Finance organizations in growing enterprises often reach a point where they need to upgrade or replace both their ERP and EPM software systems. Here, they face the dilemma of deciding which to upgrade or replace first – ERP or EPM? This dilemma occurs in one of two scenarios:
Scenario 1 - A fast-growing company has outgrown its ERP system and needs to upgrade to a more scalable solution. The company is also looking to replace the Excel spreadsheets it’s using for financial reporting, planning, and forecasting with a packaged EPM solution.
Scenario 2 - A medium to large company has multiple legacy ERPs to upgrade, replace, or consolidate. It also wants to replace legacy EPM applications for financial consolidation & reporting and budgeting & planning.
The dilemma: Which system should the company implement first, a new ERP or the EPM solution?
In both cases, the goal is to have integration and alignment between the ERP and EPM solutions. This will enable efficient transaction processing as well as faster, more accurate financial and management reporting, planning, and forecasting. The natural inclination in both scenarios above is to focus on the ERP upgrade first, re-engineering core financial business processes and often revamping the chart of accounts and organization structures as part of the project. But ERP upgrades and implementations typically take 6 – 12 months. Worse, they can wreak havoc on a company’s financial and management reporting capabilities during the process.
On the other hand, implementing a new EPM solution - before doing the ERP upgrade - is a viable way to quickly improve financial and management reporting. It also provides end-users with a stable, consistent platform for reporting, as well as budgeting & planning, during the ERP upgrade. Most modern EPM solutions can integrate data from a variety of ERP systems and bring flexible, powerful, multidimensional reporting and analysis capabilities that shorten reporting and planning cycles and improve decision-making.
EPM implementations are typically much shorter than ERP implementations – in fact, they can be as short as 3 months for cloud-based EPM solutions. As part of this process, the organization can design and implement a corporate chart of accounts and reporting hierarchies that meet current and future business needs. These also can be aligned with current and future ERP systems.
Finance organizations considering ERP and EPM system upgrades or replacements should plan these projects carefully. They should use this opportunity to improve core financial processes. They should take an approach that will minimize disruption to financial and management reporting. Many companies have found that upgrading or replacing their EPM systems, before an ERP implementation, effectively minimizes disruption and can drive the design of the underlying ERP systems. In some cases, implementing a new EPM system can even alleviate the need for an ERP replacement.
Tt the link below, you can find case studies highlighting how Host Analytics customers have chosen to forego a lengthy ERP implementation in favor of a quick EPM implementation. See how they improved their financial close, reporting, and planning processes and extended the life of their ERP systems
To learn more about how EPM and ERP systems can work together, check out our free white paper: Best Practices: ERP and Enterprise Performance Management.