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Questions Every CFO Needs to ask Before Choosing an ERP System

Posted by Indusa Admin on November 3, 2015 1:16 pm

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With enterprises operating from across the globe, disparate departments, systems, and data silos can hamper business growth. This provides motivation to invest in enterprise systems that help improve operations and enhance business process efficiency. While you may recognize the need for an ERP system, and the benefits it can offer, ERP implementation projects can either make or break your enterprise. Although deploying an ERP system is a costly and time consuming activity, proper implementation can enable you to experience increased growth and substantial benefits. Here are some questions that every CFO should ask before choosing an ERP:

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What is the TCO?
While the licensing cost of an ERP is typically the largest expense incurred, CFOs need to take into account various other associated costs. The TCO of an ERP system is a sum of numerous costs including license, hardware, hosting, consulting, implementation and customization, maintenance and support, and training costs. Understanding these costs, and planning the ERP budget accordingly ensures that you will have sufficient resources and are well-prepared for an enterprise-wide system rollout.

Is the System Right for our Business?
Investing in an ERP system leads to strategic advantages, but you need to ensure the new system is right for your business. Understanding your current systems, the business processes, and the departments that will be impacted is vital for choosing the most appropriate ERP and ensuring that the new system addresses challenges currently faced by the organization.

Will an ERP Improve the Bottom Line?
ERPs help streamline businesses and empower organizations to save time, money, and resources. But before the ERP implementation begins, you and your CIO should define how the system will run. Processes need to be mapped and integrated with the ERP project plan. Identifying gaps between the new ERP system and other technologies will enable you to develop appropriate solutions for IT staff to address other critical technological challenges, so you can improve business efficiency and enhance revenue.

Is the Enterprise Ready to Accept a New Software?
Most organizations show resistance to change when it comes to a new software rollout. A successful ERP implementation requires employee commitment, causing a shift in their day-to-day jobs. Your teams have been using the current systems for years and are accustomed to a particular workflow and rhythm. A new software implementation will disrupt the routine for a while, and you and your CIO should ensure that the new ERP operates in sync with the old system to ensure easy and widespread adoption.

Is the System Sufficiently Scalable?
Although enterprise size is a major element in implementing the right ERP solution, you should also take into account the scalability factor. As technology advances and dynamic changes in the market take place, organizations need to continuously revamp their strategies in order to stay competitive. Understanding the legal and regulatory compliances along with the future business trends and industry forecasts is essential for ERP implementation success.

Identifying Business Drivers
Identifying business drivers that determine the profitability of the ERP system to be implemented is one of the primary tasks that need to be carried out by CFOs. While cost is unarguably a primary driver, operational efficiencies, scalability, risk mitigation, and compliance are equally important. Adopting a cloud ERP model also results in sufficient cost savings and additional benefits for organizations. You must choose the most appropriate ERP deployment model based on your specific requirements and plans. As CFOs are responsible for guiding organizations through business transformation while minimizing financial risk, you need to make profitable decisions around technology adoption in order to achieve maximum ROI and ensure a competitive position in your industry.

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Keith
About the Author – Keith Reali

Keith is a financial and management executive with broad experience in all aspects of business including general management, project management, cost management and financial management.

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Topics: ERP