What does it feel like to implement new cloud-based core systems? At our recent Future of Finance breakfast, senior finance leaders met to share their experiences.
Moving to the cloud can help finance leaders deliver what business increasingly wants: better insights from data, tighter control of finance processes, agile support for new business strategies and greater process automation. Transition, however, remains a real challenge. At the latest in our Future of Finance breakfast series, finance leaders met to discuss their experience of implementing new cloud-based systems.
One of the key opportunities from moving to the cloud arises from the impact new systems have on the operating model. With cloud-based solutions, software is delivered as a service (SaaS) and, for this to work, processes need to be standardised. As a result, moving to the cloud entails replacing old, tangled processes – usually adapted by different parts of the organisation over time – with streamlined, end-to-end processes that are the same for everyone. This is how cloud technology drives finance transformation – acting as the catalyst for a new operating model that delivers better outcomes for the business.
Introducing new processes asks people to change the way they work. So change management is a vital component of any transformation. Without it, business teams won’t use new solutions effectively and the return on investment will be sub-optimal. Despite this, business leaders often focus on the price tag associated with change management and not the returns it helps deliver.
Embedding change management in the transformation programme, rather than treating it as a separate component, is one way to stop it being seen as an optional extra. Integrating change management into a different programme – one to drive continuous improvement, for example, or to develop a culture where people are comfortable with change – can also be effective.
Change management needs to stretch beyond the finance function into other functions that will be affected by transformation, such as sales and procurements. Getting leaders from across functions aligned on the desired outcomes will help get them aligned around change management. The key question should be: ‘how can we get people doing what we need them to do to achieve the outcomes we’ve agreed?’ rather than ‘who should spend what on change management?’
With cloud systems and SaaS, customising processes to support specific requirements is not preferred. It adds risk, time and expense to the implementation. Nevertheless, in some situations, it’s necessary. In a global organisation, for example, the differences in scale between operations in different countries can drive very different requirements. So achieving 80% standardised processes can be a realistic target.
Business users, comfortable with old ways of working, will often request customised processes – but getting them to adopt standardised processes is key. Much more important, in a customer-focused implementation, is that they have the opportunity to explain what they need the new solution to do. Thinking about ecommerce sites helps illustrate the point. As consumers, we are accustomed to going online to select a product and arrange delivery (and we know there will be a limited range of options in terms of colour, size and delivery slots). The process is seamless and the experience is amazing. The app just works.
The drive to get people using new technology effectively doesn’t stop once initial implementation is complete. With SaaS, new releases typically happen every six months. So, for teams to take full advantage of new functionality, a different support model is required, and should be planned for from the start.
Establishing user communities across the business, where expert users can share their skills with local colleagues, can be effective. But the model should also incorporate a central architect who can assess the value of new functionality for the business and decide where it is best applied.
Technology providers are enhancing cloud ERP fast, but specialist providers are also developing discrete applications for tasks not yet covered by core systems. Some applications use RPA and artificial intelligence to support smarter execution of activities such as credit control or travel & expenses management. By bolting these products onto core ERP, organisations can take advantage of emerging technologies early – before they become a standard component of ERP solutions.
Bolt-ons are often expensive so organisations are examining potential returns carefully before they buy: one organisation reported only spending on products calculated to deliver a return within 12 months. There are pitfalls too: integrating bolt-ons is always a challenge and products don’t always deliver on the claims made by sales reps. ‘Go in with your eyes open,’ cautioned one guest.
Data is the fuel that drives digital technologies, flowing through systems to generate insights, enable automation and improve control. That means, for organisations moving to the cloud, getting data in shape and deciding who will own and manage it is a key challenge.
An organisation-wide data policy is essential. This is because customer, sales and pricing data, for example, feed through into finance processes. Organisations also need to balance thoroughness and practicality. Making sure data is fit for purpose involves drilling down into the detail. But getting every line perfect is impossible. Organisations need to make a call on what is realistically attainable within their budgets and timeframes.
Implementing new cloud-based ERP can be expensive, risky and time-consuming but the potential rewards are transformational: improved efficiency, lower costs, smarter insights and greater agility. For many, cloud is undeniably the heart of the future finance function.
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