What CFOs need to know about an ERP implementation

Brendan Tanner oversaw the implementation of the enterprise resource planning (ERP) system SAP S/4HANA at a time when few organisations in the region had done so. He shares his learnings about the major undertaking with CFO Magazine.

Brendan Tanner left his role as divisional CFO at KPMG to join specialist advisory and restructuring firm McGrathNicol as head of finance in 2016. Within six months, he had concluded that his new employer’s ERP was wholly inefficient. Expense claims had paper-based components and were time-consuming for the firm’s hundreds of consultants. It took between 12 and 15 minutes of touchpoints to enter and approve a single supplier invoice. Timesheets, which are the lifeblood of professional services firms, were onerous and rigid. Reporting was inflexible and aspects of project management, such as billing clients, was incredibly slow. In a world where time is money, he summed up the inefficiencies as “horrifying.”

“It was a one-size-fits-all solution that had been developed ten years earlier, when McGrathNicol was primarily an insolvency firm,” says Tanner. “It had since grown into being a multidisciplinary practice but there had been next to no changes made to the ERP.”

Consult widely and choose carefully

As a fresh set of eyes with solid experience in systems, Tanner put forward a successful case for change. However, he recalls beginning the project with a certain amount of trepidation.

“I’d run projects before, but nothing of this size,” he says. “The S/4HANA public cloud version was very new and there were only a couple of organisations in ANZ who were using it. There wasn’t a lot of reference checks available and implementation partner knowledge was quite slim.”

“In terms of scaling with the business, what the public cloud S/4HANA has been able to do for us has been fantastic,” says Tanner. “It also makes it as easy as possible for our hundreds of consultants to focus on our clients, as opposed to focusing on their admin.”

Brendan Tanner, Head of Finance | McGrathNicol

Tanner and his team thoroughly researched the different options before selecting SAP S/4HANA. They spoke to many different vendors, as well as reference customers where available and their industry peers.

“It’s such a big investment and it touches so many parts of the business that you need to get input from a variety of sources including a range of senior executives. Your CFO network is a great starting point, but don’t limit it to that,” he suggests.

Mike Vorias is a solution advisor at SAP and he recommends that a CFO asks other CFO certain specific questions, such as how the ERP supports and simplifies the change management process. What processes does the solution support and are they fully integrated?

Another question he recommends asking is how the data is accessed.

“For a CFO in particular, data is the new go-to,” says Vorias. “When asked to provide commentary on certain results, the number one requirement is to have all the data in a single system, and not just at an aggregated level. If they have data in multiple systems, the process to produce reports and analyse details becomes clunky and slow. CFOs need data they can trust.”

Tanner also took up the offer of free software trials to get a feel for how different solutions operated. Tanner realised that choosing the right implementation partner was equally important as finding the right software vendor, because the partner would be responsible for configuring the software.

Nothing more important than people

After an extensive due diligence process in 2018, McGrathNicol chose SAP as their software provider and Plaut IT (now part of EY) as their implementation partner. Plaut had been one of the first professional services firms to adopt S/4HANA so were best placed to support the implementation.= It was reassuring that SAP had been in the ERP market for a long time andtheir ‘professional services pedigree’ was impressive. While there were cheaper solutions available, priority was placed on the quality of personnel.

“The support we have had from SAP from start to finish has been incredible,” says Tanner. “Often firms get handed from team-to-team during the initial sales phase to implementation and post-sales support, but we’ve had some of the same people stay with us for the entire journey.”

The most challenging aspect of the implementation was the configuration. This was because part of McGrathNicol’s insolvency business is regulated, which creates business complexities. It also has a complex corporate structure. While some customisation was required to address these complexities, the public cloud version of S/4HANA cannot undergo customer specific major change. Instead, side-by-side applications were developed on the SAP Business Technology Platform for core timesheet requirements and certain other business functions.

The many benefits of being cloud-based

Tanner believes that it is essential for an ERP product to be cloud-based. The only exception is for a mammoth organisation with such a high degree of complexity that the only way to run the ERP is with an on-premise deployment (which is likely to be much slower to implement, he notes). Tanner reels off a list of cloud-based benefits, including not having to manage and maintain server equipment, which ultimately has a limited shelf life. Cloud versions are updated regularly to include new features and it is also better from a security standpoint.

“SAP is so much bigger: our resources can only go so far,” says Tanner. “With the exponential increase in cyber threats, it’s almost impossible for a firm our size to keep up.”

Vorias believes that no form of technology is a silver bullet. People, processes and a clear vision for the future are the most important ingredient for success. He encourages firms embarking on the process to think deeply about all the possibilities.

“There have been significant changes in technology that have simplified how a business process is executed. Instead of designing a system that models what you do today, take another look at what the art of possible looks like. You may be surprised.”

It’s been three years since McGrathNicol implemented the S/4HANA, during which time the firm has increased its headcount from 240 to 360.

“In terms of scaling with the business, what the public cloud S/4HANA has been able to do for us has been fantastic,” says Tanner. “It also makes it as easy as possible for our hundreds of consultants to focus on our clients, as opposed to focusing on their admin.”

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