Is Your ERP an Asset?Locking valuable assets

This is obviously a leading question since it is probably the most expensive piece of software that your company owns.  Exactly how much of an asset it is to your business will heavily depend on how you use it, e.g. what efficiencies does it deliver? How does it enable you to differentiate?

There is a trend now to consider SaaS models as an alternative to purchasing ERP licenses, and some will tell you that this is a cheaper alternative.  But beware!  If you decide to adopt this approach to cut costs, you’ll need to focus on core infrastructure savings that can be difficult to realize.  In licensing terms, SaaS models don’t generally reduce costs when considered over a sensible period of time.

But SaaS can quickly deliver real savings and value in specific areas, giving you a pragmatic means to solve persistent, seemingly intractable problems.

Would you leave your most valuable assets out in the open?

For example, surveys show that any company in the world has around a 1 in 2 chance of an internal systems fraud, every year.  Yet most midmarket companies will allow anyone to drive their ERP system!  It amazes me how rarely companies prioritize the need to prevent inappropriate access to this core company asset.  If you bought a Ferrari, would you let just anybody drive it? (A Pinto, well, maybe…)

When I present to gatherings of CFOs, I like to ask one key question: “Has your company suffered a fraud recently?” The room goes deadly quiet, and no one moves.  It’s as if I’d suggested that they committed fraud themselves.  Fraud is the crime that no one likes to admit happened to them.

The next thing I do is explain some simple ERP frauds – many people who control ERP systems just don’t understand the issues.  For instance, the “dummy company fraud”, where someone sets up their brother-in-law up as a supplier, and processes false invoices through to payment.

I’ll then ask, “How many people in your organization can commit this fraud?”  Not a twitch.

If you had a Ferrari, you’d certainly make sure it’s locked up when you park it.  You’d store it securely overnight in a locked garage.  Yet some organizations seem to trust everyone with their ERP systems, and only pay attention to who can use what when the auditors come asking questions.

But, sadly, even your best employee might be desperate enough to be tempted if they can’t pay gambling debts, or their mother needs an operation she can’t afford.

We frequently hear about company fraud cases in the news, so why does it keep happening, often costing CFOs and CIOs their jobs?

I believe it’s because people perceive it to be almost impossible to establish a) who could commit fraud, and b) what they need to do to prevent it.

For many organizations, software solutions such as “GRC platforms” are prohibitively costly and complex. Midmarket companies need something which is much easier to implement and manage, with a price tag that works.  Neither a Ferrari, nor a Pinto – but maybe a Toyota Corolla.

This is an area where SasS can pay dividends.  There are now simple cloud-based audit services that will answer the key questions: “Where are my fraud risks, and what do I need to do about them?”

QCloud: The easy way to find out who could commit fraud in your ERP system

QCloud is a truly simple and innovative solution which will analyze your ERP security issues, identify Segregation of Duties problems and report for your auditors.  With just half an hour of technical effort.

Whether your main objective is to reduce the risk of fraud or to satisfy your auditors, it can help. Read this article to find out how or learn more about QCloud (available for Oracle E-Business Suite, Oracle ERP Cloud, JD Edwards EnterpriseOne and World).

You’ve invested in an expensive asset, so it’s worth taking proper care of it.  A Ferrari is for middle-aged men with pot bellies; your ERP system is the lifeblood of your business.

In my next blog I will look at the other side of caring for your ERP system – how to reduce licensing liabilities. Watch this space!