How a Modern CFO Selects an ERP Solution

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If you’re a modern Chief Financial Officer (CFO), you’re probably responsible for your company’s Enterprise Resource Planning (ERP) system. It may not have always been this way. In an earlier era, ERP was a matter for IT. Not anymore.

First, What is a Modern CFO?

The CFO role has evolved in recent years. The core duties remain unchanged. You’re tasked with riding shotgun on the company cash, overseeing all financial decisions and obligations while making sure the books are perfect. That’s a big job itself, but today, you’re also part of the senior leadership team. This means deep involvement in operations management and corporate strategy. It’s a more data-driven, technological position than ever before.

The CFO, ERP and Operations

A company’s operations have always had a connection to its accounting and finance function. The assets required to run the business, the money needed to procure inputs and pay people—these all ran through finance. Today, however, the connection is quite a bit tighter.

The modern CFO is expected to have a near real-time view of operations and an equally fast sense of operations’ impact on finance. For example, if sales orders pick up, that could translate into demand for an inventory of manufacturing raw materials. The CFO has to know, pretty much right away if the company has the financial wherewithal to source the materials. Does it have sufficient cash or credit to buy what’s needed? Or, will the CFO have to increase a line of credit to buy the supplies?

This a matter of ERP. The ERP solution can—and should—feed up-to-date operational information into the CFO’s department. To make this happen, it may be necessary to integrate separate ERP modules for ERP management, procurement and accounting. Most ERP solutions are up to this challenge. 

Data, ERP and the Modern CFO

The procurement example is just one of many situations where the modern CFO has to possess rich business data. It’s way past the days when the CFO’s data needs were limited to reports like Accounts Receivable (AR) and the like. Now, the CFO needs detailed reporting on inventory, logistics, asset performance, customer orders and more.

Again, this is an ERP issue. The ERP solution should support the CFO’s need for fast, accurate operational data. In some cases, the CFO’s data needs will extend outside of the company itself. In a business that is affected by changing interest rates or commodity prices, the CFO could benefit from integrating relevant external data streams into a real-time operational data dashboard. Most ERP solutions support this capability, either directly or through integration with Business Intelligence (BI) tools.  

ERP and the CFO’s Strategic Responsibilities

By synthesizing operational and financial data using ERP, the modern CFO can inform strategic thinking as a corporate leader. Formulating strategy has a lot to do with forecasting and planning for unknown future events. ERP can help. It can provide the data needed to map out future business scenarios. It can also help answer important financial questions about future plans.

For example, if a strategy calls for investing in new equipment or opening locations in new regions, the CFO can work with the ERP solution and its data to model the financial impact of such strategic decisions. He or she can then be a critical contributor to strategic decision making.

Making ERP Work for the Modern CFO

We have worked with many CFOs on the process of getting the most out of their ERP solutions. Tuning and customizing ERP can be useful in making the software the CFO’s ally for success in this demanding role. To learn how we can help you rise to the challenges of being a modern CFO using ERP, let’s talk.

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