Profesional Guide to ERP Implementation Risks

By: Melissa Dixon, Senior Manager, Capital Edge Consulting 

What Every CFO, CIO and Board Member Needs to Know Upfront About ERP Implementation Risks

Everyone has lived through or heard horror stories of implementing a new ERP system. The ERP implementation risks and challenges are real. What makes the venture worthwhile is the business benefits on the other side of the investment, a modern system, streamlined processes, and insightful business intelligence. Keeping that ideal end-state in mind is critical to planning and executing a successful ERP implementation.

There are a few things the company needs to understand upfront to achieve these beneficial business outcomes:

• Changing the core financial system has a big impact on everyone in the organization. Organizational Change Management (OCM) is paramount to bringing people along throughout the process and providing adequate training.
• Leadership alignment and unwavering support for the ERP implementation is vital to successful completion and employee buy-in.
• Business intelligence capabilities harness the power of ERP data for faster business decisions and quick insights into finances and processes.

ERP Implementation For the CFO:

As the primary stakeholder and product owner, the CFO plays a critical role in the ERP implementation process. The CFO organization owns the requirements for system functionality, reporting, and controls; and thus, the ERP team is largely made up of top talent from the CFO organization.

While it is hard to imagine transferring the best people from their duties to move to the ERP implementation project team, having the right talent and knowhow is critical to project success and designing the next generation system needed to run the business. The CFO’s team is most heavily impacted by the system changes in their day-to-day work; thus, an adequate investment of time and OCM best practices will help to bring people along with the system and process changes.

Part of the change management and adoption is rooted in the team having a voice throughout the process of implementation. It is also a great opportunity to look at process improvements to ERP optimization efficiency and effectiveness while eliminating pain points and tedious tasks or rework. 

ERP Risk Management for CFOs

Two areas that are of the greatest concern for CFOs are the risks of issues affecting cashflow or month end close and the ability to access reports and data needed to make key business decisions. While no ERP implementation goes off without at least a few hiccups, the best mitigation is to have a plan for support and troubleshooting when the inevitable issues do arise.

Planning for hyper care and organizing a “war room” for the first month or two after go-live will enable quick reaction and problem solving. Post-go-live reporting enhancements are to be expected, and so the team developing reports and dashboards is typically part of the hyper care team.

Business Intelligence, no matter how well planned, will have an implementation tail that extends beyond system go-live. Continuously improving reporting, dashboard, and visualizations of the ERP data will transform decision making for the company including quick business insights and even predictive analytics. Similarly, continuous improvements of processes can reduce cost or risk through, automation, workflows, and closing compliance gaps.

ERP Risks For the CIO:

An ERP implementation is often a make-or-break project in a CIO’s career, requiring adequate attention, support, and funding for a successful implementation. With a high stake, high visibility project, other initiatives will need to be delayed until the ERP implementation concludes. This enables the CIO to get the entire team involved to ensure that the system is well designed, thoroughly tested, and downstream groups for operations and support are trained and ready at go-live.

Much time and effort for the implementation is spent on process improvement and data conversion. These are keys to proper ERP functionality. Equally important is business intelligence, reporting, and dashboarding to harness the power of the ERP system toward faster business decisions, insights, and predictive analytics. 

Risks Associated with ERP Implementation for CIOs

There are several pitfalls to watch out for during an ERP implementation including the number of customizations and interfaces to other systems as well as data conversion and validation. Customizations and interfaces lead to higher ERP implementation risk of issues at go-live, project over-runs, and support problems down the road.

Minimizing these high touch requirements is a constant battle, and one worth fighting. An ERP system is a single source of truth for the organization’s financial data; and thus, ensuring that the data is correct and complete is a top priority requiring multiple checks for accuracy, completeness, and no duplicates.   

The upside of an ERP implementation for a CIO outweighs the risks and potential challenges. Moving from an on-premise system to a cloud or SaaS model can greatly reduce support, especially if the system was outdated and required frequent repair. Modern systems have additional capabilities for automation, workflows, and reporting. 

For the Board of Directors (BoD):

An ERP implementation is a challenging, complicated, stressful endeavor for any organization. Board support is an essential ingredient in the recipe for success.

Showing support can come in a variety of flavors. First, the BoD can harness the benefit of experience, ERP implementation challenges and successes, by sharing stories, best practices, and lessons learned with the team during the planning phase. Another way to show support is to help ensure that there are adequate resources for a successful implementation including organization change management, data conversion and validation, and a comprehensive plan for hyper care and the transition from development to operations. 

ERP Implementation Support

Although there are ERP implementation risks, it can have storybook ending with proper planning, the right team, and vision of the desired end state. CapitalEdge has an experienced team to guide your company through the process from planning, to Request for Proposal (RFP), through demonstrations, negotiations, and into alignment, design, build, validation, and even training, go-live, and hypercare.

Our team has completed many implementations per year for several years gaining insights and lessons learned to benefit our customers. If you are looking for a way to reduce risk in your ERP implementation, the Capital Edge team is ready to help.

Capital Edge Consulting is a professional services company comprised of adept problem solvers who deliver tangible results to address today’s most complex U.S. government contracting challenges. Capital Edge helps clients address the challenging regulatory, contractual, and compliance requirements of U.S. federal contracts and we have experience working with a wide variety of industries that provide goods or services to the federal government including industries such as biotech and healthcare, nuclear energy, education, information technology, non-profit, professional services, defense, and software.