Many CIOs are in the driver's seat when it comes to deciding their organization's overall ERP strategy. Yet successful transformation requires effective partnership with other stakeholders, particularly the CFO. Learn why building strong relationships across the business is critical to ERP modernization, and the business benefits that come from an adaptable platform.
This is the final article in a series of three that explore the topic of ERP modernization (you’ll find the first article here and the second article here). This content originally appeared on CIO.com and has been republished with permission.
With nearly every company striving to become a digital business today, leadership teams have become more focused on the need for agile technology that permeates every corner of the business. Organizations rely on CIOs to drive innovation and deliver adaptable technologies that enable them to react to market dynamics and grow faster.
“The C-suite is increasingly shifting to the ‘digital dream team,’ wherein every function is a technology function,” says Philip Carter, group vice president, European chief analyst and worldwide C-suite tech research lead at IDC. “In this context, the role the CIO plays is critical: as a trusted advisor, an enabler of innovation, and a source of intelligence—the digital orchestrator.”
When it comes to modernizing mission-critical systems such as ERP, this orchestration across business functions requires more collaboration than ever. For the CIO, modern ERP might just as well stand for “enterprise relationship planning.”
Nowhere, perhaps, is CIO alignment more critical than with the CFO. Finance teams have historically been focused on stewardship over resources and regulatory compliance, but today’s finance leaders are as intent on creating value as reining in expenses. And they know technology lays the path to deliver that value to the business. In an IDC study on the Future of Finance, 59% of CFOs agreed that finance will need to transform by leveraging technology and data. Finance teams need deeper insights into the levers that deliver the greatest business value and the metrics that measure success—or proactively warn of a market in decline.
Legacy ERP systems are ill-suited to handle the needs of modern business. The resulting “acceleration gap,” with the rate of change outpacing the ability of an organization’s digital strategy to keep up, is growing. Workday research found that 55% of business leaders say their digital strategy can’t keep up with change and nearly two-thirds say it takes weeks to get results at the end of a reporting period. This contrasts with the accelerating pace of business, which increasingly requires real time decision-making based upon current rather than months-old data.
CFOs expect their IT leaders to be more financially literate, while CIOs need their partners in finance to better understand how technology can support them.
Pressure is increasing. A Workday-Deloitte study found that 70% of CIOs say the COVID-19 pandemic accelerated their finance transformation strategies by at least a year. To narrow the acceleration gap, organizations need a modern ERP platform with an intelligent, consolidated data core to increase information sharing and insights for better, faster decision making.
Addressing the challenge is more than a technology issue, however. That’s where relationships come into play. The CIO needs to work collaboratively with the CFO to determine the best technology path forward to solve the CFO’s top priorities:
Become a decision-ready organization. Finance Leaders need to harness data effectively to create a reliable, single source of truth, in order to track profitability at lower levels. Having this information allows for more informed decisions, but legacy ERP systems were not designed to track value at that level.
Establish a culture of cost-containment. Successful organizations constantly seek ways to control costs. They make strategic spending cuts to create better alignment across the business to improve cash flow, minimize risk, and ensure business continuity.
Predict the best course of action. This requires continuous planning and scenario analysis allowing key decision makers to quickly assess opportunities and stress-test revenue streams to capture competitive advantage or pivot mid-quarter to course correct.
Future-proof the business. Systems that respond to constant changes in business and minimize the impact of future disruptions, enable finance to master change and enable transformation, freeing Finance and IT from time-consuming change requests.
Automate and scale global finance processes. Dramatically simplify and transform core processes with embedded machine learning that detects anomalies, identifies exceptions, and makes recommendations, eliminating manual processing and providing continuous insight throughout the period.
Attract and retain digital talent. Unlock the potential of finance employees faster with innovative solutions and technology that create a modern experience. Today’s young, technology-savvy workers expect access to the latest tools. An aging on-premises ERP system gives them little incentive to join a company.
CFOs expect their IT leaders to be more financially literate, while CIOs need their partners in finance to better understand how technology can support them. The CIO also plays a critical role in changing mindsets and culture to support what IDC calls the “digital dream team.” And that’s where alignment with another key stakeholder comes into play.
To truly enable a digital business, a modern ERP solution must go beyond finance and operations to also support an organization’s most important resource: its people.
“As all business units become technology units and are forced to break down functional silos, HR will become increasingly involved with technology decisions,” Carter says. “This collective approach will enable CHROs to address the top pain points of employee training and development, retaining high performers, and engaging and motivating remote workers.”
The CIO’s partnership with the CHRO involves defining a strategy to deliver a consistent, low-friction experience for all employees, regardless of role or location. A modern, cloud-based ERP platform can provide an experience that empowers employees instead of inhibiting them by:
In a climate characterized by constant change and disruptions, a cloud-native ERP foundation backed by a robust business-optimized developer environment provides the operational resilience and scalability that today’s digital business requires. A platform designed for rapid adaptability through configuration rather than code will support and enable all stakeholders across the organization, including employees, customers, and supply chain partners.
But the technology platform is just part of the solution. The “R” in ERP has become as much about relationships as resources. IT’s relationship with the business deepens when each side focuses on the other’s strengths and helps compensate for, rather than criticize, the other’s weaknesses. These partnerships provide the foundation of a modern digital business.
To learn more about how CIOs are tackling core modernization efforts, check out CIO.com for additional resources.
Forward-thinking CIOs are using the opportunity to rethink traditional ERP environments, with an emphasis on transforming business processes and creating a foundation for a decision-ready organization. Learn why neglecting the digital ERP core is a dead-end strategy. (Part one in series.)
The prospect of transforming complex business-critical systems is enough to scare off some CIOs from tackling core modernization efforts. But maintaining the status quo presents an even greater risk to the business. Learn what the path to a modern ERP environment looks like. (Part two in series.)
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