When an organizational leader begins to realize the ERP system he or she has grown to rely on is no longer meeting the company’s needs, it’s more than just a gut feeling. The warning signs can become painfully obvious, pointing to the fact that a rigid system can’t keep up with rapid business evolution, especially during a reorganization or integration following a merger or acquisition.
Companies shifting their business processes to take advantage of new business models and emerging markets seek the advantages of well-designed Software-as-a-Service solutions as they evolve. Though flexibility of cloud-based ERP platforms reduces an enterprise’s dependence on expensive customizations, three critical factors must still be part of evaluating ERP implementation:
- The total cost of ownership (TCO) of the technology itself;
- The administrative savings driven by improved automation and functionality;
- The overall impact to efficiency when identifying new markets or adding new businesses.
What the business leader, in this case, the CFO, needs to focus on is getting the value right. Rather than subjecting the ERP to a traditional cost assessment, a CFO that works across departments to understand the range of technology needs, the frustrations that go along with applying technology and the views of key stakeholders will move the ERP evolution toward a perspective of value. Matching ERP systems and functionality to real business needs is what delivers value across a firm.
That foundational investment in time and resources is necessary before the CFO meets with ERP vendors, but it really pays off when those interviews begin. Establishing a framework for evaluating solutions helps ensure vendor interviews are focused and the questions are on target: How will various constituents use the ERP system? How easy is it to make changes? What are the key stakeholders’ most important priorities?
A well-designed ERP transition helps companies avoid obstacles in both the decision-making process and subsequent rollout because they’ve already developed a plan for mitigating change resistance and for realigning workflows to capitalize on new ERP capabilities. They’ve also invested in the communication and the training that will ensure strong adoption of the new technologies and processes.
All of this relies on CFOs who first educate themselves about ERP technology and their evolving business needs. That literacy and versatility comes by gaining market intelligence, gathering business leader input and experiencing the technology in hands-on demos. Such an approach will enable the CFO to be well-positioned to champion change and create the culture for it, while achieving a comprehensive view of the benefits and the financial business case. It will also prepare the CFO for what has become more of a technology revolution than a technology evolution by embracing more agile tools and processes for a changing business environment.
Contact me directly to discuss how ERP has changed with the cloud, why it might not be meeting expectations and how it will continue to evolve in the future.About the author
Deb leads ISG’s Human Resources Technology practice, drawing upon extensive in shared services, outsourcing and HR management to help clients define and implement their HR technology and service delivery strategies. Deb helps enterprises assess the business case for Human Capital Management software-as-a-service (SaaS) solutions, understand the capabilities and experience of leading HR SaaS providers and integrators, and formulate and execute effective negotiation strategies for HR SaaS software and implementation. She has authored ISG’s annual survey on HR Technology and Service Delivery Trends since 2014.