For many small and midsized organizations, an Enterprise Resource Planning (ERP) system is a pillar of efficiency and insight, uniting operations and delivering real-time, decision-making data to stakeholders. However, the success of such a critical system hinges on more than just selecting the right software. It hinges on steering the project in the right direction from the start. Lately, we’ve witnessed a bit of a disturbing pattern where ERP projects are perceived as IT rather than finance and operations initiatives. When management considers an ERP implementation to be an IT project, things can go badly.
So, if the acronym ‘ERP’ in your organization has unwittingly come to stand for ‘Entirely Run by Programmers,’ you might be spelling disaster for your project.
Understanding the Role of IT in ERP Implementation
Let’s start by saying how much respect we hold for technology professionals and how critical we know they are to an organization’s ongoing success. IT departments are the backbone of any technical implementation. Their expertise is invaluable when it comes to installing and activating software, managing databases, fitting solutions into the existing tech stack, and ensuring the cybersecurity of the system.
However, when the IT department leads an ERP project, the focus may narrow to the technical aspects, sidelining the broader business objectives.
Why Finance and Operations Should Lead the Charge
ERP systems are not just technology—they are business transformation tools. They demand a leadership that understands the nuances of finance and the intricacies of operations. Therefore, Finance and Operations departments should spearhead ERP initiatives because they can align the system’s capabilities with the company’s financial goals and operational efficiencies.
When finance dictates the financial reporting needs and operations specify their process requirements, we can mold the ERP system to truly enhance business performance, not just IT infrastructure.
Lessons from the Trenches
We thought we’d share a couple of recent examples to illustrate our point.
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Case Study 1: The CFO Handoff
A CFO of a client company decided to hand over the reins of the ERP project to the IT Manager. The result was a sophisticated system that the IT department could run and manage, but one that failed to deliver on the CFO’s vision of integrated, real-time financial reporting. The project, unfortunately, ended in a costly backpedal to realign the ERP with its intended financial tracking and analysis capabilities.
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Case Study 2: The IT Wall
Another client’s IT department became a barrier between Caron and the company’s finance division. With communication channels strained and the IT department gatekeeping access and information, the ERP system was configured in a vacuum. It lacked critical input from end-users, leading to a system that, while technically sound, was practically unusable for day-to-day financial operations.
Integrating IT Support Without Ceding Control
The goal is not to sideline the IT department. The goal is to create an environment where IT support complements finance and operations leadership. IT’s role should pivot to that of an enabler, providing the technical expertise to realize the vision of finance and operational leaders. By establishing IT as a crucial supporter rather than the project head, businesses can ensure that their ERP system is a tool for business growth, not just an IT success story.
Best Practices for ERP Leadership
A clear definition of roles and responsibilities is essential to avoid the pitfalls of a misaligned ERP project. Finance should articulate the reporting needs and compliance requirements, operations should communicate their processes and efficiency goals, and IT should focus on providing technical support and security compliance. Establishing cross-functional teams can promote collaborative decision-making and ensure all voices are heard. IT personnel should be given the training necessary to support the ERP system but should not dictate its direction.
“IT” Takes a Village
While modern cloud-based ERP applications are wonders of technology, wonders don’t run successful businesses. ERP projects are not just about upgrading technology but about achieving a competitive edge through better decision-making and streamlined operations. Misaligning the project’s leadership with the IT department can lead to an ERP that excels in technical merit but fails in business impact.
Caron Business Solutions guides companies through the ERP maze, ensuring that the right team is in the driver’s seat—because when finance, operations, and IT work together, success is in the crosshairs. Take a moment to consider the leadership of your ERP project. Is it aligned with your business objectives, or is it veering off course? We’re here to help realign your ERP strategy with your company’s core needs. Reach out to start the discussion.
