4 reasons why Finance ERPs are not enough

Overview of Finance ERP limitations and how to overcome them

Published on March 30, 2021
Reading time: 5min

Invoices paid twice or far too late, a 6-week delay to add a supplier, unfollowed approval flows… Does this sound familiar?

Congratulations, you are part of the large community of people whose ERP falls short on its promise: making processes happen in a structured and efficient way, without a glitch. 

Last year showed, more than ever, the need to have access to reliable information systems.

2020, the year of change

2020 was a year of profound changes. It has notably impacted the way we work and the way we think about resource planning. Whether it is the timing, the budget, the users’ expectations or the way technology is used, there has been a paradigm shift

Unfortunately, ERPs are not adapting quickly to it. They were born in the 90’s, long before the invention of microservice architecture. Changing one ERP’s configuration is a whole project that needs time and money, even when you already invested thousands (even millions) of euros to implement the initial software.

The new cloud-based ERPs do not solve the problem either. They come with their own challenges. Moving to the cloud means dropping all customised add-ons and tweaks that you have built over the years, creating even more exceptions in your processes.

Even before the pandemic, ERP did not fully deliver on their initial promise. That is: liberating financial teams from manual processes and tracking all company’s activities in the same information system. If you still do manual checks and have some good old Excel spreadsheets hidden everywhere, you know what we’re talking about. 

Why is your ERP not fully working for you (or anyone for that matter)? 

More importantly, what can you do to bring more efficiency to your financial team, without erasing what has already been done? 

1/ Your ERP is missing a significant part of your company’s data

Your Finance ERP is focused on the financial data of your company. Quite appropriate to improve financial processes, right? Well, not entirely: the problem is your ERP is focused on the financial data only

Turns out your system does not take into account the unstructured, contextual, unquantifiable inputs. A large amount of the information is received by informal channels: email, phone, internal messaging app, etc. Your ERP does not understand it (or even know about it). It can process 60 to 80% of your data, the financial one, but up to 40% of your whole company’s information is considered as an ‘exception’. If it goes unnoticed, it creates delays and problems in the data chain. 

Let’s take an example. We recently discussed with a company using a Procure-to-Pay ERP. Today, the system can operate on its own for 80% of the invoices. It issues purchase orders automatically. What about the remaining 20%? They account for 40% of the invoices value and cannot be treated by the ERP. The finance team has to handle them manually, which creates insatisfaction and delays, and prevents the team members to focus on more valuable tasks. 

If your company has subsidiaries, it gets even more complex. The ERP might be shared throughout the organization, but the configuration often changes from one country to another. Activities are not the same, repositories are set differently. Conclusion: communication is difficult. If the data is not received in the standardized way the ERP expects, it does not match the repository… and your team has to do manual checks all over again.

2/ Your ERP is not designed for collaboration

As you know, collaboration is key, whether it is in a small operational team or at scale throughout the company - and even with external stakeholders (customers, suppliers). Working in a good environment with the necessary resources is a big enabler for the productivity of your finance team. You save time and money and have a better working relationship with your clients and suppliers. 

Your ERP is supposed to make this viable. Theoretically at least. Usually, it is working against you. Why is that? The collaboration experience is often an afterthought. It is hard to add the collaborators outside of your department or external ones, like your customers and suppliers, in the information system. You cannot bring everyone together in the same collaborative space, so it creates more silos. You lose the overall vision of the process you are supposed to get.

This brings two main problems. First, to get more visibility on the steps of the process and the actions of each person within it, finance teams often go back to using emails and spreadsheets. As we mentioned before, your ERP is not good at tracking data from those sources, so it gets even more scattered. 

Second, it creates bad blood between teams, as the communication is difficult. In case of an error - which can be very costly for your company - it is hard to track what went wrong and when, and who is responsible for the mistake. 

3/ Your ERP makes it hard to trace what has been done

As we have just mentioned, you cannot easily have a global vision of the data circuit in your ERP. You cannot see who has worked on the process before you and who is coming next. This is bad for collaboration. It is also a huge weakness from a regulatory perspective. Audits are becoming more frequent and detailed. You need to be able to tail the data and provide the information to regulators quickly, while ensuring its integrity. 

If you are a US-quoted company, you know that better than anyone else. You have to be SOX compliant - from the name of the Sarbanes-Oxley Act established in 2002 to provide more transparency in the financial reporting from corporations. You have to be able to track who intervened and why on each accounting system. You are required to show that key duties have been completed by more than one person to prevent fraud and errors - called the proof of segregation of duties. 

Most ERPs make it difficult to collect the information you need. The data is hidden in complex interfaces, multiple clicks away from your main screen. Even if you find the logs, you will get the user id (not its name), the date of the action and that is about it. You do not have direct exploitable data, you need to process it. IT has to get involved to recreate the path of the data and link the actions to the actual people who have done them. 

4/ Your ERP is coming with many workarounds

You want to add a new supplier to your ERP for paying their invoice. Bad news: it can take up to 6 weeks in some companies because of the way it is configured. Your team is not autonomous and you need to ask IT to process it. Let’s imagine you have to pay the invoice in 8 weeks maximum, you can easily surpass it for a technical reason.

Unfortunately, this happens a lot. As said initially, ERPs were born in the 90’s, long before the invention of microservice architecture. You cannot modify their configuration once it is set. Well, actually, you can but it is a costly and lengthy process. You need to involve your IT team and hire some consultants. Plus, you have to be very careful: the whole ERP structure can be impacted if there is a bad configuration somewhere. 

How do finance teams handle it? By developing workaround solutions that provide more autonomy and efficiency. Think about shadow IT, with the risks it involves in terms of data security, spreadsheets everywhere, etc. This is the only way today that your finance team can really use your ERP.

What should you do now ?

We know you have spent a lot of time and money on this technological project. You cannot waste it. That is why we won’t talk about replacing your system - or the people in your team with robots for that matter. Though, we want your team to be more successful. 

That is why we created Stratumn, a simple technological layer to add to your ERP to deliver its initial promise: bringing collaboration to your teams and involving your close partners - make finance a participative game!, having a good view of the workflow and tracking the data to ensure its integrity, thanks to the blockchain technology.

You bet on an ERP some time ago to improve your team’s efficiency and processes. Do you want to know more about your actual performances versus your initial bet? Get a free audit of your processes from our experts.

Learn more about Stratumn and our blockchain based solution?

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