ERP strategy and digital finance modernization has been saved
ERP strategy and digital finance modernization
Getting the fundamentals right
New ERP systems alone won't bring about the digital finance modernization many executives seek. ERP implementation can only deliver results if the fundamentals are in place. This article, the first in a series on achieving transformative impact from ERP and related digital technologies, discusses the importance of having a clear ERP strategy.
- Digital finance modernization
- Strategy fundamentals
- Strategy journey
- Reasons for strategy
- Stay tuned for lessons learned
Setting the stage for digital finance modernization
Your company has just gone live with a new enterprise resource planning (ERP) system. It’s day one and everyone is excited to reap the benefits outlined in the business case: reduced manual effort, greater transparency, a single source of truth, and increased productivity. The first ask for your team is straightforward—a profitability analysis by customer and product across all business lines.
But eight hours later, you still haven’t received the report. Your team tells you they’re struggling to pull the data from the new system and will need to revert to spreadsheet models to generate the report. What happened? The new ERP system was supposed to solve all these problems and make your job easier, right? This isn’t the response you expected.
New ERP systems and digital technologies, such as robotic process automation (RPA), cognitive computing, and machine learning, offer new capabilities that can make Finance more efficient and increase its ability to provide insights for better business decisions. But these results can only be achieved when the fundamentals are in place.
ERP strategy fundamentals
Many organizations assume that technology will solve all problems. In some cases, vendors will convince them that technology is a panacea. But if the fundamentals aren’t in place, a well-intentioned ERP implementation initiative can fall far short of expectations. This can lead to a significantly lower return on investment, increase business user frustration, and cause users to be skeptical of future projects.
ERP strategy fundamentals include:
- A defined vision and clear understanding of business needs
- A right mix of business partners at the table
- A clear roadmap for enabling desired capabilities
- An understanding of functional and process integration points
- A meaningful data strategy
- A sound understanding of the reporting strategy with an enabling chart of accounts (CoA)
- A clear plan to identify and develop strong talent
Embarking on the ERP strategy journey
When embarking on the ERP journey, an organization must first know where it’s going. With the plethora of digital technologies available in the market, the organization needs to understand the possibilities for business transformation. It must also determine the role each function and key business partner (for example, Finance, IT, and HR) will need to play during the digital finance transformation. Finally, it should develop a strategy to achieve desired business capabilities.
Based on our research of Finance organizations and digital technologies, Deloitte published Crunch Time: Finance 2025, a report that paints a picture of the future of Finance and outlines eight predictions.
Deloitte’s 2025 predictions for the Finance function
Crunch time: Finance 2025, Deloitte Consulting LLP, 2018
Business-led vision, capability-focused ERP strategy
In order to benefit from what these predictions allude to, many companies are starting with ERP implementations to "digitize the core." But the companies that are getting the best results recognize that technology alone won’t bring them the desired capabilities. Business capabilities, functional integrations, scalability and sustainability, operating models, talent, and desired business outcomes must all be considered, along with the technologies expected to enable them.
Having a business-led vision and a capability-focused technology strategy is important for many reasons:
- Cross-functional leadership alignment. Projects routinely fail because leadership isn’t on the same page when it comes to defining success and expectations. Having a strategy that’s clearly documented and understood helps drive the organization toward a common goal.
- Business requirements across functions. An ERP strategy ensures the right players (Finance, IT, order management, supply chain, and business units) have a seat at the table and that business needs and requirements are understood. This helps reduce rework costs if critical functionality is missed or doesn’t deliver the expected capabilities.
- Defined scope to manage costs. A focused strategy includes a comprehensive scope that can be effectively managed. This allows for better cost management and more effective change management. It also provides a set of guardrails that guides decisions throughout the program.
- Roadmap to success. Like any type of journey, ERP programs can stray off course without a roadmap. A solid strategy with defined objectives provides this, along with more predictable outcomes.
Stay tuned for lessons learned
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In the world of ERP-enabled transformation, there are plenty of stories—some good, others bad, and others quite ugly. Throughout the numerous ERP implementation journeys we’ve been on with our clients, there have been many lessons learned, and we want to share them with you.
In our series on ERP strategy for Finance, we’ll recount some of these lessons, as seen through the eyes of Finance. We’ll also delve into the several elements of a digital Finance ERP strategy—offering insights into how to develop an executable strategy—including:
- Business transformation vision
- Vendor selection (now available)
- Data strategy
- Reporting strategy
- Chart of accounts optimization
- Talent strategy and Finance operating model design
We hope these perspectives will help you achieve your desired Finance and business capabilities, setting you up for success now, as well as beyond 2025.
Contact us to learn more.