The Evolution of Organizational Process

December 8, 2009 from Baseline – “Despite a multidecade focus, business-technology processes in many companies are unmanaged, invisible and unmeasured.

Consequently, they are executed haphazardly and inconsistently. This results in delays, errors, low quality and high overhead costs. Such unmanaged processes cannot detect and adapt to changing market conditions—and that can be fatal in today’s business environment.

There are countless reasons for this continuing breakdown. Principal among them is that many processes cross an enterprise’s internal and external boundaries as part of business networks and, therefore, they become the province of no one…”

180 View – It is true that one of the reasons for suboptimal business processes is that processes cross boundaries but the problem is not just that they become the province of no one. The problem is more likely that the various departments, profit centres, or business units often have their own agenda. As they are measured on what they do and not on the business as a whole, they can optimize their own processes at the expense of the enterprise. There are some suggestions in the article as to methods to improve business processes using “business technology capabilities”, which are helpful but don’t address the underlying lack of motivation problem.

2009 Finance Book Of Metrics

July 27, 2009 from CFO and sponsored by Deloitte - “No surprise, cost-cutting initiatives are more crucial than ever for executives: “Where will I get the most impact without negatively affecting our ability to serve customers?” “Where can I reduce costs without endangering our ability to rebound quickly when the economy improves?” “Are opportunities the same from one industry to the next?”

Measuring internal strengths and weaknesses — and comparing them against “best-in-class” performance — can help executives in their efforts to identify and mitigate gaps that have the potential to impair the performance of both the finance function and the entire business.

To quantify various improvement opportunities, Deloitte’s Global Benchmarking Center has conducted diagnostic studies of core finance activities:

• Transaction processing
• General accounting and external reporting
• Controls
• Tax and treasury
• Performance management…”

180 View – Unfortunately the metrics are based on a survey of global companies with an average of $2.3 Billion in revenues. The other problem with the report is that many of the suggested “effective practice attributes” (or best practices) sound like motherhood such as “Tools are fully automated, standardized and consistently developed” or “Management information system is fully integrated and automated, thereby allowing for centralized management and operating reporting.” As the report is an executive summary, perhaps there is more useful information in the detailed findings. In any event, Deloitte does provide a useful approach for improving business process.

Aligning Business and IT to improve Performance

2008 from Ventana Research and published by BPM Magazine - “…Improving business performance is a goal that cannot be realized without mutual cooperation and alignment between business and IT. In collaboration, IT focuses on architecture, system administration, scalability and performance, security and infrastructure, while business evaluates the practical usability and capabilities of tools being considered and how effectively they can be integrated into organizational and business processes. All parties must ensure that both technical requirements and the business needs are well defined, harmonized and prioritized. Leaving everything to one party or the other can be a sure path to failure…”

180 View – The article’s title is really Aligning Business and IT to improve Performance on SAP but the content is mostly not about SAP and contains some useful advice such as “A related danger is that companies that have made significant investments in a large ERP system such as those from SAP reasonably wish to reduce the total cost of ownership (TCO) as much as possible over the life of the system. One failure-prone way to do this is to use the system for purposes beyond those for which it originally was designed or purchased”

The Power Of Less

November 5, 2009 from Forbes – “Minimalist design has been in vogue for decades. But when did we become enamored of the stripped-down business practice? When did business really start to leverage the power of less?

Google has led the way here. Remember the first time you landed on that spare, slightly dorky page, with just a multicolor logo and an empty box? We take it for granted now, but at the time it was revolutionary; every other search portal was competing to cram as many links, categories, ads and blinking gifs into 800x1200 pixels as it could…

But the art of less got a significant boost since economic conditions deteriorated, and less became the one thing we all had plenty of. In the best case scenarios, creative "power of less" responses to dramatic budget cuts have resulted in outcomes much better than the status quo, especially when technology was leveraged…”

180 View – When assisting organizations with software selection, the tendency for most organizations is to create a substantial list of requirements. We ask our clients to prioritize the requirements so as to just focus on the most important ones. We ask the vendors to just respond to the high priority items. It’s our way of doing more with less by nailing the most important requirements and not getting bogged down with less important requirements.

As well, when designing the to-be businss process, it's a good idea to keep it simple if possible. This is a huge challenge for organizations with multiple profit centres each with their own unique way of doing things. If the profit centres could share the same business processes, you also achieve more with less.

SAP Performance Benchmarking

180 View - This looks like a great service by SAP but it seems like a well kept secret. Benchmarking will allow you to compare your organization to others (that are considered best in class by SAP) to see whether your business processes are working well. The program covers 20+ processes, with 3,500 + participants from over 1,500 companies. But it also only free to SAP customers and select prospects. If you qualify, check it out.

New Aberdeen Report Lays Out Road Map for Maximizing ROI on ERP

August 2009 from Oracle – “…Based on input from more than 920 midsize companies (annual revenues under $250 million), the report found that the most successful ERP projects include aggressive, clearly quantified business goals; well-established timelines; and an ongoing commitment to measure return on investment (ROI), including a clear baseline for measuring performance improvements…”

180 View – We agree except with the ROI. Although ROI would be great, it’s usually not possible as many performance improvements are often impossible to calculate. We think the metrics, often called Key Performance Indicators (KPI’s), should relate to Critical Success Factors (what an organization must do well in order to be successful) and achievement of these KPI’s is the key.

RFID - Six Years Later

October 8, 2009 from SupplyChainDigest – “About six years ago this week, the EPPglobal organization was launched. So, we’re going take that anniversary as a catalyst to look at both the history and the future of RFID. As many of you know, Radio Frequency Identification (RFID) has been around for decades, and certainly was being deployed in both supply chains and other applications in the 1990s at some reasonable volumes...

In 1999, the MIT Auto-ID Center was born…The Auto-ID center vision was largely oriented on the consumer goods-to-retail supply chain. Parameters were developed for this more simple tag, which came to be known as the Electronic Product Code or EPC, with compelling visions for how this would transform the retail supply chain…

EPC activity in the consumer packaged goods arena, where it all started, is at a virtual standstill. The Walmart program is stalled, and its future uncertain…

On the positive side, EPC-based technology is being adopted in a large array of other types of applications, from aircraft manufacturing to an increasing number of distribution center applications, to asset tracking and more…”

180 View – There was a lot of hype when RFID was mandated by Walmart in 2003, and RFID seemed like the next big thing in technology. Conferences just on RFID were held to pave the way. But a funny thing happened along the way, and it was not the technology. There wasn’t a compelling business case for its adoption. But as the price of the RFID tags fall, that may change.

Applying IT controls

August 2009 from CAmagazine – “Financial and information technology managements are faced with competing, complex and confusing standards and guidance on how to evaluate the design and operating effectiveness of IT application controls. An application control — a user’s transaction processing limit, for example — must function within a secure, trustworthy computing environment (i.e., the surrounding network, server hardware and operating systems) for it to work. This is what placed in operation means, and it is required before an IT application control can be considered to be designed effectively…

All applications need trustworthy IT infrastructure (operating systems, database management systems, networks) to manifest their destiny and to breathe life into their lines of code…”

180 View – We recommend taking a look at the article and the accompanying chart that shows the interdependence of systems and controls. I think the author is getting a little carried away with IT infrastructure - "manifest their destiny..." It does support the application but it is not any guarantee that the application is controlled or operates effectively.

Afflicted with silos? Here are some tactics that might break them down

May 2009 from InfoWorld – “…1) Analyze the compensation system, 2) Analyze the budgeting process. 3) Establish goals that require collaboration. 4) Establish goals that can only be achieved with small, cross-functional teams. 5) Ask your senior staff members why they are still forming silos…”

180 View – ERP systems are supposed to break down the silos. But it won’t happen unless those responsible for the various silos embrace the change.

Lean Accounting's Fat Problem

July 28, 2009 from Forbes – “There is an obscure accounting battle bubbling up around the world that has broad implications for how to run a business. The battle begins when a company starts to implement "lean manufacturing," a practice that pits costs against productivity…”

180 View – The article has an easy to understand summary of “lean manufacturing”. But it gets confusing after that. The argument is that a savings in inventory leads to a write-off and loss of profits. That is, you credit inventory and debit cost of goods, which leads to less profit. I can’t imagine too many accountants complaining about reducing inventory, which has many advantages including improving cash flow, and on-going savings in the carrying costs associated with the inventory which would include interest, warehousing, handling, obsolescence, insurance and shrinkage.

The other problem is “duplicated data collection and reporting is indeed a form of waste” using traditional forms of accounting. And “Lean accounting attempts to find measures that predict success. Standard cost accounting measures results after the fact.” It seems to me that we need both measures and there should be no duplicated data collection with a system that contains the data and tools to extract it in the right way.

Every business needs a 'secret sauce'

July 28, 2009 from the Financial Post – “…A "secret sauce" will make a business stand out and survive the rough rides of the early days. That secret sauce is often intellectual property, or a unique system that isn't easily copied and thus separates the entrepreneur from competitors. It creates a barrier to entry…”

180 View – The “secret sauce” are Critical Success Factors – what we define as what an organization must do well in order to be successful. If you don’t look after the “secret sauce”, it will eventually go bad. The theme for this month is secret sauce, which is really found in the last article/video.

Business Processes and the Weather!

June 26, 2009 from Business Finance – “Will Rogers once said, “Everyone talks about the weather, but nobody ever does anything about it.” Sometimes I feel like that about business processes. I like to complain about them but don’t do enough to change them.

Think about some of your own experiences. Have you ever wondered who came up with the process being used to “service” you? I have had some recent experiences with major retail and service companies that were mind boggling at best – complicated package deals, pricing terms, and rebate requirements. Not only was I confused, but the customer service employees were struggling, too! It always makes me wonder how organizations establish and maintain effective internal controls around all this complication…

In a recent conversation with an assurance partner at a national CPA firm, he told me he sees lots of situations where an organization’s ERP system isn’t implemented in its entirety or management doesn’t seem to trust it. Instead, they use procedures outside the system (i.e., spreadsheets) to verify what’s going on inside the system or to “do the consolidation.” He surmised that this may be caused by people at the functional level not wanting to be overly reliant on the ERP system or on IT people. Sounds like a matter of trust to me.”

180 View - This short article raises 2 big problems although it does not get into any detail or solutions. The first big problem is complexity of business process. When the complex process was introduced, it likely made sense. The question is whether it still does. A design principle in improving business process is to reduce complexity. So challenge the reason for the complex business process and try to keep it simple.

The second is reliance on spreadsheets. The article points out two reasons – lack of trust in the system and not wanting to rely on IT people. Lack of trust in the system is a huge problem and the answer is not more spreadsheets but the implementation of strong internal controls. Not wanting to rely on IT people is understandable as it may require a long wait time, but the solution should not be more spreadsheets. The solution should be using reporting tools that leverage the data in the system. The reporting tools likely exist, they just need to be implemented, which requires an investment in training and support.

How About Those Leading Indicators? Do You Have an Early Warning System?

June 22, 2009 from Business Finance – “How well have you advised your organization on developing leading indicators to provide an early warning system for your board and executive and management teams? Are you still managing off the financials or lagging indicators? By the time the books close 10, 15, 20, 25 days after month’s end, the impacts of yesterday’s decisions are already being felt. Wouldn’t you want to get ahead of the curve to know with some degree of certainty what is coming? Of course, we all do.

180 View – The article does not get into any detail but reminds us of the importance of leading indicators. When developing Key Performance Indicators, make sure you have a mix of both leading and lagging indicators.

A problem becomes an opportunity

June 2009 from CAmagazine and written by Michael Burns – “…Many organizations have been forced to lay off employees and cancel or postpone new projects. Companies that are not facing collapse are just hunkering down and waiting out the storm.

There are obvious ethical reasons for keeping employees in tough times, but there are also excellent business reasons. What better time to train employees than when they have some extra time? They will learn new skills and forever be motivated to work that much harder for their employer. Does it make sense to invest in IT projects during tough times?...”

7 Steps to Better Benchmarking

May 7, 2009 from Business Performance Management – “…Organizations' goals all too often fall short of stakeholder expectations. A primary contributor to this sad state of affairs is the fact that goal-setting tends to be based on past trends and current internal practices. The external perspective is frequently overlooked, yet customers' expectations are driven by their experiences with the best providers in the industry and superior providers in other industries. Benchmarking can capture these external references and provide a basis for comparative analysis…”

180 View – We think benchmarking is a great idea, but it’s not easy. Access to so-called “world-class performance levels” is hard to obtain and may not be comparable for many reasons. As well, “deciding what you're going to measure” is also difficult. The article does not discuss how to do this. We suggest choosing metrics that link to critical success factors – what the organization must do well in order to be successful.

Accelerate Your Customer-Centric Journey: Four Best Practices

September 2008 from CustomerThink and sponsored by RightNow Technologies– “…By the mid-1990s, Customer Relationship Management (CRM) became a hot buzzword. The premise was that by managing customer information better, more profitable relationships would result.

However, our research has found that technology-focused CRM projects have mainly delivered productivity benefits through the automation of marketing, sales and service processes. Good for short-term ROI but generally not sufficient to deliver the loyalty-building experiences that customers crave.

But still, while conventional CRM thinking has not been the end-all, be-all that some had hoped for, it’s a necessary foundation for most companies. CRM technology can enable a company to run more efficiently, focus attention on more valuable customers and equip employees to deliver competent service. What’s wrong with that?...”

180 View – The article is about best practices, and not surprisingly they are more about people than about technology. The best practices are:
1. Staff Your Front Lines With Friendly and Competent People
2. Experience What Your Customers Experience
3. See Your Customers From All Sides
4. Build Genuine Relationships Through Collaboration

Making the best of best practices

April 2009 from CAmagazine and written by Michael Burns – “You will often hear business consultants claiming that they offer “best practices” — that they teach their clients the most efficient and effective way of accomplishing certain tasks based on proven, repeatable procedures. Sounds great but be careful. The so-called best practice may be good for one organization but a disaster for another…”

Professional Services Automation White Paper

January 2009 from NetSuite – “In this whitepaper we are publishing for the first time the “Killer KPI’s” (Key Performance Indicators) for leadership. We think you will be as astounded as we were to discover that great…or poor leadership permeates every facet of professional service organizational performance…”

180 View – The white paper is worth a read to see the importance of leadership but also for “In best-case scenarios, the Executive Leadership team of the company creates an overall “Business Blueprint” based on a finite set of measurable goals and develops mutually supportive measurements and key performance targets to drive functional alignment. In this representative “Business Blueprint”, the organization created a primary set of four key operating goals to support and drive the mission and vision:
• Delight our customers
• Provide a great place to work
• Deliver shareholder value
• Focus on precision execution...”
Check this out for examples of mission, goals, objectives and strategic initiatives.

Turning a problem into an opportunity

180 View - There is not one person or organization that has not been touched by the economic turmoil around us. It’s a time for all of us to be more understanding and generous with those that are living on the edges. But what should we do in our business lives? Some will hunker down and wait out the storm. Our philosophy is that every problem is an opportunity. Difficult times force us not to be complacent and we find ways to make significant improvements. You must have heard that when the economy slows down it is the ideal time to retool. This makes sense for any organization that is not on the brink of collapse. Invest in training for your employees, and ask their help through the mess. Employees will be highly motivated to help an organization that not only did not lay off their employees but invested in them. It’s also a time for projects that will make a positive difference. Don’t wait for things to turnaround. Either find ways to benefit in the slowdown (such as offering services that cater to these difficult times) or get ready for the day when things do turnaround so that your organization can ride the next wave.

Benchmarks and Best Practices for Manufacturers

January 2009 from IndustryWeek – “The Manufacturing 2008 Executive summary provides a concise view of North America manufacturing production metrics and best practices…”

180 View – We believe that a key step in moving toward so-called “best practices” is to compare key metrics to industry averages. In this report, you will see metrics such as inventory turns, cycle times, on-time delivery, yields, and scrap & rework.

How To Automate Chaos

December 3, 2008 from Forbes – “In 2005, McKinsey & Co. made a big splash with the concept of tacit interactions, processes that can't be automated in a step-by-step manner. Examples include negotiating a deal, managing staff, writing a blog, providing great customer service and selling a product.

Tacit interactions are carried out by knowledge workers who assemble information from a variety of sources and perform tasks that may be done differently each time. Tacit interactions involve improvisation, taking action and moving forward based on what you find out…”

180 View – The article includes techniques and technologies to support tacit interactions.

Timeless wisdom from IBM’s Thomas Watson Jr.

November 28, 2008 from itWorldCanada – “Some of the philosophy Watson propounded was maverick at the time. Respecting people and helping them to respect themselves will make the company profit. The Open Door policy. Job security for the folks on the floor means better product and productivity. (At least, in 1963, Watson could boast that in 25 years, not a single worker hour had been lost to layoffs, even though the company went through many major product shifts.)…

In the book, he outlined five principles on which the IBM business philosophy was based: That there is no substitute for good human relations and the morale that results; that communication -- upward and downward -- education and retraining must increase out of proportion to growth rate to overcome change; that complacency can be avoided if management sets the right tone; that company interests must come before that of a division or department; and that belief must always come before policies, practices and goals...”

180 View – Watson’s philosophy seems more relevant today than when it was written in 1963.

Preparing for ERP with Best Practices

November 7, 2008 from IndustryWeek – The article is for manufacturers but also applies to other industries - “Manufacturers can prepare for ERP adoption by benchmarking the organization against peers and then removing all non-value-adding activities from the supply chain.

Enterprise resource planning (ERP) is not a magic bullet. ERP systems have become more affordable, effective and -- to a significant degree -- essential, but manufacturers need to pause before joining the headlong rush toward implementation. Companies that do not ready themselves before implementing ERP find it nearly impossible to fully utilize their new systems, and risk upsetting their organizational culture with chaotic implementation phases. However, manufacturers can prepare for ERP adoption with straightforward activities that do not require outside consultation, require no investment other than time and can typically be achieved within three months...”

“Additionally, we will see how manufacturers, regardless of their specialty, can prepare for ERP adoption by benchmarking the organization against peers and then removing all non-value-adding activities from the supply chain…”

180 View – The author makes good points about ERP not being a magic bullet and the usefulness of benchmarking. However, we don’t agree that an organization can remove all non-value added activities in advance of the implementation and without the help of consultants. First many of the non value added activities can’t be removed because of limitations in the existing system. Second, why not take advantage of the vendor’s experience and avoid re-inventing the wheel.

The Right Stuff

November 3, 2008 from Business Finance – “…For many years, companies focused their reporting and analysis efforts on accounting measures and some high-level operating data (units produced, utilization rates, or number of employees, for example). As corporations have broadened the scope of their automation in recent years to include customer relationship management, supply chain management, and other externally facing and operating functions, they have been collecting a much wider and deeper range of data that can be used to measure performance…

The traditional reliance on accounting information as the basis for management reports produces information mostly about the past. Thus it is not surprising that our benchmark research finds that only 20 percent of participants said that they get enough information about leading indicators that will help them to anticipate business issues or opportunities, 60 percent reported that they do not get enough, and 20 percent are not getting any. Creating leading indicators usually requires a combination of operating and accounting information…

One common reason why most companies do not go beyond a historical, inward focus in their reporting is a set of constraints that have been internalized to the point where they have become habit…

They also may not have an IT infrastructure that makes doing this feasible. In far too many cases, information is held in separate systems that don't interoperate easily or is fragmented…”

180 View – We agree that organizations should generate ratios on their leading indicators but we don’t think the problem is mostly about habit/stagnation or lack of IT infrastructure. We think the problem is more about organizations that don’t know the difference between a leading and a lagging indicator. And even if they did, it’s not just a question of integration. It will often require investment in ways to gather the information such as conducting customer satisfaction surveys that have nothing to do with ERP systems.

The Pragmatist's Guide to Best Practices

August 18, 2008 from Business Finance – “Are you suffering from best practicism? There is no doubt that best practices can be helpful. Why wouldn't an organization want to learn from others who've been down a similar path, as this can help to avoid costly mistakes and may yield quicker results. But taken too far, the pursuit of best practices can replace independent thought and actually have deleterious impacts on an organization. When this occurs, an organization is afflicted with what we call best practicism -- the errant belief that replicating other organizations' processes, strategies, and ideas is the route to success…

180 View – We often hear from consultants and vendors that they offer best practices. This article gives you a few reasons to be skeptical. Other causes for concern not mentioned in the article are applying best practices to organizations very different in size or to business processes that provide competitive advantage. We have written an article on Best Practices for CAmagazine that will be published in a couple of months.

Time to Put Your G/L on a Diet?

August 27, 2008 from BusinessFinance – “Companies historically have dumped anything they needed to report on into the general ledger and added it to the chart of accounts. As a result, the G/L functioned as both a data warehouse and the financial book of record, a situation that ISA Consulting describes as "the fat G/L."

180 View – The remedy according to the article is “I would want to take to my general ledger only the bare minimum necessary to do my filings -- legal entity and natural account. I'm oversimplifying, because most organizations report by segment, but in essence that's what you need.”

But today you can have your cake and eat it too. There are analysis codes, reporting structures and subledgers that can give you the reporting you need without a fat G/L.

Collaboration is the key

August 2008 from CAmagazine and written by Michael Burns – "Have you ever watched a teenager carry on multiple conversations on Facebook? The younger generation seems to instinctively know the value of pooling resources. They tend to share information more easily than their elders do.

At a corporate level, working together toward a common goal is called collaboration. The concept is gaining ground among successful companies, who see it as the cornerstone to improving business process and attaining business goals. Those goals could be anything from completing an annual budget to building an airplane.”

The New Brood of Best-of-Breed

July 1, 2008 from Business Finance – “Today's Best-of-Breed software market offers more to dazzle CFOs than ever before. The pace of innovation is fierce, slackening only when vendors pause to digest their gains after the waves of consolidation that periodically sweep over each sector.

The governance, risk, and compliance (GRC) category, for example, continues to attract new entrants and to generate a bewildering variety of applications for mandates ranging from email retention management to enterprise risk management. John E. Van Decker, research vice president with Gartner Inc., points to a burst of innovation around reconciliations management: “Financial governance software is starting to bring together process-management-type solutions for all of the activities that you need to do before you close the books. These may or may not be managed in larger systems, but you need some type of process to line up these activities and ensure that these things are done...”

Plus, a best-of-breed package can be an attractive option for companies that don't want to take on a mammoth project at this point. Many organizations are “looking for something that can provide incremental steps to value,” Van Decker notes. “We're also starting to see more use of software-as-a-service, where companies may want to do something on a 3-year basis, but with the understanding that by the end of that period they will have implemented a much larger set of applications.”

180 View – You will also find lists of products in this article for Corporate Performance Management (they call it Business Performance Management), Business Process Management, Spend Management, Cash Management, Receivables and Collection Management, Fixed Assets Management, Tax Management, Expense Management, GRC (Governance, Risk Compliance) Management and Project Portfolio Management.

We have also seen that some companies try to save time and costs by taking a best of breed product. This is can be a good strategy as long as there is not excessive integration required.

Investing in the IT That Makes a Competitive Difference

July-August, 2008 from Harvard Business Review – “…The mid-1990s marked a clear discontinuity in competitive dynamics and the start of a period of innovation in corporate IT, when the internet and enterprise software applications—like enterprise resource management (ERP), customer relationship management (CRM), and enterprise content management (ECM)—became practical tools for business. Corporate investments in IT surged during this time—from about $3,500 spent per worker in 1994 to about $8,000 in 2005, according the U.S. Bureau of Economic Analysis (BEA). At the same time, annual productivity growth in U.S. companies roughly doubled, after plodding along at about 1.4% for nearly 20 years. Much attention has been paid to the connection between productivity growth and the increase in IT investment. But hardly any has been directed to the nature of the link between IT and competitiveness. That’s why, with help from Harvard Business School researcher Michael Sorell and Feng Zhu, who’s now an assistant professor at USC, we set out two years ago to compare the increase in IT spending with various measures of competition, focusing on three quantifiable indicators: concentration, turbulence, and performance spread…

While it’s true that the tool kit of corporate IT has expanded a great deal in recent years, we believe that an overabundance of new technologies is not the fundamental driver of the change in dynamics we’ve documented. Instead, our field research suggests that businesses entered a new era of increased competitiveness in the mid-1990s not because they had so many IT innovations to choose from but because some of these new technologies enabled improvements to companies’ operating models and then made it possible to replicate those improvements much more widely.

CVS offers a great example. There’s no shortage of people looking to fill prescriptions—or of outlets ready to handle those orders. So CVS works hard to maintain a high level of customer service. Imagine senior management’s concern, then, when surveys conducted in 2002 revealed that customer satisfaction was declining. Further analysis uncovered a key problem: Some 17% of the prescription orders were being delayed during the insurance check, which was often performed after customers had already left the store. The team decided to move the insurance check forward in the prescription fulfillment process, before the drug safety review, so all customers would still be around to answer common questions such as, “Have you changed jobs?” This two-step process change was embedded in the information systems that supported pharmacy operations, thereby ensuring 100% compliance.

180 View – Implementing a new system is a great opportunity to improve business process. The CSV experience is a great example of identifying a problem with the existing system and leveraging the new system to fix the problem. Sometimes the solution is right out of the box or just requires a little tweaking.

Why Budgeting Fails

2004 reprint from Harvard Business School – “When Jack Welch described the budgeting process as the “bane of corporate America,” he was articulating the frustration of many senior executives and academics who recognize that this annual exercise is rarely justified in today’s fast-changing, highly competitive environment…”

180 View – This older article still applies today. The article describes problems with the budgetinig process and suggests ways to improve it.

Optimizing Processes for Innovation and Agility

June 18 from CIO Update – “Working from current process models, process analysts and domain experts collaborate to generate to-be models that can satisfy the aims of business model scenarios. Next, they perform a gap analysis between the current process model and each to-be model to determine which processes need to be eliminated, streamlined, automated, or outsourced and to anticipate the potential impact of these changes on supporting applications and systems.”

180 View – We disagree with creating “to-be models” unless the organization plans to make any necessary system changes themselves or has unique requirements. We recommend understanding the problems with the existing business processes, but rather than creating the ultimate “to-be” process, we think organizations should work with their vendors, VARs or solution providers. There are usually multiple ways to get the job done. It is not necessary to always create a unique business process. Take advantage of existing or embedded business process for the routine work. You may need to do a little tweaking for some unique business processes. It only makes sense to build the "to-be" from scratch if the business process is not only unique but also contributes to an organization's value proposition, which describes the unique mix of product and services, customer relations, and corporate image a company offers or what defines differentiation.

BPM Goes Mainstream

April 3, 2008 from Baseline – “The good news is that technology to support business process management (BPM) has become widely accepted, with a majority of enterprises having BPM projects, according to a pair of recent surveys.

The bad news is that implementing BPM—which requires real process change to succeed—is no slam dunk. In fact, in a recent survey from Forrester Research a majority of IT professionals at 142 companies reported the type of mixed results from BPM more closely associated with a three-pointer.”

180 View – Another misunderstood acronym is BPM. BPM is software to improve business process. Just like all new technology, there is the usual hype and implementation based on the potential merits of technology. It’s not surprising that there are lots of problems if the technology is purchased for the wrong reasons. It could also be difficult if the tool is not integrated with the existing systems. The article says “The most unexpected finding… was the frequent use of BPM technology as a tool to support new product development and innovation”. Our view is that BPM does make sense when creating new processes from scratch. You have a clean slate and don’t need to worry about integrating existing systems, data or processes.

180 Systems launches three new web sites

ERP Portal

The objective for this site is to provide an unbiased portal to ERP (Enterprise Resource Planning) systems, ERP Value Added Resellers (VAR's) and relevant ERP articles.

CPM/BI Portal

The objective for this site is to provide an unbiased portal to CPM (Corporate Performance Management) and BI (Business Intelligence) systems, CPM/BI Value Added Resellers (VAR's) and relevant CPM/BI articles.

BPI Portal

The objective for this site is to provide an unbiased portal to BPI (Business Process Improvement) systems and relevant articles. BPI is about efficiency and effectiveness as well as about GRC (Governance Risk and Compliance).

Add one part tech, one part business smarts, hold the do-gooderism. What do you get? A whole new approach to charity

February 28, 2008 from Fortune Magazine – “Kiva is a nonprofit, but it has the heart of a Silicon Valley startup. Executives call it a "company." Rather than tax-deductible donations, users pledge interest-free loans. Standard-issue charities take as much as 40 cents on the dollar for administrative costs, but Kiva directs 100% to borrowers, thanks in part to free payment processing from PayPal… So far Kiva has attracted nearly 250,000 lenders and disbursed $22 million across 40 countries…”

180 View – Technology has the power to not only improve business process but also to improve our world. We predict Kiva will make a huge difference.

Performing a gap analysis

November 2007 from CAmagazine and written by Michael Burns – “In October, we talked about using the company responsible for your ERP implementation – often called the value added reseller or VAR – to help build your “to be” business process. The rationale was, “Why reinvent the wheel, when your VAR already has a solution or can easily leverage processes already embedded in its system?” You could go to a different VAR or solution provider but it’s a huge job to convert to a new system. It should be a last resort based not just on requirements but also on the VAR’s vision, the software developer’s R&D investment, and support capabilities…”

It’s The Organizational Change, Stupid...

October 22, 2007 from gantthead.com – “We’ve seen an inexorable effort to define, to document, to map and to generally improve our processes. Numerous consultants have attempted to argue that their way of representing processes by drawing boxes and arrows was new, proprietary and, most importantly, better. Literally thousands of them have simply bypassed that debate, and have spent hundreds of hours, days, weeks and months drawing lines and boxes on paper as they define and chart their customers’ “current state” and “future state”. The problem with all of this is that boxes, lines and arrows are just so much ink, Post-it notes and flipchart paper. They aren’t the processes, they’re simply the representation of the processes. Processes are how people work, collaborate, communicate, expedite, stall, obfuscate and in general do the work that they want to do while avoiding the work that they don’t…

What human beings bring to the table that process doesn’t is judgment. We have the ability to engage in critical thinking and reasoning. We are able to respond situationally, and recognize that the most appropriate course of action may be “it depends”. We can recognize a customer service challenge, and make the individual call that the customer needs a discount, or free shipping, or a compliment, in order to salvage the situation and keep them as a customer.

All of this completely defies the logic and rigid guidelines of normal business processes. I have never seen a process map with a box on it saying “apply judgment here”. I think it would be pretty awesome if there was, but so far this has been an elusive source of satisfaction for me…"

180 View – The author, Mark Mullaly, of this article challenges some of the current thinking about business process improvement. We think the problem Mark discusses is not in the process mapping but in the level of detail. If improvement is the objective of the process maps, then the level of detail should be only sufficient to identify a weakness or a control. By keeping the process maps at a higher level, the time to do them is significantly reduced and it avoids the “rigid guidelines” discussed in the article.

We agree with Mark’s closing paragraph which reads “Improvement isn’t simply about a faster way through the process. Although that can be part of the solution, it isn’t the whole solution. Improvement is about finding ways for people to better engage with their customers, helping them to enjoy their jobs more and allowing them to feel engaged and challenged by their work. If we want better processes, we need to leave the space and capacity for judgment, for critical thought and for mixing it up a little. That’s where people create the most value.”

Our biggest gripe with the article is in the title. It’s cute but appears not relevant until the very end, but even then it’s not just organizational change that is the issue. It’s also about the other drivers of business process improvement including motivation, empowerment, skills and environment.

Documenting Business Process with Swimlanes

October 2007 from CAmagazine and written by Michael Burns – “Swimlanes are often used to document “as is” (i.e., current) and “to be” business processes. Although you’ll find swim-lanes very useful as a conceptual tool, you will still come up against one major obstacle, especially with the “to-be” version. This obstacle is of the human variety: gaining consensus.

Some people may not have a clue what should be done. Others might get mired in the details, missing the big picture. Others still may want to protect their turf and stick with the status quo. Others still will come up with grandiose or expensive solutions. You could have a real battle on your hands. Moreover, changing the swimlanes can be labour intensive…”

Control Matrix

August 2007 from CAmagazine and written by Michael Burns – “In the June/July issue of CAmagazine, we looked at swimlane flowcharting as a tool to document business process. But even though swimlanes bring clarity and consensus to a process, they don’t show controls or control weaknesses. So if business process improvement is the objective, you need a control matrix.

A control matrix can be used to document controls and control weaknesses, which are all referenced on the swimlane. The matrix should include controls over validity, accuracy and completeness of transaction data entry. As well, there should be controls over accuracy and completeness when master files are updated through transactions. These controls need to be considered for every transaction in the scope of the review. Security of resources (cash, inventory, etc.) should also be evaluated.

If improvement is your goal, you must also consider efficiency and effectiveness. These are often ignored by the auditors, which is unfortunate. Auditors could add value in those areas. Efficiency means maximizing the work that gets done using the fewest resources. Any duplication of work or rekeying of information should be easy to catch.

Effectiveness means the business process delivers value according to the organization’s critical success factors. CSFs are defined as activities that must be done well for the organization to be successful. A single department may be efficient and effective on its own, but this may be at the expense of the organization as a whole.

Poor Process Brings CRM Pain, Experts Warn

August 17, 2007 from IT Business Edge – “Companies have fallen into the trap of having thought that they have bought a solution, whereas what has really happened is that they have bought some technology. This technology may make things work faster – but if the over-riding CRM processes are bad, all you will do is hack off customers more quickly than you were doing before – and possibly more of them.”

180 View – The same can be said for any system. Implementing a new system is the best opportunity you will ever have to improve business process.

Growing Problems: The 2007 Working Capital Survey

July 1, 2007 from CFO Magazine – “Maybe it's globalization. As U.S. companies source more goods from the far corners of the world, it makes sense that they would stock more inventory as a guard against potential breakdowns in their supply chains. Or maybe it's economic priorities. With corporate coffers bulging like overloaded transpacific freighters, finance executives could be taking their eye off second-tier metrics like inventory, payables, and receivables. Whatever the explanation, 2006 marked the first time in five years that the 1,000 largest publicly traded companies in the United States (excluding automakers) failed to decrease the amount of cash they had tied up in working capital relative to sales.”

180 View – Check this article out for an explanation of working capital problems, metric definitions as well as actual metrics across industries. One of our methodologies for any system upgrade or replacement is to link key metrics with critical success factors. It would also be useful to compare your metrics to your industry. Unfortunately, the metrics provided are based on large public companies. However it’s not clear to us whether the metrics of smaller companies will vary significantly. On the one hand, larger companies can afford more sophisticated technology. On the other hand smaller companies can be more nimble.

Process Improvement: When More Is Less

June 25, 2007 from ITBusinessEdge – “Is there such a thing as too much process improvement?

Yes, says consultant David Taber. While process improvement efforts like Six Sigma tend to work well for established products, helping companies ensure that high quality standards are met, they aren’t that helpful — and in fact may be harmful — when companies are trying to develop new and innovative products.

180 View – We defer to the comment posted by Dr. Phyllis Thompson on July 3, 2007, who said

“Don Zook has it right. When I started working some years ago, the emphasis was on “systems and task analysis.” Other cutely named strategies (good for marketing and for differentiating the designer from competitive companies) complemented and extended these approaches to figuring out what is going right and wrong, and how to demonstrate and measure that a problem has been fixed (emphasis on measurably, by the way, since without metrics you can’t prove change has occurred).

Over time we have been inundated with the menu of (quite literally) thought-provoking tools . . .and more (e.g., remember, or like others, have you forgotten Management by Objectives?). . .that Zook enumerates. The problem arises when folks check their analytical skills and common sense (assuming they have both) at the door and think a tool will serve as the holy grail, showing them the way to “the solution.” What they forget is that they, not the tool, hold the answer.

Swimlane flowcharts

June 1, 2007 from CAmagazine and written by Michael Burns – “Remember drawing flowcharts? As accounting students, it’s something we all had to learn — and it was usually a struggle. The charts took forever to draw, and then were left to gather dust as soon as they were finished. But if you think flowcharts are passé, think again. Business process improvement is the new mantra of business, and process maps are a key component. Fortunately, we now have a flowchart technique called swimlane that is easy to understand and apply...”

Nine ways to screw up a good BI implementation

June 4, 2007 from CIO Insights – “According to a BusinessWeek Research Services survey released in the fall of 2006, 62% of respondents said recent large-scale or strategic business intelligence (BI) initiatives returned the value they expected. What about the other one-third?
Vendors touting BI like Cognos, Oracle, SAP, Microsoft, IBM and Business Objects say it can deliver knowledge, efficiency, better decisions, and profit to almost any organization that uses it—when done wisely.

Even the smartest companies can make some dumb mistakes when it comes to business intelligence.

Dumb idea #1 – Not having BI. No surprise that Gartner's 2007 survey of 1400 CIOs found BI was again the most highly ranked technology priority. A Ventana Research study in the fall of 2006 of 488 companies indicates that 53% of companies plan to implement query and reporting software, while 40% plan to implement analytics and data mining applications.

Dumb idea #2 – Not having a BI roadmap and buy-in. "Just build it, they will come," is stinking thinking. Too many IT departments build a data warehouse based on the assumption that once it is built, users will automatically see the benefit. They don’t, unless you get the users on board.

Dumb idea #3 – Reliance on spreadsheets. Admit it, you know people who hide behind spreadsheets. They do it because they are comfortable with them and because they know how to manipulate the numbers to satisfy the politics of their organizations. Not smart in the long run..."

180 View – We especially like the “stinking thinking” re “just build it, they will come”. The writer says you need users on board to overcome this problem. We agree that will help, but often users don’t know what they want. As the writer discusses in dumb idea #8 (“Not knowing how to define information requirements), BI needs to link back to metrics that support the business. We think that the metrics should map to the critical success factors (defined as those things you must do well in order to be successful). BI is not just about technology; more importantly, it’s about knowing what to measure and how to motivate.

What many boards and executives STILL don’t know about the health of their businesses

April 2007 from Deloitte – “In March and April 2004, the Economist Intelligence Unit surveyed 249 senior executives and board members around the world and interviewed a number of corporate directors in North America, Europe and Asia. The report concluded:“While the overwhelming majority of board members and senior executives say they need incisive non-financial information on their companies’ key drivers of success, they largely find such data to be lacking or, when available, of mediocre to poor value…

Almost three years later, Deloitte and the Economist Intelligence Unit worked together to see whether things had changed and conducted the research along much the same lines as before. A global survey fielded in December 2006 obtained responses from 175 senior executives and board members. Then, through January 2007, in-depth telephone interviews were conducted with senior executives and board members at large companies.

Some key findings include:
(1) Existing performance measurement frameworks are inadequate, and the majority of executives perceive a growing need to better understand the underlying drivers of their performance through non-financial measurements.
(2) Though companies are aware of the pitfalls of focusing exclusively on financial performance, the ability of executives to measure and monitor performance through non-financial measurements appears to be inadequate. Companies either do not have or are not sharing critical nonfinancial performance data with their boards.
(3) Despite the dissatisfaction with the quality of non-financial measurements of performance, current impediments to the broader use and greater sophistication of non-financial performance metrics include undeveloped tools, organizational skepticism relating to the value of these tools, unclear accountability for nonfinancial performance, time constraints and the concern that such metrics may convey too much information to competitors.

180 View – Every problem for someone is an opportunity for another. There are many consulting firms and software developers that are standing by to help.

The non-financial data is a key to the balanced scorecard. See our white paper
“Corporate Performance Management - It's ready - Are You?” for a discussion of balanced scorecard under Scorecarding.

Business Process Improvement

May 1, 2007 from CAmagazine and written by Michael Burns – “This month, we will lay the groundwork for a series of articles on business process improvement. A BPI project may be initiated for a number of reasons. If a new ERP system is required, you should consider it the best opportunity you will ever have to overhaul your business process….”

Warehouse Automation--What's Really Working For Pallet, Case, and Piece Pick Operations

January 2007 from the Aberdeen Group – “Warehouse Automation” is a broad term that encompasses many different individual technologies. The following is a list of the primary technologies Aberdeen has analyzed for this benchmark report:

Bar-Code Scanning
Bar-coding has been used in distribution centers for decades, and it remains the most commonly adopted form of warehouse automation today. It is reliable and relatively inexpensive. Bar-coding is typically used in a real-time environment, with data being transmitted back and forth via a Wireless Local Area Network (WLAN).”

Voice-Directed Picking
Voice-Directed Picking was widely introduced in distribution center environments in the 1990’s and now is used heavily in certain industries such as grocery distribution. It is used in areas where workers benefit from being able to use both hands to perform their work, without ever having to take their eyes off of the task at hand.

Cart-Based Picking
Cart-Based Picking is both a technology and a methodology. Cart picking excels in cluster pick operations, where several orders are picked at the same time with a single pick path through the warehouse. Keeping track of which items belong in which orders can be challenging; hence, cart-based cluster picking often involves secondary technology such as bar-code scanning, voice-directed picking, and pick-to-light systems…”

Aberdeen has broken out its Best in Class framework according to three key metrics:

• Labor cost reduction
• Percentage of on-time and complete shipments
• Pick accuracy

Very few companies were Best in Class for all three categories – meaning that there is more than ample opportunity for even those considered top performers to improve their operations…”

180 View – Many ERP systems have the basics, but don’t include features such as cart-based picking and other technologies discussed in the Aberdeen report.

Tricks of the Trade (A few ideas to improve productivity)

February 2007 from 180 Systems – Many people spend the majority of their time with a few programs that they know well enough to get the job done. They realize they could find a more efficient way to get the job done, but the effort involved seems to outweigh the benefit. So they’re stuck in a rut. This article will give you a few ideas to crawl out.

One big waster of time is searching for information. Let’s assume that it’s on your computer somewhere and you keep everything important. The 1st trick does not involve recent technology, just common sense. Organize your documents and email in folders or directories. However even if you’re diligent in filing things away, you could be looking for something that spans directories, email and different document types. There are solutions that are easy and inexpensive that will automate the search process. All you need to do is type the keyword and you can instantly see a subset of files or emails that contain the keyword. And the keyword does not need to be a tag that you manually apply. It’s just text somewhere in the document or email. There are solutions like X1, Google desktop, ISYS that can help. And Microsoft Vista (The new Windows system) now includes search right out of the box.

Meetings are also right up there as big wasters of time. Once again, you can use common sense to reduce the wasted time by making sure everyone gets to the meeting on time, establishing a tight agenda, issuing documents in advance…. But technology can help too especially if the participants are not in the same office. Try one of the web conferencing tools such as WebEx or GoToMeeting.

You can also waste time flipping back and forth between documents. Windows does let you split the screen and synchronize or de-synchronize scrolling, but you don’t see as much as you would like. The solution is relatively inexpensive by using a dual monitor or using one of your old clunkers to view a document while you do the heavy lifting on your new PC.

When creating presentations or writing documentation, you will want to copy something that appears on your computer screen. There has always been the PrintScreen function that can give you the whole screen or just the current window by also using the ALT key when you press the PrintScreen function key. But if you can’t do it because there are restrictions on the document you are reviewing, or you want to be more picky, there is help using a program such as SnagIT. (I know I don’t need to remind you to give credit to other people’s work and make sure that you are not violating copyright)

There are also many time savers in the programs we use everyday. The best way to leverage these tricks of the trade is to provide training. Why not have a series of lunch and learn sessions? Get your best technical person to show time savers in MS Word or Excel. For example, teach the group how to do multiple selects from a list using the CTRL or ALT key or to automatically populate a series of days, months, years… Take a look at Office Watch for instruction on how to use AutoFill

We are sure there are many other ways to be more efficient, and would welcome any of your suggestions. Please update the blog with your suggestions. Thanks

180 View – We wrote it so you already know our view.

The Power of Process

December 18, 2006 from Business IT Alignment News and Analysis – “As of late, the IT industry has been peddling various solutions to understand, monitor or optimize that nebulous beast called “process.” So what is a process and why should every CIO be focused first and foremost on business process?

Most of us have seen the now overused IPO diagram: the three boxes arranged in a line, and connected by arrows like the boxcars in a train. The first box contains “Inputs,” which move into the next box titled “Process,” which subsequently flows into the final box, titled “Outputs.”

This diagram is a model of simplicity, yet exposes a flaw in current thinking. Two thirds of the diagram is concerned with inputs and outputs, placing priority on “stuff” rather than how we actually change one form of “stuff” to another. While a simplification that fits neatly into the world of flowcharts, in the real world we often focus too narrowly on moving and changing “stuff” versus why we are changing inputs to outputs, and determining how to efficiently and portably change that “stuff.”

Process is the “why” to any business problem. IT has embraced process more than most other business units, at least on a superficial level. We are familiar with how to diagram a process, and nearly all of the project methodologies provide a provision for capturing, diagramming and understanding the “as-is” process, or the current state of affairs, before we seek to intervene and bring about a new state of affairs.

We also have myriad tools at our disposal for improving a process, either by increasing its speed, efficiency, accuracy or repeatability, in the form of powerful technologies from ERP systems to entire process management toolkits and software.

What we often lack however, is the ability to separate content, the inputs and outputs, from the process itself, which has hampered the ability of IT to implement successful projects that deliver the business benefit they initially sought.

IT has been built around content, both in terms of hiring and developing its staff, and in how it approaches IT projects in cooperation with a business unit. We hire and evaluate people that are experts in a particular technology, which is just another content area. We then approach a particular business problem as an issue of content. Why are our competitors more efficient? It must be due to their ERP system. Why did a new entrant to a market outfox us? They must have better decision support systems, etc.

We see a business problem as one of bolting new technology onto existing processes, wrongly assuming that by changing the content of the process, the process will change as well. This can only be expected when we have built organizations around experts in a particular area of technical content, and business experts familiar with the rules and nuances (more content) of a process, experts in the "how" rather than the "why”…

180 View – IT does typically suggest new technology as the solution unless they have a vested interest in maintaining the status quo. It would be great if IT also considered business process improvement as a way to enhance efficiency or effectiveness. But let’s not forget about human resources (how do organizations structures, job definition, and skills impact the process?), policies and rules (such as the approval process), and facilities (workplace design, infrastructure, computers…).

Creating Smarter, Faster, Cheaper Processes is IT's Main Mission

October 4, 2006 from CIO Insight – “One of the most important lessons from the last 25 years of business computing is that you can't throw technology at a problem and expect it to go away, or fling a system at an opportunity and expect the dollars to rain down. To get any real value, business processes—how people work, how work is organized, how work flows—have to be changed, too. That lesson has been absorbed, judging by the results of our first survey on business process improvement since 2003. Process improvement has emerged as the top business priority for IT organizations; improving productivity and reducing costs as the most common goal."

180 View – IT resources typically find IT solutions to business problems, and then find a creative way to prove the business case.

Business Process Improvement Survey: Creating Smarter, Faster, Cheaper Processes is IT's Main Mission

October 2006 from CIO Insight – “Improving business processes is the top priority for many IT executives, especially at small and midsize companies. Most companies are hoping to boost productivity and cut costs by revamping their business processes with the help of IT; smaller companies are also aiming to increase revenues. Not surprisingly, that's spurred an increase in the number of BPI projects across the board. Integrating timely information into work processes is also important: 83 percent of respondents say one of their primary BPI goals is to deliver critical information to employees while they are carrying out the company's business processes. But CIOs aren't just seeking to improve operations like logistics and customer service; they are also looking to improve the ways that managers and knowledge workers do their jobs, since managers as well as rank-and-file employees are under great pressure to work more efficiently and effectively. Financial, compliance and strategic planning processes head the list of today's top three BPI priorities.”

180 View – IT can help Business Process Improvement (BPI), but should not be the driver. First, IT can have its own agenda, which may not be aligned with corporate strategy. Second, BPI is achieved not just by investment in IT. Motivation, organizational structure, and business process design can also have a huge impact.

A survey of Canadian decision makers on business performance and regulatory compliance in the Finance function

July 2006 form KPMG - "KPMG's Advisory practice conducted a survey of 170 of Canada's senior executives to determine how their Finance functions have responded to the new regulatory mandates, and how successful they have been in maintaining the balance between activities supporting compliance and those supporting business performance. In an effort to focus on the views of Finance functions' key customers and stakeholders, the survey included Chief Executive Officers, Presidents, and Chief Operating Officers, but specifically excluded Chief Financial Officers themselves…

Business leaders are concerned that regulatory requirements have caused the Finance function to focus on compliance at the expense of other areas of its mandate. Three-quarters of respondents believe that corporate growth and profitability have suffered as a result of the Finance function's focus on compliance. Management reporting, budgets and forecasts, corporate finance, risk management, and strategic planning represent areas of opportunity for Finance departments to rebalance their activities and improve contribution to the business. Decision makers are prepared to make investments to rebalance the activities of their organizations' Finance function."

180 View - We think that compliance auditors should provide value related to business performance at the same time. By identifying inefficient and ineffective business processes, compliance auditors would support business performance. Inefficient business processes do the job with the least amount of resources. Re-keying or duplication should be easy to spot. However effective business processes are more difficult to identify. Effectiveness requires knowledge of CSFs (Critical Success Factors are what an organization must do well in order to be successful). If the business process does not support the CSF, then it's not effective.

It's time to stop measuring and start doing...

May 2, 2006 from Silicon.com - "Over the past few years I have been working in companies and other organizations including those in the health and education sectors where the introduction of performance metrics has had a profoundly negative effect.

In every case there has been a liberal application of simplistic thinking that has resulted in a vastly reduced overall performance with a combined increase in operational costs. How come? Very often those to blame are in political office and under pressure to show the electorate they are earning their elected position.

For sure, if you are to manage anything effectively you need measures, and if you are to improve performance you need metrics. But the first question to ask is: does it actually need managing and is there any space for improvement?

It is unfortunately a truism that most managers don't see that they are often in the way, can add no value and should just get out of the way. An awful lot of processes and activities just don't need managing in the first place. For those that do, they require a liberal application of intelligence and understanding. If you give people targets, they will achieve them; if you demand a change in performance from managers, they will show you one. In the first instance they will try and do your bidding but in the second they will resort to embellishing the truth, polishing the numbers and plain fiddling.

In the worst areas infected by the (modern) metrics disease we see irrelevant or conflicting requirements and targets, and more managers of metrics than those actually trying to achieve them.

The real killer? People stop becoming effective and turn the metrics game into a full-time career. In many countries we have police, medics and educators spending more time reporting than doing! So the supervisory overhead is very often the dominating portion of the overall spend and budget. This is a surefire route to failure in any system. Admin really ought to be less than 10 per cent and not 80 per cent of the budget.

So what is the solution - beyond good management that is? Once a set of sensible and minimal performance targets and metrics have been decided and agreed, automation is the only route to success. Just because something can be measured and recorded doesn't mean it should be!

In the worst case people will always resort to telling lies, gilding the truth and interpreting results in their favour. So most of the information created by such human systems is a travesty, waste of time, detrimental distraction and expensive hobby! In contrast, our machines will only tell it the way it is, provided the entry of data is also fully automatic.

All of this begs the question: why isn't modern management and politics up to the job? Simple! They are operating in some 18th century regime of quill pen and parchment thinking. Until we see the application of game theory, war gaming and situation modelling, combined with automated data recording, gathering and analysis, we will continue to see the waste and disruption continue to accumulate.

We have the technology but it seems we don't yet have the wisdom."

180 View - SMART (Specific, Measurable, Actionable, Relevant, and Timely) metrics should solve all the problems above.

Benchmark production planning and control processes

"This free, 20 point "ABCD checklist" allows you to benchmark your company's production planning and control processes against current best practice... The 20 point checklist does not cover every area of business performance but it is our experience that a company's score on these 20 points give a strong indication about the company's overall business performance."

180 View - We have not used this checklist ourselves or on behalf of a client, but heard good things about it in an online forum. It looks like a good tool to evaluate your business processes. Please let us know what you think.

Why Your Employees Are Losing Motivation

April 10, 2006 from Harvard Business School - "Most companies have it all wrong. They don't have to motivate their employees. They have to stop demotivating them. The great majority of employees are quite enthusiastic when they start a new job. But in about 85 percent of companies, our research finds, employees' morale sharply declines after their first six months—and continues to deteriorate for years afterward. That finding is based on surveys of about 1.2 million employees at 52 primarily Fortune 1000 companies from 2001 through 2004, conducted by Sirota Survey Intelligence (Purchase, New York).
The fault lies squarely at the feet of management—both the policies and procedures companies employ in managing their workforces and in the relationships that individual managers establish with their direct reports...

To maintain the enthusiasm employees bring to their jobs initially, management must understand the three sets of goals that the great majority of workers seek from their work—and then satisfy those goals:

• Equity: To be respected and to be treated fairly in areas such as pay, benefits, and job security. How Management Demotivates
• Achievement: To be proud of one's job, accomplishments, and employer.
• Camaraderie: To have good, productive relationships with fellow employees.

180 View - The best system with the best business practices can't compete with motivation in improving business process.

Accounting System/ERP Customer Survey

April 2006 from CAmagazine written by Michael Burns - Check out the results of our 2nd customer survey of accounting and ERP systems. See how well readers like the system they're using, and how they rate the developers and implementation partners. We also asked for some general feedback about return on investment and future plans.

Eight Tips For Creating A Vendor Short List

February 23, 2006 from Managing Automation and based in part on an interview with Michael Burns - "Your list of requirements should match up with pre-defined critical success factors (CSF) -- those things you must do well in order to be successful as a business, adds Michael Burns, president of 180 Systems Ltd., a business consultancy in Toronto. "If a requirement can't be mapped directly to a CSF, then it's not critical."...

When creating your RFP, Burns suggests asking vendors to respond not with a yes or no but with a number between one and seven. "When they say yes, that can mean anything," Burns says. You can get more specific through a numbering system, where a "6" might indicate that a feature is available in the current release of the software, a "5" that it will be available in six months, and a "1" that it would require a major modification or workaround. Combining your weighted requirements with these weighted responses will give you a way of scoring vendors to determine which makes your short list, he says.

You might be tempted to skip the reference check process, assuming you'll get only positive responses. However, according to Burns, "forty percent of the time, the reference is not a positive one," he says. "It's amazing how little vendors know about their customers." Burns offers a checklist of questions to ask each reference and advises that you tell each one a little about yourself before asking any questions so that they have a level of comfort with you.
Don't spend time on system demonstrations until you've narrowed your list to a handful of finalists. You can even take a two-pronged approach, Burns suggests, where the first demo is done over the Internet and the second one is more in-depth. In all, you should attend no more than four demonstrations, and limit each to two to three hours, he says. Ask demo attendees to identify major strengths and weaknesses, he says."

Use internal benchmarks

2006 from McKinsey Quarterly - "While a company must know what its peers are achieving, it's a mistake to measure its performance against the competition: these benchmarks are typically just samples of data with little explanation behind them. Companies that use external benchmarks are often frustrated to find themselves off by a factor of five to ten, positively or negatively.

Using external benchmarks compounds the internal difficulties that service companies face in normalizing activities and the data that define them. Consider a measure such as costs per unit of information processed: some companies include allocated costs, such as corporate overhead and salaries; others don't.

Internal benchmarks deliver more detailed metrics, allowing a company to find its own best practices and to see where and how they are achieved. It can then have access to all relevant information to assess differences among business units and accounts. In defining internal benchmarks, for example, a company can determine which costs are included or how asset costs are allocated — details that get lost in external benchmarking. A company can see what's really possible within the organization by using its own benchmarks."

180 View - The benchmarks should be metrics or key performance indicators that align to Critical Success Factors - those things that must be done well in order to be successful.

Three Myths of Management

March 27, 2006 from Harvard Business School - "In a new book, Stanford professors Jeffrey Pfeffer and Robert I. Sutton assail popular yet shaky—maybe even harmful—management practices. Our excerpt starts with a hot trend: benchmarking...

There is nothing wrong with learning from others' experience—vicarious learning, as contrasted with direct experience, is an important way for both people and organizations to learn how to navigate a path through the world. After all, it is a lot cheaper and easier to learn from the mistakes, setbacks, and successes of others than to treat every management challenge as something no organization has ever faced before. So benchmarking—using other companies' performance and experience to set standards for your own company—makes a lot of sense. In the end, good or bad performance is defined and measured largely in relation to what others are doing.

The problem lies with the way that benchmarking is usually practiced: It is far too "casual." The logic behind what works at top performers, why it works, and what will work elsewhere is barely unraveled, resulting in mindless imitation...

In these and scores of other examples, a pair of fundamental problems render casual benchmarking ineffective. The first is that people copy the most visible, obvious, and frequently least important practices. Southwest's success is based on its culture and management philosophy, the priority it places on its employees (Southwest did not lay off one person following the September 11 meltdown in the aviation industry), not on how it dresses its gate agents and flight attendants, which planes it flies, or how it schedules them. Similarly, the secret to Toyota's success is not a set of techniques but its philosophy—the mindset of total quality management and continuous improvement it has embraced—and the company's relationship with workers that has enabled it to tap their deep knowledge. As a wise executive in one of our classes said about imitating others, "We have been benchmarking the wrong things. Instead of copying what others do, we ought to copy how they think."..

The fundamental problem is that few companies, in their urge to copy—an urge often stimulated by consultants who, much as bees spread pollen across flowers, take ideas from one place to the next—ever ask the basic question of why something might enhance performance. Before you run off to benchmark mindlessly, spending effort and money that results in no payoff, or worse yet, in problems that you never had before, ask yourself:
Is the success you observe by the benchmarking target because of the practice you seek to emulate? Southwest Airlines is the most successful airline in the history of that industry. Herb Kelleher served as CEO during most of Southwest's history and remains the chairman to this day. Kelleher drinks a lot of Wild Turkey bourbon. So does that mean that if your CEO starts drinking as much Wild Turkey as Kelleher, your company will dominate its industry? Get the point?

Why is a particular practice linked to performance improvement—what is the logic? If you can't explain the underlying logic or theory of why something should enhance performance, you are likely engaging in superstitious learning and may be copying something that is irrelevant or even damaging.
What are the downsides and disadvantages to implementing the practice, even if it is a good idea? Are there ways of mitigating these problems, perhaps ways your target uses that you aren't seeing?

180 View - There are many levers to enhance performance. Technology is but one of them. The best way to enhance performance is through motivation just as Southwest did by not laying anyone off in the bad times.