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Advice and Information for Finance Professionals

Want Transformational ERP? Team Up with the CIO

Joyce Boland
Vice President, Applications Global Marketing

A business outcome-focused ERP implementation can bring substantial competitive advantage across every area of the business. Traditionally, it's left to the CIO to figure out the design and implementation of the ERP system. While the CIO does need to take primary responsibility, finance can bring valuable insight to the process of designing a new ERP system. In the Gartner report, You Are Not 'Doing ERP': How CIOs Can Successfully Present Their ERP Strategy to the BoardGartner advises CIOs on how they should approach presenting their ERP strategy to the board.

A critical success factor highlighted in the report is the need for a partnership between the CFO and CIO. The CFO should be aligned to the ERP vision the CIO is pitching to the board and other executive stakeholders to secure funding and support for the project. Why? The board may perceive the CIO as more of a technologist rather than someone looking at the project from a business outcomes perspective.

This is not true of all CIOs. According to the Gartner report, “Gartner identifies four types of CIO: At-risk, transactional, partner and trusted ally.” If you are the CFO, you want to collaborate with a trusted-ally type CIO to get the ERP system you want and the business needs. The other types are more likely to be comfortable sticking to talk of technical details and vendor choices in light of strained resources. Those messages don't resonate with stakeholders and aren't likely to inspire approval of the proposed ERP project.

On the other hand, the CFO is seen to have a strategic view of the business. The CFO can explain business needs and demonstrate how modern ERP could meet those needs with supporting metrics that can make decision-makers sit up, take notice, and feel the urgency and relevance of the project.

Help high-level decision-makers understand the value of ERP

Some stakeholders may have an outdated view of ERP systems as transactional back offices systems used to drive standardization, centralization, and operating efficiencies. They don't recognize modern ERP for what it is today, a digital business enabler. While those benefits are still relevant, today's board members are more focused on digital business than cost savings. Make the connection between a modern ERP platform in the cloud and digital business success. As Gartner says, Postmodern ERP focuses on business strategy and business outcomes. Your presentation to the board must do the same.”

Whether you are making the case yourself or helping the CIO craft theirs, prepare to explain the benefits, new capabilities, and impact on shareholder value. For example, you need to describe how a modern ERP system enables:

  • New or improved ways of working and improved employee engagement
  • A strong core system-of-record that can support differentiation and innovation
  • Operational transformation through automation and emerging technology
  • Operational data to get new insights, predict outcomes, and uncover opportunities
  • A continuous stream of innovation through regular updates managed by the provider

Your role as CFO is to keep coming back to what the ERP implementation means for your organization and shareholder value. Maybe you can free up resources to focus on more strategic activities and to deliver differentiated value. Perhaps you're looking at acquiring new businesses or have previous acquisitions to integrate. You need to quickly and effectively onboard those businesses and smooth the integration process to accelerate time-to-benefit. There may be an opportunity to monetize corporate data through new service offerings, or it just might mean that you can get a new product out the door and into the market sooner, thanks to new technologies, robust core systems, and the data that feeds them.

Crafting a business-first ERP strategy

CFOs and CIOs together have the ideal skills to construct a business strategy-first approach to ERP. Per Gartner, “CIOs who take a business strategy-first approach to ERP will deliver 60% increased business value over those who take a vendor-first approach.” As CFO, you can act as a sounding board for your CIO—keeping them from the classic CIO pitfall of presenting technical details that risk losing the value-focused audience.

Especially critical is your ability and credibility in helping communicate to decision-makers both the positive consequences of taking action and the negative consequences of inaction. There is always the temptation to delay or scale down a new technology investment to save costs, and you're likely the best person in the organization to address that objection. As an adjunct to the CIO's presentation, prepare the tangible business and financial justification for acting sooner rather than later, and create the appropriate sense of urgency. Be prepared to field questions or suggestions from the board about delaying the project.

ERP solutions are powerful and potentially game changing for an organization. While the cloud has helped alleviate some of the challenges, they also can be complex to design, implement, and maintain. Your ERP implementation is likely to consist of multiple programs and projects, delivering measurable business value over time. Make sure that your CIO sets this expectation correctly and be prepared to back him or her up with metrics and milestones that help stakeholders understand that ERP is an ongoing strategy, not an individual, one-time project. The good news here is that there will be a continuous stream of innovation coming from the ERP cloud provider. With the cloud, the days of the big, expensive, and disruptive upgrades are over.

Make sure that your stakeholders and decision-makers know up front that the biggest obstacles to scaling digital business initiatives are culture, resources, and talent. Ideally, you should work closely with HR teams as well as the CIO to create a plan that addresses these issues.

We are pleased to offer a complimentary copy of the Gartner report to our readers, You Are Not 'Doing ERP': How CIOs Can Successfully Present Their ERP Strategy to the Board.

Gartner Report

Source: Gartner, You Are Not 'Doing ERP': How CIOs Can Successfully Present Their ERP Strategy to the Board, 11 May 2018, Paul Saunders, Mike Guay, Denise Ganly

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