Find out the three critical elements of an effective enterprise resource planning system (ERP) implementation for accounting and more.
Implementing an enterprise resource planning system (ERP) takes careful planning. Once all the blood, sweat, and tears that go into starting a business have paid off and your company is growing, attention is often directed at investing in a proper solution to meet the new demands of the organization.
Before you begin, there are three key things you will need to have in place for a successful implementation. By accounting for these elements, you will be better positioned to avoid costly mistakes and causing more work for your team.
1. Design Your Technology Stack
When investing in modern technologies, the first thing to do is to design your technology stack and create a data architecture diagram to see how the data will flow across your applications.
Why is this step so important? An ERP is the company’s financial record of truth. It will be used to convey financials to stakeholders. It will be audited by third parties. As a result, it is vital to make sure the data flowing into the ERP is as clean as possible to get a clear understanding of the financial health of the business.
If the other applications are not implemented that will send data to the ERP, the company is not ready to begin implementation. Ideally, the ERP should be the last application to implement to avoid costly mistakes and having to spend money to connect to legacy systems that will eventually be replaced.
2. Leverage an Experienced Controller
The next essential step before implementing an ERP is to make sure your internal team has the experience and knowledge of the business to set the system up for success. If your team does not have experience implementing an ERP or understand how the business strategy is, then this process will go poorly.
Ideally, the organization will have an experienced controller leading the implementation and working with third party consulting teams. At 512Financial we provide experienced financial and accounting professionals to businesses across industries that can fill this role if your company does not have these resources internally.
3. Prioritize Effectively
Lastly, you do not want to implement an ERP if your team lacks the bandwidth to avoid conflicting priorities. I have worked with companies who were trying to implement their new ERP while also going through a first-year audit, while providing debt covenant reporting to lenders. As a result, the team was not fully focused on the implementation and the system had many inefficiencies.
Additionally, some tasks took more time. The accounting and finance team must be able to focus on the implementation to achieve success. The last thing you want is for the third-party consulting team waiting on requirements and unable to do their job. This will lead to an increase in costs and a prolonged project timeline.
There are always issues that arise during an implementation and it will never go perfectly. However, if you have all the applications in place that will send data to the ERP, have an experienced team, and sufficient bandwidth for the project, then your chances of success increase significantly.
Are you interested in learning more about fractional accounting and financial services? Contact us at 512Financial today.