Enterprise resource planning (ERP) is crucial for the success of any business. The software and technology used to integrate the different management components of a business provides a bird’s eye view of enterprise processes and facilitates the most minute technical nuances.
Software-as-a-Service (SaaS) and cloud-based solutions for ERP and treasury management systems (TMS) are the overwhelming preference for modern enterprises. However, ERP migrations can be complex and time-consuming, especially when corporate treasury and IT staff lack the bandwidth to support such a transition.
To learn more about how partnering with a specialist helps reduce the strain faced during ERP migration projects, PaymentsJournal sat down with Jon Paquette, Vice President of Solutions, U.S. at Treasury Intelligence Solutions (TIS), and Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.
Out with the old complexities…
Enterprise resource planning has never been simple. Historically, the complicated aspects of ERP have involved hosting and architecture. These days, those complexities are largely resolved with SaaS and cloud-hosted solutions, the advantages of which are primarily felt on the IT side.
“IT no longer needs to build, maintain, and support the infrastructure that ultimately ERP is being hosted on,” said Paquette, “which is a big advantage versus previous on-premises models that organizations have employed.” This frees up IT to take advantage of the unlimited processing power of a cloud providers like Amazon Web Services (AWS) or Microsoft Azure.
The biggest business advantage of SaaS cloud-based solutions for ERP is the improved accessibility compared with on-prem systems. Giving all relevant individuals access to ERP applications offers a huge opportunity for improvement, not to mention an easier time with automating and standardizing processes.
…in with the new complexities
Now, the new challenge is for enterprises to get the most out of their investment in ERP migration. “A lot of the complexities don’t go away,” Paquette pointed out. As businesses consider all the different systems they are migrating from, there are a number of questions to ask:
- What other integrations are necessary?
- What do the payments processes look like?
- What do the reconciliation processes look like?
- What do the in-cash applications look like?
- How can those processes be automated?
- What data is necessary to drive everything?
APIs (application programming interfaces) also present an opportunity. More businesses than ever want to use APIs to obtain real-time transaction information for cash flow forecasting, cash positioning, reconciliations, and more. For ERP migration in particular, APIs can be very useful for accounts payable batch payments.
However, there is substantial variation both in what sort of APIs banks and businesses support, as well as whether or not those organizations can manage API integrations. “Not everybody has the capability of dealing with either creating or consuming APIs,” Murphy remarked. “Another issue is a lack of standardization of APIs.”
Outside payments platforms such as TIS can help enterprises deal with standardization issues. Specialized partners can also help enterprises avoid redundant implementation processes by navigating API integrations that are actionable in the present and will adapt seamlessly to future capabilities.
Regardless of the specific ERP concern, SaaS is a simpler, more cost-effective, more scalable, and more accessible solution. Still, it is important for enterprises to make the transition in a controlled way that does not disrupt business. “Business continuity is the most important objective during an ERP migration,” noted Paquette.
Tips for successful ERP implementation
There are plenty of common mistakes that can occur during ERP migration. Paquette offered several key points to keep in mind throughout the process:
- Understand the business needs of end users – Ensure that ERP systems are suited to the needs of end users, which can vary greatly from region to region based on different standards and protocols.
- Recognize knowledge gaps – There is a wide breadth of topics that must be addressed and understood during the implementation process, and recognizing where to fill those gaps with external resources is critical, lest small problems derail the process and drag everybody into finding a solution.
- Compartmentalize and pace work streams – Separate finance-related and finance-unrelated ERP functions. Take ERP migration in small and controlled chunks, and know that ERP migrations are multi-year initiatives.
- Do not lose sight of your vision – It is easy to get bogged down in technical components, but always keep an eye on how ERP implementation will bring major improvements.
- Seize the opportunity for transformation – Investing in ERP migration with the help of an expert partner providing SaaS cloud-based solutions is a chance for businesses to take an exciting leap forward.
“There is a perception that you save money by doing things in house during an ERP project,” said Paquette. “Partnering with somebody specialized in this particular aspect of SaaS solutions is really critical to the success or failure of your ERP project, and the SaaS fee that you are paying to a provider is pretty minimal in comparison to the investment that you are putting into the entire ERP migration.”
The paramount partnership of business and vendor
It takes a village to migrate ERP integrations; neither the ERP provider nor the enterprise itself is capable of going it alone. IT and treasury personnel may lack the bandwidth to play a major role in the migration. Specialist vendors such as TIS will plug the gaps with support and guidance on SaaS capabilities. Outside consultants will take integration a step further with specific insight into how the ERP system translates to regional connection points, but ultimately the buck stops with the business.
“At the end of the day, it is the business that really owns [the transition],” clarified Paquette. “They are responsible for what they are looking to accomplish, what systems to integrate with, the scope, how they envision that all working right – and if things ultimately don’t go as planned, it is the business who is impacted.”
To that end, there are a variety of rollout strategies for enterprises:
- Maintaining a regional focus – Starting in one area allows everybody to work in the same time zone with the same standards and provide scaffolding for potential expansion.
- Building on success – Starting with business lines that are already solid and highly automated means that ERP migration will be a lighter lift and offer valuable experience for future implementations.
- Updating legacy systems – Starting with legacy systems in one particular region or business line can be a good place for businesses beginning the ERP migration process.
No one can deny the rising popularity of cloud-based software. “Somewhere around 30-35% of institutions are now actively using cloud in some form,” Murphy stated, “and that is expected to move to above 50% in the next couple of years.” The cloud-based “as-a-service” model offloads the IT implementation and ongoing maintenance expenses of ERP migration, but also allows for the latest upgrades and software without having to do ongoing development.
It is important for businesses to realize that there is not necessarily an ERP finish line; bank relationships are always changing, and payments technology is always improving. TIS helps enterprises stay on track. “The objective of most of these migrations is finance transformation,” Paquette concluded. “It is important for the business end users to stay laser-focused on the operational improvements that they are looking to get here.”