If you’re going to go to the trouble of implementing a new ERP, you want to do it right and you'll need the right ERP implementation team to be successful. While most ERP implementations are never perfectly smooth, there are ways to manage it and allocate resources appropriately.
It is through the ERP that you obtain financial information, manage and understand operations, and get information from the field or shop floor into Finance to produce financials and help the company grow.
In short, the goal is to support Operations and Finance to help the company grow.
The big question is, how does an organization divide implementation work between Finance, Operations, and IT? Who does what, who owns what, and who is accountable for what? Establishing the ERP implementation team is of the biggest challenges organizations face during ERP implementation.
It’s easy to say, “This job belongs to business. Business should be the key stakeholder…” But Finance, Operations, and IT are all part of “business.” They all have a role to play, but it’s important to determine which person will manage the ERP implementation.
We’ve seen a number of models—from CIO or Director of IT to Finance or Operations team members. The most successful model we’ve seen is having the controller in charge of the implementation.
Consider the controller’s role in the organization. Their job is to set up controls to enable accurate financial reporting and to protect the assets of a company. To do this, a controller must have a good view of Finance, IT, Accounting, Operations, Sales, etc. across the organization. The controller’s role is where everything comes together.
Typically, the controller has spent time in the field or collaborating with Operations, particularly if they have to roll out new controls and help align the business.
A good controller knows what’s going on in a company. They have to—especially if they’re going to sign off on financials. They should be able to share how every single activity within the organization is reflected in the ledger. They have a view into day-to-day activities and inefficiencies in a way other roles do not. This puts them in a great position to manage the ERP implementation.
The role of controller has expanded over the past 30 years with the development of SOX, greater scrutiny of financial reporting, and the COSO framework. While the CEO or CFO has a view across the organization, their roles are more focused on strategy and the long-term (i.e., where do we want to be 5 years from now?). The controller is more involved with the tactical, day-to-day activity.
There are still strong roles for IT and Operations within the ERP implementation team. It’s important to define who is accountable for what (system security, the shop floor, etc.).
IT should be accountable for security, maintenance, upgrades, integrations, setting up new users, engaging technical resources, migrating changes into software environment (basically everything that makes an organization COBIT 19 compliant). All of these require project management from someone in IT who is working alongside the controller.
Operations’ involvement depends on the type of organization (manufacturing, services, etc.). Getting the right person involved requires working with the COO to determine what sort of structure falls within Operations. Typically, a plant manager or service line leader serves as a good functional lead.
When you enter information into an ERP system, that information is coming from the field, so it’s important to align with Operations. For example, it would be easy for the controller to set up a fancy work breakdown structure, but if that’s not the way Operations works or the way customers want to view information, it won’t work.
Involving other departments might be necessary, specifically Sales. Their involvement depends on how integrated with or how standalone a sales organization is to Operations. If they stand alone, it will require a functional lead from that area. If there’s a heavy focus on Sales & Operations Planning (S&OP), the operational plan will be in the ERP. This drives demand for materials, which drives the sales plan. Someone from Sales needs to be involved.
There’s also the pricing aspect. How are you pricing and how do you communicate pricing to customers? Often, Sales will invoice customers in a certain way, but the ERP isn’t set up to function accordingly. That will need to be figured out ahead of time.
In an ideal world, the main lead would be the office of controller. Then, a team of people from IT, Operations, and Sales can work together to make the implementation happen. Getting the right people in place to champion the ERP and drive change is key.
While ERP implementations can be painful, our job is to make them as least painful as possible. To chat more, contact us at info@trenegy.com.
