How to Successfully Implement a Not-for-Profit Accounting or ERP System

Now that your organization has gone through the process of choosing a new accounting/ERP system that meets your functional requirements and an implementation partner that has the required expertise, it’s time to prepare for a successful implementation!

As Robin Harmon pointed out in her article Rethinking Financial Systems for Mission-driven Organizations, “implementing a new financial system presents a unique opportunity for operational improvement, one that goes beyond technology. It’s a chance to rethink workflows, strengthen internal capacity, and align operations with long-term goals.”

The process can take four months to well over a year for large, complex end-to-end ERP implementations. Project management is often split between the organization and the implementation partner, but how responsibilities are divided will vary based on the implementation approach documented in the statement of work.

Some implementations involve a phased approach to implement core functionality in phase one and then add advanced functionality or integrations in a second phase. While we tailor every engagement to your not-for-profit organization’s needs, our implementations generally follow five key stages:

Step 1: Plan Development

Generally taking up to a month, planning is crucial as it builds a foundation for the rest of the project. Many of these activities may have been completed during the selection process, but it’s good practice to confirm them again during the planning phase.

• Name the executive sponsor.
• Name the management-level project champion for signoffs.
• Get to know the software implementation team.
• Set up key activities (e.g., milestones) and dates, including a cutover plan considering organizational busy times, holidays, and scheduled vacations.
• Confirm how much data will be migrated by summary or detail and for how many years.
• Establish staff roles and assign leads for:
  • Learning the process and overseeing data migration
  • Managing the chart of accounts creation and reporting
  • Testing the system
  • Overseeing system integrations
• Get the team excited about what success looks like in your desired future state and update organizational staff.

The internal project manager will sign off on the plan with the milestones and due dates on behalf of the team. Keep in mind that there isn’t one perfect plan. The best plan is the one that is followed and executed.

Step 2: Discovery

The second step, the discovery phase, is my favorite part of the project because the team examines processes in more detail. It can take one to two months to complete, depending on staff resources and the complexity of the implementation. While this was done at a higher level during the selection process to determine the ideal module mix, discussions during discovery will have a direct impact on setting up your new accounting system and need to be viewed from a holistic perspective, not just the part that involves the finance department.

• Review policies and procedures for money coming into the organization through the entire lifecycle, across all departments.
• Review policies and procedures for money going out of the organization, including payroll, through the entire lifecycle across departments.
• If the implementation is for a grantmaking organization, look at policies and procedures for grantees through the entire lifecycle across departments.
• If there will be integrations, look at workflows and connection points between systems.
• Don’t forget to look at spreadsheets and paper documents used in these processes and handled outside the system.

This is the time to challenge outdated policies and existing inefficient processes to imagine automation and improved internal controls. Besides documenting what is not working and what could be improved, document what is working so the team does not lose sight of existing good practices. Your implementation partner will also provide industry best practices based on their experience with other not-for-profit clients.

The internal project manager will sign off on the desired processes after the discovery sessions, as they will influence how the new ERP is configured.

Step 3: Design

After completing the first two steps, the third step is designing the ERP system intentionally. Like discovery, the design phase can take one to two months, depending on staff resources and the complexity of the implementation. Your implementation partner will walk you through configuration options and help you make informed decisions for the organization, considering internal controls.

As part of the design process, your partner will help identify the reports you need from the accounting system and how to slice and dice your data when advising you on the design of the chart of accounts and the dimension/segment structure. Before moving into the new system, take time to challenge existing processes and imagine improvements rather than simply transferring old habits, chart of accounts, and processes into modern technology, and don’t forget to gather input from people outside the accounting department.

Core staff are then trained how to use the system, starting with financial management functionality and then moving into any advanced modules. The internal project manager will sign off on the technical design requirements for functional requirements that will need to be configured or built because they are not included out of the box.

During this stage, the data that will be migrated to the new system is cleaned up, and future data entry protocols are established to keep data clean going forward.

Step 4: Build and Test

The fourth step is performing the database/module configuration for the organization’s specific preferences, as well as processing and building any additional functionality that was identified as necessary in the design phase. This step is followed by having the users test the system, which can take one to three months depending on staff resources and the complexity of the implementation. This is where organizational staff get to pressure test the new system while gaining familiarity with using it. The build and test phase includes many micro steps.

• The implementation partner walks the key organizational staff users through the setup of the system so they understand the choices made during the design stage and can interpret the testing results.
• The test environment is set up in a sandbox. Once the test scripts are created, the staff perform testing. If staff don’t take the time for testing, the intended go-live date should be revisited.
• Based on testing, there is often refinement to the database configurations.
• Integrations between systems are completed during this step and tested.
• There may be more user training depending on need after testing.
• Data migration and validation of historical balances and transactions begin.

To close out this phase, the internal project manager will sign off to confirm that the configuration is configured as expected and staff have tested the system.

Step 5: Deployment

The execution of the go-live strategy should be celebrated, and the internal project manager will sign off that the implementation is complete. Any new needs or functionality identified during deployment should be added to a phase two list with reasonable timelines.

• The implementation partner will continue to collaborate with you to ensure first month-end closing is successful and critical reports are built.
• Data migration and validation is finalized.
• Depending on the implementation partner chosen, the organization may then transition to a support plan for continued optimization of the system.

Key Takeaways for a Successful Nonprofit ERP Implementation

By following our five-step approach, we can guide your not-for-profit in successfully implementing a new accounting system that will alleviate pain points, improve reporting, use AI appropriately, and enhance automation and efficiency.  By combining deep not-for-profit industry experience with specialized accounting and technology expertise, Clark Nuber helps organizations successfully navigate every phase of an ERP implementation.

After implementation, don’t stop optimizing the system. Commit to continuing to invest time and resources in ongoing education and training to learn about new functionality, process improvement, and continuous optimization so your newly-configured system can grow and evolve with your organization.

Future virtual Sage Intacct demonstrations and not-for-profit essential workshops can be found on our website calendar.

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