If you’re still using a legacy on-premises accounting system, there’s a good chance you’re facing some challenges and inefficiencies with your business processes.
Be it siloed operations, duplicate data entry, an upcoming end of life (like with Microsoft Dynamics GP) or a whole host of other nuisances, it’s time to consider migrating to a cloud-based Enterprise Resource Planning (ERP) system.
Not only does a cloud-based ERP improve your accounting and finance workflows, but it grants the opportunity to integrate multiple (if not all) departments’ processes in your organization — including payroll and human resources (HR).
We recently teamed up with ADP to present a webinar on transitioning your accounting and payroll systems to the cloud, where they can then be integrated. You can view the full recording here.
Below, we’ll recap the primary takeaways from the presentation, including why you need to consider transitioning to the cloud, common trends for businesses moving to the cloud and what’s working, cloud-based payroll and human capital management (HCM) features and benefits, and ERP and payroll system integration capabilities.
What Is a Cloud ERP System?
A cloud ERP solution is an application in the cloud without any on-premises servers or hardware. It encompasses your core financials, supply chain, service and project management, manufacturing and HCM.
You can access the application from pretty much anywhere using a tablet, web browser or mobile device.
Some examples of fully-integrated, cloud-based ERP systems are Microsoft Dynamics 365 Business Central and Oracle NetSuite.
What Are Some Differences Between an On-Premises ERP and a Cloud ERP?
Hosting and Licensing
An on-prem ERP is either onsite or via a service provider. Typically, there’s a perpetual license where you buy the license and pay annually for maintenance.
On the contrary, cloud ERPs are mainly subscription based, priced per user and per feature.
Updates
On-prem ERPs rely on manual updates that must be installed or run annually to stay current, whereas cloud ERPs have automatic updates to the system throughout the year with new features and enhancements. There’s no maintenance or manual installation for upgrades in a cloud ERP.
General Ledger Account Structure
The general ledger (GL) account structure differs between on-prem and cloud ERPs in that cloud ERPs have a natural chart of accounts with segments or dimensions for further transaction classification. These separate classifications allow for greater reporting flexibility. With the on-prem ERP, you have a single account string with multiple segments which limits flexibility and requires more maintenance.
Mobile Reporting
Mobile reporting with an on-prem ERP requires a data gateway and on-prem setup to get data from your on-prem server to the cloud. With a cloud ERP, there are native connections available for reporting via web browser or mobile app, along with Power BI or other third-party reporting applications.
Approvals and Workflows
Approvals are included for most tasks with an on-prem ERP, but you need to be onsite or connected to a VPN for it to work. With a cloud ERP, approval workflows are native to the system so items can be approved from anywhere via web browser or mobile app. There are also business process workflows to automate manual tasks and routing, saving you time.
Importing Data
You can import data a lot easier with a cloud ERP thanks to native web application programming interface (APIs) and cloud-based integration platforms. There’s also native file import functionality.
On-prem ERPs require desktop integration tools, or a cloud connected application through a data gateway or an on-prem setup in order to import.
Third-Party Tools
For cloud ERPs, locating third-party tools that integrate with the system is pretty seamless. You can access the marketplace (app store) associated with your system to download an app to perform a specific task for you. Most of them have free trials where you can test them out before implementing an app into your ERP.
On-prem ERPs typically contain a deep ecosystem of third-party tools that can integrate with the system.
U.S. and Canadian Payroll
Payroll is native to on-prem ERP systems, whereas with cloud ERPs, there are tight integrations with service providers, such as ADP, along with third-party apps.
NetSuite: A Modern Cloud ERP
Go to minute 4:47 in the webinar recording to view the demo.
In NetSuite, all the information you need is in one place. The dashboards are customizable, so you can select whatever details you want (or don’t want) to have at your fingertips, including KPIs, monthly sales trends, subsidiaries, reminders and more.
Using journal entries in NetSuite, you can manage the chart of accounts without having to switch companies in the platform. A subsidiary can simply be selected from a dropdown menu and there are native intercompany capabilities. You would have to switch companies in order to do this in on-prem systems like Microsoft Dynamics GP or Sage.
In the journal entry in NetSuite, your chart of accounts can be further broken down by department, class or other specifications, or you don’t have to classify them at all depending on your entry. This simplifies your chart of accounts and grants more flexibility when coding your transactions.
Why Migrate to a Cloud ERP?
There are several reasons why companies decide to move to a cloud ERP. Many times, it concerns an internal corporate cloud strategy where you’re moving all your servers offsite and want to transfer everything over to the cloud.
You may also be fed up with manual upgrades and patches that come with the annual updates to the on-prem system, whereas those updates occur automatically with a cloud-based platform.
Another factor may be that you’re approaching an end of life with a legacy product, such as Dynamics GP, where you will eventually no longer have support for the system or server, and don’t want to have to maintain or upgrade on-prem hardware.
A cloud ERP has easy, agile deployment and scalability if you need more users or storage space — no need for new installations or hardware migrations to be able to scale to a larger system.
You also have the opportunity to take advantage of modern, integrated cloud applications that come out-of-the-box, so you don’t have to specifically write them into your system like with an on-prem ERP. You also can utilize modern features in the cloud (like workflow, mobile applications, etc.) that are not available with on-prem ERPs.
What’s the Process of Migrating to a Cloud ERP?
When migrating to a cloud ERP, you forgo the whole “installation process” like you had with your on-prem system. Cloud ERPs can get up and running fairly quickly and data can be migrated from your old system into the new system. That includes bringing over your chart of accounts, vendors, customers, inventory items, any open transactions and historical balances for your GL so you can run comparative reporting.
There’s plenty of time to test out the cloud ERP so you can see how your data is displayed and that your processes will work as expected. Then, you can choose a date to go live with the new system. Cloud ERPs also have what’s known as “sandbox environments” where you can make a replica of your production environment, test out new features, and once you’re ready to turn on those features in a live environment, you can do so without having to make backups and copies for testing.
How Long Does It Take?
Most cloud ERP system implementations take between three to six months depending on how complex your system is, the data you’re reviewing and what business processes you’re changing.
What Data Converts?
Typically, we’ll bring over your main data files (chart of accounts, vendor list, customer list, project list, etc.). We would also bring over historical balances, either summary balances or detail balances for GL. Then, we would bring over open transactions like your open accounts payable aging and accounts receivable aging.
What About Third-Party Products?
If you’re using third-party products with your current on-prem system, those third-party providers may already have a version available for a cloud-based system. If there isn’t a version available for cloud software, there are usually other third-party solutions that you can use as an alternative. We can help migrate the data from one third-party system to another if need be.
How to Assess Your Readiness for the Cloud
We offer a free assessment if you are interested in taking the next steps towards migrating to the cloud. During the assessment, we analyze your existing environment and generate a personalized report that includes:
- A summary of the modules, features and independent software vendor (ISV) solutions in use
- Confirmation of product version, data consumption and other industry-specific requirements
- Assessing your readiness to move to a cloud ERP
- Guidance on next steps, including the scope of implementation and a proposed migration plan
Moving Your Payroll to the Cloud
If you’re considering moving your ERP system to the cloud, you’ll have to take your payroll processes into account as well. You likely have a payroll system with your current system that will need to transfer to the cloud.
ADP offers a cloud-based payroll and HCM solution that comes with pre-built integrations with systems like Business Central and NetSuite. The solution is 100% customizable to fit your business needs, which includes:
- Payroll and tax filing
- Employee recruitment, screening and selection
- Benefits and administration tools
- Affordable Care Act (ACA) reporting
- Compensation
- HR and compliance
- Performance, learning and global management
- Reporting, analytics and benchmarking
- Timekeeping, attendance and scheduling
- Retirement
Moving your payroll to the cloud eliminates manual payroll and tax filing processes. New hire reporting, printing and distributing employee 1099s, check reconciliation and annual tax filing can be automated and supported by ADP.
This doesn’t mean you are entirely outsourcing your payroll to ADP, but you’d be giving a payroll administrator or HR director the software to handle these processes in an efficient and accurate way.
ADP’s Integration With Business Central and NetSuite
ADP’s solution integrates the GL in Business Central (it is pre-built and just needs to be configured) as well as the employee data. This means if you add a new hire into Business Central, they will carry over into ADP and vice versa — eliminating the need for dual entry.
ADP also has pre-built integrations with NetSuite, including the GL and employee data, expense reimbursement, project and labor allocations, and time and attendance.
ADP Platform Demo
Go to minute 19:26 in the webinar recording to view the demo.
The Workforce Now Portal in ADP allows you to handle recruitment, benefits, HR and payroll in a single location. There are options to transfer any payroll or HR-related information from a previous third-party payroll provider into ADP’s system. The idea is to limit the number of systems to avoid duplicate entry — so with everything in ADP and integrated with your accounting system, your HR and payroll team can free up time for other tasks. Like with NetSuite, the Workforce Now Portal can be customizable, so you have the most pertinent information presented upfront.
All of this can be paired with the ADP mobile app, where with employee self-service, staff members can clock in and out, respond to engagement surveys and receive notifications. They can also view any changes between their most recent paycheck and prior paychecks and why there’s a difference. Enabling employee self-service has shown an 80% reduction in the number of questions being routed to HR and payroll administrators. Employees are empowered with the insight into their pay, and the HR and payroll department don’t need to spend additional time addressing staff questions and can focus more on strategy versus administrative work.
The ADP mobile app also allows employees to change and edit information. For certain changes that need to be verified by payroll and HR, approval processes and workflows can be established to make sure that everyone is aware of the changes being made.
The Payroll Dashboard allows you to enter payroll information for multiple companies so you can easily perform cross-company reporting. You can also view different payroll frequencies (weekly, bi-weekly, monthly) within the same database.
When it comes to time entry, you can either manually upload a worksheet, pull hours from time and attendance within ADP, or import from a third-party vendor. When you import the time into Workforce Now, you can see a list of employees that includes their hours and pay rates. Each employee comes with their own pay profile, which is where you assign and view their rate, any deductions, direct deposit information and tax withholdings (which ADP will file on your behalf).
Once you verify and submit the pay information for your employees, you’ll be able to compare it to previous pay periods to pick up on any differences and reasons for any discrepancies. If all looks correct, you can approve the payroll for that period. From there, ADP ensures that employees are paid and taxes are filed.
Post payroll processing, you can view the GL movement in the Reports Dashboard section of Workforce Now, configure your chart of accounts and deliver that information to your ERP software. ADP also offers 174 standard reports that you can download and file electronically, along with customizable reporting capabilities.
Conclusion
With all the increased efficiency and features available in cloud ERP systems, you’d be doing your business a disservice by not evaluating a move to the cloud. Not only that, but system integrations in the cloud can also radically improve workflows and user experience across areas of your business.
In the case of your payroll and HR personnel, an integration between a cloud ERP and ADP eliminates manual tasks and dual entry that are time-consuming and error prone, leaving your team more time to prioritize strategic initiatives that strengthen their department and your organization as a whole.
Need Help?
If you’re interested in migrating to the cloud and integrating your organization’s accounting and payroll, contact us online or give us a call at 410.685.5512.
