White Paper How to achieve business and financial-system implementation success March 2010 In association with White Paper : AccountancyAge : 2 Overview Organisations about to embark on a corporate-wide business and finance IT implementation can look through history at any number of projects that came in over budget, were late in being delivered and which failed to meet the expectations of their users. But while scare stories make headlines, there are many such implementations that go smoothly, are delivered on time and to budget and do exactly what they were intended to do from the outset. So what are the secrets to successful implementation of business and finance systems? What are the common mistakes that drag unsuccessful projects into the mire? And what lessons can we learn from both? In this paper, we will look at how organisations regardless of size - can achieve success in such projects. We will look at what characterises success and what blights failure. And, ultimately, we will look at the corporate benefits of a well-executed business and finance systems implementation. Focus on people and process, not technology It goes without saying that, as business users, finance directors and accountants are not the most technically-savvy people in the organisation. However, a common trait in failed projects is that they are led by the IT department with little or no involvement from the business user at the early stages of project planning and scoping. Finance directors must get involved at the very beginning, they must be clear about what they want to get out of a new system and they must communicate this clearly to both IT and other senior leaders. Too often, projects are embarked upon without due and proper diligence from the stakeholder. Create a cross-functional project team Before the first words are written on a scoping document, a crossfunctional project team should be put in place comprising of key stakeholders from the organisation, including finance, IT and sales at a minimum. Charge a senior finance professional who is enthusiastic about the benefits of technology to lead this team in partnership with IT and document a top-level view of expectations. The team should meet regularly and act as the conduit between the relevant functions in association with White Paper : AccountancyAge : 3 that will be impacted by the implementation, feeding back ideas and concerns and, in time, developing a detailed scoping document which must be signed off by all stakeholders. By far the most common reason for project failure, is unrealistic expectations and a lack of communication. This helps to nullify both. Take a holistic view The project team is responsible for looking at the current corporate situation and should highlight existing issues such as informational silos where data is hostage within individual business functions and not available at a corporate level. Bad practice is endemic within many organisations, by stepping back and taking a holistic view of the organisation, the project team is able to highlight areas that a new finance and IT system is able to address. Key here is communication - the project team-leader must have regular meetings and updates with all stakeholders of the new system, especially if they do not have a representative on theproject team. With a business and finance system potentially impacting finance, sales, HR, procurement, supply chain, warehousing and distribution, this is no easy task but is crucial to setting expectations and scoping the project successfully. Get your house in order A common problem with IT projects is that good quality systems are built on bad organisational processes such as the siloed-based working talked about above. It is also common that different divisions or functions within the same organisation will refer to the same data in different ways, having different ways of referring to products or customers. Use this time to create policies and KPIs that support the type of operational behaviour your business and finance system will rely on in order to function correctly. Create a single version of the truth for all data - sales, distribution, finance, etc. Remove any reliance on local spreadsheet working and ensure that stakeholders understand the implications and benefits of the future implementation. This helps to improve stakeholder buy in at a user level. Nominate champions within each business unit to communicate the benefits and, equally, to pass back concerns to the project team. in association with White Paper : AccountancyAge : 4 It’s all in the scoping Before a supplier shortlist is drawn up, the project team must develop a full project-scoping document which is signed off by all relevant stakeholders. The document should include all high-level objectives, timelines and budgets. The secret to a successful project is sticking to this original document and avoiding scope creep, which so often blights failed implementations. If the project scope does change, budgets and/or timelines must also be amended to compensate. The time and effort put into making the scoping document as watertight as possible will reap huge dividends in the long run - but it’s also worth saying that an over-complex and too-detailed job scope will cause more harm than good. Organisations that follow the procedure above and avoid over complicating the issue will give themselves the best possible chance of achieving a successful business and finance system implementation. It lays the foundations upon which a nextgeneration platform can be built on. Doubtless, the causes of many failed projects can be traced back to performing one of the above tasks badly, but it’s still only the beginning of the journey. Supplier selection: Do your research There is a huge array of business and finance technology solution providers selling software, from major enterprise players to best-ofbreed software providers like Access. By successfully completing a watertight scoping document, organisations will be in a position to determine what type of solution provider best suits theirneeds. At this point, a shortlist of potential suppliers should be drawn up, including outsourcing providers should that be a preferred route. This is without doubt the most critical stage in any implementation organisations that choose the wrong partner for their needs face a difficult, expensive and time-consuming process to extract themselves from a contract. The three Cs: culture, capability, cost It’s important not to fall into the trap of going with what you know because it appears the safe option. The old adage of ‘nobody gets fired for buying IBM’ might be true to some extent, but with software that plays such a fundamental role in the operations of a company the three Cs of culture, capability and cost must be satisfied. There is little point entering into a long-term relationship with a supplier if there is a potential conflict of cultures. While the in association with White Paper : AccountancyAge : 5 capabilities of competing software products are often similar, some are certainly superior to others and will be a better fit for your organisation. Finally, while cost certainly shouldn’t define your chosen supplier, it will certainly have a strong influence. Choosing the right supplier If your cross-functional project team is satisfied that the scoping document is complete and it has been signed off by all relevant stakeholders, a supplier shortlist should be drawn up and a Request for Proposal (RFP) submitted to potential partners. This is a crucial stage in the process and should be treated as a two-way collaboration where the scoping document is used as a starting point for negotiations. The scoping document is likely to change during this process as potential vendors will have their own views on what is realistic, what works and what is cost-prohibitive. This is an important stage in the tendering process, as suppliers will have a great deal of experience in similar implementations and will know where common problems are likely to occur. It makes sense to reach out to as many different suppliers as possible during this stage, including best-of-breed software providers and enterprise-class ERP vendors. While it is tempting to be swayed by the promises of existing software partners and the potential of a single vendor providing all business software needs, this can become a false dawn. Specialist business and finance packages can often be implemented quicker, are more tailored to the specific task at hand, with experts to help deal with complex - and changing - finance and accounting issues, and are simple to integrate with existing legacy systems. Neither should the promise of a single vendor be taken for granted, as future merger and acquisition activity is likely to put paid to that. Regardless of the supplier ultimately chosen, rigorous due diligence must be performed into issues such as help desk response times, past disputes, future development plans and so on. Avoiding the problem supplier There are many things that should sound alarm bells and be avoided when selecting business and finance systems. In some instances, these are obvious, in others not so much. in association with White Paper : AccountancyAge : 6 Proprietary databases and limited integration There are many ways in which users might want to view and analyse data, so selecting systems with proprietary methods of storing that data can cause problems in the long term. Similarly, system should be included with middleware which allows straight-forward integration. Sole distributors Packages that are only available through a single distributor can lead to problems with price increases or changes in support options. Make sure that your chosen partner also has access to the source code. A lack of third-party verification Systems that don’t have accreditation from bodies such as the Institute of Chartered Accountants may not be truly fit for purpose. Similarly, those products achieving independent recognition - such as industry awards - should float to the top of any selection process. Equally, look at the client lists of your potential suppliers. A lack of flexibility While part of the reason for implementing such systems is compliance with rigorous legislation, there should be a degree of flexibility to allow users to correct wrongly entered data. That way, an accurate and robust audit trail is created. Contract terms – the devil’s in the detail While selecting the correct vendor is a complex process, if done right it will get your business and finance system off to an excellent start. However, it’s also just the beginning. There can be a minefield of issues in a standard software contract which, if not managed correctly, will come back to haunt the buying organisation. Below are some common traps to look out for. Licence limitations Make sure that the licence does not limit the usage of the software. For example, limitations by region are relatively common but should certainly be weeded out of any contract before signing. So too should platform limitations, corporate entity and job function. Maintenance limitations Make sure that similar limitations in maintenance are not included in the standard licence. Support is regularly limited by region, by time in association with White Paper : AccountancyAge : 7 zone or by territory and in some cases remote support may be the only offered maintenance in the standard contract. Also look into what the vendor classes as an update versus an upgrade, as these can have huge consequences. Duty of care If your supplier is an expert in business and finance systems, it has a duty of care to qualify how it will meet your business objectives, what it is unable to address and what the effect on your business will be because of this. The net effect is that responsibility for fitness-forpurpose of the software package lies with the supplier and not the buyer. Commitment to development Business and finance systems are, more than most software packages, hostage to changes in regulatory requirements and legislation. It is crucial that commitments to these are written into the contract. In a similar fashion, software vendors can and should be expected to keep pace with the wider industry and regular updates and upgrades be forthcoming. Vendor management Signing a contract is just the beginning With so much work having gone into the preparatory aspect of embarking on a new systems implementation, it’s important not to lose sight of post-contract vendor management. Performance metrics and indicators should be jointly developed, measured routinely and often and reported back to the supplier in order to prevent small issues snowballing into major problems. Again, cross-functional reporting on the success or otherwise of the system is a crucial component in ironing out problems and concerns. Relaying these to the supplier early can be the difference between a straight-forward resolution and significant difficulties. The end game Successfully implemented and well thought through business and financial systems can make an immediate and material difference to companies. There are many benefits that can be had from adopting leading edge technology, including not just an improvement in process and compliance but also a fast return on investment. in association with White Paper : AccountancyAge : 8 It’s important that organisations fully research what different suppliers have to offer - while, in the short term, an organisation may only be interested in updating compliance and reporting tools, in the longer run they might be interested in some of the more value-add options that feature-rich packages are able to offer. Such features can include web-based interfaces, mobile support, document management and dashboard business intelligence systems. Web-enabled systems With web-enabled systems, users are able to enter, view and approve information regardless of where they are. This can have huge workflow benefits, allowing projects to remain on track regardless of the location of key stakeholders. Timesheet and expenses information can also be captured through such systems, resulting in far greater control and compliance. Improved credit control By reducing debtor days, cash flow can immediately be improved leading to an increase in liquidity and a reduction in working capital all key issues regardless of the economic environment. Systems that increase visability of aged debt and make the best use of the credit controller’s time, such as late-payment reminders and flags for debtors who breach credit limits can significantly improve the cash position of any company. Better cash-flow forecasting Good cash-flow forecasting is a crucial part of financial management and should include inputs from all areas of the business, such as procurement. Successful forecasting demands robust and wellmanaged data, and much hard work. Software packages designed for just this type of application are available that greatly cut down on the hard work involved in complex forecasting models. Done well, it provides an unequalled view of future scenarios and helps FDs plan for any eventuality. More streamlined budget process Operating to budget is the watchword of a well-governed business, but the process can be long and drawn out. A good business and finance system will help to streamline this process. Two-way integration with Excel allows users to crunch the numbers in a spreadsheet and fine tune the numbers before updating the ledger. in association with White Paper : AccountancyAge : 9 Integration with third-party software Successful integration with other elements of your business can significantly cut down on duplicate and errant data, with subsequent benefits for the organisation. By integrating with popular workplace software, such as Microsoft Office, business and finance systems can become part of the corporate way of life. PO authorisation and outstanding invoice information can be provided within Outlook, Excel will also be part of everyday life. Integration is about letting staff work with the tools they feel most comfortable with. However, good software packages should also be able to integrate with third-party systems, protecting previous investments and making investment decisions easier. Procurement and supplier management Good procurement doesn’t just mean raising purchase orders – managing supplier relations well can create real bottom-line value for the organisation. To do so successfully, FDs must have an accurate and up-to-date view of suppliers, including payment terms and debtor days. Such information can be used to take advantage of offers such as early payment discounts as well as group-level volume discounts. Flags can also be raised for unpaid invoices. Better Management Reporting Any good business and finance system must have excellent management reporting capabilities. The ability to configure reports easily is important as it allows decision makers to focus on what’s important at any particular time. The benefits of business intelligence and analytical tools An extension of good management reporting capabilities, a wellselected business and finance system will come complete with a huge array of business intelligence tools. By presenting complex financial metrics as easily understandable charts and dashboards, better decisions can be made quicker. Huge amounts of data go into such systems - ensuring that data is presented as meaningful information is hugely important. Interactivity with Excel is an important consideration and the use of data cubes allows non-technical users to extract meaningful information from complex databases. CRM No organisation would be able to function without a good customer in association with White Paper : AccountancyAge : 10 relationship management system. However, when a CRM system successfully integrates with other systems to create a full profile of existing and prospective customers, it becomes a truly powerful tool. Document management Good document management is a key component of business software, and can lead to a huge reduction in paper use, a reduction in storage requirements and subsequent cost savings. Having a central repository of documents can also benefit the productivity of and collaboration between staff. Accounting for Carbon Emissions An increasingly important issue for business is carbon reduction and sustainability. Software packages that allow organisations to analyse their carbon footprint as simply and as logically as they do their financial performance are key in helping business leaders make real headway in this area. Only by having access to this type of information can the right decisions around how to reduce emissions be made. Payroll Payroll applications that integrate seamlessly with timesheets, expenses as well as third-party applications such as key-card entry systems can drastically simplify the payroll process. All statutory requirements are covered, while automation of everything from directors’ pay and NI contributions to student loan calculations reduces complexity. Other staff benefits, such as season ticket loans or payments of benefits in kind can also be handled. It’s a long list of additional capabilities, which leading-edge business and finance systems are able to bring to organisations today. The potential benefits are huge and the return on investment quick. And while all of the functionality listed above may not be immediately relevant to everyone, choosing a system which is scalable and which integrates with third-party software means that FDs can make buying decisions now safe in the knowledge that additional functionality can be added when needed, easily and cost effectively. Conclusion There is no doubt the implementation of a new business and finance system is no easy task. With so many stakeholders in the business in association with White Paper : AccountancyAge : 11 being affected by the decision you make, it’s almost impossible to please everybody. However, with the right preparation and by choosing the right software partner, organisations can significantly improve their chances of achieving a successful project. As we point out in this paper, preparation doesn’t just mean researching software providers. The hard work begins a long time before that with stakeholder engagement, expectation setting and project scoping required before potential suppliers are even considered. However, by following this straightforward process, by resisting scope creep as much as possible, by including key stakeholders in the system design process and by feeding back concerns and ideas to relevant project leaders the chances of achieving a successful implementation are greatly improved. But make no mistake, those organisations that implement a leadingedge business and finance system, will steal a march over the competition. The benefits listed above are proof of that. in association with White Paper : AccountancyAge : 12 About the sponsor Access will give you the advice, tools and clarity you need to make effective decisions, quickly and with certainty. As both a business-focused consultancy and a specialist software developer, we combine our innovative award-winning software with practical experience to deliver a solution that’s exactly right for you and your business. Access UK head office The Old School Stratford St Mary Colchester Essex CO7 6LZ United Kingdom T: 0845 345 3300 F: 01206 322956 E: [email protected] http://www.theaccessgroup.com/ in association with