From navigating the fallout of geopolitical conflicts to managing the heightened uncertainty of today's inflationary environment, 2023 has proven to be one of the most hectic years yet for CFOs and their financial teams.
Given that many of the disruptions businesses faced in 2023 are likely set to rollover into 2024 — if not longer — financial teams need to make sure their operations are running as smoothly as possible as the calendar flips over to the near. This is particularly true when it comes to their technology and ERP capabilities.
Serving as the hub for financial operations across tax management, core accounting, payroll and beyond, ERP systems have truly revolutionized the way financial teams are able to manage their workflows and deliver better financial outcomes for their organizations. However, as with any technology, ERP systems need to be constantly reassessed as business needs shift and new priorities arise. That's easier said than done given how intricately intertwined ERP systems are throughout organizations today.
With that in mind, below are several key considerations that CFOs and financial teams need to keep in mind as they look to optimize their ERP systems in 2024.
Determining the goals of your ERP health check
Because of how widely integrated into a business's operations ERP systems are, to effectively stress test ERP infrastructure and uncover areas for improvement it's essential for financial leaders to take a step back and establish a precise scope for their health check alongside a clear-cut list of objectives they are looking to achieve.
Each organization's needs will likely shift from year to year as they add service lines, adapt to new statutory requirements, revamp their corporate strategies and tackle other emerging priorities. ERP systems will need to be tweaked as a result. Due to the vastness of ERP systems, financial leaders need to identify exactly which modules need to be evaluated, upgraded or completely replaced from the start. Otherwise, without these "to-dos" clearly stated, health checks can quickly become unwieldy, and teams simply will not be able to make the necessary adjustments to achieve the optimization and maximum ROI they are looking for.
Review targeted module performance
With this framework in mind, financial leaders and ERP teams need to begin the process of evaluating the modules they have identified as priorities. Key to this is ensuring stakeholders understand the various limits and potential barriers their systems present over the short, medium and long term. To do this, teams need to ask several key questions of each module including:
- What functions are being performed by the system?
- How much time does it take the system?
- How much work is being performed outside the system?
- How much time does a process take from start to finish?
- If we increased business by 10%, 20% or more, would our current process be able to handle the growth?
These questions will help provide the baseline understanding that teams need to conduct their health checks more effectively.
Perform internal reviews of user experiences
Alongside the performance of the modules themselves, finance teams need to look inward and assess how their ERP platform is impacting user performance throughout the organization. For ERP systems to provide the best possible outcomes, they need to deliver a user-friendly experience, so gathering as much feedback as possible on the most troublesome and time-consuming issues users face can be pivotal. When adopting advancements to your ERP systems, this additional user-side intelligence will help leaders better understand where additional training may be needed to boost end-user experience and mitigate frustrations.
Security assessments
Nearly two-thirds (64%) of companies using ERP systems have been victims of cyberattacks. As cybercrime continues to surge worldwide, the number of attacks aimed at compromising these crucial systems will only rise as well. Therefore, it has never been more important for financial leaders to double-check the security of their ERP platforms to detect anomalies and prevent misuse. Who has access rights? Have we reviewed the system change log and deleted transactions and investigated them accordingly? Are we in line with provider SOC 1 control changes? These are just a few of the questions financial teams need to ask themselves to ensure their security is up to scratch. In addition, financial leaders should look to loop in external security partners to vet their systems for threats and weaknesses.
Current analytics and reporting
ERP systems have been a boon for financial workforces when it comes to streamlining their workloads, if they are configured correctly. ERP systems are not a one-size-fits-all proposition and need to be built in a way that allows users to receive the information they specifically need and quickly. Stakeholders must make sure during their health checks that platforms are sufficiently customized and deliver the real-time dashboards and insights in a role-based way. This is also a great time for stakeholders to reassess their KPIs and broader analytics strategies and capabilities to make sure the KPIs are still appropriate and they are able to glean the internal and external data they need to meet them.
Scalability planning
ERP health checks should not just be limited to how well your organization is meeting its current goals and targets. The most effective health checks also take into consideration how well your organization is set up for potential future growth and how your organization is going to ramp up to meet these growth demands. Once goals are formulated at the beginning of the health check process, stakeholders need to ask themselves whether their ERP system is in a position to be able to scale with them. If not, stakeholders need to establish a scalability plan that takes into account things such as budget, integration needs and customization preferences to identify which type of ERP environment — such as on-premise, cloud or hybrid — is best for them. From there, stakeholders can build methodical plans for how and when they are going to grow their systems and capabilities as opposed to having to "build the plane while it is flying."
Looking ahead
An efficient ERP system can be a game-changer for organizations today. And while health checks may seem like an onerous process, by keeping these considerations in mind, financial teams can remove many of the headaches that might otherwise exist when conducting health checks and emerge with more refined ERP systems that can deliver the long-term success their organizations deserve.
Written by Alanna Abreu. Originally published by Accounting Today.
Have a question?
Fill out the form to speak with Alanna.