6 Issues on every financial manager’s mind

Modern-day financial managers have a lot on their minds. The field of information technology (IT) is constantly changing, and companies have to be able to adapt—a tall order that is throwing business models for a loop, yet also creating new opportunities.

Data security

Protecting the confidentiality of personal data has proven to be a never-ending battle for all financial managers in 2018. A slew of companies have made headlines after suffering data breaches that leaked important information online. To keep this from happening to your business, establish a comprehensive and consistent privacy policy that includes acquiring and maintaining a security system for your data. It’s worth taking the time to find the right targeted IT security strategy; it will save you a considerable amount of money and inconvenience in the event of an attack.

Data governance

Financial managers and their employees have to process greater volumes of data every day. That data can end up costing companies dearly if it isn’t managed properly. According to IBM statistics from 2016, poor-quality data costs companies more than $3 trillion a year in the United States alone. In fact, based on another study‘s findings, a mere three percent of company data passes as acceptable. Data governance is essentially a framework for how data is used within a company. The goal is to turn that data into value by using it properly. For example, after analyzing customer data, you might develop new products and services to better meet your customers’ needs. You could also opt for predictive maintenance, which involves gathering information about your equipment, for instance, so that you can more effectively plan maintenance work and predict failures or breakdowns. The possibilities are endless. You won’t see measurable results, however, unless your data use is directed toward specific goals. That means putting in place a strategy designed to turn information into value.

Assessing the need for artificial intelligence

Artificial intelligence (AI) is on everyone’s lips these days. According to the 2017 Accenture report “How AI Boosts Industry Profits and Innovation,” AI has the potential to increase businesses’ profitability by 38 percent by 2035. In many sectors, it’s already possible to create AI software that predicts customers’ orders and behaviour. By helping companies make wiser, smarter, and faster decisions, AI drives growth and makes it easier to anticipate roadblocks. Getting the most out of this technology, however, requires collecting data and organizing it effectively. AI needs a steady diet of information in order to work. All around the world, billions of dollars are being invested in AI development, including in the financial sector. “We’re seeing the rise of a whole series of financial technologies, or fintechs, that use AI to determine needs and risks,” says Jean-François Gagné, CEO of Element AI. “Robo-advisors, for example, identify clients’ profiles and assign an investment strategy.” The challenge now is making sure that the structures within the financial industry are prepared to face the seismic shifts still to come.

Strategic IT alignment

According to PwC (article in French), technology accounts for one of the biggest areas of companies’ spending. The field is also drawing more and more interest from governments looking to stay competitive on the world stage. Statistics Canada reports that in 2017–2018, for example, the federal government invested a record $12.1 billion in science and technology. To benefit from IT tools, however, businesses must first align them with their broader objectives. Strategic alignment means ensuring that a company’s technology development strategy reflects its overall strategic direction. When done right, this technique offers companies a more cost-effective way to stay competitive.

Cost management: the bottom line

Managing costs is not a new concern. In the world of SMBs, financial managers have always aimed to limit spending while maximizing profits. Nevertheless, even today, few companies appear to have mastered cost management. In a Wolters Kluwer survey of SMBs, 61 percent of respondents cited an inability to manage costs as the main reason small businesses fail. Closer to home, a Canadian study (text in French) identifies weak management as one of the top four reasons for failure. Regardless of the project, it is crucial to set concrete goals. Having a clear vision will translate into better decision making and allow you to gauge the strength of your capital return. In other words, impulsivity doesn’t lead to profits.

Training employees on new technologies

With so many technological changes taking place in SMBs, you need to surround yourself with flexible employees who are motivated to learn how to use new tools. Employees who perform poorly can become a real burden on their company. According to a Robert Half survey of CFOs, financial managers waste more than a quarter of their weekly hours on coaching and/or supervising poorly performing workers. Imagine everything you could do with that extra time! If you want to lower your costs, aim to hire motivated, versatile, and resourceful employees. That means making sure you have an effective hiring process. Feel free to incorporate methods such as assessing candidates’ skills through a variety of tests.

Exciting challenges for financial managers

SMB financial managers will face plenty of challenges over the next few years. On top of juggling an ever-growing volume of data, they will need to become connoisseurs of artificial intelligence and train their employees on new technologies. What about you? What are your biggest concerns?

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5 criteria for selecting an ERP solution

Are your considering setting up an enterprise resource planning (ERP) software at your company? No matter what the reason (reducing costs, increasing your productivity or your revenue, etc.), you need to put more thought into the matter before obtaining quotes from recommended providers. After all, this system will become the centrepiece of your software infrastructure. Make too hasty of a decision and you risk choosing an ERP that doesn’t meet all your company’s needs. Here are the basic criteria to consider to ensure the ERP you choose becomes the business launching pad you were hoping for.

Your company’s current and future needs

To make the best choice, you must understand the technological needs an ERP can satisfy. Take a more long-term point of view. Besides creating a list of your current needs, think about your company’s future needs. This evaluation of your business needs is dependent on your strategic plan. What exactly does that involve? The point of view of all its eventual users is essential for determining the critical needs to be fulfilled. Your co-workers understand their job descriptions, daily activities and challenges in dealing with your current system, if there are any. They must be consulted during the first phase of the project.

The flexibility of the desired product

The ERP software will be with you for the long haul, over many years. The solution you choose must be sufficiently flexible to adapt to your company’s future activities. In fact, industry trends or your own expansion projects might require the addition of modules or functionalities. The solution must also allow you to keep up with the waves of technological evolution to come. The reality of today is not necessarily that of tomorrow! The interface must not only be adaptable to the needs you have determined in advance, but also be easy to use, intuitive and up to date, both now and for years to come. But no matter what, deploying this kind of system is a dream opportunity for rethinking your processes.

The reliability and sustainability of the intended solution

Before selecting a provider, information about the publisher should be assembled. Their experience in creating software and the organizational stability of their team of developers are two items of interest you should take into consideration. You can also try to obtain references attesting to the quality of the desired product. Even better, perhaps, is to select a product that has already proven its worth in your business sector! Since it acts as the cornerstone of your software infrastructure, an ERP needs to be sustainable. In particular, you should obtain information on the frequency of updates needed, functionalities to come in the future and any glitches encountered in the past year.

The total cost of the project

There are not only initial costs to consider. To be able to “compare apples with apples,” selected providers must submit detailed proposals and conform to the evaluation of your needs. Demand a precise estimation of additional programming costs. Cost estimates must obviously include set-up costs for the ERP at your company and any supplementary costs for the subsequent training of users. No matter the situation, adopting a systematic approach will limit the costs associated with choosing an ERP. The Business Development Bank of Canada (BDC) also offers a 10-step guide for choosing the technology that’s right for you.

The quality of technical support offered

There’s technology… and then there are people! People are one of the major factors in the success of your project. The developer needs to offer options for troubleshooting, technical support if there is a problem, and resource people in case of an emergency. You wouldn’t want to find yourself stuck at the end of the day when a report has to wait for someone to make a quick decision. The software creator’s mission doesn’t end once the system is installed. Want to learn more about the subject so you can make the right choice for your next ERP system? Download our free guide and discover a wealth of advice that will help you make an informed decision.

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Five key ROI calculations for your ERP project

To get a conversation going with your decision-makers around the ROI (Return on Investment) of a process, tool, or product, it’s a good idea to start with a quick overview of the benefits. But discussing the bottom line benefits needs a deeper dive and some complex ROI calculations. When talking about ROI on ERP systems, it’s no simple task to create the equation that identifies the investment side of the ROI.

Here’s the make or break element when presenting an assessment of ROI — Make the complex ROI calculations more approachable so as not to discourage anyone who might be considering a new ERP implementation.

Because ERP projects are often associated with overruns, ERP implementations are typically received with tepid enthusiasm. Time overruns can sometimes be traced to a breakdown in project management processes or team dynamics. As for cost overruns, they generally result from underestimating cost components and undervaluing certain aspects of the project.

There’s a simpler way to provide true estimates of the cost of ERP software investment and break away from the cycle of overruns. The ERP ROI analysis starts by defining each element, determining the number of items that comprise each element, and identifying the cost per item.

After assessing the many factors to consider, we’ve come up with the five key cost calculations that are likely to impact the ERP software solution you choose to implement:

1 – Determining the Cost of New Hardware and/or Upgrades

Your current ERP software is likely installed on an existing IT infrastructure. There are now Cloud-based ERP solutions and SaaS configurations, which allow service providers to offer many ERP software acquisition, deployment, and usage options.

In choosing which solution is best suited to your business, think about on-premise or cloud ERPs, then factor in the cost of hardware acquisition and/or upgrade, additional servers and/or telecommunications equipment.

Normally computer hardware is purchased, recorded as an asset, and depreciated over its useful life. The additional depreciation in terms of reduced taxes, or improved cash flow should be reflected as a benefit (Return) in your ROI calculations.

2 – Buying a Software Licence or Service

In the past, software licences were purchased, capitalized and depreciated over their useful life, just like hardware. Software-as-a-Service (SaaS) subscription configurations have now dramatically changed how ERP software is purchased and used. So much so that the accounting industry has been challenged in providing clear instructions on how to correctly account for fees paid in a SaaS arrangement.

To offer some clarity on the issue, the Financial Accounting Standards Board (FASB) recently proposed some guidelines to define the accounting treatment of SaaS arrangements. Under the new recommendations, cost elements for fees paid within a SaaS arrangement that includes a software licence element, must be identified and treated just like any other software licence—meaning that they must be capitalized and depreciated over their useful life. However, when the SaaS arrangement does not include a software licence, the cost elements must be charged to operating expenses, just like a service contract.

Clearly, this differentiation of a software acquisition made under an on-premise or SaaS arrangement will impact your evaluation significantly. So the decision must be factored into the ROI calculations on your ERP project.

3 – Customizing Software

ERP products on the market today can provide systems that will very closely fit your business needs. Still, most projects will require some degree of customization. Fortunately, some of these customization costs of ERP implementations can be capitalized and depreciated, adding to the financial benefit of the ROI analysis.

This benefit comes with a cautionary note. Software customization is the single most underestimated ERP implementation cost component and can potentially derail your project or radically impact ROI calculations. What is more, unanticipated software customization costs and delays will impact the full scope of an ERP implementation project.

4 – Factoring External Consulting and Implementation Cost

From an accounting perspective, the total costs of the implementation efforts cannot be capitalized as part of the acquisition cost. However, it is important to identify theses costs and include them in the investment component of the ROI calculations.

External consulting or project management services costs, along with temp services costs, should be included. The ERP implementation must also identify and estimate initial training and data conversion costs.

5 – Evaluating Ongoing Costs

Post-implementation, there are maintenance costs to consider over the useful life of the ERP software. In both on-premise and SaaS configurations, software maintenance fees will customarily be defined when you purchase an ERP system. Your ROI analysis needs to determine the cost of training new staff, or retraining existing staff when software upgrades are installed, as ongoing expenses in order to maintain—and capitalize—your ERP investment.

ERP software is a powerful resource that can take your business up to the next level. With due diligence, a complete and accurate ROI assessment can ensure that your company makes informed decisions up front, acquires the best ERP system for your needs, and is empowered to fully realize the benefits of a new solution.

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Comparison checklist for ERP software

You can’t choose an ERP system the same way you pick produce at the grocery store: checking its colour, firmness, and scent will not get you very far. Careful research goes into selecting the right ERP for your business: it is a major decision that will affect every area of your company. You may feel overwhelmed by all the options on the market, as most products can seem similar at first. Because the devil is in the details, making the right choice often lies in dissecting the differences between the systems.

So, how can you go about researching all the platforms and making sure you are evaluating the right criteria on which you will base your decision?

Our free comparison checklist can guide you through your ERP selection process by allowing you to analyze multiple systems. You can customize the checklist by filling it out and identifying which benefits, features and functionalities should be prioritized according to your business needs.

5 Key Areas

Our comparison checklist helps you to evaluate ERP software side by side by focusing on five fundamental categories:

Productivity

How will the system help you and your employees become more productive?

Fonctionality

What features does the system have to offer?

Technology

How is the technology harnessed to ensure the software is usable, customizable and easy to maintain?

Value

Do you get the most bang for your buck in terms of features versus lifetime cost?

Risk

Does the software provide security while minimizing risk?

How to use the checklist

ACCEO ERP’s benefits are already included in the checklist. You can add two more companies in the additional columns and identify the benefits that apply to their ERP. We also included a column to single out the items that are a priority for your business.

For instance:

In the productivity category, you might favour an ERP software that can be accessed from multiple devices and locations so your staff can work from anywhere and at any time.

In the functionality category, you might want to prioritize an ERP that offers integrated business intelligence to help you interpret the data and make informed decisions.

In the technology category, you might single out a true cloud solution as the top priority because you want to access the system through a standard browser without having to install software beforehand.

In the value category, you might prioritize a system that offers multiple deployment methods (on-premise, public cloud, or private cloud).

And, in the risk category, you might want to favour a solution that stocks your data in the cloud instead of on your servers to protect it from attacks.

While we believe our ACCEO ERP cloud solution will meet all of your priorities, we recognize the importance of making an informed decision by comparing all your options. By providing this checklist, we help you take the guesswork out of your ERP selection process.


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5 reasons professional services firms should use an ERP solution to manage projects

Regardless of industry, project type, or firm size, most professionals share similar needs when it comes to financial and data management. Enterprise resource planning (ERP) is a software system designed to meet those needs hassle-free by allowing companies to manage most of their activities from one place and keeping them up to date on crucial factors like budgets and generated revenue. CEOs, CFOs, and employees can use this software to view company financials, keep tabs on money coming in and going out, secure data safely, and more. Instead of having separate systems to deal with each of these individually, an ERP system is a one-stop shop to manage every cog in the business efficiently. Below are five ways an ERP solution can help with your projects.

An ERP system increases financial management efficiency

Despite their differences, every company shares the common goal of wanting to manage finances as effectively as possible. Too often, though, a disorganized system will stand in the way of that. An ERP solution solves all the problems presented by inefficient spreadsheet tracking and manual tasks that allow wide margins of human error and simply take up too much time. Consider the expectations of an accounting team at an engineering firm that’s tasked with generating profit reports, identifying high-earning projects, allocating company funds correctly, setting budgets, and monitoring material costs. In order to make the wisest inputs regarding the company’s funds, this information needs to be accurate, organized, and presented effectively. An ERP solution can help with all of this. When determining how much funding to designate to an upcoming bridge construction project, for example, the company can use its ERP system to see the profitability and costs of a similar project done in the past to make an informed decision. Since the ERP system also generates reports automatically, accountants can streamline their processes and revise budgets more easily, if need be.

An ERP solution tracks project costs and revenues at all times

Using an ERP solution provides a global view of operations within a business so company leaders can get a clear grasp of factors like profitability, costs per project, and budget management. It’s so easy for a business to allow this data to become scattered, and, when that happens, exceeding the budget can become a real consequence. Using an ERP solution will keep these numbers organized and take the guesswork out of the picture right from the start. Imagine, for example, an architecture firm that has been contracted to design new buildings for a second campus of a prominent university. A project like that has several phases, many architects involved, and it’s going to take quite a bit of time and company resources. For something like this, the firm will want to set up the project in their ERP system to monitor things like budget expenditure per project phase and whether they’re on track to stay on budget overall. The firm should also be using their ERP system to track when deadlines are met by the architects. Extending deadlines means using more company resources and that affects overall project profitability.

With an ERP solution, making payments is hassle-free

Payments and billing systems can be a major headache if software is out of date or ill-equipped. Even your best employee can only handle so much at a time. That goes for your accountant too. Too much on the plate will lead to mistakes sooner or later. Working with ERP software is almost like having a personal assistant help out with everyday tasks. Take, for example, the to-do list of an accountant working for a consulting firm. That accountant must pay taxes accurately and on time. She must also pay full-time employees and freelance consultants. Everyone in her system has different rates, billable hours, and projects durations. The different variables have her inundated. With an efficient ERP solution, she could better organize payments and make end-of-project payments automatic, working with multiple currencies if need be.

An ERP system stores data safely

A big part of data management for service workers is making sure that company files are safely stored. Stories of hacked accounts and stolen data can have business owners in a fret. Usually, professional associations prohibit their members from disclosing their client lists to protect confidential information. ERP software not only facilitates relations with clients, it also keeps their information safe from prying eyes. For example, a hacker would have a hard time obtaining client data from a law firm that uses a management solution. To do so, he would have to get past several complex security mechanisms. On the other hand, a hacker could easily break into the computer of a law firm that stores their client list on a spreadsheet. Imagine what could happen if the hacker published that list on the internet—the firm’s reputation would take a big hit. In short, an ERP solution simplifies the management of current and potential clients of professional firms, while ensuring their data is protected.

An ERP solution enables executives to use the system while away on business

Those who run high-growth companies have enough on their plates without being held back by systems that can’t rise to their demands. Say, for example, that a major accounting firm has been rapidly expanding in recent years and, as such, the executives regularly find themselves travelling for business. During the busy season, they’re away from the city for an average of two weeks a month, meeting with clients and checking in on major projects. Since they go back and forth so frequently, they need a management system that they can use on any device. Many software systems, though, have to be installed on individual machines and won’t work on tablets. An ERP system solves this issue by allowing users to work from anywhere so long as they have internet access. This means that all C-suite members can check up on key components of the business no matter where they are.

An ERP solution is a cost-effective platform that keeps financial and data management information in one place. It’s accessible from anywhere there’s an internet connection and helps those in professional services manage their financials wisely. When project deadlines are constant, professionals want to be able to stay focused on the tasks at hand. Since an ERP solution tracks costs and project progress, while regularly generating reports on these factors, entrepreneurs are always aware of the status of these elements that are crucial to the business.

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8 questions to ask any ERP provider

Choosing and implementing enterprise resource planning (ERP) software can take months. They are therefore not decisions to be taken lightly. To avoid unwelcome surprises, be sure to ask your ERP provider the right questions before implementing a management solution at your company. That way you’ll be sure to choose the right solution for your business needs.

Standard questions

What type of business is your ERP solution designed for?

Ask your ERP provider to describe their typical customer so you know who the solution is best suited to and why. Also ask if any SMBs like yours—same size and sector—have been using the solution for more than two years. That way you’ll know if your provider has experience with similar companies. At this stage, your provider will probably tell you about the pros and cons of its solution. Take notes so you can compare it with other management software on the market.

How did your other implementations go?

The answer will let you know how much experience your provider has and what they’ve learned from past implementations. In an ideal world, your provider would have you feeling confident about the quality of its solution and post-implementation service. When asked, a trusted ERP provider will be happy to provide references. Speak with similar-sized businesses in the same industry to see what they think. It’s a good sign if several companies are satisfied with the services of the ERP provider you’re thinking of using. Less so if multiple companies say they had a bad experience.

How do you know your solution is the best one for our company?

In response to this question, a diligent ERP provider will usually suggest conducting an in-depth analysis of your needs. This requires several meetings with you and your teams to gather information. You could also hire an external consultant or put together an in-house team to do it. This will make the meetings with your provider even more efficient. The provider’s role will then be to consider your needs and eliminate any grey areas before implementing the solution. Your provider should also suggest post-implementation meetings to make sure everything is running smoothly.

Technical questions

Will it be easy to integrate your solution into our systems?

Most solutions come in a vanilla version with basic features. A few adjustments are often all it takes to ensure the solution is perfectly adapted to your needs. Avoid any unpleasant surprises by discussing adaptations, add-ons, and adjustments, and include them in the total base price of the solution. Transparency is key. You should also discuss integrating the solution into your current systems. You’ll want an experienced partner that can provide the right expertise and support for the type of integration and configuration you want to do.

How long will it take to implement a functional solution?

Your ERP provider should give you a realistic time estimate. Once your needs have been determined, a detailed work plan and timeline should be the focal point of your discussions. A vague timeline often means a potential cost overrun.

Tougher questions

How can I avoid time and budget overruns?

Unfortunately, post-implementation cost overruns are common. Look for an ERP provider that offers fixed-cost pricing if you want some peace of mind.

In addition to the base price, be sure to discuss recurring costs, such as operating expenses, paid upgrades, and how much it will cost to adapt your ERP solution as your business evolves. Ask your provider to be specific.

Do you provide training and technical support?

There’s nothing worse than waiting for hours to speak with a technician. Implementing an ERP solution involves multiple steps, and your employees won’t become autonomous overnight. They’ll need time to learn how to use their new ERP system. To help them learn, set up several training sessions with your provider before, during, and after the implementation. Not only should your ERP provider give you easy access to a team of qualified trainers, they should also provide solid technical support. Be sure to agree on the details before signing the contract.

Do you offer protection?

As the BDC mentions in its guide Buying an ERP System, clauses can be included in your provider’s contract to provide buyers with protection when purchasing an ERP solution. These can range from maintenance to technical support terms. You can even add a specific clause regarding source code ownership in the event of provider bankruptcy.

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Inventory management: 4 common mistakes to avoid

Inventory management is a challenge for any growing SMB. The goal is to have enough inventory to meet demand without ordering too much. After all, no business wants to have warehouses filled with idle stock. Striking the right balance can be difficult, and the supply chain is riddled with pitfalls. Here are a few common inventory management mistakes along with our advice on how to avoid them.

1- Ignoring goods receiving

Many SMBs rely on shipping orders to update their inventory rather than having their employees conduct a physical count. Using shipping orders, however, can be both inefficient and inaccurate, since you never really know exactly how many items you have received. Your shipping order could say that there are 100 items when there are really only 95. Although it may mean added labour costs, it’s a good idea to have an employee carefully count the items in every shipment you receive. It’s the easiest way for companies to be sure they receive everything they order.

That said, some shipments are so large that counting each item is virtually impossible. In such cases, a mobile barcode-reading system can be a valuable time-saver. Barcode readers are just one of the tools that can be used with enterprise resource planning (ERP) software.

Whether done manually or with the help of technology, inventory counts give you an accurate picture of your stock levels. That’s a good place to start if you want to keep your customers happy!

2- Using a basic spreadsheet

The moment inventory management starts being the slightest bit complex, spreadsheets become unmanageable. Since the data is entered manually, spreadsheets come with a high margin of error. What’s more, they have no management indicators to help you make decisions and can’t provide real-time inventory numbers.

ERP software offers a variety of tools for optimizing inventory management. For instance, you can set a minimum inventory level—no more drawing water from an empty well if your sales suddenly shoot up or your main supplier is out of stock. An ERP system also allows you to reserve items from inbound shipments so that you can process important clients’ urgent orders.

3- Relying on a single supplier

There’s no denying the advantages of having a solid working relationship with your most trusted supplier. But what if that supplier were suddenly unable to fulfill a request? It’s important to maintain good relationships with secondary distributors; they are the ones who will pick up the slack if your go-to resource can’t deliver the goods. Look for distributors based near your facilities to minimize delays and shipping costs.

All SMBs would stand to gain by working with their suppliers so that products are delivered on an as-needed basis. Some of your partners may be willing to provide just-in-time (JIT) delivery. With a JIT system, new products can be scheduled to arrive just before your inventory runs out.

4- Using a silo approach to inventory management

Silo inventory management is a common mistake among SMBs that have multiple warehouses. For example, one warehouse might have products collecting dust while the very same items are out of stock at another location. Without a shared inventory management tool, separate warehouses can’t help each other out.

Centralized inventory management means no longer losing time and money because of gaps in communication. Keeping all of your locations connected can optimize your inventory system: not only does it become easier to transfer stock from one warehouse to another, but you can also pinpoint the location of products in any area of your business.

Inventory management is an art. Find out more by reading the Business Development Bank of Canada’s (BDC) four steps to improving inventory management.

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ERP implementation: success or failure?

Companies that are looking to boost their growth and stay competitive in today’s market, have an unavoidable choice to make about acquiring an ERP system or upgrading their aging system. For these companies, having a real understanding about the life cycle of the software implementation is as important as the choice of the software itself.

What is typically called the “life cycle” actually refers to the combined group of phases that comprise an ERP implementation. Although the time required to implement a new ERP system varies from one company to another, when it comes to the implementation phases themselves, they are practically set in stone. In fact, whether your implementation process spans a few months.

The main phases of an ERP implementation life cycle

Planning and organization: This preliminary phase is technically not included in the time allocated to the system implementation, because it takes place before any real expenditure or action has occurred. Nevertheless, a company that is ready to move forward with the project, can begin to assemble a team and develop a workable plan in a few weeks. Typically, this phase can take up to 6 months, and sometimes longer.

System selection: Choosing the ERP technology and the system software can be a complex task, given their prominent role in the project and the wide range of options on the market. The selection phase usually lasts anywhere from 3 to 6 months, from the definition of requirements, market prospecting, short-listing potential choices, receiving proposals and holding demonstrations, to final selection and negotiations.

Installation: Lead times ranging from several days to several weeks are a consideration for the delivery of hardware and software, the installation of infrastructure components and the installation of the software itself. There is minimal to no lead time involved in the installation of a cloud ERP system.

Data conversion and loading: Once the ERP software is properly installed, the data must be entered or moved to the database of the new system. This includes customer records, vendor and product master records, bills of material, general ledger chart of accounts, and more. Just prior to going live, transactional activity is migrated to the new software. While this phase does require time and effort, it does not add significantly to the implementation timeline.

User training and procedure development: This is undoubtedly the most important phase of the project. Indeed, developing procedures and training users will likely take up most of your time. This phase calls for users to be available and requires some effort on their part, since training employees are also expected to keep up with their regular workload. How long this phase lasts will depend on the size and complexity of the ERP software being implemented (number of modules or functional areas involved, number of users, difference between new and existing procedures, etc.) and on how much time new users can spend on training every week.

Testing and validation: IT resources will be working with new users during this phase, to compare and examine both basic records and transactional data to verify that the data is exact and ensure that the new ERP software is working as expected. Testing and validation takes place over an extended period of time. Each functional area loads data and starts processing (test) transactions by the users during training and procedure development. The testing and validation phase will not extend the life cycle timeline in any significant way, but it must be considered in the training and procedure development process.

Launch of the new system: The launch of your new ERP can be done instantaneously (“big bang” approach), step-by-step, or by parallel operation. In this last approach, the old ERP system is kept in operation alongside the new system for a set period of time (typically two accounting periods).

Follow-up and conclusion of the project: After the new ERP system is fully operational and the old system is deactivated, the implementation is not yet completed. Users and IT support should continue to monitor the new software to ensure that it is working optimally. To capitalize on the features and benefits that new ERP software has to offer, users should be provided with ongoing training.

The significant consequences of failure

ERP implementation failures at large corporations often grab the headlines because these failings can cause serious operational problems: inability to ship products, unanticipated shortages, issues processing orders, etc. This may lead people to believe that ERP implementation failures are commonplace. In fact, quite the opposite is true. These failures are exceptionally rare but their impact can be devastating for the businesses concerned.

What happens much more frequently is that companies fail to attain all the benefits expected from an ERP system software. ERP technology is not a magical solution whose mere implementation will automatically reduce inventory, improve customer service or bring order to organizational chaos. To produce a positive impact on company performance, ERP technology requires the backing of a competent team and well-defined processes—and these elements must be planned during the life cycle of the implementation.

So why do some implementations fail?

The answer is simple: no preparation and no teamwork. ERP implementations do not fail when leadership, a project team, proper planning, and strong communication come together. When any one of these components is inadequate or missing, the result can be failure. Unquestionably, you must choose the right ERP software for your industry and your specific needs, but this is not usually an issue, as most organizations tend to be quite careful in choosing their system.

ERP implementations must be planned and managed just like any other project. They need a dedicated and multidisciplinary team, with strong leadership to organize and manage each phase of the implementation life cycle. In addition, it is important to get an executive “champion” on board who sees the business growth and development potential around the implementation of a new ERP system. The executive champion will share this vision with the rest of the company and inspire all the stakeholders, so that every level of the organization understands the importance of the initiative.

In short, with sufficient knowledge of the life cycle, detailed and realistic planning, and the right team in place, your ERP implementation will be a success across the board!