The Chief Financial Officer (CFO) relies on software and data for nearly every aspect of his or her job. This is a reliance that goes far beyond accounting. Enterprise Resource Planning (ERP) software provides the CFO with information about the financial health of the business across many different dimensions, e.g. supply chain and logistics. However, older ERP solutions are a drag on the CFO’s effectiveness. They are not able to provide instantaneous, granular needed data for analysis. Outdated ERP also translates into inefficient, siloed workflows for the CFO’s team.

The CFO’s Role and Its Relationship to ERP Software

The CFO has three primary duties. He or she is responsible for controllership, treasury management and financial planning. The specific ways these play out will vary by company. Variances in job description aside, the CFO is on the hook for financial reporting, optimal investment of the company’s financial assets and preparing for its financial future.

Each duty depends on ERP for proper execution. Controllership, of course, is inextricably linked to the accounting functionality in the ERP solution. Treasury management is usually executed through ERP, i.e. through investment account management tied to the balance sheet. Financial planning processes flow from operational and financial data in the ERP solution—combined with other data sources.

Difficulties that Arise from Outdated ERP

A number of difficulties arise for a CFO who needs execute his or her three core jobs with out-of-date ERP. One of the most significant problems is the inevitable emergence of siloed systems. Over time, as a company grows and changes, different groups and business units start to use their own software and work processes, which are typically not well connected to the ERP system. Siloes come from integration challenges, organizational rigidity and lack of budget to connect older systems.

Reliance on spreadsheets and manual record keeping is another obstacle to the CFO who has to use obsolete ERP software. Paper-based processes and spreadsheets are natural, even clever, adaptations to an inflexible, costly-to-change ERP system. They are also a reaction to rigid, obsolete user interfaces, such as the “Green Screen,” which date back to mainframe and minicomputer era, but are still common in ERP. (You know you’re in trouble when you have to buy special mainframe “terminal emulator” software to run a green screen on a modern laptop…) Manual processes inhibit the kind of rapid, accurate accounting the CFO needs to be in the role of controller.

From a data reporting perspective, paper and Excel sheets tend to mask information that would be a lot more useful it if were easily visible to the CFO. Manual processes also contribute to higher-than-needed financial operations costs and impede the growth of the CFO’s organization. Siloed systems form a bottleneck for data the CFO needs for treasury management and financial planning. The effect of an outdated ERP is to create a single source of data, which may not reflect the true financial condition of the business.

Modern ERP systems have rich, real time reporting capabilities. These are powered by intuitive user interfaces and simple, fast connectivity with multiple data sources. For treasury management and financial planning purposes, older ERP solutions invariably lack these features.

Security and compliance also suffer with outdated ERP. Older ERPs are hard to patch and maintain for security, creating risk exposure. For compliance, their rigidity works against the implementation of robust, adaptable controls.

We have experience helping CFOs update their ERP resources to help them do their jobs better. To learn about our ERP offerings and services, visit https://www.iproerp.com/ 

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