Every senior executive’s motto is to make sure that every penny counts in their company’s management. Rather than searching for different cost-cutting steps, an Enterprise Resource Planning (ERP) software such as SAP, Oracle, or PeopleSoft may increase the return on investment and maximise business benefits.
ERP is the lifeblood of every company, regardless of scale. The majority of industries and businesses now use ERP, which unifies resources, data, and processes into a single application for easy access and workflow. ERP systems are commonly used to manage a company’s production, logistics, distribution, inventory, shipping, and accounting.You may find more information at Jones CPA Group.
Until the 1990s, only automotive and industrial firms used ERP software, according to Gartner, a research and consulting company based in the United States. Since then, ERP’s success has spread to other sectors, and it has also gained traction in the public sector.
General ledger, accounts payable, accounts receivable, fixed assets, expense accounting, joint venture accounting, cash management, funds management, and budgeting are some of the financial functions that ERP could provide.
ERP applications are usually customised for each enterprise, and ERP implementations may differ even within the same organization’s business units.
This is one of the reasons it’s important to know how your company uses ERP. Another point to consider is that large multinational corporations can spend anywhere from $1 million to $500 million or more on ERP implementations, but only a handful have an independent quality assurance programme in place to ensure that the business benefits are realised. According to experts in the sector, a good 10% to 15% of the ERP implementation cost is wasted. A large number of ERP projects go over budget by 10% or more, fail to meet deadlines, and fail to deliver the promised business benefits.
This is due in part to the lack of an ERP quality assurance programme to match the programme with your business plan, as well as the lack of adequate checks and balances during implementation.
In one case, a multinational corporation invested approximately $300 million on an ERP programme over a three-year period, but the programme was ultimately considered a failure by the company’s management. The corporation then filed a lawsuit for reimbursement of US$375 million against the system’s implementation business. Such an incident could have been prevented if quality assurance had been performed by independent experts from the start.
The board of directors, chair of audit committees, and heads of internal audit, finance, and information technology are all responsible for ensuring that the company’s ERP programme has an assurance programme.
ERP Quality Assurance
A thorough ‘ERP programme assurance’ should enable the programme to be aligned with your business strategy. It should be a customizable assurance service that includes:
Corporate and Information Technology Governance
To ensure that the programme achieves its goals and defined business benefits, programme assurance should concentrate on developing and maintaining a sound governance system as well as efficient communication channels.
Risks to Business and Information Technology
Working closely with business leaders and programme managers to ensure that business and IT risks at the organisation (Corporate) level, as well as company-level operating risks, are well-managed throughout the programme.