David Singh outlines the process involved when selecting and implementing a new financial management system.
Changing to a new financial management system (FMS) is still seen by many as a daunting task and one that requires experts to be hired. In days gone by this meant getting in one of the big firms to carry out the requirements analysis, manage the selection process and maybe even oversee the implementation of the new system. I would however argue that it is not as difficult as some may think. None of us are system change virgins and during our careers we will have been through the process more than once. We may have watched from the sidelines but there is nothing to stop you undertaking the change process yourself assisted by others in the organisation. What follows is some common sense advice and approach to selecting and implementing a new FMS – it’s not rocket science and there is a lot of freely available material to help you.
Why change?
The first question you need to ask yourself is – why am I changing my FMS? Have you really outgrown it and need a new system to meet the longer-term needs and objectives of the business? Or is your current system simply being underutilised? There are instances where charities change FMS for the wrong reasons. For example, switching systems due to lack of knowledge of the full system capabilities, users not using the system because they haven’t been trained or a new senior manager wanting the system they used in their last role.
Thankfully those are in the minority and the majority of change takes place for valid business reasons. Recent statistics conducted by NCC Research show that 62 per cent of organisations changed their FMS responding to changes in business procedure, 45 per cent switched to gain greater integration with other operational systems and 38 per cent decided to change FMS because their previous system did not fit their business needs – all legitimate reasons for change.
Before embarking on the journey in selecting a new FMS, you need to put some structure around your selection process and also create a timeline to work towards. You should also make use of the resources available to you, ensure that you form a selection committee with representatives from different areas of the business; a senior finance member, IT staff, and senior business users commonly combine to form such a committee. Taking advantage of the experience and knowledge at your disposal dramatically reduces the need to outsource advisory services, enabling huge savings as a result.
What is the most effective tender process?
The days of the detailed functionality checklist are over. Most modern systems are very flexible and will tick all the boxes and meet most business requirements. Therefore it is the specialist requirements, those things that are the biggest challenge to your organisation, which should drive the statement of requirements.
Consequently, the need to produce an invitation to tender (ITT) document has diminished in recent years. ITT’s are onerous to prepare, respond to and to evaluate. Many organisations are unable to dedicate the time or have the resources to conduct the detailed analysis to produce; for a medium-sized organisation it can take around 100 man days across your organisation.
Fortunately there is an easier, efficient and cost-effective alternative to ITTs – the request for information (RFI). A good RFI is one which concentrates on those key business processes that hold your organisation back, the business issues that must be resolved by any new system. RFIs are therefore quicker to produce, easier to evaluate and reduce the selection process to only four stages; preparation, evaluation, selection and implementation planning.
Preparation
When producing an RFI document for potential vendors, it is essential to prepare your document with your longer-term business strategy clearly in mind as well as departmental and operational needs. Make sure you are specific when collating your key requirements and highlight nonstandard requirements such as: international capabilities, processes such as consolidation, integration with external applications, reporting and BI. This ensures that vendors prepare explicitly for your organisation and do not submit a standardised tender.
Once you build your RFI, the next step is to identify software providers and compile a shortlist of vendors. There are two types of vendors to consider – software authors and software resellers. Software authors tend to supply resellers. However, there are some software authors who sell direct. Software resellers typically sell different software solutions and don’t always have the same flexibility, particularly around commercial as software authors so bear this in mind when you compile your shortlist.
Don’t be afraid to scratch beneath the surface when researching your shortlist. Consider areas such as sector knowledge, software update history and plans, company profitability, quality of support and quality of user base to gauge the long-term compatibility between your organisation and the software provider.
Give vendors a reasonable time to complete your RFI and make yourself or a colleague regularly available to answer any questions. In order to get a comprehensive RFI submission, it is imperative to engage with the vendors and keep them in sync with the provisions for your new FMS.
Evaluation
To give yourself the best opportunity to effectively analyse the different FMS providers, it is recommended to shortlist three vendors for the next stage of the process. Organise demonstrations with each provider and leave an hour for questions so you can gain clarification on any specific queries.
After initial demonstrations, it is time to evaluate each software provider and cut your shortlist to the final two. The next stage should focus on specific organisational requirements – provide the remaining two with business scenarios typical to your organisation, and give the vendors a final opportunity to showcase their software in more detail. Final presentations will provide a detailed look at how each system responds to the proposed scenarios. By this point you should have a good idea which vendor is the best fit for your organisation. The next recommended step is to contact at least two references given by each provider. Reference sites give you a chance to understand implementation experiences, support responsiveness and general feedback of the system benefits in a working environment. They should not be used for yet another presentation.
Selection
Upon completion of your detailed selection process examining the different features and benefits of each vendor, the selection committee should be able to arrive at a fully informed decision as to who will be your new FMS provider. The final part is the commercial negotiation and contracts which should be reviewed before signing up.
Implementation planning
Selecting the right FMS and partner for your business is only part of your challenge. The next step is ensuring that your new solution is implemented on time, on budget and delivered to benefit your organisation. Just like building a selection committee, it is recommended that you form a project team to ensure a seamless implementation and transition to a new system, typical roles that should be considered are:
Project manager: This should be someone with a track record of delivering projects or a senior manager who has experience in systems implementation. Your project manager has to be highly detailed, organised, results-orientated and proficient with systems and good with people. Senior business user: An ideal senior business user would be an enthusiastic member of senior management who knows the business and is an advocate for change. They will also require comprehensive knowledge of either a specific aspect of the business or general all-round knowledge.
Senior technical user: Typically an IT-focused member of staff who is open-minded and aware of the needs of the business and processes. A senior technical user would need to be qualityorientated, thorough in approach and able to support the project through delivery.
Senior department users: Department heads/managers are best suited for this role. This should be someone who has a good handle on departmental requirements throughout the organisation and appreciates the big picture.
After pre-implementation planning is finalised and your system is designed and built, you will need to undergo user training and acceptance testing prior to going live. Be thorough and encourage users to put forward any issues or requests. This is the time to iron out any kinks in the system before migrating your data and going live.
Once live, it can be easy to accept the project as complete, however, it is recommended that you conduct a post-implementation review a short time after the go-live date. Post implementation reviews help identify and action any final teething issues with the system as well as devise future plans for the software.
David Singh is sales & marketing director at PS Financials
Charity Finance wishes to thank PS Financials for its support with this article
