Archive for category News & Articles
Holy Chipotle: What’s Hot About a World-Class Close
Posted by Natalia Warren in News & Articles, Trends & Technology on July 19th, 2010
The concept of a world-class close has been around for decades, and with the economy booming, stalling, and then doing who-knows-what in the future, revisiting the elements of a world-class close can bring unexpected benefits to any organization. Driving toward a world-class close means by definition that IT and Finance will become more flexible, more strategically aligned with the business, adopt continuous improvement policies and practices, improve the timeliness and accuracy of financial reports, and enhance overall financial reporting and analysis. Any one of these improvements would be welcome by any organization. All five at once would be a boon, and worthy of a strategic corporate initiative sponsored by any C-level executive, be it the CEO, CFO, or CIO.
A world-class close is performed efficiently and effectively, in a few days or in some cases a few hours, with as few people as possible, using as little technology and time as possible, and with minimal use of manual or miscellaneous journal entries. After the books are closed for the reporting period (day, week, month, quarter, or year), within a few short hours final reports can be generated, the numbers are accurate, auditors check controls, and everyone goes on to focus on making money or reducing costs in the next reporting period – not on compiling and disseminating reports.
A world-class close can only happen when it is a priority for C-level management. But as a corporate strategic initiative, a world-class close can also be an indicator of a world-class organization with the following characteristics:
- Management and employees are all held accountable for the business.
- Performance metrics are aligned throughout the organization.
- Continuous Improvement programs are well established.
- IT systems are highly integrated.
- The organization is nimble and can easily respond to changes in the business environment.
- The organization is committed to training and cross-training employees.
- The organization values innovation.
In an organization with a world-class close, accounting and finance teams recently described their processes and day-to-day responsibilities. Common characteristics include:
- Enter data only once at the source.
- Automate the reconciliation process.
- Control tightly any manual or miscellaneous journal entries.
- Continuously review the period-end close process and recommend improvements.
- Hold yourself accountable for the period-end schedule and process.
- Time system run-times to the hour and minute.
- Track and hold yourself accountable for any booking errors.
- Centralize the period-end process for IT, finance, and accounting teams.
- Be accountable for compliance to the period-end process.
- Move to a single, global chart of accounts if you are not already there.
- Ensure that anyone who is held accountable for their departmental budget, both revenue and cost centers, understands the close process and receives or can access updated reports whenever needed. Variances will be easy to spot and to respond to.
- Make it easy for internal and external auditors to monitor controls over financial reporting by automating virtually every step.
A world-class close can have different characteristics in different organizations depending on numerous factors. For example, one organization may perform a full close each quarter without performing a monthly consolidation. In Month One, a local close provides reporting on the operating income detail. In Month Two, they would do a partial consolidation without, for example, eliminating profit in inventory. Another organization may perform a complete close quarterly at the corporate level but with sub-units still fully closing on a monthly level. Regardless, organizations should resolve any accounting issues before the closing so that the closing period does not turn into a decision-making period.
All contributing business units should also be tracked on the quality and the timeliness of their submission to the same set of metrics. For example, organizations should establish definitions for early, on-time, and late submissions (e.g. more than 4 hours before deadline, between 4 hours and deadline, and more than one minute late, respectively). The organization would then track the timeliness of the submission and publish a performance scorecard. Similarly, an organization would define thresholds for materiality. Anything above the threshold would be handled in the following reporting period to ensure that a timely report is released and the organization would focus on reducing, or eliminating, manual adjustments and corrections wherever and whenever possible. Using a single, global chart of accounts helps ensure accuracy not only in the reports, but also in the submissions with fewer variations – reducing the number of possible errors.
Focusing strategically on developing a world-class close process will bring the obvious benefit – less time spent generating reports and more time focusing on the business. The additional benefits for any organization can be substantial and provide a way to establish a culture based on quality and accountability, one hallmark of a world-class organization.
If IFRS…Then, Part 1: How IFRS Reporting Will Impact Filers
Posted by Natalia Warren in Designing a Chart of Accounts, News & Articles, The Changing Enterprise on June 16th, 2010
Although IFRS adoption in the US is still a few years away (according to the last SEC proposal: 2014 for large accelerated filers, 2015 for accelerated filers, and 2016 for non-accelerated filers and smaller companies), some US-based issuers may have the opportunity to report financials using IFRS standards sooner, depending on their industry and relative market share. Still, the SEC has not made its final decision and won’t until at least 2011, though it has renewed its commitment to move forward with adoption.
Nevertheless, outstanding issues that are not yet resolved – and may not be before the various deadlines – will affect filers, contributing to the chaos and confusion of any significant transition in reporting requirements. For example, IFRS does not yet have standards for the treatment of insurance contracts, recapitalization transactions, extractive activities, some common control transactions, reorganizations, and other similar transactions. Also, IFRS permits various accounting practices based on local standards, something the SEC seeks to eliminate. But even today U.S. GAAP also does not have a single standard for property, plant, and equipment or even revenue recognition.
In addition there are known differences between U.S. GAAP and IFRS. For example, IFRS does not permit accounting for inventory on a LIFO basis and instead requires FIFO which could impact taxable income based on differences in inventory valuation using the two methods.
Complications would also impact companies that invest in entities that don’t report using IFRS or private companies planning an IPO that need to switch to IFRS from a different standard. And companies that do not operate globally will be challenged to adopt IFRS both for financial reporting and auditing, e.g. reporting on the effectiveness of internal controls over financial reporting (SOX Section 404).
The SEC has asked for comments to help it assess two alternative reconciliation proposals, neither of which has yet been selected. The first proposal would require a one-time reconciliation from U.S. GAAP to IFRS1, whereas reconciliation in the second proposal would cover a three-year period. If option 2 is approved, large accelerated filers would need to reconcile 2012 – 2014, accelerated filers would reconcile 2013 – 2015, and non-accelerated filers would reconcile 2014 – 2016. In effect the companies would need to issue two sets of reports in each of the three years, one set following U.S. GAAP rules the other set using IFRS standards. Of course, some large global companies may already have to report using both.
Depending on company size and the number of times reconciliation disclosure is required, the SEC estimates modest costs for the IFRS roll-out, anywhere from 0.125% to 0.13% of revenue, a number that is expected to drop over time. However, if the SEC’s SOX compliance estimates are used as a predictor, then their cost estimates for adopting IFRS are much too low.
Although the SEC decision is not expected until 2011, the time to prepare for what appears to be an inevitable future is now. The difficulty and complexity in IFRS reporting will only be exacerbated for organizations that frequently acquire other companies, frequently reorganize, or have different charts of accounts (COAs) for various business entities. It stands to reason that compiling period-end reports for them is already difficult and will only be more so as U.S. GAAP rules morph into IFRS standards.
At the very least, organizations should move toward adopting a single COA for all business entities. At a minimum this will mean that all of the convoluted mapping during period-end consolidation will be minimized, if not completely eliminated, along with the myriad spreadsheets consumed in the effort. IFRS compounds the issue for U.S. filers accustomed to following rules by establishing standards and not publishing a recommended COA. The sky is the limit, or so it seems. But adopting a COA that can accommodate various lines of business in different countries and industries is not an insurmountable task if best practices are followed. The question then becomes, what are those best practices?
In If IFRS…Then, Part 2 we share best practices in COA design.
eprentise can help you get to a single global COA with FlexField software. Please see the following articles that will assist you in designing a new chart of accounts that complies with best practices and align your chart of accounts with your business:
If IFRS…Then, Part 2: 5 Best Practices in Designing a Chart of Accounts in Oracle E-Business Suite
Posted by Natalia Warren in Chart of Accounts Structure, News & Articles, The Changing Enterprise on June 16th, 2010
To better manage the transition from U.S. GAAP rules-based to IFRS principles-based financial reporting, U.S. filers who use Oracle E-Business Suite (EBS) should determine how many different Charts of Accounts (COAs) they currently have and begin working on a plan to adopt a single global COA for every business entity and reporting unit. Although regional differences in reporting requirements will likely persist even after a full-scale transition to IFRS, this should not prevent organizations from a brutally honest assessment of the current situation. Whether organizations are running R11i or R12, a common COA will simplify external reporting and internally provide management with better and faster reports. Regardless of how you approach the COA design, keep in mind that the Oracle COA structure needs to contain at least 2 (balancing and account) but no more than 30 segments, the total length of code combinations can be no more than 240 characters, and the account value must be limited to one type, e.g. asset, expense. There are also tools available in R12 that will make this transition even smoother, like Secondary Ledgers, Subledger Accounting and Autoaccounting rules that we discuss near the end of the article. First, here are Chart of Accounts design guidelines that are applicable, no matter what version of EBS your organization is running.
1. Build Flexibility into the Structure
The trick in designing a new COA or changing an existing COA is to always keep in mind that the future will bring change. Whatever structure you design will also need flexibility. This may sound like an impossible goal but is easily achieved by putting values for each segment into ranges that are large enough to accommodate significant growth or change in the future. For example, in Out of Range: Using Logical Ranges, my colleague Helene Abrams describes how a project segment set up in an accounting flexfield with the values 55000 – 55999 might represent a specific type of project. There is room in this structure for at least 999 different projects of that same type, and you can tell just by looking at the number what type of project it is. If the range were 550000 – 559999 there would be room for 9999 projects. If you know the trends in your business, you can define an appropriate number of characters for a segment and range. Don’t hesitate to broaden the range by increasing the number of characters in the segment. What may seem like a lot today, 999, might be wholly inadequate in a few years. Increasing segment values to accommodate growth lets you build flexibility into the COA structure, as long as you keep the total character count at or below 240.
2. Create a Hierarchy and Protect It
When designing the COA think in terms of an outline, hierarchy, or parent/child relationships. Group product lines into categories, and then define the ranges for the categories. This will help you determine where you will need to allocate more characters and where you can have fewer characters. Usually children in the family tree will be more granular and will therefore require more values, but not always. By sketching the COA family tree you will see where you need to build in room for expansion.
Once the COA tree structure is designed and implemented, stick to it. Resist the temptation to share account values with different account types because it’s “easier” to do it that way in the moment. Establish procedures, protocols, and definitions for values and types and make sure that everyone involved understands how to use them and what they mean.
3. Address Politics from the Start
By having a cross-functional team work on the COA design, global buy-in will be all but assured. However, don’t let one group dominate the decision-making process, e.g. finance ends up with 200 characters leaving only 38 for everyone else.
Designing a logical and flexible COA for Oracle E-Business Suite can start with a simple table, created in Excel, like the one below. The detail for each major category such as Company, Location, Department, Account, and Product Family for which data exists is expanded in another tab.
The spreadsheet for the Account type will include fields for the following additional information, for example:
- Range – the range of numbers in which the item falls
- Segment value – the actual number assigned to the item
- Item name or description
- The account type – Revenue, Expense, Asset, Liability, or Owner’s Equity
- If applicable, the old account number or segment value
- The parent account or rollup value
- Whether or not there are any cross validation rules with the Account Value and the Company, Location, Department, or Product Family values
4. Use Numbers Only Randomly
Avoid using intelligent numbers in any scheme you design. For products, where intelligent numbers can help to identify a particular product family or subgroup to a customer, devise a scheme where you have both non-intelligent and intelligent numbers for a particular product. The non-intelligent numbers will be used for internal and financial reports but the intelligent numbers can be used in a customer-facing environment. Also, wherever possible, avoid using alpha characters, except potentially in parent values, because these will create problems in sequencing and sorting data in reports, assigning codes, using ranges, and when creating validation and/or security rules. If you do use letters, use only capital letters for consistency and to facilitate any queries you may need to run.
5. Keep One Type of Data in One Segment
Each segment should have one – and only one – type of data in it. For example, there shouldn’t be a Department segment value such as “HR – Sacramento, CA” if there is also a Location segment in the chart. The location data, Sacramento CA, should be kept only in the Location segment, and not also in the Department segment. It is more difficult to write a rule for a segment that includes multiple types of information, and keeping the data in only its relevant segment helps reduce redundancy.
R12 Features Applicable to the IFRS Transition
Secondary ledgers and Subledger Accounting are welcome additions in R12. Sets of Books in 11i are Ledgers in R12, and Ledgers and Ledger Sets bring along with them a new and different method of performing accounting in EBS. From a single transaction ledger where a transaction is entered only one time, R12 uses accounting rules to populate other related subledgers. In this new light, a company that currently reports according to US GAAP standards is able to set up a secondary ledger specific to IFRS standards. Once the business understands how the current GAAP transactions should be mapped in order to comply with IFRS and is able to implement the mapping in the form of R12 accounting rules, EBS will take care of translating the transactions to the IFRS subledger, and IFRS compliance becomes transparent to the users. Users may continue to enter transactions in the way with which they are familiar: according to US GAAP standards. With each new transaction that is entered, R12’s accounting rules will populate the IFRS secondary ledger with the corresponding IFRS transactions. Of note here is that this can and should be accomplished with a single Chart of Accounts, provided that the Chart is designed with respect to both US GAAP and IFRS reporting standards. If a business takes the time to redesign its Chart of Accounts to accommodate both standards as well as the five guidelines listed above in the article, it will find itself in an excellent position to transition to IFRS in a seamless manner.
Conclusion
Designing a flexible COA that will work as well today as it will in the future when business takes unexpected turns takes a little forethought and sometimes some experience. A well-designed COA along with the new features in R12 make it easy to comply with IFRS standards and to reconcile with the current GAAP standards. A well designed COA should do its job for years to come while ensuring that management has timely access to reports and finance teams can quickly and easily consolidate period-end reports. When COAs are different, the best medicine is a consolidation into a global COA and redesign rather than another work around or spreadsheet.
Our Secret Sauce
Posted by Helene Abrams in Data Quality, The Changing Enterprise on April 15th, 2010
Everyone always asks us how we do what we do, and why, in over 20 years of Oracle E-Business Suite implementations, no one else has ever created software to automate the process of changing the underlying configurations or consolidating or separating data. eprentise software is built on a proprietary process called Metadata Analysis that is really the engine that drives the changes in an Oracle E-Business Suite. eprentise Metadata Analysis uses patterns and rules-based technology to discover everything about a particular database. A good analogy for Metadata Analysis is an architecture diagram for an already-built house (see That Old House). 
The architecture diagram includes all the wires and the pipes in addition to all the other internals of the house, like where every stud is located, whether the wallboard is aligned, the mechanicals including the type and efficiency of the heating unit, and the age of each appliance and how it is used. This architecture diagram knows the capacity of each wire or object in the house, knows what it is connected to, knows the order of operations if something needs to be changed, and fully understands the impact of that change. Metadata Analysis discovers and documents all database objects (e.g., tables and columns, primary and unique keys, rows and objects, foreign keys, other constraints, triggers) and application objects. It understands the data and has a built-in knowledge repository of how every piece of data is used, and how that data supports each business process. When it finds information (in the format of rules) about an instance, it confirms the information by checking every row of data to see if the information is consistent within the database, then validates the information against the eprentise Knowledge Repository. In addition, the eprentise Knowledge Repository houses information from each version of Oracle E-Business Suite gleaned from a variety of methods. (Only about 30% of what we find is documented in the DBA or FND tables or in the Oracle Technical Reference Manuals). After all the rules about the metadata are confirmed and validated, Metadata Analysis populates the eprentise Knowledge Repository with information specifically about the database, its schemas, constraints, and other database objects. It also compares configuration details between a source and a target. The source and targets can be different database instances, or different operating units, or really anything in the EBS. eprentise software uses the rules that it finds during the Metadata Analysis process to dynamically generate code to perform four functions: copy, filter, change, and merge.
Again, back to the house analogy. Once you have all the building materials available, and if you can get a good schematic of the house, you can remodel it with the right tools. You can move walls, add on to the existing structure, or even start over again on the same foundation. Within Oracle E-Business Suite, Metadata Analysis gives us the schematic, your data and business processes are the building materials, and we have the software tools to remodel EBS any way that you want, whether it is merging data together, splitting it apart, changing it, or moving data to realign it with the changes in your business.
That Old House
Posted by Helene Abrams in Data Quality, Data Systems, The Changing Enterprise on March 10th, 2010
Maintenance of an ERP System
When you moved into the new house, everything was clean, uncluttered, and ready for you to personalize and adapt to meet your needs. So it is when you first implement an ERP system. However, many people bring with them boxes of things no longer needed – data and structures from their legacy system that were once required or that the users have simply become accustomed to. Once you move into the house, you begin accumulating stuff that looked like a good idea at the time, but now sits in a corner and collects dust. Even worse, those obsolete items need to be moved and re-boxed, and every time you need something, you might spend hours or days looking for it. Feng shui practitioners believe that clutter is low, stagnant, and confusing energy that drains energy from you. Depending on the area of your home where your clutter is located, it can also negatively influence, or even completely block, the flow of events in specific areas of your life. Once again, there are many parallels to an ERP system. Multiple Charts of Accounts or Org Units clutter the business processes and take effort to create workarounds. Hours and days are spent reconciling spreadsheets looking for data that you know is there, but that is “boxed” so that it is not easily found. ERP clutter is a barrier to the sharing of information, to streamlining business processes, and to complying with statutory and regulatory requirements.
After about 10 years of living in the house, you probably need to make some major modifications to accommodate changes in your lifestyle. Maybe your family has grown and you need to add more space, maybe your children have moved out, or maybe your furnace is not as energy-efficient as you’d like and is costing you a lot of money. Similarly, after a number of years, your ERP system needs to be modified to continue to support your business. You may have acquired some companies, sold part of your business, or want to take advantage of new technologies. The good news is that in the same way that remodeling your house and upgrading your appliances adds value to your house, cleaning up your ERP system adds value to your business in the form of reduced operating costs, reduced hardware, and fewer people for non-value-added activities. In your house, once you clear most of your clutter with feng shui and have a clear system to avoid its accumulation in the future, you will start experiencing high energy levels, more clarity, and a heightened sense of well-being. In your business, once you clear the clutter left from years of ERP accommodations, you will start experiencing greater visibility to the entire enterprise, transparency in your financial transactions, less complexity, and the ability to drive value from new initiatives. Click here to learn how to reduce ERP clutter…
Getting the CFO to Pick Up His Bottom…Line: Best Practices in Cutting Costs
Posted by Helene Abrams in Data Quality, Return on Investment Analysis, The Changing Enterprise on February 16th, 2010
In the past, improving business processes was the primary objective of most ERP implementations, and welcome outcomes were cost savings and productivity improvements. When ERP systems were initially implemented, the opportunities and gains in back office operations were considered significant strategic advantages. But although the strategic advantages of having robust ERP systems persist, today’s economy is forcing companies to look for ways to cut costs rather just improve their systems. The good news is that focusing on cost savings and improving ERP can go hand-in-hand and lead to better business processes if they are managed properly.
Because cost savings will continue to be the focus for the foreseeable future, this paper will review best practices in workflow improvement that reduce costs for three key business processes: Procure to Pay, Period-end Close, Order to Cash. At some point when the economy moves out of recession, organizations will begin hiring again. Keeping an eye on our concluding key performance metrics will help organizations better decide when it’s time to flip the hiring switch. Read more…
Everyone Takes the Hit: What You Can Do About It – 5 Key Business Metrics and Oracle E-Business Suite
Posted by Helene Abrams in The Changing Enterprise, Trends & Technology on January 19th, 2010
Before the onset of the recession and the meltdown in the financial sector, for businesses addressing change meant adapting to more cash coming in and what to do with it to keep investors happy or adapting to unprecedented growth – one of those “good problems to have”. Organizations were looking at 3, 5, and 7 year strategic plans with upwards of 20% growth year over year. A company doing $100 million in revenue might have had plans to double in size in four or five years.
As businesses were growing, building their customer base, and hiring, they may also have been planning to implement lean manufacturing or otherwise improve a host of business processes, from financial and R&D to product management, sales, and marketing. Along with the business processes improvements, IT managers were retooling their IT systems, upgrading their infrastructures, improving performance and security, or adding functionality for a host of business users.
But as the recession took hold the optimistic forward-looking projections changed. Revenues dropped precipitously and survival tactics were implemented across the board. Companies cut their work forces. Cost centers like Finance, HR, and IT gave up headcount. Even R&D headcount, usually the last to go, was reduced. New products in the pipeline were pared to the bare minimum. Manufacturing shut down to reduce WIP and labor costs. Purchasers cut orders to reduce inventory. Marketers cut back on tradeshows and direct campaigns, redirecting scarce funds to less costly online programs. Sales organizations were consolidated, products heavily discounted, and travel budgets reduced. Across the board employees were furloughed and salaries were cut. Performance-based bonuses were first severely cut and later completely eliminated.
At the same time that companies hunkered down in survival mode, the business environment continued to change. Markets changed, customers changed, and financial or other regulatory requirements changed. Technology changed as well. In the middle of the recession Oracle released upgrades to R12 which included new “global” functionality, important bug fixes, and improvements. Other technology vendors in the ERP ecosystem released new products. Despite the changes and even with significant loss of headcount, IT managers somehow continued to deliver and support IT to their internal or external customers.
Below we examine how the economy impacted five key business metrics: Productivity, Inventory, Days Sales Outstanding (DSO), Customer Satisfaction, and Retention, how organizations responded as the recession unfolded, and the effects they had – or should have had – on ERP systems. Read more…
Show Me the Money: Reduce the Costs of Running Oracle EBS Before Upgrading to R12
Posted by Helene Abrams in Data Systems, Return on Investment Analysis, The Changing Enterprise on January 19th, 2010
Reducing costs is the major strategic focus for most companies. An often overlooked cost is the general operation of financial operations. This paper details a methodology for calculating the costs of running each of the financial modules. The costs are compared against both internal and external benchmarks. After calculating the costs, the paper shows how to reduce costs in two ways: first, by eliminating work that is duplicated across different business units or divisions, and second by determining which operations that are currently distributed across the organization can be consolidated into a shared services center. Together these changes, both to the organization and the Oracle EBS system, can generate significant cost savings. Finally, the paper details how streamlining operations prepares for a better R12 implementation.
Calculating the Cost of Operations
The cost of operations is calculated by breaking down how much time is spent on an activity during the year by each person doing that activity, how many items were processed, and then calculating the cost using a baseline cost of FTE. As an example, for AP, each department would calculate the number of hours in a year spent on each of the following tasks or activities:
- Maintain policies and procedures
- Enter, code, match, and correct payment documents
- Prepare and issue automated checks
- Certify checks
- Process manual checks and special payment requests
- Respond to vendor and internal inquiries
- Perform Reconciliations
- Perform corporate and government reporting
- Create Corporate Chargebacks
- Other A/P Activities
The hours would be translated to a number of Full-Time Equivalents (FTEs) by dividing the hours by 2080 (the number of hours for a person working full time per year). A baseline average burdened (including benefits and expenses) salary is then multiplied by the number of FTEs to calculate the annual cost of that activity. To obtain the cost of an operation, multiply the number of items processed (i.e. number of checks) by the cost of the activity. For each of the finance areas, costs are calculated to measure the performance of each activity. For example, General Accounting would calculate the number of journal entries processed per FTE per year and compare those to an internal benchmark. Travel and Entertainment would calculate the number of expense reports processed per FTE per year. Fixed Assets would calculate the number of unique fixed assets or line items per FTE per year. Accounts Receivable would calculate the number of bills issued per FTE per year. In other words, each area would develop its own internal key performance metric and a way to calculate that metric against FTEs contributing to the process. In aggregate these calculations may uncover significant additional cost savings that could be realized quickly and relatively painlessly by migrating from a distributed services model to a shared services model.
Old Dog, New Tricks: How Gartner’s Pattern-Based Strategy Impacts Oracle E-Business Suite Customers
Posted by Natalia Warren in The Changing Enterprise, Trends & Technology on December 16th, 2009
As the economy moved into a recession, last year’s Black Friday was particularly dismal for many retailers who, in anticipation of the usual holiday rush and ignoring any leading economic indicators, had stocked up on inventories. Last year’s lesson was remembered this year, and Black Friday profits – although weak – at least weren’t dragged down by the costs of excessive year-end inventories.
But our collective memories are relatively short. Already new mortgage-backed securities are being sold, this time on the backs of first-time home-buyers even as Dubai World sends jitters through the financial community. Are we able to recognize the weak signals that will eventually turn into tsunamis, but well in advance, so that we have time to react? Or are we still relying on the tried and true lagging indicators, quarterly sales reports and performance reviews?
And even if we recognize the signals and know what we need to do in order to stay competitive, will we be able to adapt quickly and then sustain the ability to respond for the next time when conditions change yet again?
Dealing with Change – Teaching an Old Dog New Tricks
Gartner maintains that companies need to be proactive in reacting to changes and recognizing the early indicators and patterns that can provide visibility into potential future opportunities and threats. These early-warning predictive patterns are increasingly coming from outside the enterprise, driven by an interconnected society and changes that are outside the control of an enterprise. As the investors in Dubai World seek funding, US corporate executives worry about the impact on their already fragile economic recoveries and how deliveries passing through the busy United Arab Emirates ports will affect their just-in-time supply chain. Earlier Sense and Respond systems and Business Intelligence systems did not focus on the transactional data in ERP systems that might reveal indicative patterns of future changes and help executives make fact-based decisions. Further, Yvonne Genovese, Gartner VP and Distinguished Analyst, identifies several factors that inhibit the ability to predict and adapt to change in ERP systems. Genovese maintains that, even when exceptions are recognized in an enterprise, there is “siloed visibility” meaning that the exceptions are not shared across different organizations. Additionally, the lack of transparency and the presence of conflicting data often result in conflicting patterns, and finally, ERP systems by their very nature are not flexible enough for decision makers to change the business processes in order to react to and change the pattern quickly (and not a 3-year reimplementation process).
Gartner identifies three component parts of Pattern Based Strategy: Seeking, Modeling, and Adapting. Read more…
It’s 11i… Do You Know Where Your Children Are?
Posted by Helene Abrams in Data Quality, The Changing Enterprise on December 16th, 2009
After spending enormous amounts of time and money, not to mention the tremendous emotional and social resources, it’s hard to imagine that conscientious parents wouldn’t be able to answer that question. But every so often it happens. Kids grow up, change, and become difficult to manage. The controls that were originally in place don’t apply, and as the children reach adulthood and some level of maturity, there is a need to develop new approaches for governance.
Similarly, companies have invested enormous resources in their ERP systems, nurturing them and adding to them over time as the needs of the business changed. The original Oracle E-Business Suite implementation, for example, was designed with the best of intentions. The team, along with the busload of consultants, tried to build a system that would last the company for years and through generations of change. They provided each location the ability to govern its own system and configure it for flexibility to meet the operational needs of that entity. As with children, providing a good foundation prepares the organization for change, but it is difficult to predict the external factors that influence the adaptation and performance of the company over time. Read More…