Written by Natalia Warren Tuesday, November 10 2009
Every quarter, every year, and every month, financial organizations work hard to close their books and prepare financial statements in accordance with countless rules and regulations. And when their ERP systems, designed at great expense and some point in the distant past, can’t keep up with their ever changing needs, they resort to creative workarounds, relying on spreadsheets, diagrams, or other documents jut to get through another reporting period.
As time passes, documenting the period-end process becomes more complex, and maintaining the process documents takes more and more time. But the collective memory of the finance team hasn’t forgotten what it was like to get through that first ERP implementation project – not to mention its enormous expense – and any hopes of improving the situation are abandoned as soon as someone says, “What about the ROI?”
Finance teams would have a better chance of responding to the ROI question if they banded together with their colleagues in purchasing, HR, product management, manufacturing, sales, marketing, and IT as they struggle with the same legacy ERP systems. Ask around and you’ll find that all of them have created their own sets of creative workarounds just to get through another day.
It’s happening everywhere.
HR professionals, for example, have all sorts of ongoing ERP-related headaches to deal with. Employees leave or join the company or move from one business unit to another, possibly in another country. As a result, compensation, bonuses, benefits, commission policies, and structures are a moving target. Layoffs and furloughs have taken their toll, and divestitures and acquisitions mean company reorganizations are seemingly endless. How likely is it that the once elegant workflow designed around an ERP system implemented 5 or 10 years ago hasn’t needed to change?
And with businesses struggling to keep their heads above water during this recession, RIFs and budget cuts only exacerbate the problem. It’s like having your business broadcast on a hi-def TV. Suddenly every innocuous work around looks more like a big ugly wart.
And it’s happening in virtually every business unit and functional area.
Purchasers in recent quarters have been working hard to reduce inventories by renegotiating contracts and payment terms. Manufacturers looking to reduce costs have outsourced, in some cases insourced, and in many cases adopted lean production practices. Product managers have been reducing product lines to those that are most profitable, and IT teams have been investigating cloud computing and other virtualization initiatives to drive out costs. Sales teams have seen dramatic changes in their territories, pipelines, and orders. And marketing teams have been redirecting funds to less costly online venues thanks to Twitter, Facebook, and LinkedIn.
In other words, everyone has been on the same bandwagon for months, driving out costs and looking for efficiencies while hoping to hang on until the economy turns around. And one day it will.
The Next Great Companies
The question is how easily will your organization be able to adapt to a new business environment? Is a hopelessly inefficient ERP system going to cut it? Will you briefly consider doing something about it but abandon any lofty plans because of that killjoy acronym, ROI? How will your organizations respond to an uptick in the economy, effectively and efficiently? Nimbly? Like the contortionists executives want everyone to be?
As if issuing a wake-up call to the business community, Gartner has proposed that organizations should now seek changing patterns in their business environments and formulate strategic plans to address those changes. IT systems will be a key component of this highly competitive new organization, aggregating and analyzing data, synthesizing information, and ultimately discovering patterns that uncover new opportunities or threats.
If Gartner’s vision for the future holds true, organizations that aspire to be market leaders won’t hesitate to update outdated ERP systems and abandon off-line workarounds.
Those who don’t will muddle along. They’ll be the good companies, but never the great ones.
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January Puzzle
A traveler gets lost on a deserted island and finds himself surrounded by a group of n cannibals.
Each cannibal wants to eat the traveler but, as each knows, there is a risk. A cannibal that attacks and eats the traveler would become tired and defenseless. After he eats, he would become an easy target for another cannibal (who would also become tired and defenseless after eating).
The cannibals are all hungry, but they cannot trust each other to cooperate. The cannibals happen to be well versed in game theory, so they will think before making a move.
Does the nearest cannibal, or any cannibal in the group, devour the lost traveler?
Solution
The short answer is the traveler’s fate depends on the parity of the group. If there is an odd number of canibals, the traveler will be eaten, but if there is an even number, the traveler will survive.
To prove this, we will consider small groups and use mathematical induction to explain the solution for larger groups.
Case n = 1: this is an obvious case. If there is one cannibal, the traveler will be eaten. It doesn’t matter that the cannibal will get tired because there are no other cannibals around as a threat.
Case n = 2: this is a more interesting case. Each cannibal wishes to each the traveler, but each knows he cannot. If either cannibal eats the traveler, then he will become defenseless and the other one will eat him. So each cannibal uses backwards induction to realize that the only strategy is to not eat the traveler. The hapless traveler finds a bit of luck, therefore, and actually survives.
Case n = 3: this is where the problem gets interesting. The best strategy is for the closest cannibal to make a move and eat the traveler. The cannibal will be defenseless after eating, but ultimately he will be safe. Why is that? The reasoning is due to induction: once the cannibal eats the traveler, the resulting situation has 2 unfed cannibals and the 1 defenseless cannibal. But as we just showed above, when there are 2 unfed cannibals, neither will make a move for fear of being eaten by the other! Thus the first cannibal to make a move will be safe as the remaining 2 cannibals block each other.
We can prove the higher cases using mathematical induction. If the number n is odd, then the closest cannibal can safely eat the traveler because the remaining number of unfed cannibals is even (and by induction, with an even number of unfed cannibals no one makes a move). If the number n is even, then no cannibal will eat the traveler, for if he did, the remaining number of cannibals would be odd, meaning he will get eaten by the induction hypothesis.
Success Tips for Oracle Project Management
- Create a standard for documentation at the beginning of your project, and hold team members accountable for completing documentation requirements as well as keeping them at and above the standards required.
- Before promulgating user documentation or training, it’s also a good idea to choose a representative from the among the business users base to review materials first.
- If you are not sure about the resources and budget required, obtain several estimates from people that have experience with the same size and scope of your project.
- Be explicit, before beginning the project, what internal resources are required for execution. This includes people, infrastructure, hardware, and software.
- Help the project champion understand the impact your project will have on the organization and how its successful completion will make him or her an internal hero or heroine for supporting it.
- Break up your project into smaller projects (try for projects that can be completed in 4-6 months, especially early on) to get success and demonstrate momentum.
- Make sure that your testing includes reports, upstream and downstream interfaces, customizations, enhancements, and workflows.
- Ensure that comprehensive transition reports and meetings between departing and incoming personnel are completed.
- Instead of spending time and resources implementing third-party reporting, consider consolidating multiple instances, moving to a global chart of accounts (CoA), and/or standardizing on a consistent calendar.
- Include governance, risk, and compliance management as part of the project plan.
- Finally, celebrate the successes. Too many projects focus on defects, failures, or small cost over-runs without looking at the big picture and what was accomplished.
The Analyst Corner
John Van Decker, Research VP of Gartner, states:
"A single chart of accounts allows consistency in financial reporting across the enterprise by standardizing on common metrics and reporting structures, reduces dependencies on a separate financial consolidation system, and significantly reduces the costs incurred with ongoing, complex conversions and translations."
