As accounting practices have evolved over time, not much has been said to challenge the traditional model, which fundamentally is as simple as ‘capture first, analyze second.’ And why would you? After all, you can’t analyze what you don’t have. For smaller companies and start-ups, this idea still holds true.
But for most of you reading this, getting the account data isn’t the problem – it’s analyzing what you’ve got that is most impactful to the business moving forward.
In the ‘standard’ approach, the next step would be to, well, ‘standardize’ the data, and what better way to do that than to have everybody in lockstep on the data capture front. Bring new acquisitions into the fold by forcing them to use a company standard Enterprise Resource Planning (‘ERP’) platform. Roll that out throughout the entire company, the thinking goes, and the data will all be precisely what you want!
OK, that sure sounds great – but do you have the time? According to this study by ArcherPoint, the average ERP project can take up to two YEARS to complete! In the grand scheme of things, that may not sound like a lot, but the business world waits for no one and two years is literally a lifetime of countless businesses over the years.
Perhaps it’s time for turn conventional wisdom on its head and consider CPM before ERP. Here are four compelling reasons for you to consider.
Users first, data second. As mentioned above, data is certainly crucial, but it’s the information that we can glean from the gathered data that is more important. Most legacy CPM systems were designed primarily for a small cadre of analysts and data entry specialists in the finance department. This specialization essentially cut front-line managers out of the planning and analysis process and added more process steps (as well as much more time) to the planning and forecasting cycles. Meaning the last person to see the data was the person who needed it most – the user.
The OneStream XF platform is not only user-friendly, it’s available everywhere. Cloud-based deployment means that decision-makers throughout the company can immediately understand how the business is performing and quickly calculation the implications of potential operational changes, financial or otherwise. Taking two to three years to implement a transactional system is hardly making your organization as nimble as it needs to be to meet rapidly changing business requirements.
CPM <> Cloud ERP. Measure performance and strategy first, identify transactional gaps second. Use CPM to drive out the changes required in the move to cloud ERP. In the past, ERP implementations tended to follow a regimented hierarchy: transaction systems first, analytics systems second. Again, this seems logical at first glance, especially since legacy analytics systems were built from the data up. But that’s not how anybody runs a business. Fundamentally, any business focused on long-term success start with strategies to drive shareholder value, create the objectives to achieve that value, and put in place the metrics to measure those objectives. This makes the selection, and implementation, of the analytics platform even more critical.
Every company can adapt. Chances are high that your current transactional system was put in place when your business was very different than it is today, and likely for good reason (at least back then). And odds are high that your business will continue to change – reorganizations, organic growth, new lines of business, acquisitions, IPOs – any or all of these will impact the operation of your organization. A properly designed CPM platform like OneStream XF gives you the ability to add or remove, reorganize or consolidate, all without extensive back-end coding know-how. While change will always be in fashion, so too will come flexibility and control.
CPM helps ERP ROI – Designing back-end architectures by thinking first how ERP will serve CPM (and not the other way around) builds enormous flexibility into your planning and forecasting capabilities. But a flexible CPM system can also accelerate an ERP implementation and minimize risk. A well-designed CPM-then-ERP implementation will allow you access to capabilities that previously required weeks of customization, if they were possible at all. Among them, the ability to:
- Easily create “what-if” scenarios to understand the implications of changing account structures.
- Quickly “prove out” Chart of Accounts modifications with rapid prototyping and mapping.
- Harmonize financial reports by tying CPM data to known systems like an existing GL, then validate the new GL system, and finally load old and new GL information simultaneously to validate the conversion.
- Create a single financial analytics platform that allows for a seamless, sane transition from old GL systems to new ones.
This is what flexible CPM + Analytics looks like. And what will it get you? Alignment of strategy to technology, democratization of planning and analytics, lower operating costs, faster Cloud ERP implementations thanks to fewer reworks, and the ability to see where you can improve your Cloud ERP implementation while it’s happening, not long after the fact when it’s too time-consuming or expensive to fix it.
Consider CPM and analytics solutions before you upgrade your Cloud ERP, and chances are you’ll be happier with all three.
Here is another great perspective on how CPM and ERP work together: https://blog.onestreamsoftware.com/erp-and-cpm-better-together.
