Clean ERP before new budgeting and forecasting software: Yes or no?

Rob Livingstone explains how to decide whether or not to get ERP data in order before implementing new budgeting, planning and forecasting software.

Should a company get its enterprise resource planning (ERP) system in order before deploying new budgeting, planning and forecasting (BP&F) software? Or should it leapfrog any necessary cleanup onto a new BP&F implementation?

Rob LivingstoneRob Livingstone

Faced with this situation, it's important to have a crystal-clear perspective on your organization's IT strategies, technology roadmap and business priorities. Taking on an ERP system cleanup or reconfiguration is no small task, usually requiring a multidisciplinary approach and careful planning. Having a clear mandate or perspective on your organization's business priorities will determine where your limited effort and resources should be prioritized.

Your optimal approach will depend on a number of key factors, the most important relating to the architecture of the IT systems. Use the following three steps to determine how to proceed:

1. Assess the degree of integration:

  • If your new budgeting, planning and forecasting software will be tightly integrated with your ERP, it could be relying on data of potentially dubious integrity as the foundation for variance management, reporting and forecasting processes. In this case, you would be best advised to validate your data quality and integrity processes first, especially if the output from the BP&F system will drive your operational processes directly through the ERP system.
  • If your new BP&F system will be insulated from your ERP system, you should have the ability to identify and resolve data inconsistencies or anomalies before finalizing any outputs. In this case, provided you have adequate controls to validate these data inconsistencies, it may be more appropriate to go ahead with the implementation of your BP&F project independently of the ERP cleanup. In fact, adopting this approach could be a powerful tool for guiding the ERP cleanup project by continuously identifying and prioritizing ERP data cleanup issues.

2. Revisit the business case: What are the drivers in the business case? If there is a hard deadline for implementation that has to be met, ensure you have the skills, resources and data cleansing strategies in place to mitigate cross-system data pollution. If these resources are withheld, then quantify the risks of a suboptimal implementation of a new BP&F system.

3. Align the project risks with the risk tolerance of the organization: Attempt toquantify the consequences of the various risks. If an organization is risk-tolerant and has to have a BP&F capability, even an accuracy rate of 90% might lead to the decision to not get stuck behind a lengthy ERP cleanup.

At the end of the day, the decision to either defer the implementation of a new BP&F system or not should not be left to the CFO or CIO alone. The benefits and risks of the implementation of new budgeting, planning and forecasting software are enterprise-wide. For that reason, the decision has to be balanced, well-informed and made with the full scrutiny of the senior management team.

About the author:
Rob Livingstone is a former CIO with over three decades of experience in the corporate world. In addition to running his IT advisory practice, he is an author and commentator, providing authoritative, independent insights on a range of IT topics including emerging technologies, governance and IT security. Rob is the author of the book
Navigating Through the Cloud and is also a Fellow at the University of Technology, Sydney, Australia, where he teaches leadership, strategy and innovation in the school’s flagship MBITM program. Visit Rob at or email him at [email protected].

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