It is not uncommon that an HR implementation within an ERP context is commissioned and implemented after the financial modules have been rolled out. Many organizations are typically faced with similar challenges and with this in mind a number of considerations need to be kept in mind in order not to disrupt the existing implemented functionality, while at the same time not imposing any unnecessary constraints on the HR implementation.
A starting point would be to evaluate what data is shared between these two modules within an ERP solution. This may vary in different ERP solutions, and so may the compromising workarounds that need to be adopted to find a common ground between the finance and HR project teams. Generally speaking, it is quite common that both modules share data which needs to be addressed in the planning phase of an HR implementation after the financials have been rolled out. Shared data includes:
- HR illustrationDepartments/Units/Cost Centres
- Employees and Assigned work
- Address Information
- Employee pay related cost allocation
- Approvers Hierarchy and related workflows
It is also quite common that after a company has successfully implemented the financials side of the business, the effort required for HR implementation tends to be underestimated. The thing is that the effort for HR implementations may vary drastically between one implementation and another. And several factors contribute to difference in effort, starting off with the more obvious reasons like number of employees within the company, specific industry, legislative or collective agreement rules, and reaching to more tricky questions such as whether the HR will ‘simply’ be used as a back-office application or if a number of self-service functionalities will be rolled out among the different organizational units. Also dependent on the industry the company is operating in, the IT literacy of its workforce and the different business rules used in different departments, such self-service roll-out, may hold its own challenges and increase the implementation effort.
Additionally, the finance staff occasionally needs to be involved with the HR project implementation team. Furthermore, the C-level Executives’ sponsorship of the project and the change process is required, especially when the new HR solution is not just intended to be used as a back-office application. The roll-out of new self-service functionality may often entail high resistance to change by members of staff. This becomes particularly evident when users have used the same self-service functionalities for a number of years – as the saying goes, old habits are hard to die.
Another important consideration to make is on the testing of the HR system before it’s rolled out. It is typically recommended that, particularly when it comes to the payroll runs, there must be substantial time allocated to do parallel testing. This should also be extended to test the cost allocation to the respective General Ledger accounts. Parallel testing is clearly required in order to ascertain whether the new system does produce same pay results as the current legacy system is producing on the production environment. This is a very complex task to execute correctly, and in such a sensitive business function. It is also important that payroll users will get hands-on training on the new HR functionality. Certainly one has also to consider the man power required to do the actual data entry in the two systems while the parallel testing is being done – this is not to be underestimated.
The above is by no means an exhaustive list of factors that need to be considered and the challenges in need to be dealt with to implement HR after financials. Actually, this is more of a teaser and it is indeed an interesting topic to explore in much further detail, and also I can see the potential that one could explore and research this subject in a more structured paper write-up.