Whether finance chiefs are implementing a new enterprise resource planning system or updating an existing one, ERP projects are a major undertaking for many CFOs.

They must collaborate across teams to find the right platform and vendor, ink contracts that limit liabilities and transition to cloud-based systems without missing an operational beat. It’s a tricky process: where the rubber meets the road when it comes to realizing the buzzy promises of AI and digital transformation.   

Adding to the complexity, some growing companies making the switch to an ERP platform, or simply a more robust one, can arrive at the juncture under pressure from the old systems reaching their limit. Tim Naddy, VP of finance at the growing professional baseball team Savannah Bananas, likened the jump to a new system to flying a plane needing repairs. 

“You’re in a plane, you’re putting duct tape on the wings as this thing is flying, right?” Naddy said as part of a panel during CFO Dive and CFO.com’s Modernizing the ERP Transition event last week. “You’re trying to figure out, ‘okay, which piece is falling off the plane, and how do we get this thing moving?’”    

Below are four dos and don’ts shared by ERP experts that CFOs and other finance leaders should consider as they lead ERP transformation or implementation projects. 

1) Do: Nail down thorny issues before inking a deal

It may seem obvious, but companies and finance leaders under pressure to find a relatively quick fix to their ERP needs should be mindful about leveraging their power before signing any agreements. “You never have as much leverage as a customer as you do when you’re negotiating before you sign with them,” Marcus Harris, a partner at law firm of Taft Stettinius & Hollister, who specializes in drafting and negotiating enterprise software-related licenses and agreements, said during one of the panels. “You’ve got to play it smart.” 

Be aware that the companies selling the system will sometimes try to pressure you into signing by the end of the quarter or the end of the year, injecting the process with a “false sense of urgency,” Harris said. Instead of rushing, take your time, talk to more than one vendor and wait to reveal which one you’re going with. Also make sure to vet the legal terms of the contract, such as the liability and warranty terms. If you don’t get concessions upfront on those issues, you could ultimately face high legal fees later on if something goes wrong with the ERP. 
 

2) Do: Reconsider the one-size-fits-all ERP paradigm

Historically, many ERP vendors, whether they were serving small, middle-sized or larger businesses, provided the same monolithic large and costly systems, which can run into the millions of dollars in terms of cost and be prohibitive to smaller companies. But that is changing, partly due to AI and other new technology tools.  

Joe Locandro, EVP and CIO of Rimini Street which provides ERP software support, suggests that companies pursuing a new ERP system or upgrade should avoid thinking of ERPs as a monolithic type platform and instead approach the process as one in which they can compose a system that they need. “Think composable in that now the technology and the processes are discrete so you can have a best in breed accounts payable, a best in breed type of salesforce automation…because that’s going to be a quicker time to market,” he said.

3) Do: Collaborate to strengthen protection against ERP disruptions

More mature and highly regulated industries are making a much better effort to ensure CFOs, CISOs and CIOs collaborate and are on the same page when it comes to cybersecurity, according to Britta Simms, global enterprise platform security lead at the consulting firm Accenture. 

“But one gap that we absolutely see, especially with digital transformations and/or ERP modernization programs, is we do not see enough collaboration between the CFO and the CISO office together to really make sure we are identifying; what are the security controls relevant for this ERP platform or platforms that we’re moving to, are they aligned with what our organizational standard is?’” Simms said. 

When a cyber incident occurs, security team may handle actions needed to contain the impact, but there are many other issues that need to be addressed, according to Michael La Marca, a partner at the law firm of Hunton Andrews Kurth. CFOs and their companies can strengthen the collaborative response by putting a multifunctional incident response plan in place that is tested annually, along with a business continuity plan that is also tested to find common points of failure and where improvements can be made. “You don’t want to be figuring it out on the fly,” La Marca said. 

4) Don’t: Think you have to install an ERP

Given the fast-moving pace of technology, it can make sense to defer the need for a large ERP upgrade or even a new ERP, Rimini Street EVP and CFO Michael Perica said, adding that in some cases his firm has been having conversations about putting an ERP on pause given the next-generation tools and technologies that are reshaping what is possible. 

There’s also the possibility of not pursuing an ERP project at all. “Don’t think you have to do this,” Perica said. “Getting to tomorrow can happen more economically, more efficiently and more inexpensively with this alternative path, these next generation technologies that don’t have to be brought to you through a large system upgrade.”