
Having an experienced partner and a solid release management program in place is critical for success in this area.
- How will you ensure the necessary training and ongoing education for users? Without regular retraining, users won't stay up to date as the system changes, or get the most out of existing features as they get further away from training and forget some of what they learned. And, if that’s the case, you won’t get the bottom-line benefits you’re looking for.
And finally, here are a few important questions CFOs should ask potential vendors:
- What has your experience been like with previous implementations? What have you learned along the way, and what pitfalls have you helped subsequent clients avoid?
- What do other clients have to say about their experience? Can we talk to previous customers directly to find out more about what the transition to ERP was like for them?
- Can we go beyond demonstrations to see real-life applications of the software in operation?
- Instead of just talking with salespeople, can we speak with members of the team who handle implementation?
For more on how an ERP can have a beneficial impact on your bottom line, read The Business Case for Cloud ERP.
Want to learn more about how Columbus can help you select and implement the right ERP solution for your business? Get in touch with us today.