Best Practices

Successful ERP implementation: Best practices for data cleanliness and system processes

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The successful implementation of an ERP system hinges on the cleanliness and organization of your data and the processes that support it. When data is accurate, complete, and consistent, it enables the ERP system to function at its full potential, providing reliable insights and driving informed decision-making. In contrast, poor data quality can lead to errors, inefficiencies, and misinformed decisions that may have long-lasting negative effects on your organization's growth and profitability.

Establishing and maintaining clean data is an ongoing process that requires commitment from your team. This involves setting up clear data governance policies, implementing data validation rules, and regularly auditing and updating your data to ensure its accuracy and consistency. Investing in data cleanliness will pave the way for a smooth ERP implementation and set the stage for long-term success and scalability.

For a complete guide to evaluating ERP software + a downloadable checklist for the evaluation process, check out our ERP Buyer’s Guide.

The FP&A team is critical in driving strategic financial decisions and supporting organizational growth. It is essential to remember their needs and requirements when deciding on data structures within your ERP system. A well-structured data model that aligns with the FP&A team's needs will enable them to easily access, analyze, and report on crucial financial data, streamlining their processes and enhancing their ability to provide valuable insights to the organization.

Establish data governance policies

Establishing data governance policies is crucial in ensuring the accuracy, consistency, and security of your organization's data. These policies provide a framework for defining roles and responsibilities, setting data quality standards, and outlining data management procedures, including data collection, storage, and usage.

Here are some ways to get started:

  • Define naming conventions. Create a standard set of naming conventions for all data elements, such as tables, fields, and values, to ensure consistency across the organization.
  • Identify data sources. Determine the data sources that will be integrated into the ERP system, including legacy systems, spreadsheets, and third-party software.
  • Assess data quality. Evaluate the current state of data quality, including accuracy, completeness, and consistency. 
  • Develop data cleaning strategy. Outline a plan to clean and correct any inconsistencies or inaccuracies in the data before migrating it to the new ERP system.
  • Have clear deduplication practices. Identify and remove duplicate records from the dataset to ensure data accuracy and reduce storage requirements.
  • Create data validation rules. Establish data validation rules and constraints to maintain data integrity during the migration process and in the new ERP system.
  • Standardize data formats. Ensure that all data is formatted consistently according to established naming conventions and data type requirements.
  • Transform and map data. Transform data from various sources into a consistent format and map it to the corresponding fields in the new ERP system.
  • Test data migration. Conduct a test migration of cleaned and transformed data to validate the accuracy and integrity of the data in the new ERP system.
  • Plan for data backup and archiving. Create a backup of the original data and archive any historical data that is not required in the new ERP system.
  • Implement data monitoring tools. Utilize data monitoring tools to continuously assess data quality and adherence to naming conventions in the new ERP system.
  • Create a process for ongoing data maintenance. Establish processes for ongoing data maintenance, including periodic data audits, cleaning, and updates to ensure data cleanliness and consistency.
  • Train staff on data policies. Educate team members on the importance of data cleanliness, naming conventions, and the organization's data governance policies and procedures.
  • Plan for periodic reviews. Conduct regular reviews of data quality and naming conventions to identify areas for improvement and ensure ongoing compliance with established policies.

Best practices for setting up the general ledger

The general ledger is the foundation for all financial reporting and analysis. It contains a record of every financial transaction, which is essential for generating accurate financial statements, tracking the organization's performance, and informing data-driven decision-making. Setting up the general ledger correctly in your ERP system ensures seamless financial management and minimizes the risk of errors that may lead to inaccurate reporting or compliance issues.

Consult with the FP&A team to understand their reporting and analysis requirements. Ensure that the general ledger structure accommodates these needs, making it easy for the FP&A team to access and analyze relevant financial data. This collaborative approach will result in a well-structured general ledger and foster a seamless integration of the ERP system with the FP&A team's processes, ultimately enhancing their ability to support organizational growth.

Best practices for setting up the general ledger in your ERP:

  • Define the chart of accounts structure: Establish a clear and organized structure for your chart of accounts, taking into account the required account hierarchies, segments, and numbering conventions. Be as specific as possible as early as possible with recurring spends. For example, if you’re going to have recurring legal costs, define legal in the general ledger rather than categorizing these recurring fees under operational expenses. This ensures you can drill down into these spends when needed.
  • Align with organizational structure: Ensure that the general ledger structure aligns with your organization's structure, including departments, cost centers, and profit centers, to enable accurate reporting and analysis.
  • Consistent account numbering: Implement a consistent account numbering system that easily identifies accounts and accommodates future growth or changes.
  • Consider multi-currency and multi-entity requirements: If your organization operates in multiple currencies or has multiple legal entities, set up the general ledger to accommodate these requirements, such as currency conversion and inter-company transactions.
  • Establish account categories and groups: Organize accounts into categories and groups to facilitate financial reporting, analysis, and budgeting.
  • Implement a clear hierarchy: Create a logical account hierarchy to enable easy navigation and drill-down capabilities within the general ledger.
  • Automate posting rules and allocation methods: Set up automated posting rules and allocation methods for recurring entries, such as depreciation, amortization, and overhead allocations, to improve efficiency and accuracy.
  • Define access controls and user permissions: Implement access controls and user permissions within the general ledger to ensure data security and compliance with relevant regulations.
  • Establish a clear closing and reconciliation process: To ensure accurate financial reporting, develop a consistent and efficient period-end closing and reconciliation process, including necessary checks and balances.
  • Regularly review and update the general ledger: Conduct periodic reviews to identify any required updates or changes, such as adding new accounts, updating account descriptions, or removing inactive accounts.
  • Train staff on general ledger processes and ERP functionality: Provide adequate training and support for finance team members on general ledger processes and relevant ERP system functionality to ensure accurate and efficient system use.

Build a strong foundation

Clean, accurate, and consistent data forms the backbone of an effective ERP system, providing reliable insights that drive informed decisions. Investing time in defining data governance, standardizing data structures, and maintaining data cleanliness will ensure a smooth ERP implementation and set the foundation for sustainable long-term success and growth. Regular reviews, updates, and staff training are vital for maintaining the quality of your data and the efficiency of your ERP system. Following these best practices will help your organization leverage the full potential of an ERP system, driving strategic decision-making and fueling business growth.

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