enabling high performance through leading practices...

CFO InsightsEnabling High Performance through Leading Practices for Finance ERP

C. CRISTIAN WULF

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CFO Insights

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This book is printed on acid-free paper.

Copyright 2006 by Accenture. All rights reserved.Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Wulf, C. Cristian.CFO insights : enabling high performance through leading practices for finance ERP / C. Cristian Wulf.

p. cm.Includes index.ISBN-13: 978-0-471-77083-1 (cloth)ISBN-10: 0-471-77083-3 (cloth)

1. Business enterprisesFinance. 2. Business enterprisesFinanceData processing. 3. Managementinformation systems. 4. Business planning. I. Title.

HG4026.W85 2006658.15'1dc22

2005037203

Printed in the United States of America

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www.wiley.com

CFO InsightsEnabling High Performance through Leading Practices for Finance ERP

C. CRISTIAN WULF

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Preface

Organizations across the globe continue to look for ways to achieve highperformance.

Recently, I met with an organization that was looking to integrate anacquisition and implement a standard set of Finance capabilities usingtheir Enterprise Resource Planning (ERP) solution to reduce costs andimprove capabilities. When asked about the biggest risk the organizationfaced with this effort, the CFO replied Manumation. Automation of ourexisting manual processes. . . . How can I be sure we are enabling theright outcomes and not just automating what we do today?

At Accenture, our research shows that Finance capabilities enabledthrough ERP solutions are both a primary driver and a key enabler toattain high performance. CFO Insights: Enabling High Performancethrough Leading Practices for Finance ERP focuses on leading practicesin Finance and how those practices can be realized through Finance ERPsolutions. The chapter authors offer their expertise and practical guidancesupported by case studies to bring the experiences to life.

Through our Accenture High Performance Business research, wedefine high-performance businesses and governments as organizationsthat consistently outperform their peers over a sustained timeframe (fiveto seven years) and across business cycles, industry disruptions, and man-agement cycles. These organizations deliver consistent upper-quartiletotal returns to shareholders. They create returns on invested capital sig-nificantly in excess of the cost of capital and drive profitable revenuegrowth faster than their industry peers. In short, high-performanceorganizations are lean, responsive to changing competitive fundamentals,and consistently rank as market leaders.

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By examining organizations that met our criteria for high perform-ance, we found that Finance capabilities matter. We found a correlationof more than 70 percent between organizations that were assessed asFinance masters and those that were also high-performance businesses.Finance masters were those organizations with progressive and pioneer-ing practices across five key Finance capabilities: Value-Centered Culture,Enterprise Performance Management, Finance Operations, CapitalStewardship, and Enterprise Risk Management.

In this book, our chapter authors scrutinize each of the end-to-endbusiness processes that enable leading practices in Finance. By reviewingbusiness processes in their entirety, we are able to determine how businessoutcomes are enabled and what specific actions and integration pointsneed to be managed to achieve those outcomes. This book examines thebusiness processes of Record to Report (key closing and reporting cycles),Procure to Pay, Acquire to Retire (Asset Lifecycle), Order to Cash, and TaxManagement. In each chapter, we discuss process, technology, and orga-nizational considerations all components of high performance. We alsoexplore key implementation and operational imperatives such as: ERP ina Shared Services environment; Enterprise Performance Management; andTotal Cost of Ownership.

In addition to our own research and experiences, this book includesmetrics and insights from The Hackett Group in an effort to provide thelatest information from their database of Finance operating cost andleading practice trends. The Hackett Group benchmarking methodologyand database together are recognized as the gold standard to define andmeasure how Finance cost structures and leading practices have changedover time. The Hackett Group perspectives provide details on whereFinance organizations are positioned today and how that has changedover time.

CFO Insights: Enabling High Performance through Leading Practicesfor Finance ERP is the third of the Accenture CFO Insights book seriespublished by John Wiley & Sons. The other titles in our series includeCFO Insights: Achieving High Performance through Finance BPO and CFOInsights: Delivering High Performance.

CFO Insights: Achieving High Performance through Finance BPO pro-vides a strategic guide to the fast-growing Finance & Accounting busi-ness process outsourcing field for CFOs and senior management. CFOInsights: Delivering High Performance is based on exclusive, in-depth

Preface

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research with CFOs of some of the worlds most distinguished organiza-tions; it presents a new operating model that sets the Finance function ofhigh-performance businesses apart from their peers, describes their fivecommon characteristics, and explains what these organizations do differ-ently and how to emulate them.

We wish to thank the many members of our global Accenture teamfor their support and contributions: Dan Hahn, Geoffrey OConnell, andScott Uelner, Chapter 1; Tiffany Brown, Elton Doi, Gary Duncan, JanetHobbins, Denise Mitchell, and Geoffrey OConnell, Chapter 2; DarbyBrennan, Karisa Nava, Sean Norton, and Geoffrey OConnell, Chapter 3;Greg Dyer, Christian Kaemmerer, Adrian Leaf, and Jessica Wang, Chapter4; Tony Masella and Kimberly Morgan, Chapter 5; Adebayo Bankole, TroyBarton, David Santoro Jr., Richard Boustead, Melissa Brandebourg, WildaSiu, and Joy Wei, Chapter 6; Scott Elsky, Sunil Tanna, and Mike Wallace,Chapter 7; and Jacqueline Bourne, Gary Duncan, and Gregg Taylor,Chapter 9.

We also give special acknowledgement to our external contributorsand to the team that helped us put this publication together. We wouldlike to thank Richard T. Roth, Chief Research Officer of The HackettGroup. In addition, special thanks go to Scott Uelner, senior manager inthe Accenture Finance & Performance Management (F&PM) service line,Deborah Hinson, Director of Marketing for the Accenture F&PM serviceline, and their team (Haralds Robeznieks, Sarah Muskett, Deanna Finley,and others) for their efforts and contribution on our behalf.

Dan LondonManaging partner, Accenture Finance & Performance Management service line

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Contents

Acronyms/Abbreviations xiii

1 Overview of Finance Solutions Leveraging Leading Practices 1Introduction: A New Look at Finance ERP 1Defining Core Financials 3High-Performance Finance 5Defining ERP 7ProgramsNot Projects 7Leading Practices Enabled with ERP 15ERP Journey Considerations 25The Hackett Group on World-Class Finance Organizations 26CFO Insights 28From Insight to Action 29

2 Leveraging the Financial Close to Gain a Competitive Advantage 31Financial Close: An Overview 31Benefits from a World-Class Close Initiative 34World-Class Close Leading Practice Initiatives 35System/ERP-Specific Leading Practice Improvements 44Deciding Which World-Class Close Leading Practices to Adopt 45Future World-Class Close Trends 46Case Study Summary 48The Hackett Group on Leveraging the Financial Close to

Gain a Competitive Advantage 49CFO Insights 51From Insight to Action 51

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3 Financial and Management Reporting 53Financial and Management Reporting: An Overview 53Designing Financial and Management Reporting with ERP Solutions 55Non-Process-Related Considerations 77Role of Third-Party Software Solutions 80Future Trends 80The Hackett Group on Financial and Management Reporting 81CFO Insights 83From Insight to Action 83

4 Procure to Pay for the Next Generation 85Procure to Pay: An Overview 85Process Design: Leading Practices & Emerging Trends 90Third-Party Software: Enhancing the ERP Solution 101Future Trends 101The Hackett Group on Procure to Pay 104CFO Insights 106From Insight to Action 106

5 Asset Lifecycle Management 109Asset Lifecycle Management: An Overview 109Asset Lifecycle Management Benefits 113Beginning the Implementation Journey 115Asset Lifecycle Enabled with ERP 117Industry Adaptability 132Role of Third-Party Software Solutions 134Future Trends 135CFO Insights 137From Insight to Action 138

6 Order to Cash Management 139Order to Cash: An Overview 139Order to Cash Enabled with ERP 142The Hackett Group on Order to Cash 164CFO Insights 166From Insight to Action 166

7 Tax Management 169Tax Management: An Overview 169Direct Taxation 174

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Indirect Taxation 181Tax Insight 188Future Trends 193The Hackett Group on Tax Management 196CFO Insights 198From Insight to Action 198

8 Implications of Regulatory Compliance 201Compliance: An Overview 201The Lead-up to Sarbanes-Oxley 202Sarbanes-Oxley: An Overview 204How ERP Vendors Will Assist with Sarbanes-Oxley Compliance 209International Financial Reporting Standards 211IFRS: An Overview 212The Hackett Group on Compliance Impacts 218CFO Insights 219From Insight to Action 220

9 Implementation and Operational Imperatives for ERP 223Introduction 223I. TRANSFORMING FINANCE THROUGH ERP-ENABLED

SHARED SERVICES 225Shared Services Defined 225Shared Services and ERP 226ERP Solutions Can Help Reengineer Processes

with Leading Practices 228ERP Solutions Provide a Technology Platform

to Support the Shared Services Model 233The Final Word on Shared Services and ERP 237The Hackett Group on Shared Services 239II. ENTERPRISE PERFORMANCE MANAGEMENT 241Overview 241Enterprise Performance Management Tools: Current State 243The EPM Framework 245EPM Framework Delivery 246Requirements and Attributes of Successful EPM Solutions 253The Hackett Group on Enterprise Performance Management 255III. TOTAL COST OF OWNERSHIP 258Overview 258Total Cost of Ownership Defined 258

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ERP Solution Cost Drivers 260Invisible Cost of Ownership 264The Hackett Group on Total Cost of Ownership 266CFO Insights 268From Insight to Action 269

Biographies 273

Index 281

Contents

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Acronyms/Abbreviations

ABC Activity-Based CostingACH Automated Clearing HouseASBN Automatic Shipping & Billing NotificationASN Advanced Shipment NotificationBI Business IntelligenceBPO Business Process OutsourcingCoA Chart of AccountsCOSO Committee of Sponsoring OrganizationsCRM Customer Relationship ManagementCRP Conference Room PilotDPO Days Payable OutstandingDSO Days Sales OutstandingEDI Electronic Data InterchangeEFT Electronic Funds TransferEPM Enterprise Performance ManagementERP Enterprise Resource PlanningERS Evaluated Receipt SettlementES Enterprise SolutionsEU European UnionFASB Financial Accounting Standards BoardGAAP Generally Accepted Accounting PrinciplesGAAS Generally Accepted Auditing StandardsHFM Hyperion Financial Management

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IAS International Accounting StandardsIASB International Accounting Standards BoardICR Intelligent Character RecognitionIRR Internal Rate of ReturnIT Information TechnologyKPI Key Performance IndicatorM&A Mergers & AcquisitionsMRP Material Requirements PlanningNPV Net Present ValueOCR Optical Character RecognitionOLAP On-Line Analytical ProcessingOTC Order to CashP-Card Procurement CardP&L Profit & LossPCAOB Public Company Accounting Oversight BoardRFID Radio Frequency IdentificationRFQ Request for QuotationROI Return on InvestmentROIC Return on Invested CapitalSCM Supply Chain ManagementSEC Securities and Exchange CommissionTCO Total Cost of OwnershipVAT Value-Added TaxXBRL Extensible Business Reporting Language

Acronyms/Abbreviations

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CHAPTER 1

Overviewof FinanceSolutionsLeveragingLeading Practices

INTRODUCTION: A NEW LOOK AT FINANCE ERP

Enterprise Resource Planning (ERP) solutions have consumed vast amountsof time, resources, and money as organizations strive to implement,upgrade, and operate these complex integrated solutions from vendors suchas Oracle and SAP. Through our vast Accenture client experience, we haveseen that successful organizations have learned that an ERP solutionencompasses and affects all aspects of the enterprise. In fact, many organ-izations have found that these solutions end up redefining Finance organizations processes, policies, technologies, and even organizationalstructures. Their ERP programs do not end, rather, the ERP solutionsbecome part of the fabric that makes up their Finance organizations andcontinue to present challenges and opportunities long after the technologyis in place.

The ERP journey has made Finance realize how directly and frequent-ly it is affected by all areas of operation. In contrast, real-time participa-tion in the operation of the organization that the ERP programs have

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Overview of Finance Solutions Leveraging Leading Practices

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enabled has also raised expectations around Finances own services.Increased expectations have often led Finance to take the lead as ERPsolutions are being implemented or upgraded, or as process and capabil-ity programs associated with ERP solutions are being undertaken.

Through CFO Insights: Enabling High Performance through LeadingPractices for Finance ERP, Accenture executives offer readers an alternateview of ERP projects and programs by looking at end-to-end businessprocesses, rather than individual functions. We review key end-to-endFinance business processes, such as Procure to Pay, Asset Lifecycle, Orderto Cash, and Tax Management, along with key Finance functions suchas the closing process, financial and management reporting, and compli-ance. Each chapter discusses process, technology, and organizational con-siderations all components of high-performance Finance functions and,indeed, high-performance businesses and governments. By focusing onend-to-end processes, we want organizations to identify and understandthe key integration points and areas of focus that impact Finance.

This book also provides key points of view on broader implementa-tion and operational imperatives for an ERP solution, such as:

Enabling Shared Services and Business Process Outsourcing (BPO) Enterprise Performance Management (EPM) Total Cost of Ownership (TCO)

CFO Insights: Enabling High Performance through Leading Practicesfor Finance ERP includes a number of case studies and lessons learnedfrom Accenture clients that have implemented, upgraded, and operatedOracle, PeopleSoft, and SAP Finance solutions. Each case study highlightskey thoughts, benefits, and considerations and provides relevant guid-ance for other organizations as they proceed with their ERP on their jour-ney toward high performance.

The intended audience for this book is varied, as it includes organi-zations that are planning a software selection, embarking on a new ERPimplementation (either the full Finance suite or perhaps adding a newmodule), or preparing to upgrade their existing ERP solution. We alsobelieve organizations that are working to achieve real value from theirimplemented Finance ERP solution can follow the leading practices wehighlight and discuss in the book. From the individual readers perspec-tive, the audience for this book is also broad, as it includes the CFO anddirect reports, as well as CIOs and project managers.

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We will discuss key success factors for Finance ERP programs, per-haps the most important of which is that Finance ERP programs shouldbe business driven and IT supported and enabled. Organizations mustrealize that business and Finance requirements should drive the imple-mentation of an ERP solution. The objective of the book is to highlightthe dos and donts that organizations will face during the entire life-cycle of their Finance ERP programs.

DEFINING CORE FINANCIALS

The scope of Finance, also known as the CFO Agenda, is represented asend-to-end processes (depicted in Figure 1.1). Typically these end-to-endprocesses can be grouped into two categories: Core Financials and Value-Added Finance.

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Defining Core Financials

Figure 1.1 The CFO agenda

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This book focuses on the key Finance end-to-end processes describedas Core Financials. Core Financials end-to-end processes include:

Record to Report Procure to Pay Asset Lifecycle Order to Cash Tax Management

The functionality supported by the top-tier ERP packages (Oracle,PeopleSoft, and SAP) for these Core Financials processes is typicallysound and stable. However, very few organizations can claim to have thefull Finance set of modules implemented in one instance to support thesecore end-to-end processes. Even fewer organizations can claim they usea single ERP package solution on a global basis for the core Finance end-to-end processes. Finally, only a small number of organizations haveachieved full Finance integration with other key functions, such asHuman Resources or Supply Chain, on the same ERP software package.This lack of full implementation is often driven by the complexity ofthe organization both the existing legacy technology and the Financefunction along with the overall business complexity (multiple businessunits, business models, and countries of operation). We find the challengemost organizations face is to optimize the capabilities of the ERP solutionin these complex environments (see Figure 1.2).1


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Figure 1.2 Enterprise-wide integration of enterprise systems

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The Value-Added Finance scope of the CFO Agenda includes:

Enterprise Performance Management Planning and Forecasting Management Reporting

Treasury Management

Top-tier ERP software package vendors are focused on expanding func-tionality around Enterprise Performance Management (including planning,budgeting, forecasting, and management reporting) and Treasury Man-agement. Although these processes lie beyond the scope of this book, thedemand for these value-added processes is increasingly high. Key chal-lenges faced by ERP programs focused on the Value-Added Finance scopecenter around vendor selection and quality of the data in the underlyingsource systems, including the Core Financials solution. Best-of-breed soft-ware vendor packages, such as Business Objects, Cognos, and Hyperion forEPM and Sungard, Trema, and XRT for Treasury Management, are stillquite prevalent in the Value-Added Finance arena and probably a versionor two ahead of the larger top-tier ERP packages (Oracle, PeopleSoft, andSAP) based on organizations buying patterns. Organizations also typicallyface a difficult decision to continue to invest in Core Financials to spreadthe footprint of the core ERP package or to focus limited resources on theprimary expected benefits of improved decision making and managementreporting as supported by the Value-Added Finance scope.

HIGH-PERFORMANCE FINANCE

Accenture defines high-performance businesses as organizations thatconsistently outperform their peers over a sustained timeframe and acrossbusiness cycles, industry disruptions, and CEO leadership cycles. Thesecompanies deliver consistently upper-quartile total returns to sharehold-ers. They create returns on invested capital significantly in excess of thecost of capital and drive profitable revenue growth faster than theirindustry peers. In short, they are lean, responsive to changing competi-tive fundamentals, and consistently rank as market leaders.

Accentures research has identified key differentiators of high-performance businesses and government agencies, and one importantfinding has emerged: high-performance organizations have developedsophisticated capabilities in one or more of several strategically important

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High-Performance Finance

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business functions. Finance is certainly one of the most important busi-ness functions in any organization today. Our research2 shows that thereis a 70 percent or more correlation between a high-performance organiza-tion and Finance mastery, as measured by:

The pervasiveness of a value-centered organization The depth of Enterprise Performance Management The efficiency of Finance operations The sophistication of capital stewardship The extent of enterprise risk management.

Organizations that achieve Finance mastery exhibit key characteris-tics that differentiate them and set them apart from their competitors. Ourresearch shows that high-performance businesses and government agen-cies use Finance technology as a tool to help executives make better decisions for resource allocation, while at the same time increasing pro-ductivity. Finance ERP solutions enable integrated systems, a commonsource of data, timely information, and standardized processes that sup-port Finances contribution to these companies high performance. High-performance organizations continually make technology investments atabove-average industry rates and secure higher returns and value realiza-tion than their counterparts.

High-performance businesses and government agencies are typicallyalso early adopters of leading technologies. In terms of the core financialend-to-end processes, examples of these leading technologies include scan-ning, electronic invoicing, and workflow processing. High-performanceorganizations are currently focused on leveraging their strong CoreFinancials-based ERP solution and expanding into business analytics toolsrelated to Enterprise Performance Management.

In summary, high-performance Finance functions leverage technolo-gy as one ingredient to achieving Finance mastery:

A world-class, leading practices-based Finance ERP solution is a nec-essary, but not sufficient, condition for high-performance Financefunctions.

A Finance ERP solution based on leading practices enables extremelyefficient and effective Finance operations and is the backbone to suc-cessful EPM.


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DEFINING ERP

ERP has been around for a long time. ERP solutions began as back-office solutions to the problem of automating complex, repetitive, time-consuming transaction processing. Although the names and acronymshave changed and the scope continues to evolve and expand, the basicobjectives remain the same.

The earliest manifestation of an ERP model came in the 1960s, withthe first Material Requirements Planning (MRP) systems, which focusedon planning and scheduling for manufacturing companies. By the 1980s,Manufacturing Resource Planning (MRP II) systems were introduced.These mainframe-based solutions were the first to focus on the integra-tion of manufacturing and financial applications; they can be categorizedas interfaced solutions that share data across modules but maintainseparate (and in many cases duplicate) master files (for example, Items,Vendors, Locations, and Company Codes). In the late 1980s, the nextphase of ERP focused on integrating more and more functions of anorganization. In the 1990s, these integrated solutions truly startedfocusing on the entire organization: across Finance, Human Resources,Supply Chain, and Manufacturing. The ERP solutions began sharing (andintegrating) common data elements and master files, allowing additionalinformation and tighter integration within the walls of the organizationby leveraging the latest client/server technology.

The latest iteration of ERP, also described as Enterprise Solutions,leverages the Internet. Packaged software vendors are more and morefocused on integration between organizations to connect with suppliersand vendors. Enterprise Solutions are software applications that connectand manage information flows across complex organizations, allowingmanagers to make decisions based on information that truly reflects thecurrent state of their business.3

PROGRAMS NOT PROJECTS

The history of ERP demonstrates that an ERP initiative is not a one-timeeffort ERP as a technology solution is continually evolving. New func-tionality is added by way of new modules or new enhancements to exist-ing modules, and more and more leading practices are incorporated intothe basic off-the-shelf software packages.

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Programs Not Projects

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Organizations that tackle ERP successfully address ERP as a programcomposed of multiple initiatives and projects. Leading organizations do notaddress ERP as a one-time project that is independent of other ongoing ini-tiatives. The scope of the ERP program can be as large as entire suites ofmodules, such as Finance, Human Resources, Supply Chain, CustomerRelationship Management, and Performance Management, and it can coverall geographies of the world. Other programs may be as narrowly focusedas a new module within a family of applications, for example, Fixed Assetswithin Finance. Individual initiatives or projects within the ERP programwill have to address strategy, technology, configuration, processes, policies,and organization in an integrated fashion. Those same programs are alsoestablished within the constraints of each organization and must addressthe interdependencies of other programs or organization charters. ERP isintegral to the organization, and strong program managers will questionhow each of the current or planned programs, projects, or initiatives with-in the organization will affect the overall ERP program.

Organizations also need to view ERP as a series of ongoing projectsthat continually challenge the value realization of the existing solution.One of the typical downfalls of ERP programs is that they do not focuson achieving the business case or realizing the full value of the imple-mented solution. Typically program teams establish a business case earlyon in the lifecycle of the program; at best, the team continues to evolveand fine-tune the original business case until the final go-live date.Only a very small number of organizations establish a mechanism orfunction to continue to track the actual value realization of the imple-mented solution up to and past the go-live date. Even fewer use this valuerealization process to continue to evolve and fine-tune the ERP solutionwhile leveraging the value realization process to justify ongoing invest-ments. Organizations should not view their ERP program as completeuntil the data stored in the ERP solution are transformed into informa-tion that changes the way the people in the organization conduct theirwork activities and make tactical and strategic decisions. We recommendthat the key focus of successful Finance ERP programs be the achieve-ment of ongoing business value, as opposed to delivering the project orinitiative on time, under budget.

An ERP program is a major undertaking, even if the scope of the pro-gram is focused only on Finance. Finance ERP programs need a delicatebalance of strategy, process, organization, and technology.


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A leading practices-driven Finance ERP program will drive key deci-sions around the new end-to-end process definition and system imple-mentation considerations. Todays off-the-shelf ERP software packagessupport most of the generally accepted leading practices and continuous-ly work to include enhancements and/or new modules, as more leadingpractices or more detailed leading practices are developed and refined. AsFigure 1.3 shows, successful organizations plan and execute Finance ERPprograms based on the premise of supporting the organizations overallstrategy. The leading practices-based, end-to-end process definitiondrives the proper ERP package configuration for each organization.Successful ERP programs will then focus on process-driven configura-tions, as well as on process-driven organizational impacts.

The ERP software package by itself is not the solution to any organi-zations unique problems, issues, and constraints. Instead, ERP softwarepackages should be viewed as the key technology enabler to the overallERP solution at the same time that they establish the groundwork for trans-formational change. Successful ERP programs are focused on businessresults not just software implementations or configuration exercises.

Our experience demonstrates that successful ERP programs arebased on eight key elements, centered on the ERP solution, as shown inFigure 1.4:

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Figure 1.3 Finance ERP program drivers

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1. People: deep proven software package technical and configurationskilled resources, coupled with the know-how to implement full busi-ness (for example, Finance) solutions. Successful ERP programs arestaffed with their organizations best resources.

2. Program Management: established program management organizationand methodology focused on business results for example, leverag-ing a business case and delivery excellence.

3. Risk Mitigation: proactive risk mitigation, covering technology, busi-ness, delivery, and return on investment (ROI) risk mitigation.

4. Enterprise Technology: focus on Total Cost of Ownership and integra-tion with the overall organization technology strategy.

5. Business Value: delivering differentiated business capabilities with anindustry focus when appropriate.

6. Business Readiness: creating ownership and accountability in thebusiness while developing key metrics to measure performance.

7. Global Sourcing: a program team that includes the appropriate mix ofinternal personnel and external consulting skills from business con-sulting to low-cost implementation skills, including sourcing acrossthe globe through off-shore delivery centers.


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Figure 1.4 The eight key elements of successful ERP programs

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8. Customers and Suppliers: internal and external stakeholders, includ-ing customers and suppliers that are actively engaged and measure thesuccess and value of the program.

Typical ERP Program ObjectivesWe find there are many different objectives and goals for embarking on aFinance ERP program, just as there are different organizations and Financefunctions. Most organizations group the program objectives and segmentthem within functional (Finance and business) benefits and technology (IT)benefits. This approach is the first sign that the overall vision for the ERPprogram may not be fully understood. Segmenting program objectives typ-ically demonstrates a siloed approach or an unnatural response to assign-ing budget requests or business case responsibility across functions anddepartments. ERP programs need to be business led, for example, led byFinance while incorporating Finance stakeholders. Although IT is an inte-gral part of the program, the key sponsorship for the ERP program mustcome from the business. If this is the case, there is no need to segment thebenefits the benefits are business driven and technology enabled.

With this ERP definition and these overall ERP solution objectives inmind, we can summarize the typical Finance ERP program objectives asfollows:

Strategy Better management decision making. Although the Finance ERP pro-

gram addresses Finance stakeholders key needs and requirementsspecifically, the end goal needs to be improving the business overalldecision making based on the appropriate financial data.

Mergers and acquisitions (M&A) support to create an extendable plat-form. A successful Finance ERP program will deploy not only a stan-dardized common solution but also an extendable one. Finance must beinvolved in early discussions of future M&A strategies.

Process Streamlined financial, management, and performance management

reporting. The Finance ERP solution needs to provide all reporting thatis financial data driven. As Chapter 3 will discuss, there needs to beone single source of the truth.

Increased Finance focus on value-added activities versus transactionprocessing. Finance organizations typically spend most of their time

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on transaction processing (including the data manipulation neededto create requested reports and information) versus planning or man-agement reporting. Finance ERP programs typically address CoreFinancials modules first to address data quality concerns and to freeup time for value-added activities.

Improved process and/or function management. Finance ERP solu-tions result in organizational impacts to the Finance function, as wellas to its key stakeholders.

Sarbanes-Oxley compliance and enablement. ERP software packageshave added compliance modules in response to the latest regulations.Although these modules provide greater visibility into the controlsembodied within the new technology, the software itself does notaddress all compliance requirements.

Organization Shared Services operating model support. Finance and Human Re-

sources are the most common functions to lead the way in imple-menting Shared Services. Leading organizations address the FinanceERP initiative and the Shared Services initiative simultaneously underthe same program umbrella.

Business Process Outsourcing transition and transformation. BPO isa logical extension to Shared Services. Every organization consideringShared Services should also consider Finance BPO for its future oper-ating model.

Headcount reduction. This key quantitative benefit needs to be con-sidered in every ERP program business case, but it also needs to becarefully balanced with headcount redeployment, particularly for thoseFinance functions trying to rebalance their activities with a morevalue-added focus.

Technology Process and systems standardization and simplification. The top-tier

ERP software packages enable policy, process, and procedure standard-ization across business units as well as geographies.

Systems/technology consolidation. Legacy technology sun-settingis another quantitative benefit of Finance ERP programs. However, adetailed design is required to ensure that legacy systems can truly beretired, as heavily customized technologies rarely provide a one-to-onematch with an ERP module.


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Accenture research4 (based on data collected from 340 distinct corpo-rate headquarters, business units, and government entities across indus-tries and geographies) demonstrates that ERP programs realize certainbenefits more often or more quickly than others (see Figure 1.5).Interestingly, the typical ERP program benefits highlighted in originalbusiness cases tend to focus on the easier to quantify aspects of the pro-gram, such as headcount reduction or cost savings to be realized fromincreased operational efficiencies.

ERP Program Key Success FactorsMost of the typical program and project key success factors discussed inthe following list certainly apply to all ERP programs. However, forFinance ERP programs, we believe some additional and more specific keysuccess factors need to be considered:

Visible executive commitment throughout the program. For a FinanceERP program, executive commitment typically includes the CFO (andbusiness unit CFOs if applicable), the CIO, and, in some cases, the CEO.Executive commitment manifests through a strong governance modelthroughout the program and continues after implementation.

Business unit executive sponsorship across the business, includingfunctions, lines of business, and geographies. The newly implementedFinance ERP solution is not just an internal tool for the Finance func-tion but is also a vital resource for Finances key stakeholders. Executivesponsorship typically manifests in the ERP programs SteeringCommittee.

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Figure 1.5 Key benefits targeted by enterprise systems

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Program alignment with overall business strategy to support the busi-ness as well as the Finance vision. The Finance ERP program is not anisolated event. Finance derives its vision from the overall organization-al strategy, and the Finance ERP solution is a key tool to deliverFinances vision. The Finance ERP solution should be value driven andshould explicitly support the organizations strategy.

Strong change management, with a focus on people, not technolo-gy, as the main challenge. An ERP program is not a software exercise.ERP success hinges on how the new solution is accepted and leveragedby the entire organization.

Design globally, roll out regionally. Every country has its own regu-lations and requirements. The power in the ERP solution relies on thelevel of commonality and standardization successful Finance organi-zations can drive with the ERP program. Global ERP software solutionsare designed to support local regulations and requirements. A globaldesign with representation from countries and regions provides thecorrect balance to drive that standardization.

Funding by operational units, not by corporate. Requesting fundingsupport from the operational units will ensure their buy-in and partic-ipation at all levels throughout the lifecycle of the program (eventhough the overall budget for the Finance ERP program will notchange in response to what part of the organization provides the pro-gram funding).

Strong management and program management office. Success relieson identifying the right Finance resources (from Finance, businessunits, and geographies), with the right skills and appropriate level ofdecision-making power, supported by a proven ERP implementationmethodology designed for the particular ERP software package.

The key reasons ERP programs go wrong are centered on people andprocess. Technology factors usually represent a small fraction of the rea-sons for failure. In fact, people and process factors typically outnumbertechnology reasons by a 4:1 ratio. The top people factors that lead toprogram failure include: change management, executive and stakeholdersupport, internal organization resource capabilities and/or allocation,project team training, and external resources. The top process factorsleading to ERP program issues include process re-engineering, scope man-agement, and value realization. Technical program breakers are softwarepackage functionality and enhancements/upgrades.


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