Best Practice ERP: Don't settle for piecemeal, go for Change Management

Why do we implement enterprise resource planning (ERP) solutions? Ask several different companies, and you will get a variety of answers. The one response I hear most often, indeed a common refrain from those who are most successful, is: “To integrate all facets of our business on a single application platform.” This makes sense, especially when you consider that the 'E' in ERP is Enterprise.

Now, let's ask a different question: What is the one thing you would do differently?

Again there are a variety of possible answers, but one that is often high on the list — and that usually comes from those who struggle after they completed their implementation — is: “Avoid a piecemeal implementation.”

piece·meal  /ˈpēsˌmēl/  — characterized by unsystematic partial measures taken over a period of time in separate stages rather than being planned and done as a whole 

It is no easy task to interject change into any human enterprise. It is more difficult still when that change impacts all facets of a going concern, disrupting the status quo or the day-to-day. But, if it is intended to enable people to work together to be more responsive to customer needs in a cost effective manner, then change management must encompass all functions.

A common mistake

Many firms implement ERP solutions because of rich functionality that addresses a variety of modes of operation from CRM and Sales to Inventory Planning, Purchasing and Manufacturing.

Accounting is one area that is sometimes left out of an ERP selection and implementation in an attempt to reduce scope and complexity. This is a big mistake.

The good news is that with a good ERP solution, integration with accounting functions is a natural by-product of a good implementation. Why? Because ERP utilizes a set of general ledger account mappings in each module that once properly setup, automatically post the financial side of all business transactions to the correct accounts.

I recall vividly when the Controller of a very large ERP customer said to me the afternoon of the go-live day: “We are already seeing some interesting and valuable information flowing to the general ledger that we were never able to see before.” Had they considered running the operational side of the business on one platform and the accounting side on another, they still be in the dark.

How to make it happen

So, you might ask, how do we implement all of an ERP solution from the beginning? The implementation process is a very broad topic that could take up several blog posts, so let's narrow the scope of our discussion to integrating accounting with other operational functions. Here are a few ideas.

First, appoint as the project lead someone with an operational background who has a good working knowledge of the entire business. Ideally this person should not come from IT / DevOps or Accounting. IT /DevOps and Accounting, while extraordinarily important, are functions that support the business's mission rather than define it.

Your core implementation team will look like this:

  • Operations (project lead)
  • Accounting (project support)
  • IT / DevOps (project support)

To be effective, a team must train together. This is as true in ERP implementations as it is in sports. Make sure, then, that together they attend the core ERP application training. Why? For the project lead it should be obvious. This person will be knitting the business together operationally on a new software platform. So, too, is the accounting team member, although in this case it is financial integration, not operational. And IT/DevOps? The value of the data collected by the ERP is immense. An IT/DevOps team member is most valuable when — above and beyond providing day-to-day support for hardware and software assets — they understand how an application supports end users.

Now that the team has trained together on application fundamentals, it is time to start developing the first or "small" pilot. This pilot contains a scaled version of the company's business with just a few items, customers, suppliers and general ledger accounts. It constitutes the first attempt to map process and data into ERP. Again, comparing this to sports, teams first train together then they conduct intra-squad scrimmages before playing a game. Following a successful "small" pilot is the full or "big" pilot containing all company data including any data that comes by way of imports. Working on the big pilot is analogous to scrimmaging the cross-town rival under game-like conditions. More on piloting.

The accounting team member must be involved in the piloting process from the very beginning to provide guidance on general ledger account setup, mapping, and transaction validation when running transactions through the pilots. In fact, the accounting team member owns the general ledger and account mapping setup. After input has been provided on account mapping setup, the accounting team member can now focus on a strategy and preparation for beginning balances, financial report definitions, and training members of the accounting staff on day-to-day business transactions in ERP.

During piloting the IT/DevOps team member works with the team, and later end users, to tweak core forms and reports such as Purchase Orders, Invoices, etc., and develop new reports and application enhancements if necessary.

Defining success, then achieving it

There are many ways to gauge the success of an ERP implementation. How you define success may be different from other companies who have implemented ERP. But, if your objective is to more tightly integrate the business making it more responsive and cost effective, then implementing all of the core functionality should be one of your success measures.

By way of example, we took a brief look at how the accounting function can be easily incorporated into the implementation plan so that once ERP is operational, valuable financial information seamlessly flows to the appropriate accounts as the result of business transactions eliminating batch uploading, re-keying, mistakes, inaccuracies, and time gaps that result when an external accounting system, such as QuickBooks, is used.

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