Implementation excellence: A strategic framework for Costpoint success | Baker Tilly

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Implementation excellence: A strategic framework for Costpoint success | Baker Tilly

Starting off on the right foot

The foundation of any successful ERP implementation lies in thorough upfront planning and stakeholder alignment before any technical work begins.

Addressing the need

ERP implementations are driven by various business imperatives, for instance, many organizations typically pursue them due to mergers and acquisitions. Commercial companies entering the federal contracting space frequently need systems capable of handling government compliance requirements that existing platforms cannot support. Organic growth also serves as a driver, particularly when existing government contractors win contracts that require them to reorganize internally and get on board with more robust systems. New organizations entering the federal marketspace often choose Costpoint because, after a well planned and successful implementation incorporating the required controls, it promotes Defense Contract Audit Agency (DCAA) compliance. For instance, some organizations discover their prior systems simply cannot handle the complexity of indirect rates or allocation requirements demanded by compliance.

Timing

One of the most important decisions in any implementation is timing. Fiscal year cutover represents the most opportune time to go live with an accounting system. Mid-year conversions, while certainly possible, require more effort in data conversion and historical data staging. When implementing at fiscal year close, organizations can properly start the new year with full alignment between general ledgers and sub-ledgers, making the transition cleaner both from a technical and change management perspective.

Who and when

From a compliance standpoint, implementing Costpoint is a significant investment opportunity that organizations should fully leverage. This involves analyzing current cost accounting practices and determining future state corporate and segment alignment along with updated indirect structures that align with the future state. This analysis can take anywhere from nine months to eighteen months, requiring early planning. Additionally, early involvement of stakeholders is necessary. Business development teams need to understand how rate changes will affect their bidding strategies. Compliance professionals must ensure new structures address and comply with regulations such as the Federal Acquisition Regulation, its agency supplements, Cost Accounting Standards (CAS) and contract requirements as well as assessing any cost accounting practice changes and their impact on CAS covered contracts. Business owners across all affected functions should participate in design discussions.

Requirements analysis

Effective requirements analysis goes deeper than simply documenting what the current system does. The key is understanding not just current-state processes but also the desired end goals and outputs. This approach often reveals manual workarounds and inefficiencies that can be eliminated through proper system design. Requirements gathering should involve probing questions that uncover the full scope of business needs, bringing fresh perspectives with industry expertise, compliance knowledge and system capabilities to challenge existing assumptions and identify improvement opportunities.

End state vision development

Successful implementations require developing a shared vision of the future state that includes how business processes will work, how people will interact with systems and how organizations will operate not just today, but years into the future. The vision must account for anticipated growth, potential mergers and acquisitions and evolving business needs. This forward-looking approach ensures the system will support growth and adaptation rather than constraining future opportunities.

Design and the PMO

Strong design and project management coordination transforms requirements into concrete system architecture while ensuring all functional areas work together cohesively.

Define the scope

Design refers to determining the logic and structure for processes and data elements within the system. For Costpoint implementations, project design is one of the most important and complex areas. The system’s project structure flexibility allows organizations to accommodate both rigid compliance needs and flexible operational requirements. Understanding the difference between design and configuration helps companies make better decisions. Design is the “what” and “why” of system behavior, while configuration implements those decisions through system settings.

Design sessions

These sessions should involve the right people to capture both functional and compliance considerations. Practical design sessions often involve whiteboarding and process flow development with business owners, compliance professionals and process teams. This collaboration helps identify control points and ensure all stakeholders understand how processes will work in the new system.

Crossing silos

Successful implementations require breaking down silos and ensuring design decisions are coordinated across different business processes and system modules. Cross-functional coordination is critical and requires strong program management to bridge different work streams and functional areas. Well-planned project management helps manage this coordination by having program managers aligned to different project areas and functional leads who understand overall business processes and system constructs.

Documentation

Projects that lack sufficient documentation inevitably face challenges when new team members join or when questions arise about system behavior. Proper documentation should explain not just what was configured, but why specific decisions were made. Frequently, policies, procedures, roles and responsibilities will be impacted that require updated documentation to reflect the new controls and processes. These updates are normally coordinated with the design effort. This information becomes critical for DCAA audits, where auditors will want to understand controls and processes. Good documentation also builds flexibility for future growth, including guidance on how acquisitions would be incorporated and how business lines would be structured.

Design acceptance

This step is more than a simple sign-off on documentation. It requires ensuring that design decisions align with business needs, compliance requirements and long-term organizational goals. The acceptance process should involve all key stakeholders who will be affected by design decisions. This phase also involves creating matrices that document how specific design decisions address regulations, creating clear audit trails that connect system configurations to compliance.

Build test and prepare the organization

The final phase transforms design into working reality while preparing users for adoption and ensuring audit readiness.

Configure the software

The configuration is the translation of design decisions into actual system settings. This phase marks the first opportunity for users to interact with the actual system. While design confirms what the system should do and why, configuration is specific implementation – checking boxes, setting flags and setting up organizational structures within the software. These configuration decisions will live throughout the system’s production life.

Data conversion

This phase is time-consuming and a complex aspect of the implementation, becoming “the longest pole in the tent”. The fundamental challenge lies in translating how things were done in previous systems, whether Excel, QuickBooks or other platforms into new system’s structure and logic. Organizations must decide what level of detail is necessary and feasible to convert from historical systems. For government contractors, data conversions become more complex due to audit requirements.

Testing

While confirming proper mathematical calculations is important, comprehensive testing must focus on business processes, user roles, control points and organizational responsibilities. Real testing involves practicing processes and controls, ensuring users understand their responsibilities and access rights. Design sessions may have identified who should perform what functions, but testing reveals whether users can actually access the data and functionality they need. While early implementation phases involve core teams, testing brings in broader user groups who will use the system daily. This expanded involvement helps validate functionality.

Change management

Users who understand that the new system supports company growth and builds upon past successes are more likely to embrace changes than those who receive simple directives. Change management needs to address the natural resistance that occurs when familiar processes change. Users need to understand not only what changes relate to their work area but also how their role fits into broader processes. In addition, cost accounting practices may have changed with the new implementation and functions such as accounting, estimating, billing and others need to understand those changes. Without this understanding, users may continue old practices simply because they don’t understand downstream impacts.

Prepare for audit

Audit preparation is woven throughout the entire process. Every design decision, configuration choice and process flow document during implementation becomes part of audit trails that DCAA and other auditors will review. Organizations should compile comprehensive audit packages, including requirement matrices showing how regulatory requirements are addressed, policies and procedures aligned with system functionality and process flows demonstrating control points. This documentation should clearly connect system configurations to specific compliance needs. One primary benefit of Costpoint implementation is that future audits become easier through system-generated reports, automated rate calculations and integrated controls that reduce manual effort while providing more reliable information.