Enterprise resource planning (ERP) systems, when optimized, offer limitless benefits to businesses — from improved analytics to increased productivity — but they are bound by the talent, processes and data that organizations use.
In the middle market, financial planning and analysis (FP&A) is a paramount example of how various departments across a business can influence the effectiveness of an ERP system. For successful software implementation and operation, it is imperative that organizations have a robust FP&A strategy that works alongside their ERP systems and fills gaps in the finance department.
According to a Gartner survey, 55% – 75% of ERP projects fail to meet their objectives. A clear ERP roadmap that works in tandem with FP&A can help organizations avoid costly implementation failures or subpar systems that don’t achieve their goals.
ERP systems often perform standard accounting and transactional data management functions well. These functions can include:
- Transaction Automation
- Accurate Data Records
- Improved Compliance Through Audit Trails
- Report Creation
However, despite often being billed as an end-to-end solution for financial management, ERP systems are often unable to access and provide the granularity of detail required for strategic financial planning and analysis tasks, such as:
- Future Performance Forecasts
- Predictive Analytics
- Profit Margin Analysis
- Scenario Planning
This leaves a critical gap for CFOs that can be exacerbated if obsolete ERP systems and siloed data are also present. Leveraging your FP&A team will not only maximize your investment in your ERP, but also ensure accounting, analysis and processing are performed concurrently to provide a comprehensive view of a company’s financial condition. Digital transformation within the finance department is one way to better leverage FP&A.
Implementing Tools for Finance Transformation
Technologies such as generative AI, machine learning (ML), robotic process automation (RPA) and data analytics serve to streamline processes and enhance overall analysis. Another Gartner survey found that 66% of finance leaders see the most immediate impact of gen AI in explaining forecast and budget variances.
Additionally, ML tools can analyze large amounts of data to identify trends and predict future performance while eliminating human error. Instead of relying on spreadsheets, harnessing new technology for FP&A will more efficiently fill the gap left by the ERP system and allow your team to keep up with the fast pace of today’s middle market.
Creating a Strategic Approach To Avoid ERP Failure
Common reasons ERP systems fail include budget overspend, lack of expected benefits, and difficulties in software management and integration. Without effective integration planning, you may also find ERP systems operating in silos, leading to incomplete and inaccurate financial reporting.
With an effective ERP roadmap, organizations can align solutions to meet specific business goals. Steps to creating a strategic roadmap include:
- Defining Business Objectives: Identifying business objectives and ensuring the organization understands the vision is a critical first step.
- Selecting a System: Choosing the right ERP system that meets those specific needs ensures your company will have the right tools.
- Planning & Design: Planning and designing the system, includes:
- Integrating the ERP into other organizational areas of the business, such as the FP&A function.
- Identifying stakeholders in all functional business areas to ensure collaboration and shared commitment at all levels.
- Testing & Training: Testing and training an ERP system are critical to ensure it functions correctly, users are proficient, and the transition is smooth, minimizing risks and maximizing efficiency.
- Launching & Monitoring: A smooth launch involves going live, monitoring performance, addressing issues, and ensuring effective tool utilization to enhance productivity and efficiency.
Hiring an ERP implementation partner can help ensure your organization maximizes its investment and has the right resources in place to champion a large change initiative. In addition to serving as an advisor for your ERP implementation, Cherry Bekaert also provides FP&A strategy services.
How Cherry Bekaert Can Help
Cherry Bekaert’s Accounting & CFO Advisory practice offers a comprehensive suite of financial planning and analysis services, from financial forecasting and modeling to data analytics and variance analysis. Our team of professionals can help you achieve your financial goals and integrate FP&A into your ERP solution.
The Digital Advisory practice has extensive experience with ERP implementation and support. Together, both practice professionals will work with you to identify your company’s unique needs and develop a strategy to drive you forward.
