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.
Why Should You Integrate Your Financial Planning With an ERP System?
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 on their own 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.
Financial ERP System Implementation Process: 6 Steps to Success
Common reasons ERP systems fail include budget overspend, lack of expected benefits and difficulties in software management. 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:
1. Defining Business Objectives
Identifying business objectives and ensuring the organization understands the vision is a critical first step. Key stakeholders should prioritize communicating the goals of the company to the wider group and craft messaging on how the implementation and integration will help the business obtain desired outcomes.
2. Choosing an Integration Provider
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.
3. Selecting a System
Choosing the right ERP system ensures your company will have the tools to adequately assess the business’s data and meet the organization’s reporting needs. Make sure to evaluate each ERP system option against the business objectives defined in the first step.
4. Designing the Platform
Next comes planning and designing the system, including:
- Integrating the ERP into other organizational areas of the business, such as the FP&A function.
- Identifying which stakeholders in all functional business areas will be responsible for ensuring collaboration and shared commitment at all levels.
5. Testing the System
Testing and training an ERP system is critical for verifying it functions correctly, users are proficient and the transition is smooth, minimizing risks and maximizing efficiency. Stakeholders will again need to rely on consistent communication to ensure employees are aware of the benefits of the new system and how it will impact their specific role.
6. Monitoring the Results
A smooth launch involves going live, monitoring performance, addressing issues, and ensuring effective tool utilization to enhance productivity and efficiency. Comparing the results of the ERP implementation to the integration plan can allow stakeholders to better align on future updates and the overall return on investment (ROI).
Benefits of Coordinating FP&A With an ERP System
Implementing an ERP system by itself comes with several benefits. Add to that the integration with FP&A, and those advantages can quickly multiply.
Integrating an enterprise resource planning system with financial planning functions may lead to:
- Improved Real-Time Reporting and Analytics
- Streamlined Business Decision-Making
- Better Informed Planning
- Increased Productivity
- Improved Collaboration
- Fewer Data Errors
- Smoother Regulatory Compliance
Additional Tools for ERP and Finance Transformation
Besides ERP system platforms, other technologies such as generative AI, machine learning (ML), robotic process automation (RPA) and data analytics serve to streamline business 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.
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.
