Reducing the Risks of an ERP Upgrade

There’s plenty that can go wrong with an ERP upgrade: new dependencies, master data changes, unexpected downtime, insufficient training, mounting costs, and missed deadlines, plus the potential negative impact on customer service and satisfaction.

Experts agree that the better a project is controlled through effective planning, staffing, and up-front investment, the more likely a successful outcome becomes. That’s why Molly Boyle, finance transformation expert at BlackLine, maintains that companies facing an ERP upgrade should think about an upgrade to their core accounting processes—possibly as the first step.

For a business to function successfully, ERPs and other sources of accounting data must be closely linked together. This linkage facilitates the performance of functions like closing the books and reporting to stakeholders and investors. Exchange of information should be near real-time and the data must be reliable.

“The accuracy and completeness of data feeding financial close processes is critical, and the ERP is a huge component of that,” says Boyle. “When the ERP system is upgraded, the introduction of new processes and rules can add risk and complexity to the close.”

It’s well known that spreadsheets carry a high degree of risk. An innocent formula error can wreak havoc on controls and results. And with the growing volumes of accounting data, there’s no guarantee it’ll be caught in time. Using out-of-date numbers can introduce errors into reports that are used for critical business decisions.

“Undertaking an ERP upgrade without fixing the accounting processes first runs the risk of the well-known and often feared ‘garbage in, garbage out’ conundrum,” she says. “It’s much better to bring in accounting automation first, so you’re dealing with your ‘desired state’ rather than replicating the ‘current state’ in the ERP.”

According to Gartner’s 2018 Strategic Roadmap for Postmodern ERP, many organizations focus on monolithic, vendor-first ERP strategies that do not support digital business initiatives.

Because of this, process design decisions in many cases are made by the ERP team rather than the accounting group. A likely result, according to Boyle, is an increased risk of disrupting the financial close and reporting processes during the upgrade. This can slow down the close and add the risk of errors creeping into financial statements.

She offers these reasons for making an accounting upgrade part of the overall plan.

An accounting upgrade helps “put better supports under your house” prior to the ERP effort, Boyle says. “For instance, a high volume of open items on the balance sheet can put the brakes on an ERP upgrade.”

Accounting automation helps address those without a massive, seemingly impossible manual effort. As an example, BlackLine’s Transaction Matching solution automatically clears open items in ERP systems. This enhances balance sheet integrity by saving time and reducing go-live risk.

With accounting automation, teams can dedicate more time to the ERP upgrade—an important ingredient to project success.

Says Boyle, “Staff accountants and accounting managers are often some of the heaviest users of the ERP system and data. They’re the most knowledgeable about processes, pitfalls, and improvement opportunities for the new ERP system.

“Accounting automation can free up as much as 50% of their time to help with the upgrade.”

Accounting automation puts preventive controls in place —close templates, workflows, and completeness checks—that help insulate accounting teams.

This helps protect Accounting and the ERP project from risks both during and after the upgrade. For instance, BlackLine makes it easy to reconcile pre- and post-upgrade ERP data by storing historical financial information such as pre-go-live GL balances and the chart of accounts.

BlackLine maps and links the new to the old, so accountants and auditors can perform and verify tasks and results in a consistent fashion, before and after the upgrade. There’s also a huge reduction in reliance on time-consuming validations and controls that would only be needed without automation in place.

“Digital transformation is a fact of life today,” says Boyle. “It offers new opportunities for measuring, tracking, and enhancing business performance, but it also creates new challenges in managing change.

“That’s why it’s essential to put a strong digital foundation in the form of accounting automation in place before—not after—businesses perform ERP and other business upgrades.”

Read this white paper to learn even more ERP upgrade strategies and discover how to free your accounting team’s time by 50%.