It’s Tool Time!

… Or perhaps new ERP tool time?

By Mary Huhn, CPA, CIA

How does an organization know when it is time to change its ERP structure or upgrade its accounting system? If it is time, then how does an organization go about deciding what comes next?

Typically, the ERP change process starts at the top. Perhaps the organization’s management has an issue that cannot be solved with current processes and technology. Maybe the issue can be solved with current processes and technology, but the resource demand to solve it is too strenuous on the organization to complete on an ongoing basis.

In essence, ERP changes typically stem from a need to record and report new data that is required at a high level to make key business decisions. Specific to my experiences, examples include inventory tracking, job and resource scheduling, compliance or regulatory data, and loss of support from vendor supporting the organization’s current ERP product.

The most critical step in the ERP selection process is finding out what is truly important in a new system — for that organization. What’s important for one organization might not be the best fit for another.

Continuing with our example, management states they need new information. Currently, the users don’t record or report that data. Does this mean it’s new ERP time? Not quite.

The first path is to see if processes around data entry need to be updated so that the data can be recorded. This step involves ERP users as well as IT to review if the necessary fields and tables are available for data capture. If not, then the next step is for IT resources to work directly with the organization’s current ERP vendors to see if configuration is viable for recording the new data needs.

If these two steps come up short, then the organization has reached “new tool time!” This is one of the scariest, and yet possibly most fruitful, ventures an organization can take.

A new ERP system can open a wide variety of options to an organization. It can reduce resources, eliminate non-value processes, streamline cumbersome processes, etc. The next step in the ERP selection process is the most critical. That is finding out what is truly important in a new system for that organization. What’s important for one organization might not be the best fit for another.

Typically, the ERP change process starts with one issue, but rarely is that one issue the sole reason for an ERP change. Most likely, the issue is like the piece of straw that broke the camel’s back. Digging and discovering the other underlying issues that need to be solved is the most critical piece of an ERP implementation. Otherwise, the organization is solving a puzzle for which it doesn’t have all the pieces or the picture of the desired end result.

Digging and discovering can also be called interviewing or just plain talking. This step typically involves the project leader holding conversations with three groups of people:

  • Talking to management to see what their concerns, issues and problems currently are with reporting. What upcoming problems do they foresee needing to be solved by data? What pressing questions come up on a regular basis that could be alleviated by having additional data?
  • Discussing with users their current issues with data entry and recording. What processes slow them down in the current system? What data are they recording that no one views? What data are they not recording that they feel is important?
  • Chatting with IT. What are their current struggles with the system? What would they like to see in a new tool? What systems have they worked with in the past that may work well in the current environment?

Then the organization reviews results of these conversations to find common threads throughout the three groups’ concerns, weighting issues that seem to be more concerning or alarming. After these initial conversations, it’s a good idea to walk away and then come back the next day or week to revisit the interview results.

During this process, the organization is looking for the three main issues. Typically, the key issue will be the problem that started the process, but there are often two more clean, clear main problems. Reviewing the current day’s review with the previous review will help. Do the declared main issues from each review match?

If so, then the project leader is ready to present to management the base scope for the new ERP search and implementation. If not, then the steps need to be repeated. It might help to remember that the main driver is from management. Their issues always take precedence. If needed, the project leader can repeat discussions with them and specifically ask for their three biggest wants from an ERP change.

Once the three main issues are declared and management has agreed, these three issues then become the first items to review against for matches with ERP systems, partners, integrations, and all other decision items throughout the new project’s life.

Mary Huhn (CPA, CIA) is the lead accountant at Northern Industrial Sands in northwestern Wisconsin. She recently went through the ERP selection process with the organization and is currently the project lead for their new ERP implementation.