ERP Success: Accounting – Process – People – Not Just Technology!
ERP Implementation: More Than Just Technology – A Pakistani SME Perspective
In the bustling landscape of Pakistani small and medium enterprises (SMEs) as is the case in other countries too, there’s a pervasive misconception that implementing an Enterprise Resource Planning (ERP) system is primarily a technological endeavor. The buzzword “ERP” often evokes visions of cutting-edge technology and promises of streamlined operations.
As someone who has walked countless businesses through their digital transformation journey, and now particularly with ERPNext I have always held the view that implementing an ERP is 80% about Accounting, Processes, and Change Management—and only 20% about technology. This belief was shared by our clients on many occasions when we did remediation work for them. Albeit, a little too late and a little heavy on their pockets!
The Accounting Conundrum: When Expertise Meets Necessity
Imagine this scenario: A mid-sized manufacturing company decides to implement an ERP system. Their excitement quickly turns to confusion when they realize the software demands more than just data entry. Most SMEs in Pakistan operate with minimal accounting expertise, often relying on junior staff or family members to manage financial records. These “financial managers” mostly rely on spreadsheets, softwares like Peachtree and Quickbooks, or some homegrown software which can produce invoices and record expenses.
Accounting forms the backbone of any ERP system. Yet, many SMEs lack qualified accountants to collaborate effectively with the ERP consultants. This gap often forces ERP professionals to don multiple hats, providing accounting and tax advisory services alongside their core responsibility of implementation. In our implementation experiences, we’ve found ourselves in this kind of a situation multiple times. More often than not, we’re not just ERP consultants but de facto accounting and tax advisors.
I recall a textile manufacturer in Faisalabad for whom we did an ERPNext implementation. Their initial financial records were a labyrinth of some half-Oracle-half-Excel based ledgers and spreadsheets with inconsistent formatting and a never-ending reconciliation activity between AP/AR and Production data. We ended up providing complimentary accounting consultation, restructuring their chart of accounts, and helping their team understand fundamental accounting principles.
Key Insight:
Accounting knowledge is the foundation of any successful ERP implementation. Without a solid understanding of financial reporting, taxation, and local regulatory requirements, the most sophisticated ERP system becomes nothing more than an expensive digital filing cabinet.
Business Processes and Local Laws: The Critical Context
Pakistan’s business ecosystem is unique. Our tax regulations, local accounting standards, and industry-specific compliance requirements are complex. An ERP consultant who understands these nuances can tailor the system to deliver real value. For example, Pakistani tax laws frequently change, requiring businesses to adapt quickly. An ERP implementation isn’t just about installing software; it’s about adapting the system to reflect the intricacies of local business practices
A Real-World Example: Stock Valuation Challenges
Consider the challenge of stock valuation, a critical pain point for many businesses. In Pakistan, certain sales taxes on inventory items are non-admissible for input tax claims, particularly for items consumed internally by the company. This distinction requires a sophisticated approach to inventory valuation.
For instance, a food processing company might purchase ingredients where the sales tax cannot be claimed as input credit. In such scenarios, the stock valuation must be tax-inclusive. An experienced ERP consultant understands these subtleties and configures the system accordingly. Most off-the-shelf solutions fail to address these local complexities, making specialized knowledge crucial.
Change Management: The Human Element of Digital Transformation
Technology is neutral; people are not! No matter the size of your organization, change management is the make-or-break factor in ERP implementation. The success of any ERP implementation hinges on user acceptance. Yet, resistance to change is a universal challenge, especially in SMEs where employees are accustomed to manual processes or legacy systems.
We’ve witnessed departments resist ERP implementation like it’s an invading force. Accounting teams fear losing control, sales teams worry about additional reporting requirements, and operational staff dread learning new systems. This resistance isn’t about the technology—it’s about fear of the unknown. In one project for a boarding school, initial resistance came from the academic and administrative staff, who were skeptical about the new system tracking admissions and expenses and reducing paperwork. By conducting focused training sessions and involving them in the implementation process, we not only won their buy-in but also turned them into champions of the new system.
Practical Strategies for Effective Change Management:
- Involve end-users from the beginning of the implementation process
- Provide comprehensive training tailored to different user groups
- Create champions within each department who can advocate for the new system
- Demonstrate tangible benefits, such as reduced manual work and better insights
The Technology Trap: Why 20% Doesn’t Tell the Whole Story
While ERPNext is a powerful open-source solution, the software itself is merely a canvas. The real art is in configuration, integration, and alignment with business processes.
A successful implementation requires:
- Deep understanding of accounting principles
- Comprehensive knowledge of business processes
- Ability to translate local regulatory requirements into system configurations
- Strong change management and communication skills
Beyond Technology, Towards Transformation
For Pakistani SMEs, just like any other company in the world, an ERP implementation is a journey of business transformation. It’s about reimagining processes, standardizing operations, and creating a single source of truth for your business. Remember, the most expensive ERP system is the one that fails to deliver value. Invest in understanding, training, and holistic implementation—not just in technology.
A professional tip that I almost always give to prospects when they are evaluating ERP solutions, is to prioritize consultants who speak the language of business, not just the language of code. As Jim Collins says in Good To Great, get the right people on your bus!
Looking Ahead: The ERP Consultant’s Skill Set
In my next blog, (hopefully soon, if I can get some time in my thinking corner) I will try to dive a little deep into the skills and qualities SMEs should look for in an ERP consultant. Mind you, technical prowess or marketing gibberish is just the tip of the iceberg!
The writer is the CEO of OliveERP/Webmekanics and is an experienced ERPNext Consultant with a strong accounting and finance background having worked with firms of Chartered Accountants in Pakistan and the UK. He has worked at senior positions in the Asset Management and Technology sector for 40+ years and now passionately works to create awareness about the world-class Free & Open Source ERPNext© solution developed by Frappe Technologies© and help the SME and Enterprise level organizations in its adoption. He may be reached at tariq.rehman@oliveerp.com.