From ERP Strategy to Process Mapping

Yesterday I published 2 Articles on the subjects of ERP Strategy and Finance Process Mapping and as the latter is a key component of upgrading your ERP I thought I would share both with you here for ease of review.

I have 3 Newsletters and I am conscious that not everybody is in each one so these 2 Articles are worth sharing here in case I missed anyone yesterday. If you would benefit from my help on either topic just reach out by DM to Michael Ryan

ERP Strategy

On the business front I have been approached recently by many Clients who are pondering their ERP Strategy.

Now for those of you who love sport and don't know what an ERP is, it is the London Tube Map of a Finance function. It cannot function without one despite the fact that many have to labour with antiquated technology to fulfil their Financial Reporting duties. This Finance system is designed to take all the 'flows' of the Enterprise you work for and account for it in a streamlined fashion.

Every Finance person in the Subscriber list just rolled their eyes to heaven at that as it seldom accomplishes this. In fact in most cases the Finance system makes Accountants go prematurely grey. The IT people in the Subscriber list smile and say its your own fault you got the 'requirements' wrong.

I can assure our IT brethren that no Professional Accountancy body on earth teaches you how to define Business Requirements correctly, for that you need an experienced Consultant. 'Experienced' in what Finance is supposed to do.

The requests generally fall into 3 categories.

Firstly, the ERP Strategy has been set by the CIO and the Finance team are slightly uncomfortable with the direction of travel and the ERP path chosen, they want reassurance.

Secondly, the Finance team has a clear ERP preference of its own but is not experienced in running an effective RFP process and needs support to arrive at the best solution.

Thirdly, the CIO and CFO are in alignment on the ERP system but they are unclear on the Organisational impact. They are therefore apprehensive of how the change will be delivered in reality.

A system change is like buying a new car, you can see, touch and feel it. People 'get it'. Organisational change is like the mist in the early morning light, try and touch and feel it. Consequently, everybody gets nervous when facing the Organisational impact of a system change and by extension nobody puts their hand up first and goes, 'me, me' Ill own it!

I get approached by Clients directly and via Recruiters. I can assure you both that it makes no difference what business you are in, FTSE100, PE backed or Public body, all that matters is defining the Business Requirements correctly. Skip this step, light touch this step, you will fail when you reach implementation stage. Failure can take many forms but will certainly involve delayed Go Live, running over Budget and driving your Finance team up the wall.

There are 3 key principles which underpin my thoughts on ERP Strategy:

1. The ERP exists to support the Business not the other way around
2. People & Process are more critical than Technology and take precedence in decision making
3. Fail to perform an effective review of your Finance Operating Model as it currently stands before you change anything and you can start adding time and money to your Budget

To fundamentally succeed with ERP Strategy you need a Consultancy that understands Finance at an operational level and knows how to define Business Requirements to drive the result you need. Start with a thorough review of your Current Operating Model before advancing to TOM options and do not commit to buying anything whilst this process is in flight.

How long does this take?

It depends on 3 factors. Firstly how many FTE are in Finance, what locations are they physically based at and how complex is your business model. On average I allow for 3 months to perform this task for Clients, whether its more or less depends on the headcount. For context I have performed this from 50 to 500 FTE.

This opening Phase of a project will make or break it and I appreciate that is hard to 'appreciate' as everybody sets out on this journey, when its all smiles and visions of the future but if I have learned anything in 25 years, its that if you fail to do this you will fail, its only by a matter of degrees.

Finance Process Mapping

Finance Process Mapping - how do you do yours? My top tips on how to Process Map effectively without driving your Finance team barmy.

1. Lead it externally - No Finance BAU team is proficient in Process Mapping

2. It is ALWAYS a Top Down exercise - Create the Process Taxonomy first

3. Wipe the phrase 'Its just a Visio diagram' out of your vocabulary

4. Learn to Story tell like an Irishman - Set the Context first:

5. Apply Metrics to these Processes

6. Work with the Team to Document the Process in narrative form only if needs be

7. RAG Status the Process Taxonomy from the CFO's perspective

Always remember that if the Output of this exercise does not create Control and a springboard for future Action it is worthless. That is on top of it being one of the toughest exercises in Finance Transformation programs to get a BAU team to do whilst working. Follow those 7 Key Steps and you will have a Process Bible you can use for efficiency, effectiveness, compliance, training and most critically to drive any ERP RFP Process.

Any questions on the above topics feel free to reach out directly.

Best Regards,

Michael Ryan