Standard chart of accounts (SCoA) conversion projects have the potential to be complex and risky. As such we thought it would be useful to investigate chart conversion over two blogs, starting this week with some of the following fundamental challenges:
- Business Engagement – SCoA initiatives tends to arise when a legacy chart of accounts has become unwieldy through uncontrolled change whether dictated by mergers and acquisitions (M&A) or organic growth. This change in business focus results in the need for better financial processes and reporting and often results in a SCoA project (although this is not the only option, but we will save that for a later blog). The new SCoA needs to be ratified by multiple areas of an organisation, all fighting for their specific needs to be addressed. Without careful management, this can become a very iterative process and the results can be an aggregated chart as opposed to a truly standardised structure;
- Validation – Whilst it is an accepted fact that each area in the organisation will fight for its specific needs to be addressed, they are usually reluctant to sign off the chart until they see the impact on their reports and month end processes. In most cases, these numbers are only produced after a trial conversion to the new standard chart (with all the pain that accompanies that process). In our experience this is too late in the process and can result in many expensive iterations and trial conversions;
- Satellite Systems Impact – A chart conversion will usually affect the interfaces between your various financial applications. In the worst case this can invalidate the design of existing consolidation, reporting and planning applications. Trying to change the interfaces and re-implement all of these applications whilst changing your chart of accounts dramatically increases the scope, complexity and risk of a SCoA project. Devising an effective approach to managing the impact of a chart conversion on your satellite applications is a major challenge for a SCoA project; and
- Change Management – The existing financial applications continue to change during the CoA design and conversion process. This creates a challenging masterdata governance problem as masterdata created during this period needs to be extracted and included in the design process. This creates multiple versions of the truth and can create a real headache for the design team. Similarly, managing multiple versions of SCoAs, report definitions, and mapping files is difficult.
Next week we will look at some of the common pitfalls of chart conversion. If you would like to find out more about howSeismi helps our clients tackle these challenges, then please do not hesitate to get in contact.