What is Parallel Run?

Definition

Parallel Run is a transition method used during system implementations or upgrades in which a new system operates simultaneously with an existing legacy system for a defined period. During this phase, both systems process the same transactions so that organizations can compare outputs and confirm accuracy before fully switching to the new platform.

Finance teams frequently use parallel runs during ERP deployments to verify that critical processes such as invoice processing, payment approvals, and financial reporting aligned with accrual accounting produce identical results in the new environment. This comparison ensures that the new system reliably supports daily financial operations.

Once both systems consistently generate matching results, organizations can confidently transition to the new system as the primary operational platform.

Purpose of a Parallel Run

The primary objective of a parallel run is to validate that a newly implemented system performs correctly under real operating conditions. Instead of relying solely on test environments, organizations process live transactions through both systems and analyze the results.

This approach allows finance and operations teams to verify key workflows such as cash flow forecasting, revenue recognition under accrual accounting, and operational activities like vendor management. Any discrepancies identified during this phase can be investigated and resolved before the legacy system is retired.

By comparing results across systems, organizations ensure data accuracy, operational consistency, and confidence in the new system’s performance.

How Parallel Run Works

A parallel run typically occurs after system implementation and testing have been completed but before the organization fully transitions to the new system.

During this phase, both systems receive the same operational data and transactions. Finance teams monitor outputs closely to verify that calculations, postings, and reporting remain consistent.

• Transactions are entered in both the legacy system and the new system.

• Outputs such as reports and financial statements are generated in each system.

• Teams compare results using reconciliation controls.

• Any discrepancies are analyzed and corrected.

• Once outputs consistently match, the legacy system can be retired.

This validation period ensures that the new system can reliably support operational and financial workflows.

Key Operational Activities During Parallel Run

Several operational activities occur simultaneously during a parallel run to ensure accurate system validation and user readiness.

• Verification of financial postings within the general ledger reconciliation

• Monitoring of customer transactions affecting accounts receivable management

• Review of supplier transactions within accounts payable management

• Validation of internal controls using reconciliation controls

• Testing transaction throughput using Parallel Simulation Processing

• Operational task coordination through Parallel Workflow

These activities help ensure that operational and financial processes function correctly in the new environment.

Practical Business Example

Consider a retail company implementing a new ERP system for its finance department. Before fully transitioning to the new system, the company runs both the legacy accounting system and the ERP system simultaneously for two months.

During this time, daily sales transactions, supplier invoices, and expense reports are recorded in both systems. Finance teams compare outputs such as revenue reports, cash balances, and expense postings.

If both systems consistently produce identical financial statements and operational reports, the organization gains confidence that the new ERP system is functioning correctly. After the validation period, the legacy system is retired, and the ERP system becomes the primary operational platform.

Benefits of Parallel Run

Parallel run provides organizations with a structured approach to validating new systems before full deployment.

• Ensures accuracy of financial transactions and reporting

• Validates operational workflows under real business conditions

• Provides a safety mechanism during system transitions

• Supports user training and operational readiness

• Enhances confidence in system performance before full adoption

These benefits make parallel run a widely used strategy during ERP implementations and major system upgrades.

Best Practices for Successful Parallel Run

Organizations typically follow structured practices to ensure that parallel runs deliver reliable validation results.

• Define clear comparison metrics for system outputs

• Establish strong monitoring procedures for financial data

• Ensure consistent data entry across both systems

• Conduct regular reconciliation reviews during the validation period

• Document discrepancies and corrective actions

These practices allow organizations to identify and resolve issues quickly while maintaining operational stability.

Summary

Parallel Run is a system transition method where a new system operates alongside an existing legacy system for a defined period. By processing the same transactions in both environments, organizations can validate accuracy and ensure operational continuity.

Through comparisons of workflows such as invoice processing, financial controls like reconciliation controls, and forecasting activities including cash flow forecasting, companies confirm that the new system reliably supports financial operations before fully replacing the legacy system.