Abstract

There are any number of articles that have been written regarding Accounting and ERP Software selection, including several that I have written myself. While the techniques suggested may differ, the success of any accounting and ERP software selection initiative is dependent on the support given to these projects by each of the various groups of people that comprise the organization itself. These stakeholders have the ability to drive an ERP software selection project to a successful conclusion or they can drag a project to failure. If these people possess this level of power or control, what then can we do to motivate them to positively impact this project?

What is a Stakeholder?

Stakeholders are individuals or groups of people within an organization who have a vested interest in a project’s outcome and/or whose support is required to launch an ERP software selection project, drive it forward to a successful conclusion and ensure that the product selected is utilized to its fullest extent.

Short term support for or giving lip service participation in an ERP software selection project is insufficient. Avoiding responsibility for the outcome of a project invites failure. Stakeholders have the power to drive a project to failure just as much as they have the power to drive a project to success.

Who are the Stakeholders and what are their responsibilities?

Depending on the size and complexity of an organization, the number of stakeholders can vary. The question we must address is the role these people play in an accounting or ERP software selection project.

CEO/Owner

Every organization has but one true leader. That person sets strategic objectives and as such requires information generated by the financial management system that helps them measure how well these strategic objectives are being met.

While the CEO/Owner is a stakeholder by virtue of the fact that they need information (and therefore must take an active role in defining exactly what information they require), their role as leader is far more important. Accounting and ERP software selection projects are complex beasts that can seem to drag on forever, particularly if snags develop (and they will!). Even if the CEO/Owner may not be involved in the intricacies of a project, they unwavering enthusiasm and support is required to make sure that other stakeholders understand the importance of the project and participate to their fullest extent.

Software Selection Project Manager

You might question why I didn’t list the CFO/Chief Accountant as the next most important person. While I might believe that the CFO/Chief Accountant is responsible for initiating the decision to switch accounting or ERP systems, the Project Manager is responsible for guiding the firm through the project. They make sure that all of the detailed tasks are identified, that each task is assigned to the correct individual and that these tasks are completed on-time, on-budget and with the correct level of detail,

One critical fact needs to be accepted by every single person involved in the project. The Project Manager has the full support of the CEO/Owner and has the authority to direct the actions of each person participating in the project. I think that one of the most significant reasons why ERP software selection projects fail is that the participants do not respect the Project Manager. One effective method by which this potential for failure can be avoided is assigning a senior manager as the Project Manager’s report-to. This senior manager has the clout necessary to keep the project on track. Hopefully it will not be necessary to use this “powerful ally” to move the project forward, but to ignore the potential for foot-dragging invites failure.

CFO/Chief Accountant

Obviously the CFO/Chief Accountant is a key stakeholder. In most cases they are responsible for initiating discussions that lead to the decision to invest in a new accounting or ERP system. The CFO/Chief Accountant may also be the Project Manager in a small firm. Much like the CEO/Owner they have to be the primary enthusiast, getting people to acknowledge that change is necessary and that the outcome is worth the effort.

While the CFO/Chief Accountant may be a critical stakeholder, there is a potential knowledge deficit danger that needs to be avoided. The production of financial management statements represents only about 10% of a modern accounting or ERP system’s capabilities. Business Process Management, Business Intelligence and Customer Relationship Management represent the other 90%. The CFO/Chief Accountant may be very knowledgeable regarding their current systems, but do they know what’s possible in terms of today’s software capabilities?

While the Project Manager may be responsible for the day-to-day software selection tasks once a project has been launched, the CFO/Chief Accountant must be responsible for educating each person, including themselves. How can you become more effective and efficient (and therefore more profitable) if you don’t know what’s possible?

Of course this may lead to another form of knowledge conflict. While modern business management systems can give firms software driven capabilities they did not have in the past, this doesn’t mean that more capabilities are the best solution. It’s a bit like a kid in a candy store. Too many software capabilities may lead to a monumental stomach ache. In some cases it’s not possible to turn these capabilities off and users become overwhelmed. The CFO/Chief Accountant has to educate all system users with respect to software capabilities while guarding against the selection of these capabilities simply because they exist.

CIO/System Manager

The CIO/System Manager is a stakeholder by virtue of the fact that they are responsible for the system itself and the network that connects users to the system. I am not a big fan of ERP software selection projects that are driven by the CIO/System Manager. While it is true that they will have to “make the system work”, that’s a technical requirement. The CIO/System Manager may have even more of a knowledge deficit than the CFO/Chief Accountant. Certainly their knowledge with respect to the hardware/software infrastructure decision is critical, but they may not possess sufficient knowledge regarding the business management needs of the organization.

There is one additional critical factor that the CIO/System Manager needs to address and of course that is deployment. In the past the decision was easy. Create a network infrastructure that supports the on-premise software application. While that’s certainly one alternative today, there are several other options: hosting and the Cloud. The Cloud is becoming an attraction to many firms, but it may not be appropriate in all circumstances. Maybe some form of hosting might be the most effective alternative. Actually accessing a hosted solution via the Internet is just one variation of Cloud computing. The real question that needs to be answered here is whether deployment method is going to drive product selection or is it going to become an important decision alternative once several products have been identified as best suited.

Sales and Marketing

Sales and Marketing used to be somewhat of an island unto itself, but most firms now are very aware of the potential benefits of an integrated Customer Relationship Management (CRM) system. The real question when it comes to ERP software selection is balancing the needs of the Sales and Marketing department vs. the business management needs of the rest of the organization. Sales and Marketing must support the software selection process, but it cannot drive the process.

System Users

The process of selecting a new accounting or ERP system must proceed from two different directions: top down and bottom up. The strategic needs of the organization and its executive managers must be defined and usually translated into Business Intelligence requirements. That’s the top down approach. On the other hand people need to “do the work” and that translates into Business Process Management requirements. That’s the bottom up approach. Sitting in the middle of these two approaches is our friend Customer Relationship Management.

System Users don’t need information per se. They need to process business transactions (purchase order, sales orders, etc.) and do so efficiently. They also need to be able to easily track business processes that are not being completed on time (track and resolve overdue purchase orders, sales orders, and overdue invoices). If this critical group of people (usually a majority of the total number of people interacting with the ERP system) are not included in the software selection process, two outcomes are possible. It may cost a lot more to process transactions or worse still significant resistance to the new system will be generated.

You cannot force a system on people who have not been consulted in its design or selection. These people and their needs are just as important as executives and managers who utilize the output of the ERP system.

As organizations grow in terms of size or revenue, the complexity of their business processes tends to grow as well. One of the most significant issues many System Users have to face when upgrading to a more powerful or comprehensive ERP system is that the vendor may have created a set of software driven business processes that differ significantly from the firm’s current business processes. Now what do you do? If the Business Intelligence and Customer Relationship Management needs of the firm can be met by the new ERP system, but it imposes a completely different set of businesses processes on System Users, what do you do? You certainly don’t want to ignore System Users for to do so invites resistance that can literally drag down the new system. There is no easy resolution, but awareness of this potential issue and inclusion of System Users in the software selection process is a required first step.

Summary

In the end every person who has any connection with an organization’s accounting or ERP system is a stakeholder. As such they all have the potential to significantly impact the software selection process as well as the utilization of the system selected.

• Every stakeholder must participate in the decision to replace their current business management system and support the project through to a successful conclusion. Any form of negativity endangers the project and the system selected.
• Every significant managerial or operational person is jointly responsible for creating a vision of the future. The software selection project plan then becomes a road map that describes where the firm is today; where the firm needs to be tomorrow; and finally how the firm can most effectively move to this future vision.
• The software selection process must be directional: top down to set strategic requirements and bottom up to set operational requirements.
• The CEO/Owner is the firm’s leader and as such is also the de facto leader of the software selection project. While the CEO may not participate in the project with hands on, they must approve the project, support the project 100% and make sure every other stakeholder participates in the project fully.
• The Project Manager is the project’s administrative manager. Their most important responsibility is the development of an understanding of how a software selection project should be organized for success. Their most critical potential weakness is letting other stakeholders oppose or resist the project. To combat this weakness Project Managers must have some higher level report to person who has the authority to make people do what they should be doing.
• The CFO/Chief Accountant is responsible for the financial management system (not the operational side of the system). Their most important responsibility is developing an understanding of what’s possible in terms of software driven functionality. Without this vision of future potentials, how can you possibly move to a more profitable tomorrow?
• The CIO/System Manager is responsible for evaluating deployment alternatives. They should not run the software selection process. That’s the responsibility of the CFO/Chief Accountant and the selection committee.
• Sales and Marketing is responsible for defining how the firm is going to connect with its prospects and customers. While the selection of an appropriate CRM system is critical to a firm’s success, every effort should be made to select a CRM system that integrates fully with the new business management system.
• System Users make the new system run. They must be included in the software selection process and must feel as though their input matters. Given the fact that the new system might impose a different set of business processes, every effort should be made to evaluate the impact this might have on System Users. A system that seems to be overly complex or demanding will become a self fulfilling prophecy unless the issue is addressed and precautions taken.