Integration Woes

April 2008 from CAmagazine and written by Michael Burns – “Integration still is the No. 1 problem facing many organizations that require more than one internal system…”

Five misconceptions about ERP

April 2008 from Manufacturing Automation and written by Michael Burns – “There are so many misconceptions about ERP, it’s a wonder that the acronym has not been replaced. Are you guilty of harbouring one of those misconceptions?”

New CRM Website

We have just launched a website for CRM (http://www.crm180systems.com/), to join our other websites on ERP (http://www.erp180systems.com/), Corporate Performance Management/Business Intelligence (http://www.cpm180systems.com/), and Business Process Improvement/Governance Risk Compliance (http://www.bpi180systems.com/)

The objective for all these site is to provide unbiased information about products, implementers and relevant articles. We would appreciate any suggestions on how to improve the site and recommendations for products or implementers to add to our site.

Leading waste hauler sues SAP claiming ERP rollout a 'complete failure'

March 27, 2008 from ITBusiness.ca – “The trash disposal giant, Waste Management is suing SAP over an ERP implementation it dubs "a complete failure." In its court complaint, Waste Management said senior SAP executives, including SAP Americas' president and CEO, Bill McDermott, participated in the "rigged and manipulated" demos.”

180 View – It’s hard to believe that SAP would intentionally rig or manipulate a demo. A canned demo is apparent if you are asking questions. The demonstrator will be unable to show anything other than what was planned. It’s also unlikely that SAP would have answered specific functionality questions dishonestly. That would be a big problem in court. It would also be a big problem during the selection process if the truth was uncovered as the decision is largely based on trust. But perhaps the requirements were not well defined. And perhaps SAP was not forced to be specific in responding to requirements. A “Yes” can mean many things including out of the box functionality, third party, customization or workaround.

It’s not to say that the vendors are always blameless. We have recently heard a number of horror stories of failed implementations. In these cases, the problem lay with the Value Added Reseller who promised the world and failed to deliver. One question raised by these failures is to what extent the developer should be responsible for the failures of their Value Added Resellers. Many of the developers have certification processes, but it’s no guaranty. We would like to hear your thoughts on this.

SAP and Oracle: Who’s Ready for Small and Medium-Sized Businesses?

June 2007 from Nucleus Research – “Who’s’ delivering the greatest value to the SMB market? An in-depth analysis of 56 customers showed significant differences between the value delivered by SMBs by Oracle and SAP today…”

180 View – If you read the article you will find that 44% of the Oracle respondents would recommend Oracle to their peers. If you think that’s bad, only 10% of SAP customers would recommend SAP. Is SAP getting a bad rap? Perhaps based on a limited survey base or because SAP’s midmarket systems were not included. I (Michael Burns) have used SAP at Ryerson University to demonstrate ERP concepts. I think SAP would overpower most SMB’s. SAP does offer All-in-One, which is preconfigured for a specific industry and would reduce the setup hit. Also SAP has two SMB solutions – SAP Business One and ByDesign.

Why You Should Jott Yourself

April 16, 2008 from PC World – “In a recent column, Memos on the Go, I briefly mentioned Jott. It's a free service that transcribes voice messages you send it into text, then e-mails a transcription of the message to you. The idea is to make it easy to record memos and reminders for yourself.

I didn't have the space to get into more detail about Jott then, but the service is definitely worth a longer look. In fact, like PC World's Steve Bass, I've become a fan. In my opinion, Jott is a fantastic productivity tool that every busy mobile professional should try.”

180 View – Looks good to us. You could use this program not only when you have a great idea while in the car and don’t want to forget it but also to dictate notes from your last meeting and fresh in your mind. Our only concern is that some people may gain some productivity at the expense of bad driving.

The Forecast for Cloud Computing

March 5, 2008 from CIO Insight – “Thanks to the phenomenon known as cloud computing, businesses can rent access to applications and IT infrastructure that reside on the Internet, pay for them on a subscription or per-use basis and provide employees with access to information from anywhere at any time with nothing more than a connected device…

But theory isn’t reality, and just because cloud computing holds promise doesn’t mean that’s going to translate into practical solutions for real business technology challenges—at least, not anytime soon...”

180 View – There are a number of success stories in the clouds with Salesforce.com and NetSuite, and we believe there will be a lot more action up there.

Microsoft Releases Dynamics CRM Online

April 22, 2008 from InformationWeek – “Microsoft (NSDQ: MSFT)'s been dabbling with on-demand software services for awhile, but the general availability of Microsoft Dynamics CRM Online, beginning Tuesday, marks its most significant effort yet to provide the market with an alternative to Salesforce.com.

The software service for managing a business's customer contacts, sales information, and marketing efforts is available as a subscription and hosted from Microsoft's data centers using a multitenant architecture. General availability follows months of testing by 500 Microsoft customers.

Microsoft is trying to beat Salesforce.com on price and storage options. The base version, called Professional, costs $44 per month per user following a one-year introductory rate of $39 per month. That includes 5 GB of data storage per organization and the ability to customize workflows. The Professional Plus version costs $59 per user per month with 20 GB of storage, with more customization features and the ability to synchronize data contained in other systems with the service. Users access the service using Microsoft Outlook or a Web browser as an interface.

180 View – Microsoft is now fighting yet another war (with Salesforce.com), but it’s a war that they are well equipped to wage. But Salesforce.com has formidable allies especially in Google. Click here to see the April 15, 2008 from itWorldCanada entitled “Google, Salesforce.com partner on business apps”

SOX 404: US Non-Accelerated Filers – Are You Ready for Certification?

April 2008 and written by Geoff Rodrigues, CA, ORMP of Horwath Orenstein - On July 30, 2002, the Sarbanes-Oxley Act became law for all companies listed in the United States, including those foreign companies that have listings on United States exchanges. Section 404 of the Sarbanes-Oxley Act set out requirements for both management of these public companies as well as the external auditors to separately and independently evaluate the company’s internal controls over financial reporting. Section 404 has two provisions: 404 (a) requires management to assess the effectiveness of the company’s internal controls over financial reporting, while 404 (b) requires a separate auditor attestation of the company’s internal controls. Accelerated filers (i.e. companies with market capitalization over $75 million) have been subject to both provisions since 2004. Non-accelerated filers (i.e. companies with market capitalization less than $75 million) are now gearing up to make their first certification, as management must perform their assessment for their first year ending after December 15, 2007, with the external auditors performing their assessment likely after December 15, 2009 (this date is still under review).

What Does this All Mean?

What this means is that management, should already be looking at evaluating not only the design of their internal controls over financial reporting, but also the operating effectiveness before year end. Section 404 says management has to certify that as at year-end the internal controls over financial reporting are effective in mitigating those risks that could prevent the financial statements from being materially accurate. The United States Securities and Exchange Commission were very clear in their release 33-8183, “Strengthening the Commission’s Requirements Regarding Auditor Independence”, stating, “…..we believe that designing and implementing internal accounting and risk management controls impairs the accountant’s independence because it places the accountant in the role of management.” A large part of evaluating the internal controls is making design changes to identified weaknesses. Therefore, it is pretty clear that the independent auditors cannot effectively assist management with their assessment without impairing their independence. Also, the auditors are expected to perform their own assessment of the internal controls. So how could they be able to independently assess and conclude on internal controls that they have already assessed on behalf of management, and presumably participated in making design changes based on that assessment. With all that being said, what is management to do?

Tips to Management on Performing their Assessment

Our role as consultants to companies going through the process is to provide guidance and assistance to them on applying a systematic process to document and evaluate their internal controls over financial reporting to allow management to conclude on their effectiveness. Below we have summarized our thoughts on how to efficiently and effectively implement a sustainable certification effort:

Overall Plan – Probably the most important piece of the entire effort is to plan. If you fail to plan, then plan to fail! Within the plan companies should begin by starting at the top. Management should look at the financial statements and assess what are the areas where material errors are likely to occur. This is achieved by considering several factors such as defining a materiality threshold to identify from a quantitative prospective what are the financial statement accounts that if misstated by that threshold, would likely affect the decisions of users of the financial statements. After performing the quantitative assessment, management should also perform a qualitative assessment on those same financial statement accounts by looking at inherent items such as complexity of transactions, history of errors, transaction volume, subjectivity to judgment, etc. After performing both the quantitative and qualitative assessment, management should be in a position to identify which financial statement areas to focus attention. Other objectives of the plan are to develop a steering committee, develop milestones for performance of key phases, establish a document repository and identify a pilot process for evaluation.

Entity Level Controls – Based on guidance set out by the Public Company Accounting Oversight Board in Audit Standard 5, the assessment should be top-down focusing more attention on the entity level controls due to their pervasive nature and impact. The intention is that with a strong control framework at the entity level, the likelihood of material errors occurring at the transaction level is reduced. Some of the areas to look at within the entity level are control environment, disclosure controls and procedures, estimates and judgments, period end reporting, and susceptibility to fraud.

Conduct Pilot – The purpose of conducting a pilot is to test the state of a single process or location, at the transaction level, to provide an indication of the state of all the key transaction level controls. This will provide management with a sample based on time spent that can be extrapolated to determine the amount of work required to complete certification. Management can use those results to refine the budget, resources, timetable and plan.

Project Roll-Out – This is the phase where the internal controls at the process level (identified in the planning phase) are evaluated. This is done by documenting the controls using process maps, risk/control matrices, and/or process narratives. Once documented the controls are evaluated for effective design by ensuring controls are in place to mitigate all critical risks identified for each process. Once management concludes the design is effective, the controls are tested to ensure they are operating effectively.

Monitoring – The final phase representing the testing of the operating effectiveness of the internal controls over financial reporting. In this phase, samples are selected for all key controls identified in the previous phase and test plans and procedures are developed. The test procedures are executed and results are extrapolated to represent the entire population of transactions for each material process.

Note: Remediation and implementation of new or modified controls can occur both at the design evaluation and operating effectiveness stage. Much of the work planned in the project rollout and monitoring phases is based on the results of the entity level evaluation and to what extent management can rely on the strength of the entity level controls. An important hazard to watch out for is scope creep, so make sure you keep to the plan.

I’m going to conclude this article with 10 of the most commonly pitfalls we’ve encountered companies experience when conducting their own internal control evaluation (whether it’s SOX 404 or Bill 198/MI-52-109):

1. Management is trying to evaluate a function versus a process – the “Silo” mentality
2. Not enough communication between management and internal audit. Internal audit is independent of management and usually performs the evaluation once the controls are documented by management.
3. Lack of top-down risk-based approach – too much focus at the transaction level
4. Lack of competent internal resources – organizations tend to bring in employees from finance to perform the work, but management must carefully oversee their work as not all finance personnel have experience in internal control
5. Insufficient testing of automated controls – too much focus on manual controls
6. Lack of timely implementation of guidance – piecemeal application of standards
7. Treatment of compliance as project management versus process management – the framework developed must be sustainable
8. Insufficient knowledge transfer from process owners to key personnel
9. Lack of differentiation between key and non-key controls and streamlining of processes
10. No initiative to introduce operational efficiencies based on compliance activities

The most important thing to remember is that internal control evaluation should extend beyond regulatory compliance and should add value where possible. So when management is going through the process, it is important to make the number of controls scaleable to the size of the organization with the focus remaining on what will materially effect the financial statements and users’ decisions. Remember, one size does not fit all!

As your company nears year-end, the most important question you can be asking yourself is, are you ready for certification?

Preparing for the next downturn

April, 2007 from the McKinsey Quarterly – “By our reckoning, nearly 40 percent of leading US industrial companies toppled from the first quartile in their sectors during the 2000–01 recession, and a third of leading US banks met the same fate. At the same time, 15 percent of companies that had not been industry leaders prior to the last recession vaulted into those positions during it...”

180 View (written by Lawrence Young) – I’d like to preface my thoughts by making one thing perfectly clear – I’m not knocking economists! I for one fully understand that nobody’s crystal ball provides 20/20 vision.

But are you as confused as I am when you read the newspaper these days? One well-respected economist says the cost of oil could hit $200 a barrel by year-end; another says oil is going to drop back to $90 from its current level of about $115. The prime rate has been cut twice over recent months, but now the word on the street is that rates may rise in the not-too-distant future. Oh well, like Nobel laureate Paul Samuelson aptly said “Economists have correctly predicted nine of the last five recessions”.

While economists may not agree on everything, they all seem pretty convinced of this-tough times lie ahead! Some feel the United States is in a recession now, some say a recession is coming, and some don’t believe the timing of the next recession is imminent. But the ‘R’ word aside, an economic downturn in the short-term seems to be a given to all pundits.
So what do corporate managers do now? Simply take a ‘weather the storm’ attitude? If history repeats itself, as it always seems to, fruitful opportunities await those who are willing and able to ‘seize the moment’ when the opportunities surface on the rocky road that lies ahead.

So what can a manager do today in order to exploit these opportunities down the road? This article, published a little over a year ago, reported on the study of the performance of some 1300 U.S. companies before, during and after the recession of 2000-01.

In short, the research clearly showed that three kinds of corporate flexibility can significantly help managers embrace opportunities that emerge during a recession. And insofar as human resource management prior to an economic downturn is concerned, gains in employee productivity today will go a long way to increasing a company’s flexibility when times get tough.

We all know the old saying ‘timing is everything’. Well, now may be the best time of all to seek out productivity improvements in your work force. Equip your workers with the tools they need to do their jobs efficiently. Run ‘lean and mean’ by re-engineering your business processes to cut out the fat. And as this article concludes, ask yourself today if you are ‘building the financial, operating and product flexibility to make the most of the next downturn’.