On average, the implementation of a new ERP system costs 5% of an organization’s annual revenue, and almost 60% of those implementations exceed their scheduled time by at least 25%1. While that investment is indeed costly, the impact that a properly implemented ERP system has on the office of finance cannot be overstated.
Through the centralization of information and workflow, the value of a properly implemented ERP system lies in its ability to improve collaboration, streamline tasks and help manage the financial close process by acting as your system of record. And with those benefits, it’s understandable that organizations spend so much time and money to maximize the benefits that their ERP has for the business.
However, despite such a large investment, an ERP system cannot truly provide an organization with the unique automation capabilities that are necessary to create an efficient and effective close process.
The Shortcomings of Your ERP
Due to events such as mergers and acquisitions, global expansion or the need for vertical-specific IT requirements, organizations have naturally built up their own unique internal IT ecosystems. While well-intentioned, this typically leads to a collection of different types of ERP systems under one corporate umbrella. And even when companies only have a single ERP, they will often have multiple instances which aren’t necessarily talking to each other. Because of these all too common situations, there usually isn’t integration at the data level.
To overcome this disparity in the IT environment, accounting teams must take a significant amount of information outside of their ERP and process everything manually within a multitude of spreadsheets at each period end.
Why Is This a Problem?
While incredibly time-consuming, it’s fair to say that the manual approach has been getting the job done for the most part. Why fix what isn’t broken, right? Yet while this is a somewhat manageable way to close the books, it goes against the very reason you implemented an ERP system in the first place.
When your financial information is removed for manual processing, you lose the collaboration and centralization that ERP systems are implemented for. Any amount of work that is handled outside the ERP has no centralized way to be tracked, and the final product becomes suspect. Additionally, the disconnected spreadsheets offer nothing in the way of streamlining the process and instead pose a significant risk to the integrity of your financial data. A few of the key factors leading to this risk is the complete lack of:
- Visibility and Control
- Policy, Quality and Audit Management
- Supporting Evidence
- Reporting and Aging
- Risk Assessment
How to Remove the Shortcomings
As a company’s workload grows, so does its reliance on spreadsheets and sadly, the complications become more apparent each time data is manipulated outside of the ERP. Simply put, this process is not sustainable due to its high risk of bad data.
In order for organizations to both maintain a reliable system of record, and to ensure potential benefits for the office of finance are maximized, the ERP must be supported with strong investments in dedicated systems that address the needs of the finance and accounting teams.
For more information on how financial automation technology can help support your ERP investment, view our eBook “Your ERP is Just the Beginning: It’s Time to Close the Process.”
Written by: Caleb Walter
 (2018, May 23).”Rule of Five” to Estimate Time – ERP System Implementation Strategies Retrieved April 5, 2019, Panorama Consulting