2 weeks Ago
Ann Blakely is the managing principal of Baker Tilly’s digital solutions practice , with a focus on modernizing legacy business models. Modern enterprise resource management (ERP) system replacements are becoming increasingly more common in highly regulated industries as compliance regulations continue to increase in both quantity and complexity. In the healthcare industry, a 2025 Healthcare Compliance Outlook Report found only 31% of respondents "feel very prepared to meet compliance and risk challenges" with less than half (42%) feeling "very confident about maintaining a high quality of care" due to the influx of compliance demands.
These demands extend into the insurance industry where 2024 saw regulators issue over $4.3 billion in non-compliance fines , accounting for 95% of fines issued globally. This surge in regulations, along with the increasing need for operational efficiency and enhanced resource management, is driving chief information officers (CIOs) to mitigate risk by replacing outdated ERP systems with more advanced solutions.
Leveraging the capabilities of a modern ERP system can assist with navigating the complex, ever-changing compliance landscape more effectively—allowing a shift in focus to delivering more value-added work. Modern ERP systems come equipped with built-in features that track and manage compliance-related data, creating a centralized platform for handling all compliance activities. With real-time visibility into operations, potential compliance issues can be identified and addressed proactively, helping to reduce the risk of non-compliance penalties and making audits more manageable.
In the healthcare sector, modern ERP systems help secure patient data, ensuring compliance with the Health Insurance Portability and Accountability Act (HIPAA). By providing organizations with data encryption, role-based access controls and audit trails, these systems protect sensitive information and maintain detailed logs of all data access and modifications to ensure only authorized personnel can access. These features support compliance with HIPAA while improving overall patient care by enabling efficient resource allocation and better decision making.
In the insurance industry, organizations face stringent regulatory requirements set by bodies like the National Association of Insurance Commissioners (NAIC). The centralization of compliance-related activities, along with automated financial reporting, accurate record maintenance and real-time data management, supported by modern ERP systems provides a comprehensive view of operations, enhancing visibility and control—a critical aspect of regulatory adherence. Additionally, with the regulatory environment continuously changing, organizations need to be agile to keep up with the pace of change.
Modern ERP systems are designed to be flexible and scalable so that organizations can seamlessly adapt to new regulations. While necessary for companies of all sizes, this adaptability is essential for middle-market companies that may not have the extensive resources of larger enterprises but still need to comply with the same regulatory standards. With middle-market companies typically having fewer resources and smaller teams dedicated to compliance, it can be increasingly difficult to keep up with the rapidly changing regulatory landscape.
Modern ERP systems can help alleviate this burden by automating many compliance-related tasks, reducing the need for extensive manual work which allows smaller teams to manage compliance more efficiently and focus more resources on their core business operations. Implementing a modern ERP system can be a complex and challenging process, but with the right strategies, it can lead to significant improvements in compliance and efficiency. It’s critical to start with the understanding that an ERP system replacement is not just an IT project—it’s a business project that impacts the entire organization.
Below are eight critical success strategies for ERP replacements: Select an ERP system that not only meets your current needs but also supports your future growth and strategic goals. Consider the selected ERP system’s scalability, flexibility and ability to integrate with other systems as your business evolves. Identify the critical and unique requirements essential to your operations and certify the selected ERP system meets those needs.
This ensures the chosen system addresses the most important aspects of your business, leading to better ROI post-implementation. Considering tangible elements (cost, functionality and technical specifications) and intangible elements (vendor reputation, customer support and ease of use) ensures you select a system that not only meets technical requirements but also aligns with your organizational culture and user preferences. Your ERP system is a centralized platform that will be utilized across the business.
Aligning team members across departments (who may have previously utilized conflicting processes) eliminates silo thinking, creates a unified approach to implementation and ensures the system supports end-to-end business processes. Engage employees early in the ERP selection process (involve them in decision making, provide training and gather their feedback) to increase user adoption. Early engagement helps address concerns, build buy-in and ensure users are comfortable with the new system.
Effective project management of an ERP system implementation includes setting clear timelines, defining roles and responsibilities, and regularly monitoring progress. A disciplined approach helps in managing risks, staying on schedule and ensuring that the project stays within budget. Having a strong commitment and prioritization of the project by securing support from top management, allocating necessary resources and maintaining focus on project goals can help avoid slowing down the project.
This ensures that the project receives the attention and resources it needs to succeed. Software demonstrations should be focused on "day in the life" business scenarios to provide a realistic view of how the ERP system will function in your organization. This helps in assessing the system’s usability, identifying potential issues and ensuring that it meets the practical needs of your users.
With the increasing complexity and volume of compliance regulations organizations in highly regulated industries need to adhere to, implementing a modern ERP system can help navigate the intricate regulatory landscape while also enhancing operational efficiency and resource management. As the regulatory environment continues to evolve, organizations must remain agile and adaptable, making modern ERP systems a key tool for achieving compliance and driving strategic growth. Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives.
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