Success and reward: Navigating ERP digital finance transformations
The phenomenon of integrating new digital technologies into all areas of business has become more pronounced as businesses adapt to challenges and opportunities arising from the pandemic.
When combined with next-generation technology, such a transformation will help to deliver insights, automate processes and workflows, advance decision support, and drive advanced capabilities.
The issue for businesses yet to 'transform' is no longer whether they ought to. It's simply a question of when and how.
In the next five years, more businesses will be looking to upgrade their Enterprise Resource Planning (ERP) estate to the latest suite.
However, this transition is significant, requiring substantial investment, and places CFOs and the broader finance function front and centre of the decision-making. So much so that for many enterprises, ERP transformation focuses on the finance function ahead of other parts of the enterprise.
This helps the finance function shift from daily processes and workflows to a real-time mode that reflects the need of the hour. Being a basis for expansion, a digitised finance function will be crucial in subsequently managing the broader and more expensive ERP transformation of the rest of the organisation.
Finance leaders approaching ERP digital finance transformation will face a plethora of digital finance technologies available in the market. CFOs will need to work closely with CIOs to find solutions that work best for the organisation – both in terms of key business priorities and enterprise architecture decisions.
Here's what to consider and some of the benefits you can look forward to.
Setting up for success
- Realising strategic value drivers
It is crucial to evaluate the cost of implementation compared to expected benefits from efficiency improvements using target state ERP. Businesses should consider a value realisation model (VRM) assessment identifying potential quantifiable value levers and operational levers from ERP capabilities that help deliver to the value levers.
There also needs to be a clear view of the roadmap, phases, timelines, and approach to the implementation to make a proper ROI assessment.
In addition, CFOs must also keep themselves abreast of the latest ERP Finance innovations and prioritise the top ones that add maximum business value.
- Predicting and avoiding expensive setbacks
Most organisations are saddled with a fair bit of technology debt and complexity – legacy systems are not readily compatible with the digital technologies available, causing organisations to stall their innovation agenda.
Adopting a bi-modal approach helps the organisation leverage best-of-breed architecture innovations while simultaneously upgrading legacy systems in a phased manner.
The idea of waiting until all legacy applications have been upgraded/replaced is no longer an option to keep pace with the competition.
- Aligning around a target operating model
ERP transformation is an opportunity to pull the entire enterprise into financial alignment around a proven set of simplified and standard global processes.
The target operating model should clearly state enterprise finance definitions and guidelines, especially regarding rationalising the organisational structure, harmonisation of chart of accounts and standardisation of global processes – with a focus on ERP as a single source of truth for reporting and analytics.
Reaping the rewards
- A digitally transformed finance function
With an intelligent ERP, it is possible to have faster and easier month-end closure activities enabled through the universal journal to provide a single source of truth. Since all data is stored in the universal journal, there is no reconciliation effort between different data sources resulting in much quicker and simplified period-end closing. Group reporting also enables financial consolidation in real-time and provides a detailed perspective of the business at any point in the period.
It also provides a seamless process between the local and group closing activities since both utilise the same data source, speeding up the closing process to provide more time to analyse and act upon the results.
- Scaling for growth with AI and Machine learning
Intelligent insight capabilities help organisations proactively determine trends and patterns to perform Resource Consumption Accounting, real-time planning, closing, and budgeting. AI and Machine learning functionalities enhance support through data visualisation to improve data modelling capabilities and deliver deeper insights using future-state reports.
The automation enables finance and accounting teams to save several hours of labour-intensive work and effectively scale for growth by leveraging algorithms to automate budgeting and forecasting and drive business-critical insights.
As CFOs navigate their organisations through this transformation journey, they must be acutely aware of what the business case is and the innovation that they seek. In prioritising the needs and wants of the business throughout the transformation process, CFOs have an important role in charting the future of a highly successful enterprise.
To find out more about how Infosys has helped more than 250+ customers on their Transformation journey and an overview of our services, please visit Business - Digital Transformation With SAP - Success Stories and SAP S/4HANA System Implementation - Migration Services.
