When an ERP project becomes an expensive accounting program

Starting an ERP project with accounting is normal: planning and management functions later rely on accounting data. The trouble begins when the first phase is designed only for statutory accounting. The company pays for 1C:ERP and receives what 1C:Accounting does. When management functions are needed, the accounting block is implemented almost from the beginning.

How the scope shrinks

Nobody decides to build an accounting program. The scope shrinks through small decisions, each reasonable for accounting and each made without regard to later phases. The cause is usually a poor understanding of the product, not bad intent.

When the processes are modeled in the product in a hurry, gaps between them and the standard functions appear only in pilot operation and are closed one by one, in the order users report them. Earlier modifications get rewritten, and changes to standard objects make every later update harder. In one published review of two stalled projects the models listed 9 and 12 gaps; pilot operation revealed many more.

Signs a manager can check

Five signs can be checked without knowing the product.

• The project goal names subsystems to launch, not a result for the business.
• Later phases exist only as titles in the plan, so first-phase decisions ignore the full scope.
• Master data was copied from the old system unchanged. Duplicates and inconsistent names suit the ledger but not purchasing or production planning.
• The functional model of the processes is missing, or the consultant wrote it alone after a short interview.
• A simplification was chosen for speed with no recorded reason. Production without production orders can be justified, but moving to production scheduling later means reworking the whole chain of documents.

What each phase must contain

Each phase closes a complete accounting loop: every figure it reports is produced inside the phase or received from another system. Sales without purchasing and stock records, for example, cannot show a margin. A block left outside is integrated with the system that handles it today. If no such system exists, or it cannot exchange data, the block belongs in the first phase. Functions the company has never had can wait, unless they are the reason for the project.

Master data is designed once, for the whole scope. The most demanding future subsystem, such as production, sets the requirements even when accounting goes live first. A catalog built for the ledger alone later forces a choice between converting the history and starting again from opening balances.

Three launch orders

Operational accounting first. Sales, purchasing, warehouse and management reports move to ERP, and statutory accounting stays in the current system. Accountants are not disturbed, but the two systems exchange data until the second phase.

Statutory accounting first. Accounting is built in ERP at once, with the minimum of production accounting the reports require and treasury functions such as a payment calendar. In this order a project most easily stops at accounting.

Planning and international reporting first. The current system keeps operations and accounting and passes its entries to ERP, where budgeting and reporting under international standards are launched. The result depends on data quality in the old system, and only loosely connected blocks can start this way.

What to ask the project team

Ask for five things in writing.

• The functions of every phase, not only the first.
• The master data design and the later phase whose requirements shaped it.
• The functional model, agreed by the people who run each process.
• The reason for each first-phase simplification and the cost of moving to the full function later.
• How each modification is made and how updates are installed after it.

If the answers describe only statutory reports, the project is an accounting implementation. Plan and price it as one, or reopen the design before the first phase goes live.