Improve Your Business

When IT Projects get in the Way of Business Transformation

2010-07-31T17:08:00.001-05:00

IT projects are initiated when business identifies a need to change or improve their processes. Many process improvement or business transformation initiatives have an IT component. A company I worked with recently that was looking for an IT solution to help them drive improvements in their global procurement group. The key driver was a need to make operations more efficient to support aggressive business growth objectives. Essentially this was a business transformation project. The IT component in this case was a key part of the success of the project. The IT project would deliver more effective transaction system for procurement and better information for decision making.

Given the potential benefits to the business of these projects, it is not hard to get business support and sponsorship, as well as engagement of resources from the business side. However, expectations are normally high, and a clear understanding by the business of the rigor and methodology around IT projects is not always understood. The implementation of an enterprise IT system of this scale needs to follow a methodology that ensures that the rest of the systems are not impacted, and that good IT and project governance is followed.

So what happens when the requirements imposed by good IT governance slow down the delivery of the benefits of the business transformation project? Furthermore, how often do we see IT procedures and policies used in the name of good IT governance, that do not make sense from a business point of view? Does project methodology constrain business process improvement?

Good project governance around IT projects reduce risk. At the same time, they transfer some of 'ownership' of the solution from the business to IT; reduce the level of engagement of business; and extend project timelines and cost. Balancing business expectations with IT governance is a challenge.

Here are some of the key project aspects that we addressed to tackle this challenge on our project.

- Employed an iterative project approach. This ensures that small successes can be delivered to the business, and subsequent work can build on each project deliverable.
- Clear communications and business engagement. This manages expectations realistically, as well as ensures that project team stays close to business needs.
- Well defined and communicated project milestones supported by a well maintained project plan.
- Strong functional team leads who understand business processes and requirements; the technologies being deployed; and good IT governance, methodologies and tools.

Making the Business Impact Matrix the foundation of a Change Management Program

2010-05-11T22:40:00.002-05:00

What is a Business Impact Matrix (BIM)? The BIM is the output of a thorough assessment of change impact on the business processes, people/organization and systems. Defining change means documenting the current situation and the future situation, then assessing the change that this means to each impacted group. Proposed actions for making this change successful means understanding the risks of not making the change. These actions need to occur to manage risk of change. The BIM assessment should also idntify the opportunities for the business of each change.

So the Key Elements of the BIM are:

Defined Change.
Identified Impacted Groups
Risks of not Changing
Actions to address Risks
Opportunities of Change

Actions will translate into a Organizational Change Management Plan that include communication, solution design reviews, user acceptance testing, user documentation, end user training, and user support. In a multi-phase project, these actions need to be aligned by project phase.

Opportunities will support the Value Proposition that needs to be part of the communication around the change. The BIM will help guide the Value Proposition by impacted group, making communication to specific audiences more effective.

When Operational Technology and Information Technology Collide

2008-12-16T16:34:00.004-05:00

What happens when business units acquire or develop new technologies that support more efficient business practices, without the involvement of the IT department? What may start as a good idea, and not initially seen in the domain of 'traditional' IT, may very quickly result in islands of technology with all of the characteristics of taditional IT - but owned and supported by the operational business unit.

For example, I recently helped a client in the utility industry that had developed innovative technologies that would drive tremendous value to their consumers, the industry and their own top line. However, these technologies included infrastructure, applications and networks that overlapped those systems that were in managed by the IT department. This situation had resulted in organizational silos; political tensions; and waste due to duplicated processes with a negative impact on the company bottom line.

CHALLENGES

Little integration between corporate IT and business technology strategies.
Multiple accountabilities and responsibilities around technology
Corporate IT not seen as agile enough to adapt to maturing systems that support new business technologies.
IT change request process perceived by business as too slow and bureaucratic
Potential loss of intellectual capital and tribal knowledge due to losses in personnel through retirements and natural attrition.
Lack of consistent project management discipline across technology projects.
Security responsibilities split between IT and business units. At the same time, higher risk exists to system via more access points to new wireless networks.

KEY OPERATING PRINCIPLES

We quickly determined that we needed to establish a framework which the C-suite could agree on, before any solution could be found. These key operating principles were:

Corporate CIO is responsibile for establishing a technology governance model that should standardize technology policies, practices and procedures and communicate openly and often with the business.
Corporate CIO needs to have overall oversight accountability for all technologies.
The IT organization needs to be strategically and tactically aligned with business requirements to be flexible and responsive to changing needs.
Business unit leadership needs to be accountable for support of operations-specific applications and should be closely aligned to the corporate CIO
Technology infrastructure needs to be centrally managed throughout the company to help ensure standardization.
Technology security (cyber and access) needs to be centrally managed across company.

BUSINESS IMPACT TO WAYS OF WORKING

Without going into the details of the solution for this specific client, it sufices to note that the above design framework had a real impact on the "ways of working" across the organization. Any organizational tranformation initiative would include some or all of the areas below:

On Technology Governance. Establishment of clear levels of accountability and enforcement of technology standards and policies, as well as strong relationship between corporate and business technology groups.
On Project Governance. Establishment of strong working relationship with project managers across the company, in order to standardize project methodologies and tools, as well as develop the standards for project management across the company. If possible, leverage and build on existing project management and process standards.
On Portfolio Management. Development of processes to support project and application portfolio management; assessment and implement tools to support these processes; establishment of procedures to make this work across the company.
On IT Change Request Management. Migration of the current change request processes under a single group with all associated communications and clear, simple working procedures to ensure complaince while ensuring speed of change.

RISKS TO NOT CHANGING.
If this sounds like a lot of work, here are the risks of not making any changes.

‘Islands of technology’ will make integration of newer technologies with enterprise systems difficult.
Multiple technology strategies – not aligned to business strategy - continued waste due to duplication of processes.
No single accountablity around technology standards and policies - means no technology standards and policies.
Limited visibility across company of technology projects may result in poor leverage of learnings and benefits and higher implementation costs.
Multiple views and approaches to applying cyber security policies across company hieghtens risk to systems.
Multiple views of technology across company will limit decision making at all levels of organization.

Managing IT in a downturn: Beyond cost cutting

2008-09-23T10:42:00.004-05:00

According to the McKinsey report "Managing IT in a downturn: Beyond cost cutting", there are opportunities to drive business benefits even in a slow or bad economy. The authors state that economies around the world are slowing down, and companies are looking for ways to trim spending and improve the bottom line. Although information technology often represents a small fraction of the corporate cost base, senior executives inevitably turn their attention to IT budgets for substantial contributions.

Yet in some instances, IT investments deliver more value to a company’s top and bottom lines—by creating new efficiencies and increasing revenues—than any savings gained from traditional IT cost cutting.

The "sweet spots" for IT improvements during slowdowns include:

Manage sales and pricing. Develop insights into customer segments and improve pricing discipline to increase revenues without increasing prices.

Optimize sourcing and production. Rethink supply chains and logistics to improve the scheduling of deliveries and inventory management.

Enhance support processes. Improve the management and use of field forces (such as installers and field technicians) and of customer support centers.

Optimize overhead and performance management. Sharpen awareness of risk exposure and improve decision-making and performance-management processes.

How does Green Computing help your business?

2008-05-27T07:59:00.001-05:00

Green Computing has come out of multiple programs over the past several years around protection of the environment, corporate social responsibility & sustainability. Sustainable development was defined by the Brundtland Commission as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs."

Green Computing is driven by technological developments, as well as by implementation of tools and processes that make more efficient use of computers. Some of these are simply "common sense" things that we can do to reduce consumption. Reducing power consumption saves money as well as the load on our resources - is a key factor in the strategic sustainability "triple bottom line" of people, planet and profits.

As the need to capacity and processing power increases, so does the need to cool down these more powerful processors – and increasing consumption of energy. Major initiatives are underway to address this issue, and over the next few years we will see newer cooling technologies being introduced that will reduce our reliance on noisy and power hungry fans on PCs. The Economist recently ran an interesting article how this issue can impact us closer to home.

These and other technological advances are fundamentally changing the way we use computers so that Green Computing becomes a reality – supporting sustainable development. HP has a range of energy efficient solutions built around their ProLiant Servers, while Dell have developed programs and policies around energy efficient computing. Intel too have multiple initiatives underway around Green Computing – from specific targets to reduce CO2 emissions with energy efficient processors to building lead-free and halogen-free devices. Sun Microsystems have created solutions around their Sun Eco Innovations around the ‘greening’ or data centers.

Applications that are run over the web as services (Software-as-a-Service or SaaS) also contribute to Green Computing, if they are built to support the following key principles:

Provision of centralized processing and shared services. This reduces the need to infrastructure on the client side, and thus less decentralized processing power.
Building of green SaaS data centers. Centralized data centers mean that the innovative technologies, processes and policies can be effectively applied.
Greening of the software development process. Using ‘lean’ coding processes like Agile Software Development, means simpler coding processes, faster delivery and fewer energy consuming processor calls.

Here are some of the many blogs where you can find more information about how Green Computing is supporting sustainability efforts around the world.

Applying LEAN to ERP System Implementations

2008-03-08T21:05:00.001-05:00

"The speed of the boss is the speed of the team" - Lee Iacocca

LEAN methods have been applied to software development. LEAN methods, or Agile methods use development iterations during software develoment. These methods minimize risk by developing software in short pieces over short periods. These short development project pieces, or iterations allow for logical pieces of functionality to be developed; the bugs to be ironed out; and for project priorities to be re-evaluated.

How do we apply LEAN to ERP system implementations? Traditionally, a 'waterfall' approach is used on ERP projects. This means that you would design the solution first; and then configure the ERP software; and then test it. Using this traditional approach, project teams would have spent a lot of money and time before finding issues that may have required going back to changing the solution design, or system configuration.
But LEAN CAN be used to make ERP system implemenations more effective. This is how:

Spend time up front in getting requirements correct to avoid waste due to developing functionality that is not needed or defects.
Break down Design concepts by critical business subprocesses or functional areas that can be tested and validated against business requirements.
Plan iterative Design / Build / Test activities around these functional sub-system designs.
Creating Learning Cycles around the Build and Test activities. This will reduce training effort and better utilize people's time.
Align business processes around ERP system functionality – maximize asset usage; avoid having to customize the system more than you need.
Avoid complex project plans. Use a milestone plan to drive achievement of project objectives. Use of Work Packages to breakdown work activities, if more detail is needed at that level. These Work Packages should be build around the iteration cycles that will lead to rapid deployment of the system.
Rapid deployment – design, build, test and review pieces of the solution. This requires user involvement during design, testing and review – knowledge transfer reduces training effort of traditional methodologies.
Document of design and review decisions – capture knowledge

LEAN in system implementation has two basic components:

a quick, interactive process to achieve flow in the development process, and
a knowledge capture process to improve quality, reuse, and repeatability of information developed in the interactive cycles

Relationship Selling - "Going for the Green"

2008-01-13T00:37:00.004-05:00

"Going for the Green: Selling in the 21st Century" is a "how-to-book" written in the form of a novel about golf. So, it can be read as this - a story of a single mother who, suddenly about to lose her job through no fault of her own, discovers a new world of unrealized opportunity.

Or, you can read this book as a learning tool about how to use your relationships within your organization and with your clients and vendors, to succeed in selling your products or services.

The author, Doug Peterson, uses golf analogies to keep the reader engaged in the process of learning how to deal with challenges in making sales numbers. He asks the questions, and educates the reader through the storyline, about the process of Relationship Selling.

The book includes some practical advice, which includes:

"Studying the Links". What do you need to know about your customer?
"Playing out of the Rough". Once you have gathered useful information about the client, how do you analyze and process that information to be successful?
"Changing your Game". Are you product-focused, or customer-focused?
"Course Management". How do you develop a relationship strategy in order to build an effective plan?
"Grip it and Rip it". Can you sell your solution within your own organization?
"The Approach Shot". How do you 'win' the opportunity?
"On the Green". How to manage the new strategy?

The book concludes with advice on getting "In the Cup" and "Turning Pro".

A good, and easy read - whether you enjoy golf stories, or want to learn more about Relationship Selling.

Building a Business Case for an Improvement Project

2007-11-23T10:33:00.002-05:00

“Write your injuries in dust, your benefits in marble.” Benjamin Franklin.

How many times do we go into projects without defining the measure of success? That is what we do when we do not think through the cost and benefits of any investment in an improvement project. How can we measure how we haev achieved our improvement goals, if we do not have these quanitified in terms of the time and expense we put into building the improvements?

Building a business case does not have to be an exact science, and is simpler that many think. However, it does take effort, and requires buy-in from the project sponsor or the person who is signing the check.

Building the Business Case for a project is most commonly done using Excel. You want to estimate the costs & benefits over time with all of the assumptions that you will need to make, so that you can define the key project metrics that will help you decide whether to go on with the project or not. Below I have listed the elements of this business case: the costs and benefits over time, and the metrics.

Types of Costs

One time costs to implement solution. Eg. project time & expense costs, hardware and software purcahses, etc.
Recuring costs. Eg. depreciation, training, licensing, etc.

Types of Benefits. Below are examples of typicial quantifiable benefits of an business improvement project

Increased number of customers
Improved revenue per customer
Improved customer retention
Reduction in sales discounts
Reduction in penalties, returns & credit notes
Software portfolio consolidation
IT maintenance cost reduction
Reduction in capital costs
Labor savings (by department)
Improved cash collections
Reduced stock holdings
Faster training
Other one-time benefits (
Other monthly benefits

Business Case Metrics

Payback. Payback period refers to the period of time required for the return on the project investment to "repay" the sum of the original investment. Calculating Payback Period using Excel
Net Present Value: NPV measures the excesses of shortfalls of cash flows over time in terms of present value of the cash. Calculating NPV using Excel
Internal Rate of Return: A project is a good investment if its IRR is greater than the rate of return that could be earned by alternative investments (investing in other projects, or even putting the money in the bank). IRR will be expressed as a percentage. Calculating IRR using Excel

ERP Systems Production Support's role in Continuous Improvement

2007-09-22T09:49:00.003-05:00

"As you wander on through life, whatever may be your goal,

keep your eye upon the doughnut, and not upon the hole."

Deborah Osgood, Chief Architect and Cofounder of BUZGate.org

I recently came across a good article on ITtoolbox Blogs entitled Building a "SAP Support Model". The author, Bob White, outlines a step by step approach for building an ERP support model. This article was SAP-centric. This model also aims to support and solve the technical issues that you would find. Great if you are looking to only support your IT investment.
The question is, having made such a great investment in your system, and then this ongoing cost of supporting your application, how can you sweat this asset to drive real business benefit and continuous business improvement?

The answer lies in understanding the Continuous Business Improvement cycle for ERP systems. This cycle of

Adopting (the ERP system);
Sustaining (customizing, implementing and supporting the ERP system); and
Exploiting (driving business benefit from your ERP system)

This is what aligns technology-based business improvement to business strategy. The illustration above shows this cycle more clearly. Once the ERP system has been implemented, and is stablised with an effective support model (as the article above describes it); then it is time to make System Support a cornerstone of initiatives to drive real business benefits.

How does System Support help drive continuous improvement?

Great support data gathered from users that will point to improvement opportunities.
Issues identified by System Support are related directly to the ERP system. Any changes to address these issues will exploit the system capabilities - 'sweat the asset'.
System Support team are often well positioned between Solution Managers who understand the system capabilities; the users who identify opportunities for improvement; and the deployment teams who can make the changes happen.

___________________________________________

How can you apply this to smaller businesses? Look into the capabilities of your current applications and the needs of your users to identify opportunities to drive productivity and improvement via automation in your business. No need to reinvent the wheel. Use what you have.Keep your eye on the doughnut around and not on the hole ...

Communication - The 5 rules of Orwell

2007-07-11T15:34:00.000-05:00

Communication is a critical part of running any business - regardless of it's size. Imagine running your business without any communication!

HOW EFFECTIVE IS THE COMMUNICATION FROM, TO AND WITHIN YOUR BUSINESS?

The fundamental answer to this question does not lie in systems, or tools, or policies. Fundamentally, communication is based on language and the style of the language used.

Even though George Orwells "Politics and the English Language" has been around since 1946, I have only come across it recently. Orwell incapsulates these fundamentals of effective communication in English in 5 Rules which I have summarised below:

Never use a metaphor, simile, or other figure of speech which you are used to seeing in print.
This sounds easy, but in practice is incredibly difficult. Phrases such as toe the line, ride roughshod over, stand shoulder to shoulder with, play into the hands of, an axe to grind, Achilles’ heel, swan song, and hotbed come to mind quickly and feel comforting and melodic.
For this exact reason they must be avoided. Common phrases have become so comfortable that they create no emotional response. Take the time to invent fresh, powerful images.

Never use a long word where a short one will do.
Long words don’t make you sound intelligent unless used skillfully. In the wrong situation they’ll have the opposite effect, making you sound pretentious and arrogant. They’re also less likely to be understood and more awkward to read.
When Hemingway was criticized by Faulkner for his limited word choice he replied:
Poor Faulkner. Does he really think big emotions come from big words? He thinks I don’t know the ten-dollar words. I know them all right. But there are older and simpler and better words, and those are the ones I use.

If it is possible to cut a word out, always cut it out.
"Great literature is simply language charged with meaning to the utmost possible degree" - Ezra Pound. Accordingly, any words that don’t contribute meaning to a passage dilute its power. Less is always better. Always.

Never use the passive where you can use the active.
This one is frequently broken, probably because many people don’t know the difference between active and passive verbs. Here is an example that makes it easy to understand:
The sales target was missed. (passive) We missed the sales target (active).

Never use a foreign phrase, a scientific word, or a jargon word if you can think of an everyday English equivalent.
This is tricky because much of the writing used in business can be highly technical. If possible, remain accessible to the average reader. If your audience is highly specialized this is a judgment call. You don’t want to drag on with unnecessary explanation, but try to help people understand what you’re writing about. You want your ideas to spread right?

Bonus Rule: Break any of these rules sooner than saying anything outright barbarous.

And if the above rules are not easy enough to follow, just remember what Einstein said:

"If you can't explain it simply, you don't understand it well enough."

Lean Training - the "ILU" Chart

2007-03-30T21:59:00.001-05:00

Much of what the Toyota Production System has taught us, has now fallen under the "Lean" umbrella. There is a ton of great material on Lean Manufacturing, Lean Projects, Lean methodologies for all types of activities. Lean Cuisine for business! Yes - Lean is big!

However, do a search for Lean as it relates to people training, and you don't find much.

Two key principles of Lean are VISIBILITY and SIMPLICITY. When you apply these to people development and training, there is nothing leaner than the ILU Chart.

This is something that I learnt a long time ago, and have applied many times. Simple to understand, simple to implement and very, very effective. To explain the ILU Chart, you have to understand the idea behind the original ILU Charts. Think of a matrix with skills along the top and people down the side. The chart below is an exmaple of what an ILU chart would look like to a Watch Repair business.

"I" (the first 'stoke' on the chart) indicates that the person has undergone training for the skill.

"L" (second 'stroke' on the chart) indicates that this person can now execute this task within the standard time so that she can work productively.

"U" (3rd stoke on the chart) indicates that this person is an expert at this task and able to train others.

In the above example, you can see that Mary has recently joined the team and is building up her skills. Kelsey seems to be the expert in the group, and is probably the team lead/ trainer.

The ILU Chart SIMPLY and VISIBLY shows where people's expertize and definiciencies lie.

How can you use the ILU Chart as a Lean tool in training / people development?

Quicker System Implementations – Quicker Benefits

2007-02-23T23:15:00.001-05:00

"If you want to get somewhere else, you must run at least twice as fast as that! " Project Management Proverbs.

Rapid Deployment and Lean Methodologies in application development are not new. These methodologies employ iterative cycles of designing, building and testing activities, to quickly validate requirements, and address development issues. In this way, defects and rework are reduced. This also gets requirements correct to avoid waste due to developing functionality that is not needed.

Even though these methodologies are not new, the execution of these methodologies in large ERP system implementations is not widespread as it should be. There could be several reasons for this. If you are a large consulting company with a big bench, it may not be in your interest to propose a shorter implementation with a smaller team!! However, I like to believe today the consulting industry is competitive enough so that businesses are smart enough to look around and get the best deal when implementing their systems.

I bigger hurdle to getting to rapid deployment with ERP projects is the planning for such a project. Rapid deployment/ lean approaches depend on breaking down the work into pieces that can be designed, built and tested in parallel. This requires a thorough understanding of business processes, business requirements, and of the ERP application – in planning the project! Project Preparation is therefore crucial in getting a rapid deployment project executed correctly. These pieces of the project can be defined as Work Packages or Learning Cycles. Some companies prefer calling these Learning Cycles, as that emphasizes the fact that the team needs to be continually learning through design, built and test to ensure the highest quality of the end product.

This approach requires early availability of system infrastructure for development and for testing / quality assurance.

This approach also requires early involvement of the user community in testing and QA activities. This supports early knowledge transfer, and thus reduces training efforts closer to go-live.

Key benefits of faster system implementations:

Leveraging what is there! Building on what we know. Not re-inventing the wheel = innovation.
Sharper requirements - stay focused on meeting business requirements. Less "fluff" in development.
Reduced rework through quick design-to-test cycles.
Learning cycles built into development - faster knowledge transfer.
Controlled scope = simpler project plans and lower overhead. Milestone plans drive project performance.

Using Web 2.0 to Improve your Business

2007-02-08T16:34:00.000-05:00

The growing number of user-driven, web-based appliactions is being called Web 2.0. We all have heard of the success stories around YouTube, MySpace, Blogger, eBay, and a plethora of other sites.

BUT, HOW CAN WE USE WEB 2.0 TO HELP IMPROVE OUR BUSINESS?

Driven by new applications and innovative use of existing applications, businesses are finding new and exciting ways to use Web 2.0 to grow their business.

I was recently sent a link to a site which I think will be of value to you in this regard: "The Entrepreneur's Guide to Web 2.0: Top 25 Apps to Grow your Business".

No doubt that this guide is already outdated :-)

Top Reasons to Upgrade your IT Systems

2007-01-30T17:06:00.000-05:00

We live in a connected and automated world of alphabet soup systems - ERP, SOA, CRM, etc - fueled by innovations in software and hardware of an unprecedent scale.

We want to beat our competion by leveraging technology, and technology vendors want our business, which in turn drives investment into better systems that we can leverage.

As your business changes, your IT systems need to be kept aligned with your processes to support your business objectives. In the same way, your business will benefit from taking advantages of improvements in technology. So you may be sitting on software that is a few years old and under pressure to upgrade. Here are 3 good reasons to upgrade your software:

Taking advantage of new functionality offered. Sticking to older version means needing to build custom code for desired features that were not incorporated into a product. The newer releases may have the desired functionality built in. While converting to a newer release is a painful experience because of the modifications, it reduces risk. Your code no longer has to be tested each time a patch comes out for the language you used or the operating system changes.

Maintenance costs increasing, or hard to find skilled resources in the older versions. So needs to get on the upgrade bandwagon. Often it is difficult to find support staff to support older versions of software. Most people want to stay at or near to the current releases. Finding someone that is competent to work with an old release can be difficult and expensive.

Older versions are not compatible with newer hardware and you are locked into old technology. The hardware or operating system is no longer supported by the software vendor. I've seen this one bite companies severely over the years. Software companies shed low sales volume operating systems and hardware platforms to reduce support costs.

Project Management for Dummies

2007-01-10T14:20:00.001-05:00

PMI Definition: A project is a temporary endeavor undertaken to achieve a particular aim and to which project management can be applied, regardless of the project’s size, budget, or timeline.

Further, as defined in the 2000 edition of A Guide to the Project Management Body of Knowledge (PMBOK® Guide), project management is the application of knowledge, skills, tools, and techniques to a broad range of activities in order to meet the requirements of a particular project.

Essentially, project management is comprised of five processes:

Initiating,
Planning,
Executing,
Controlling,
and Closing

These five processes are wrapped around the triple contraints of project management. These 3 constraints will define a project, and any changes to any of these will impact the project enough to require review and approval by the project sponsor(s).

TIME
COST
SCOPE

The Project Management Insitute has also defined NINE knowledge areas

Project Integration,
Project Scope,
Project Time,
Project Cost,
Project Quality,
Project Human Resources,
Project Communications,
Project Risk Management
and Project Procurement.

Project management is used globally by multi-billion-dollar corporations, governments, and smaller organizations alike as a means of meeting their customers’ needs by both standardizing and reducing the basic tasks necessary to complete projects in the most effective and efficient manner. As a result, project management leadership is a highly desirable and sought-after skill as intense global competition demands that new projects and business development be completed on time and within budget.

PM a nutshell: 3 contraints; 5 processes; and 9 knowledge areas.

RELATED BLOG ITEM:- Project Management Resources

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Imagine tracking net-profit by customer, by product - on demand!

2007-01-05T00:09:00.001-05:00

In a previous article, "Optimize profitibilty by managing value", I discussed the use of an application called ProfitFinder which allows you to analyze net profit by product AND customer along your value chains. This is an unique innovation around how profitibility is tracked and measured, that allows businesses to look at how value really can be managed to increase company net profit.

These would be the benefits of having this information at your fingertips:

Customers Net Profit – compare to today’s Gross Margin – you can then focus resources on more profitable customers and their buying patterns and manage the less profitable customers.
Customer / prospect costs – you can adjust the amount of sales activities and decide when to stop working on prospects when target marketing costs are reached.
Resource capacity utilization – giving you the capability to do marginal marketing to maximize utilization of your resources to lower the fixed costs and increase total profit.
Sales force effectiveness - track net profitability by sales person. This information allows you to better set sales targets based on profit, as well as allows you to manage sales accounts more effectively.
Supporting departments costs per Value Chain – the ability to adjust the different departments costs involved in the value chains related to the profit that the respective VC brings in.
Decision-making information by Value Chain from products/services/procurement through inventory/warehousing to customers/ markets, on a real-time basis or in batches on order.

RELATED BLOG ARTICLE:

Data rich information poor

Organizational Restructuring - Aligning People with Technology

2006-12-14T23:00:00.000-05:00

"Processes don't do work, people do." - John Seely Brown

I have been on too many technology implementation projects where Change Mangement, Organizational Transformation - or whatever you want to call it - is simply seen as "Training". Seeing Organization Change Management (OCM) during a system implementation as simply writing up new business processes, procedures and training people - is setting your new system up for failure!

OK - maybe 'failure' is a strong word. But doing by this, you are simply not maximizing your system investment.

Why spend a good percentage of your gross revenue on a great new ERP system, that hopefully has been built, configured and implemented using best practices, and then spend a fraction of this investment on the people who will make or break you new system? So, apart from training our people on how to use the system, what else can we do - you may ask. Well, here are a few things :

Involve the people who will use the system in the system design and configuration. In this way, you ensure that their requirements are baked in, AND they start understanding how their jobs will change. The sooner people understand this the better.
Develop 'powerusers' by involving them in system testing. These 'powerusers' will be your first line of system support, and will be key in establishing the new system as part of daily business.
Involve people in the design of new processes that must change with the implementation of the new technology. Understanding how their daily jobs will change is part of managing any resistance to change.
Avoid class-room style training.
HIRE people who understand the new technology and business processes!
MOVE people around as new skills are learnt and utilized.
Compentate people for these new skills - retain & develop your investment in people.

Involving people in all aspects of a system implementation - even if it takes longer - will allow the new "champions" to shine, and to develop your greatest resource to ensure success after a system implementation.

RELATED LINKS

Optimize Profitibilty by Managing the Value Chain

2006-12-07T07:23:00.000-05:00

I recently came across an interesting innovation that actually drives product profitibilty. The innovation comes from a Sweden-based company called Scorebase. According to the founder, Börje Paulsson, what started as a technique for analysing business data to track profitibility at the various phases that the product goes from production to market, has developed into a powerful analysis tool which has become a valuable piece of software for his clients. The application is called ProfitFinder and is more than a profitibility analysis tool.

Gross Profit is defined as sales minus all expenses directly related to these sales. PROBLEM: GP does not consider fixed costs in production and marketing

Net Profit is defined as total revenue minus total expenses. PROBLEM: NP is normally measured monthly and is not easy to measure by customer/ product combination more frequently.

(Click on Picture)

ProfitFinder will allow you to see, based on actual production and billing, your net profit by product/customer combination - along the value chain!

Imagine what you can do with this information.

You can identify and reduce waste in your production process, & reduce direct costs;

You can understand and manage how indirect costs impact your product cost;

Quantify and manage your direct sales costs by customer. How much more are you paying in shipping for the same product for different customers? How much of a sale-person's time is being spent on marketing/ selling to a specific customer? Are yoru marketing dollars spent in the right area?

Indentify and manage how indirect marketing costs are being allocated to products.

Rank performance across market segements more accurately - better plan your marketing campaigns.

Not have to wait until the end of the financial period to know what you net profit is!

Assess your Business

2006-11-28T21:29:00.000-05:00

"Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win."

Sun-tzu (~400 BC), The Art of War. Strategic Assessments

Businesses need to step back and assess how they are performing against plan and how to get to the next level. You need to take the time to step away from the business and look at the basics. Do your business numbers make sense?

Review your Market

Which markets, or market segments, are most profitable?
What plans do you need to attack new markets?
Are existing markets saturated?
Who makes up your markets
Are your existing marketing methods right?
How much do they cost?
How do you target potential new customers?

Review your Products & Services

Which are the most profitable? Why?
Which are the least profitable? Why?
Do you understand your how your product/ customer mix affects your company profitibility?
What issues do you have around price, service and quality?

Your competition

Who are they?
What are their strengths and weaknesses?
How do customers compare you and your competitors?

Assess your business performance.

How does your cashflow forecasting system work? Is it accurate?
What about your profit forecasts - do you keep them up to date and monitor performance?
Do you maintain tight budgetary control on financial matters?

Your suppliers

What are relationships like?
Do you work with them to improve their quality of supply to your business - and thus to your customers?

Assess People

Do you have the right people to achieve your business objectives?
Do they know what is expected from them in achieving those objectives?
Do you operate a training and development plan?
What are their strengths and weaknesses of your management team?

Assess Yourself

Do you know your own strengths and weaknesses?
Do you need training?

Assess Your Infrastructure

Will your premises cope with your plans?
Are they used to best effect?
Is your equipment up to date?

How will you find any improvements?

How the best differ from the rest

2006-11-21T07:23:00.000-05:00

"Only the mediocre are always at their best." Jean Giraudoux (French dramatist: 1882 - 1944)

Why is it that some companies perform better than others. Is it luck? Their people? Their products/ services? Their markets?

Some time ago, I reviewed the top-rated book "Six Disciplines for Excellence" . In that book, Gary Harpst defines five key reasons for why the best differ from the rest. Here's the top five - in order of their importance:

Strength of the Leadership Team. Top-performing organizations rated 155% higher than the lower performers. The two primary factors were the ability of leadership to define a clear vision for the company, and the appropriate involvement of leadership in leading and supporting projects that were strategic to the organization.

Ability to Attract and Retain Quality People. Top-performing organizations rated 142% higher than the lower performers. The best small businesses have found that success in this area all starts with recruiting.

Disciplined Approach To Business. Top-performing organizations rated 114% higher than the lower performers. Top performers are also good planners, but are practical and are disciplined about the commitments they make.

Strategic Use of Technology. Top-performing organizations give more emphasis to using technology to impact the business in strategic ways (114% more) than the lower performers.

Effective Use of Trusted Relationships. Top-performing organizations rated 100% higher than the lower performers in their ability to utilize the expertise and talents of external organizations.

Other factors contribute to top-performing organizations and how they differ from lower performers (i.e., work ethic/attitude, teamwork, commitment, etc.). The five described above highlight the areas of greatest difference.

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Why do Start-ups Fail?

2006-11-02T07:10:00.001-05:00

“Once you've hit five years, your odds of survival go way up. Only two to three percent of businesses older than five shut down each year.” David Birch - MIT

The stats are scary! 50% of all businesses fail within 5 years. Why? I've listed 10 reasons below. Can you think of more?

1.Lack of experience
2.Insufficient capital (money)
3.Poor location
4.Poor inventory management
5.Over-investment in fixed assets
6.Poor credit arrangements
7.Personal use of business funds
8.Unexpected growth
9.Competition
10.Low sales

Here are a couple of books if you are interested in learning more:

Small Business Management, by Michael Ames

The Do It Yourself Business Book by Gustav Berle

Reasons to Own a Small Business

2006-10-27T09:45:00.000-05:00

Thinking of starting a small business? You're on the right track. There's a lot of thinking to be done before you plunge into entrepreneurship. Below are some of the reasons why you should take that plunge:

You are your own boss. Of course, you live or die by your decisions, but that’s good - isn’t it?

You get to do what you’re interested in – you can turn a hobby or interest into a profitable enterprise.

Your firm, your deadlines - meeting your own targets can be a huge motivation to work hard and drive the business forward.

Get creative – Being an entrepreneur gives you the freedom to express yourself and develop your concept in any way you choose.

It’s not hard to set up a business.

It can be very profitable - if you run your business well, the rewards can be huge. And, from a purely selfish point of view, you will keep most of the profits yourself.

It’s not boring – an entrepreneur’s work is not just busy, it is also extremely varied.

Cut the commute.

Your big dream really can become reality.

Still not sure? This set of quizzes and check-lists from the U.S. Small Business Administration will quickly and simply help you determine if you're ready to start your own business and give you some factors to consider in your planning.

Seven Phases for Selling Professional Services

2006-10-11T20:36:00.003-05:00

When you buy a car, you want to know about its features, don’t you? Does it have electric windows? How big is the engine? What is the fuel consumption? Does it have all wheel drive? Automatic or manual stick shift? Even though the salesman may influence your purchase, if you like the car (and the price), you will buy it even if you don’t necessarily like the salesman.

However, when you sell your professional services, you are selling yourself first! If the client does not like you, they will not pay for your services. Think about the professionals that you use in your life. Your doctor, your lawyer, your accountant … do you like them? Would you do business with them if you did not like them (and had a choice)?

What if you are the professional trying to sell your services? Successful professionals are great at Personal Marketing. This applies to doctors, lawyers & accountants. But this applies particularly to consultants, as their services are far less tangible.

Here are Seven Phases of Selling Professional Services:

Phase 1. Create a Public Image. Getting involved in professional associations; civic, social & political organizations; church groups; school associations; writing articles, blogs; delivering talks to groups. Malcolm Gladwell calls people who do this well “Connectors”. Connectors are people who involve themselves in diverse groups – in this way getting known by a broad cross-section of people.

Phase 2. Develop Contacts. Through the networking opportunities that these activities create, you will get to know of many people … and many people will get to know of you. Professional Networking tools will help you further develop these contacts.

Phase 3. Develop Relationships. Contacts are great … but do these people really know you well enough to help you sell your services, or to buy your services from you? Developing relationships with your contacts takes a lot of work. You need to understand their needs; offer assistance where possible. Use your contacts to help people connect with others that can help them – they will remember you for that. You need to interact socially with people … why do you think good sales people play a lot of golf?

Phase 4. Interest the buyer. Your contacts and your relationships will lead you to opportunities where you can demonstrate your capabilities enough to interest a buyer.

Phase 5. Sell. Just having someone interested in you will not get them to agree to pay for your services. You will need to do the due diligence of understanding and defining the need well enough where you can make a proposal to the potential client. This takes preparation, documentation, presentation and follow-up.

Phase 6. Deliver your Service. Some may say that at this point, the selling is complete. In selling professional services – this is when you have your opportunity to PROVE your capabilities and thus to develop additional business. So, in meeting (or exceeding) your clients’ expectations, you are in fact selling yourself and your services.

Phase 7. Retain your clients. Retaining an existing client is a lot easier than getting a new client. You retain your client (and thus sell more business) through delivering high quality, timely service. After delivering your service – maintain and develop your relationship. This is back to Phase 3, but this time around it is a lot easier if you have done a good job of delivering the service that was paid for. Becoming a “trusted advisor” makes sure that you have effectively locked out the competition.

If you sell professional services – review the above phases. How well do you do each of these? It is extremely difficult to be good at all of these. Your ability to perform different phases better than others depends so much on your personality and personal preferences. Some people are great networkers, but not good at closing deals. Others are good at closing sales deals, but not good at delivering solutions.

The 14 Commandments of Creating a "Wealth Pulling" Niche!

2006-10-04T21:22:00.000-05:00

The person who finds or creates a special niche, gets the cream of our societies financial rewards. Whether you're Bill Gates or Joe Average.

To out-niche your competitors you must focus on these "14 commandments" of niche creation at all times. Observe the ones you apply to your business, product, or service - and watch your sales soar.

1."The Principle of Adaptation" - The simplest way to create a new idea is to do what others in another business or industry are doing. Next, see if you can adapt it to your own business, product, or service.

2. "The Principle of Addition" - Can you add something extra to your product or service that your competition doesn't have or isn't doing?

3. "The Principle of Combination" - "What positive elements can you combine from another product or service to make yours better?" A candy bar did it with simple peanut butter and chocolate, and made a successful new product. So can you.

4. "The Principle of Customization" - Can you find little ways to personalize a part of your product or service? That's a quick, easy, and cheap way to create niches. Can you make your product or service more personal and less cookie cutter?

5. "The Principle of Ease and Convenience" - Can you find more ways to make your product or service easier and more convenient to buy, use, or own? Then you'll have a strong niche.

6. "The Principle of Elimination" - What negative or inconvenience can you eliminate for your customer, with your product or service. People not only pay for more they'll pay for less. Less irritations, less waiting, less inconveniences.

7. "The Principle of Enlargement" - Do people like your service or product? Then it's a sure-fire bet there is a segment of your market that would like even more of it. Can you super-size something?

8. "The Principle of Entertainment" - From cradle to grave, we all have this inner urge to be entertained, amused, or fascinated - especially before we spend our money. A relaxed customer spends more. Find little ways to amuse customers before, while, or after they buy your product or service.

9. "The Principle of Longevity" - It's making some feature of your product or service last longer. It can also include making a positive experience or feeling last longer. If you can do either, you will have a niche that's hard to match.

10. "The Principle of Portability" - People hate to be tied down. So, if your product allows people the freedom to use your product or service in more than one place, that's a powerful niche.

11. "The Principle of Reduction" - If you sell a product or service, is there any way to reduce a certain feature to make it more convenient? More portable? Or easier to use? Can you reduce it and make it more affordable for another type of customer?

12. "The Principle of Reversal" - Look at what features or services your competition is offering or not offering and reverse them. If they close on weekends, can you be open? If they cater to seniors, target more young people. Or if they cater to high-end customers, target more low-end volume customers etc? The list is endless.

13. "The Principle of Safety" - If you can show others how your product or service can add safety or reduce risk, you'd have a powerful niche. People hate to experience loss, feel insecure, or waste money. Try to think of little ways you can help people avoid the above with your product or service.

14. "The Principle of Speed" - You should always be thinking, "What can I do faster than my competitors-without reducing quality?" Can you fill your orders faster? Can you give faster service? Can your product get faster results? Can you resolve customer issues faster? Think speed!

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REFERENCE: Business Know-How

Failure is the Mother of Innovation

2006-09-27T19:58:00.000-05:00

"Failure is our most important product. "
R.W. JOHNSON, FORMER CEO, JOHNSON & JOHNSON

It is amazing how many innovative and visionary companies have grown, not out of detailed strategic planning, but rather by trail and error. By stumbling onto a great opportunity by accident.

Johnson & Johnson started their business back in 1890 as a supplier of antiseptic gauze. Because of complaints that this gauze caused skin irritation with some patients, they started sending a small packet of Italian talc with their medicated plasters to apply to the skin. To their surprise, customers started asking to buy the talc directly. J&J responded by creating a separate product called "Johnson's Toilet and Baby Powder". And as they say in the classics, the rest is history!

In the 1940's J Willard Marriott was running a successful group of restaurants, and was opening up new restaurants across the country following a strategy that clearly worked. But then a strange thing started to happen at his restaurant located at Hoover Airport (now Reagan National) in Washington DC. Their customers were not behaving in the same way as customers at other restaurants. Many of the customers at this airport restaurant were buying meals and snacks, and stuffing them into pockets, paper bags and carry on luggage - and taking the food onto the plane with them. Marriott was smart enough to recognise the opportunity and within a short time, had negotiated a deal with the airlines to supply pre-packaged food to passengers on the tarmac. This service soon grew to other airports and became a major business for Marriott Corporation.

Jim Collins and Jerry Porras write about companies that "Try a lot of stuff and keep what works" in their book "Built to Last". As J&J, Marriott and many other successful companies have shown, growth is not driven purely by good strategy. Bill Hewlett of HP stated that he "never planned more than two of three years out". Companies follow an evolutionary process that allows them to grow through learning from what works and what does not work for them.

But, how do you formalize this "evolutionary process" to ensure that you DO learn from your mistakes, and that you do not miss opportunities that may be off your strategy radar? The answer is through making innovation part of your business.

You make innovation part of your business by having the your ear to the ground! This means having the capability to capture business intelligence, and then to review that information that may be off your strategy radar to find those variations in your business that will lead to opportunities that you may not have thought of. The greatest source of this information is your people! How are you tapping into this wealth of information, ideas, and creative energy; and then translating this into your business plan? Are you staying fresh and ahead of the competition, or are you sticking to what you have done in the past? How do you know what works and what does not work in your business?

Imagine what Marriott Corporation would look like today, if they had ignored what was happening at that one restaurant at the Hoover Airport way back in the 1940s!

Why Should I Hire a Consultant?

2006-09-14T20:21:00.000-05:00

"A consultant is someone who provides value through specialized expertize, content, behavior, skill, or other resources to assist a client in improving the status quo in return for mutually agreed compensation"

Alan Wiess

I know that I need someone to help me with my problem, but how do I know that I need a consultant? Why should I invest my company's money and time in a consultant? How can I measure the return that make in this investment?

In his book, "Million Dollar Consulting", Alan Weiss goes on to define the categories of value that a consultant will bring to a company. These are the key areas of value that you can use to evaluate whether the consultant you are considering using to solve your problem to is the right one for you.

Content. This is the most common consulting value. The consultant you use must know what they are talking about. Consequently, you will probably be able to find consultants who have worked in a specific field or industry that you need help on. Many people who break out of corporate life to go into consulting base their business on content consulting.
Expertise. Many consultants have an expertise that transends a specific industry. For example supply chain management; or change management. These consultants can adapt their expertise to a variety of problems and across multiple industries. You will find people who have worked across diverse industries and companies to have developed this type of expertise.
Knowledge. This is a quality of people who have "been there before". Knowledge includes an understanding of process as opposed to content. Real process knowledge come with experience. However, don't expect the consultant to have the same level of knowledge of your business that you have.
Behavior. A consultant with good interpersonal skills in virtually never behind the scenes. These interpersonal competencies may be of value to you in facilitating groups, leading teams, resolving conflict, enhance brainstorming and creativity, listen to customer or employee feedback, etc. Mediators and arbitrators are examples of consultants with with this competency.
Special Skills. Some people have highly developed, well defined skills that are in high demand. These are often talents and innate abilities. For example, some people have a sense of style that makes them excellent image consultants. These people may not know anything about the content, or have precise expertise of knowledge related to your business. But, these consultants will have a gift or talent that you cannot acquire independently.
Contacts. Good consultants are normally well connected and will be able to get the right person for the job at hand, if they themselves do not have the necessary expertise, content, knowledge or skills that you may need for a specifiuc task. A well connected consultant can also be a good lobbyist for you.

Consultants will bring one or more (or all) of these competencies to bear to help you move from the status quo to the improved position.

Turbocharging Data Access with SAP-BI Accelerator

2006-09-06T13:36:00.000-05:00

Naeem Hashmi, Chief Research Officer at Information Frameworks recently published a paper on the new SAP-BI Accelerator that caught my eye. Below is my summary of the points he makes. For a complete copy of his paper click here.

Building a data warehousing architecture requires following a process that begins with defining user requirements as clearly as possible. This too is the case with SAP-BI (formerly SAP-BW). The reason that user requirements are so crutial to define correctly, is that the design and development of InfoCubes is key to how data will be accessed and information presented to the end user.

With a well designed data model, performance has not been an issue for most smaller SAP clients. Any performance issues could have been managed by aggregating data and user data navigation views. However, in larger applications with complex data structures - with time based, multiple-hierarchies, snow-flaked dimensions - data access performance degrades rapidly.

"Now Generally Available BI Accelerator Complements SAP NetWeaver® and Enables Customers to Analyze Large Amounts of Critical Business Information up to 200-Times Faster than Alternative Tools."

SAP Saphire Press Release of May 17, 06

SAP-BI Accelerator is an appliance (blade server) that sits alongside of the BI instance and that works with SAP-BI. Indexes and data are moved to the accelerator that is able to search indices and associated data at lightening speed.

With the SAP Netweaver technology, BI Accelerator serves as a cache at the SAP-BI application server and is at the same time a full InfoCube as well as an Aggregate. To the end user, this application does ad hoc data aggregation at high speed, on the fly, off the Cube based on user queries.

SAP-BI accelerator eliminates the need for aggregates in the data model. So SAP-BI accelerator will simplify data modeling, but will probably introduce (in the short term) some challenges in managing/ changing established processes and best practices. This does not do away with the need to based your design off user requirements, because you still need to build your Cubes, but it will certainly cut down on support costs due to ongoing development of views based on changing user requirements.

In the long term the intention of SAP is to make cubes optional ... but until then we will have to keep them in mind when developing data warehousing solutions in SAP.

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Business Ethics and Philosophy

2006-09-04T07:43:00.001-05:00

The Society of Business Ethics held their annual conference in Atlanta in August this year. Nearly 5 years since the collapse of Enron, ethicists still find their work in demand. Interestingly, most of these ethics professionals have philosophy backgrounds and more and more companies are adding ethics or compliance officers to their ranks. Pay for the top ethics officials at the biggest companies averages nearly $750,000 (according to Kieth Darcy of the Ethics & Compliance Officer Association).

In 2002, The Sarbanes Oxley Act was passed to establish new or enhanced standards for accounting in response to the corporate & accounting scandals affecting the likes of Enron, Worldcom, and Tyco International. However, these regulations have done more economic damage than it prevents (especially with smaller companies under $100Million in revenue where applying the law is particularly costly). On the other hand, some believe that SOX is essentially modest compared to the heavy rhetoric accompanying it.

Thus in 2004 the Federal Sentencing Guidelines mandated that companies "promote an organizational culture that encourages ethical conduct and committment to compliance with the law". These guidelines go beyond purely legal compliance. Companies must recognize and honor the spirit of the law. Thus, the growth in ethics training in all shapes and sizes.

According to Paul Voss, President and Founder of Ethikos, any approach to improving business ethics must be seen as a strategy and a system, and that all ethical systems require a philosophical foundation.

This gives businesses of all sizes an approach for building an ethical culture that will ultimately result in a system that will make SOX compliance easier (and less costly). And this is what I find of value for improving your compliance processes. It is all about getting to the foundational, value-added, day-to-day ethical activities that will result in compliance.

But how to you get to this? Paul Voss has a well established process around this. For the purposes of this article, I will pose his ten questions that every executive should ask about corporate ethics and ethical culture. These are questions that applies to any business executive or owner, regardless of the size of the business.

What is the relationship between ethics and other performance metrics in the company?
Have we, as required by the 2004 Federal Sentencing Guidelines, offered ethics training for all our employees? What should that training look like?
What is the relationship between ethics and profits?
Have we conducted a "risk assessment" to determine our exposure to real ethical damage?
How can we be pro-active in the area of ethics, culture, and corporate citizenship?
What tone should Executive Leadership set regarding ethics, integrity, and transparency?
What does management need from the Board of Directors and Senior Executive Leadership to enhance and buttress corporate ethics?
Who is driving ethics and compliance in the company?
Do we have consistency between and among the board, the CEO, executive leadership, and associates in terms of ethics and culture?
What impediments and roadbocks do we have that preclude ethical conversions and implementation of ethical practices, procedures, and protocols?

Any ethics initiative may seem "fuzzy" when compared to "harder" business process improvement initiatives. However, many business owners have learnt that SOX compliance is bigger than just changing their accounting processes. They have learnt that SOX compliance depends very much on the behavior of people as they carry out their business activities every day. THIS is where the "softer" side of ethics is key - and this is why it is important to look for solutions for driving ethics initiatives. The solution is in crafting a plan with a philosophical foundation coupled with a logical process. Ethical companies can be more profitable, competitive and sustaining.

Making Win/Win work for you

2006-08-28T06:12:00.001-05:00

"TREAT OTHERS AS YOU WANT TO BE TREATED"

(The Golden Rule)

Whatever you do every day - you are probably going to interact with another human! Whether you are closing a sales deal, talking on the phone, or even preparing a presentation - your behaviour is influenced by how others will feel about their interaction with you.

In any human interaction there are six paradigms: win/win, lose/lose, win/lose, win, lose/win, or no deal. The 'win' alternative is a little different from the others, as people with this mentality don't necesarily care if others win or lose. What matters is that they get what they want.

Which option is best? In "The Seven Habits of Highly Effective People", Stephen R. Covey says that "it depends". If you are playing a football game, then if you win, the other team loses; if you value the relationship with the other person and the issue does not really matter - then a lose/win situation may be OK.

In most situations in business the win/win option is really the only viable alternative of the six. However, at the beginning of a business relationship or enterprise, 'no deal' may be a viable option.

Success in closing deals and in developing value partnerships in business is based on a win/win approach. So how do you make this work for you. Covey identifies 5 dimensions of win/win:

Character. This is the foundation of win/win that is based on the character traits of integrity (the value we place on ourselves), maturity (the courage to express one's convictions balanced with the feelings of others) and a mentality of abundance (there is enough for everyone).
Relationships. From the foundation of character we build the relationship of trust that is necessary for win/win. Without trust there is lack of credibility for open communication, and the best we can hope for is compromise.
Agreements. From relationships flow agreements that move the interaction to a win/win conclusion.
Supportive Systems. Win/ win can only work in organizations where systems support this. Talking win/win, but rewarding win/lose you have a losing program on your hands. You reward system must align to the goals and values that are reflected in your mission statement.
Supportive Processes. You can't get to win/win by saying "we will get to win/win, whether you like it or not." In their book, "Getting to Yes", Fisher & Ury describe the 'principled' approach versus the 'positional' approach in bargaining. This process separates the person from the problem; focuses on interests and not on positions; invents options for mutual gain; and insists on criteria that both parties can buy into.

"We have committed the Golden Rule to memory; let us now commit it to life."

EDWIN MARKHAM

What makes a Visionary Company?

2006-08-20T23:13:00.000-05:00

"The leader has to be practical and a realist, yet must talk the language of the visionary and the idealist." Eric Hoffer

What makes a visionary company? Vision statements, value statements, mission statements, purpose statements, aspiration statements, objective statements, etc. These are all fine and good, but they are not the essence of a visionary company. A "Vision Statement" (or something like it) in no way guarantees that it will become a visionary company!

In their book, "Built to Last - successful habits of visionary companies", Jim Collins and Jerry Porras say that the essence of a visionary company comes from something else. It comes from the translation of its core ideology and its own unique drive for progress into the very fabric of the organization - into goals, strategies, tactics, policies, processes, cultural practices, management behaviours, building layouts, pay systems, accounting systems, job design - into everything that a company does. A visionary company creates a total environment that envelops employees, bombarding them with signals so consistent and mutually reinforcing that it's virtually impossible to misunderstand the company's ideology and ambitions.

The central concept of alignment is what enables a visionary company to do this. Alignment means that all the elements of a company work together in concert within the context of the company's core ideology and the type of progress it aims to achive - its vision.

In his book "The Six Disciplines", Gary Harpst talks about aligning processes, policies, measures, technologies and people as part of achieving excellence in small businesses too. So, creating a vision is not simply an activity that you have to do as part of planning your business - hoping that this will somehow drive your strategy, tactics and day-to-day activities. The Vision Statement is just a small part in building an excllent company that will last.

RELATED ARTICLE:

The Six Disciplines: Building Excellence in Small Businesses

SAP for Small to Medium Sized Businesses

2006-08-17T16:51:00.000-05:00

SAP Business One is a simple yet powerful integrated ERP solution provided by the world's largest ERP solution provider specifically for small and medium-sized businesses.

SAP aquired this suite of applications from Israeli company Top Manage in 2002. As of 2006 it is sold in at least 40 countries and SAP claims 9000+ installations.

SAP Business One consists of applications for Financial, Distribution, CRM, Manufacturing, MRP, HR and Services.
SAP provides optional add-ons at no extra charge for applications such as fixed assets, synchronisation with MS Outlook and advanced forms design. Perhaps the most exciting add-on in this category is the XL Reporter reporting tool which came about as a result of SAP's acquisition of iLytix in 2005. With preset metadata, a drag and drop design and over 80 starter reports, it is extremely easy to learn and use. It uses MS Excel for formatting and comes with a choice of ready-to-use templates or you can put your knowledge of Excel to work to create your own.
The scope of the product is further extended by over 100 third party add-ons. Some are developed using SAP's Software Development Kit which results in a consistent 'look and feel' to Business One. Some add-ons have their integration with Business One certified by SAP.

The product has a relatively modern and 2-tier architecture. It has won a design award for its user interface. It offers users a high level of flexibility with the ability to create a virtually unlimited number of user-defined fields and tables, user-configurable alerts and workflow processes. Users can control to a significant extent the display of data on transaction screens, configure look-up windows and set data access security. Most of this tailoring can be achieved with no formal IT skills.

Any company looking for integrated and real-time solution with a secure future should consider SAP Business One seriously. As it is supported by SAP, it benefits from the commitment and experience of the world's largest and most successful ERP software company.

While Business One is quick to implement and is affordable, because it is designed for small to medium sized businesses, it does not offer the same level of functionality of the high-end SAP products or even many tier-2 products. In most cases, though, the inherent flexibility of Business One allows a more acceptable work-around than may be expected if you are prepared to invest a bit more in customising the product.

As an example, the standard Business One Financial module does not provide a ready-to-use approval process for supplier payments i.e. a user who has access to creating a payment does not need to get another's approval before paying a supplier. Using SQL scripts and the built-in Alerts function, though, it is possible to provide a measure of control for this process.

Another example is that the Purchasing module of Business One does not formally support prior stages to a purchase order e.g. purchase indent, nor tracking. It starts directly from "Purchase Order". However the approval process provided for purchase orders means that an unpproved "purchase order" can be created. This can function as a "requisition" until it has been approved. Changes made to the "Purchase Order" during the process are fully tracked. Further work can be also be done with MRP and the Planning Data in the Inventory module to manage purchasing requirements.

You can define a catalogue that matches item codes to part numbers used by suppliers and customers but there is no link between Items and Business partners directly out of the box. Again such links can be defined using the customisation tools.

Some releases have been error prone, especially when compared with older or legacy products that are having far less development than Business One. But stability is as good or better than for comparable, new generation, offerings. A good general policy for any product is not to be the first to upgrade to the new version - leave this to others.

Third party add-ons should be added carefully. Apart from the cost, they will require additional system resources to maintain an acceptable performance level.

In short, don't expect Business One to do everything. But speak to a SAP Business One consultant before ruling it out and you may be pleasantly surprised to find there is a workable solution to your perceived gaps.

RELATED LINKS

SAP Business One Brochures & Whitepapers

Manufacturing Sector is Looking Up

2006-08-08T18:31:00.000-05:00

With Manufacturing having gone through a tough time in the US and many other countries over the past few years, where does that leave improvement strategies for manufacturing companies? Is there still a place for organizations like APICS? What are the roles of Lean and Six Sigma in driving competitive advantage for manufacturers? Answers to these questions depend very much on where Manufacturing is going.

So ... what are the trends worldwide? I did a search of news items around "manufacturing growth" for August and this is what I found:

From CNN Money
USA - The nation's manufacturing sector grew at a faster pace in July, according to a survey of industry executives released Monday that contained lots of good news for Wall Street expectations. More ...

From Bloomberg
GERMANY - German unemployment fell to the lowest in almost two years and European manufacturing expanded at close to the fastest pace since 2000, bolstering arguments the European Central Bank will raise interest rates this week to bring inflation under control. More ...

From Reuters India
INDIA - India's manufacturing sector will need massive investment of $135 billion over the next five years if it is to support economic growth of more than 8 percent, the commerce and industry minister said on Wednesday. More ...

From Shanghai Daily
CHINA - CHINA'S manufacturing growth fell to a five-month low in July as companies trimmed production and overseas and local orders eased. More ...

From Financial Times
UNITED KINGDOM - Continued improvement in export markets helped UK manufacturers register a twelfth consecutive month of growth in July, a period of expansion that has encouraged them to take on more workers. More ...

From Independent Online Business Report
SOUTH AFRICA - South African manufacturing growth accelerated to an annual 6.1 percent in June, the fastest pace since December 2004, as the rand's plunge against the dollar fuelled exports and made imports more expensive. More ...

The Importance of Your Brand

2006-08-07T14:25:00.000-05:00

When it comes to your image, are you hitting hard or striking out? Cover all your bases with these 4 critical elements of a winning brand.

What instantly springs to mind when customers hear your company name? If you're uncertain--or even worse, stuck with a less-than-stellar image--it's time to give your brand an overhaul. It's no coincidence that industry leaders in every category from soft drinks to spas toil endlessly to create some of the world's most recognized brands. But it doesn't have to cost millions or take years to put your company's branding efforts on track.

Kim Gordon writes about this in the August edition of Entrepreneur magazine. Kim suggest that you just follow these four guidelines to create a winning brand image.

1. Differentiate your brand.
2. Promise value.
3. Be a market leader.
4. Integrate your messages.

... more

-----------------------o---------------------------

Kim's Small Business Tip Of The Week
Out-of-home advertising is one of the few marketing tactics that will match a local sales territory. You can put your message exactly where it will reach your prospects, tailoring your buy to eliminate waste. You can buy just a single outdoor billboard or 20 to reach commuters in Atlanta, and you can reach tourists in Key West with taxi-top ads or by advertising on the backs of the pedicabs that transport passengers up and down famous Duval Street in front of the bars and restaurants. This ability to pinpoint your prospects by using different types of advertising media in highly specific locations can make out-of-home advertising extremely cost effective. You can choose the out-of-home advertising option that fits your type of business and budget. From Chapter 5, "Think Outside the Box"

Read more about it in Maximum Marketing, Minimum Dollars
Kim Gordon's website: http://www.smallbusinessnow.com/

Will your airplane fly?

2006-07-26T01:17:00.000-05:00

Recently, on a flight from the USA to Europe, I enjoyed a meal while watching a movie. The ambient temp was around 72F. Very comfortable.

... And then I considered that less than a foot away from me, on the other side of the window, the temperature was -50F and the air was rushing past at 500 mph! I'm sure that I would not have been able to enjoy my dinner and movie in those conditions.

This Airbus 330 in which I was flying was designed to take people long distances at high altitudes. A single engine Piper Pawnee certainly would not have done this job. But then again, I would not expect the A330 to do a great job of crop-dusting!

The design of these aircraft had taken external factors into account.

How well do businesses take external factors into account?

When you consider that most small businesses do not survive 5 years, the environment in which they operate is as deadly for them as it is for a human outside a plane traveling at 500mph at a hieght of 36,000ft.

Many businesses look outside of their four walls with rose-colored glasses. Seeing the opportunities and planning how to exploit these. This is not a bad thing (in fact, it is essential). However, in our desire to see the positives we often miss the external threats to our survival and do not take the measures to counteract these.

External threats include competitive activity, changing market/consumer patterns, and advances in technology. Your people with valuable skills could also be lost to competitors. The business model that worked when you were operating out of your basement, will not work when you have 200 people working for you. How have you aligned your people, systems, technologies, processes and policies to adapt to these external factors?

How will you ensure that your plane does not break up when you climb to an altitude of 36,000 ft?

Three Phases of Continuous Business Improvement

2006-07-19T17:56:00.000-05:00

Our responsibility is to do what we can, learn what we can, improve the solutions, and pass them on.

Richard Feynman

US educator & physicist (1918 - 1988)

After an improvement has been made to a business - through a system implementation/ enhancement and/or a process change - many companies struggle to keep the momentum going to drive continuous improvement. In my recent publication in Techlinks about driving business benefit from an ERP implementation, I outlined the 3 phases of Continuous Business Improvement. Below, I have adapted these for process changes as they relate to Organizational Change.

Phase 1: Adopt
After the change, most teams focus on supporting and/or rolling out the changes with little or no attention to the formalization of these changes. The objectives of the Adopt Phase are:
• The establishment of effective leadership/ ownership of the new process/ system.
• Making changes part of the day-to-day business process.
• Clearly documented new processes and procedures.

This will result in business ownership of the changes. This ownership is a key requirement if you want to ensure that improvement is not a once off event.

Phase 2: Sustain
Once the initial improvements have been made, you can put process controls in place to ensure that you don't go back to they way you were before. In fact, process control is part of and Six Sigma implementation. However, it is just as improtant to get the organizational side of this equation right too. Thus the objectives of the Sustain Phase are:
• The establishment of end user competency programs.
• Process support and capability.
• The retention of employees with portable business process skills.

This phase must result in a competent resource base and a formal process for managing issues and defects.

Phase 3: Exploit
Apart from driving value for the business, process improvement intiatives also build capabilties for additional imprvements. How? The experience of going through an improvement project builds valuable experience in your people. Also, with systems implementations, the full capability of the new system is fully exploited in the begining. Thus, the objectives of this phase are:
• The formalization of the process for identification and prioritization of exploitation opportunities driven by business value proposition.
• A structured process for planning and execution of continued improvement initiatives.
• The organizational alignment of resources.

This phase must result in well managed improvement initiatives and resources that are aligned to effectively exploit opportunities.

RELATED ARTICLES:

The Six Disciplines: Building Excellence in Small Businesses

2006-07-15T14:10:00.000-05:00

"Unfortunately, many of us are caught trying harder and harder to "whistle a symphony" when we should really be building an orchestra."

According to Gary Harpst, author of "The Six Disciplines", even though small businesses collectively generate $5 trillion in sales in the U.S., the biggest challenge of an individual business is 'survival'. 80% of all new business start-ups are out of business within five years. And 80% of the 20% that survived do not survive another five years! That means that, on average, only 4% of small businesses starting this year will be around in 10 years.

What makes it so hard?

In his book "Six Disciplines for Excellence", Gary Harpst details a roadmap for small businesses to learn, lead and last. This book is based on over 30 years of experience and research into more than 300 small businesses - each with 10 to 100 employees. The result is a book which is lays out a systematic approach for building and sustaining a successful business - driven by excellence. This systematic approach is what Harpst has termed The Six Disciplines:

Decide what's important. Based on your mission, values, strategic position and vision, what are your vital few objectives? What are you doing that you should stop doing?
Set Goals that Lead. What are your business measures, targets and initiatives? And how do you engage your team?
Align Systems. What in your business is not aligned with your strategy? How do you align your processes, policies, measures, technologies and people?
Work the Plan. How and when do you define, review, rate and prioritize Individual Plans to ensure that your business goals are being worked at?
Innovate Purposefully. How do you tap into the creativity of your team to create new and innovative ideas to solve problems and drive excellence in your business? As business owner, how do you recognize individual contribution?
Step Back. How and when do you review the internal and external factors impacting your business? How do you review performance of people?

Gary Harpst and his team have put a tremendous amount of work into detailing the steps within each of these disciplines so that this book can really be used as a small business owner's manual. They have succeeded in developing a practical methodology for those of us who spend too much time "working in the business, instead of on the business". These disciplines define solid well structured approach that supports the small business from strategic and tactical planning to the execution of tasks to meet the business' goals every day.

This approach is not for large businesses - it is targeted at small businesses that employ between 10 and 100 people. It is also not for those who are looking for a 'quick fix'. Success in using The Six Disciplines takes ... well, discipline. You would not expect to see results of this approach within 6 months.

I like the approach and would recommend the book, as it is uniquely tailored for small businesses; it is well written with a lot of substance; and gives business owners a practical tool that they can use to implement business improvement for sustainability, growth and excellence.

RELATED LINKS:

Be Excellent Blog

The Top 3 Myths about Business Intelligence

2006-07-08T07:34:00.000-05:00

Myth 1. BI is a technology solution.
Myth 2. BI is all about data warehousing.
Myth 3. The IT function can take care of BI.

The July edition of the PMI Network magazine carries an article entitled Get Smart. In the article, Malcolm Wheatley outlines some good case studies that dispel the above myths around Business Intelligence.

The example that caught my eye (mainly because it is close to my heart) is that of Coca-Cola Amatil in Australia, and what they have done with BI to drive improvement. By using good business intelligence, they were able to avoid investing in additional production capacity by improving their existing line capacities. I'll let you read the details of this case, but the basic steps of BI were followed:

Collect data. At Amatil, they collected highly granular, second-by-second data off their line PLC's.
Store it. Warehouse your data.
Carry out that Analysis. Look and data trends and patterns over time or compare what is happening in one location over another. Those of you who have read some of my Six Sigma posts will see the relevance on BI in analysing processes to get to the root cause of problems.

Dispelling those Myths:

BI is a technology solution. No, it is not. BI is a management initiative powered by data.
BI is all about data warehousing. No, it is not. The analytics and reporting are at least as important. (Good to know when you are chosing a BI solution or vendor).
The IT function can take care of BI. Yes, BUT - if you want measures that are 100% focused on the objectives of the business, the business better have total ownership of the BI solution. IT should certainly take care of the data warehousing.

RELATED ITEMS

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SMALL BUSINESS VIEW

What information do you need to run your business?
Understand what data your business processes generate. Capture and store it.
Make the time to analyze this data. Look for trends over time; for patterns that point to problems in your business.
Improve your business!

Are you a Change Agent?

2006-07-05T16:33:00.000-05:00

"You could not step twice into the same rivers; for the waters are ever flowing onto you." - Heraclitus

In her book, "The Change Agents - Decoding the New Workforce and the New Workplace", Liz Nickles discusses the fact that America in 21st Century still straddles the great digital divide. Workers on one side of the line working 24/7 from virtual offices, while others are still trying to program their VCR's and wondering what this 'internet thing' is about.

In this ever competitive job market; organizational changes; and the ever growing use of the web and digital tools to increase connectivity and productivity, her research is increasingly relevant. Nickles reveals the following trends:

Lifestyle Entrepreneurialism: Entrepreneurs are starting younger. "I took an entrepreneurial approach to everything in life" said the co-founder of the now-defunct dot-net startup. The age of the internet has allowed young people to sidestep the traditional corporate ladder.
Full Engagement: The new workforce never feel like they are doing enough; never thinking enough. Always searching the new boundaries, the new terrains.
Convergence: The boundaries between home and work life blur and Change Agents like it that way.
Getting a Life: The new workforce believe that work (even if it takes 18 hours a day) is just a job, and that they can and will walk away from it. In the book, Nickles quotes software designers who like to hike in Nepal every year. "You just won't see me in October because it is the best month to go hiking there."
Early Retirement: The new Change Agents do not believe in working mid-pace until they are 65 and then retire. They plan to work 24/7, cash out at 35, ... then move on.
No Prisoners: Nickles' Change Agents will do whatever it takes to move ahead. They'll make note sof enemies and squash them.

In these times of change, Nickles also has some good advice for the Baby Moguls, as well as for the Baby Boomers. This is a relevant book, especially for you reading this blog - a product of our 24/7 worklife!

RELATED POSTS

- Organizational Restructuring

Cheap Technology - for Small Enterprises

2006-07-03T20:48:00.000-05:00

Two articles caught my eye in this week's edition of BusinessWeek: The Next Cheap Thing and More To Life Than The Office. What these articles talk about are two ideas that have been around for a long time - that were perhaps ahead of their time.

"The Next Cheap Thing" talks about the use of 'thin client' devices, consisting of not much more than a keyboard, a mouse and a monitor that are linked to a 'server' with the capacity run the require applications and store data - remotely from the device. In this article, Stephen Dukker of NComputing talks about the price devices dropping from around $50 to the point where the "hardware would be essentially free". There are plenty of competitors out there in this market too.

"More To Life Than The Office" discusses Microsoft Office's rivals in the office productivity market. MS Office's (Word, Excel, Outlook, & Powerpoint) dominance in the market at around 95%, is being challenged by others that are competing on price and features.

So what's the connection? Why did these articles grab my attention?

These articles talk about how wonderful this cheap technology is for non-profits, schools, etc. And that is all great, but how do we apply these technologies to commercial enterprises.

Large commercial enterprises would not be interested in moving away from MS Office ... in the short term. MS Office would just be too hard (and expensive) to replace in most places. Not to mention that many comparable products are simply not good enough to fully replace the full suite of MS products used in most larger companies. However, the 'thin client' solution may have applications with certain company locations.

However, what I have seen of many small businesses, is that they simply need an easy to use cheap solution that does the job. A combination of a thin client set up with it's advantages, and suite of applications that support basic office functionality (Internet, email, word processing, spreadsheets, & presentation graphics) will provide a technology platform that will enable small business processes to be automated and thus drive improvement.

Check out a few options out there for cheap office applications:

OpenOffice: Free office suite from Sun MicroSystems with about 40 million users worldwide.
Ajax13: Free collection of Web applications that support some office requirements. Still early stages - but watch these guys, they are gaining about 10,000 new users per day (according to the BusinessWeek print edition)
IBM Workplace: IBM's suite of office products with about 1 million users. Costs around $69.

Yes - there are other free word processing, spreadsheet, email applications out there. And if you are looking for a free web browser - Mozilla Firefox is the way to go.

... so with some creativity and know-how, you can maximize your productivity while minimizing your investment and cost of doing business.

. ... Now that sounds quite entrepreneurial - just what small business is about!!

DFSS: Monte Carlo Simulation in Business Process Design

2006-06-28T10:49:00.000-05:00

When designing or re-designing a business process it is often difficult to model changes based on deterministic factors (using simple math, or empirical formulas). Business processes are dynamic and so stochastic methods work better to model them. Stochastic models help to understand the probabilities of things happening (or not) and thus can quantify risks better in design.

Martha Gardner of GE Global Research recently spoke about this topic. You can find her paper here. Ms. Gardner talks about DFSS in an engineering environment, and her examples include problems like the stiffness of helical springs. However, these methods can be sucessfully implemented in solving business process problems.

Translating the initial business problem statement, usually based on the 'voice of the customer', into the final problem statement in very clear terms will require understanding the relationship between the process input and process outputs. This will help us define the process "Y's" and "X's". The process "Y's" are the metrics or indicators that we will want to optimize or improve. These "Y's" will be related to process "X's" - the process measures which you would be able to capture data around.

For example - if you are trying to improve the service level at your call center, you may have identified 'Abandon Rate" - the rate at which callers hang up - as one of your process Y's. In this case, by reducing Abandon Rate you would be improving service level. Abandon rate would depend on numbers of calls at a time, the length of the hold time, and the number of call center agents. So these would be your process "X's".

You could capture data on all of these "x's" - number and time of calls; hold length of calls; and of course you know how many call center agents are taking calls. Empirically, you would be able to use all of this data to see very easily when you have your highest abandon rates, and thus take measures to adress these (adding additional agents, adding call options, etc.) However, your solution is limited to the data that you have. You are not exploiting the distribution of the data, and what this tells you.

Stochastic Methods like Monte Carlo will do this. All of the process "x's' will have different distributions of data. Monte Carlo simulation will use these distributions to generate data for these "x's'', and over thousands of iterations, simulate your best "Y" for your solution.

MORE INFORMATION

More about Designing for Six Sigma on the iSixSigma website.
Recording of a Martha Gardner web siminar on the subject.

FREE Six Sigma Lessons

2006-06-27T21:42:00.000-05:00

Yes - I thought that I would get your attention by using FREE in the blog title. But this is true!

I found this link on the Motorola University website and wanted to share it with you. Click on the link below and enjoy.

Free Six Sigma Lessons

Business Advisor Online

2006-06-22T14:38:00.000-05:00

Here is a great resource for small businesses (and others)! Business Advisor Online is packed with great information - like having a management consultant on your staff. They do a great job of collecting valuable articles by category, making it easy for you to find business information that you may need.

Here is their Strategic Thought Of The Week around Competitive Advantage.

"Competitive advantage, to be effective, doesn’t have to huge and pronounced; it can be incremental and subtle, as long as your business is consistently better in some way and customers perceive it that way. Every business would like to have a “better mousetrap,” but few actually do. Choosing a small, but effective, way to differentiate your business and sticking to it is sometimes all it takes to separate you from the pack."

Why Six Sigma now?

2006-06-17T17:16:00.000-05:00

So what is the difference between Six Sigma, TQM and SPC? What is the big deal around Six Sigma? Why are so many companies investing millions in Six Sigma programs now? I had to think about these things as I tried to answer these questions to someone new to Six Sigma recently.

There really are several answers to what is different about Six Sigma, however, the fundamentals are the same. You need to understand the quality principles that underpin TQM as well as the mathematics of SPC to be able to succeed with Six Sigma. However, what Six Sigma has added to the mix is a methodology for improving quality (reduce defects). So you can consider Six Sigma to be like TQM/SPC on steroids. Add to this the principles of Kaizen and Lean, and you have a very powerful toolbox for improving processes.

Furthermore, Six Sigma has been marketed in a way that TQM never was. Also Six Sigma training and the progression of a trainee to a Six Sigma Master Black Belt is a powerful way of establishing Six Sigma as the way many companies do business. Six Sigma has become part of many a corporate culture. This is what makes Six Sigma work.

Actually making a Six Sigma project work is a subject for another blog ...

Let me know how you have used Six Sigma to drive value for you.

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SMALL BUSINESS VIEW

Applying Six Sigma to small to mid sized enteprises is more than just scaling down on the timeline of the Six Sigma method. The rigor that Six Sigma brings to large projects is great - but not normally necessary for a smaller operation. Smaller operations have the flexibility to take on changes that have an immediate impact on performance. They are also generally less complex, and thus it is normally quicker and easier to get to the cause of problems and address them. However, as with larger operations, what Six Sigma brings to the table which is often ignored, is process control to ensure that the process does not 'drift' back to it's old wasteful ways a few months after the project is implemented.

Forecasting Demand Part 3: Achieving the Benefits of Accurate Demand Forecasting.

2006-06-07T09:40:00.000-05:00

Achieving the desired benefits of accurately forecasting demand requires that you keep in mind some basics:

Keep the goal of demand management clearly in focus: to predict customer demand accurately every time.
Gain as much depth and insight into forecasting techniques as possible. Find that technique or combination of techniques which are responsive to your needs and are capable of being attuned to a changing environment.
Measure, measure, measure!
Apply what you learn from analysis of sales data, forecast data and of your measurements to improve your business.
Bring your resources in line with what your customer requires.

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SMALL BUSINESS VIEW

As a small business owner, you may feel that you do not have enough time to dedicate to improving your demand forecasting accuracy by using forecasting tools and methods. You are too busy fighting fires and meeting current demand. Well, ask yourself - how many fires were caused by poor planning, unexpected customer requirements, limited resources to fulfil orders? And how many of these fires could have been avoided if you knew 2 weeks ago what your customer would be wanting today?

The 5 Questions for Better Business Reports

2006-06-05T21:57:00.000-05:00

As with most system implementations, there are several approaches for developing effective business reporting solutions. However, here is an approach that I like to use, as it provides a 'checklist' to develop the action items in a project to ensure that the reporting solution supports the business objectives of the project.

The 5 Key Questions for Better Information Delivery:

What are all of the 'as-is' and 'to-be' reports that the business wants? [END SOLUTION VIEW]
Which of these reports are in scope (and budget) of the project at hand? [SCOPE DEFINITION]
What INFORMATION does each of these reports provide? [MOVE MINDSET FROM REPORTING SOLUTIONS TO INFORMATION REQUIREMENTS]
What are the future data sources to support these information requirements? [INFORMATION MODEL]
How does the business want this information to be presented to users in the future? [INFORMATION DELIVERY]

These 5 questions should get you to developing an approach for getting to a Reporting Solution Design which will support the business information requirements which will be supported through the implementation of the new system.

How does this apply to your industry? Does this help to focus on why you are developing reports? Does this ensure that a system implementation will include reports that users can use?

The full article can be found at Egoli Solutions Publications website. The article was also published on Techlinks.

RELATED BLOG ITEM:- Data Rich, Information Poor?

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SMALL BUSINESS VIEW

What information do you need to run your business?
Understand what data your business systems generate.
Align this data with your information requirements
Formalize the creation of this information for your use in a timely and accurate manner

Forecasting Demand Part 2: What is Demand Forecasting?

2006-05-17T16:42:00.000-05:00

Predicting customer demand, simply put, is Demand Forecasting.

Following our previous discussion (Forecasting Demand Part 1: Is a Demand Forecast a Sales Target?), this then becomes one of the most critical functions in the organization. The quality of the output from this function will determine the success of the organization in meeting customer demand ... and its chances of growth in the long term!

If the objective of Demand Forecasting is to predict customer demand accurately every time, then the process and the achievement of this objective is more important than whatever theory or single technique is used in achieving this. If, simply by talking to your customers or sales/ marketing people you can forecast demand accurately, then that is the correct forecasting technique to use. In a different market, more sophisticated computer-based techniques or combination of techniques may be appropriate. It is therefore important to approach demand forecasting in a professional manner, by understanding the theory, but once you have found a methodology which works ... exploit it!

In meeting the objective of demand management, organizations will vary in their methods. To what extent forecasting theory is applied will vary from company to company. As long as we keep focused on this simple objective, the process of forecasting customer demand must remain as flexible and dynamic as the market which we are in.

“Nothing is more important to accurate forecasting than developing a logical and consistent system which is responsive to the needs of managers and capable of being attuned to a changing environment.” Renfro & Morrison

The fact remains that it is impossible to accurately forecast customer requirements every time. So, the management of any demand forecasting system will focus on:

measuring forecast error
understanding the causes of forecast error
continually minimizing the error
Managing your business by buffering the impact of the forecast error by keeping surplus inventory and/or capacity.

Forecasting Demand Part 3: Achieving the Benefits of Accurate Demand Forecasting.

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SMALL BUSINESS VIEW

Generally, as compared to bug businesses, you are closer to your customers, are selling fewer products or services, and have a simpler order to delivery process. As a small business owner/ manager, you thus require less sophisticated tools to forecast demand, and the technique that works the best for you is simply talking to your customers and sales people.

Where small businesses fall down in this area is that they do not track forecast accuracy. Doing this will help you undersand the relationship between your customer service level, and how well you plan your business.

It’s the Network! The power of Professional Networking.

2006-05-17T16:12:00.000-05:00

"Individual commitment to a group effort -- that is what makes a team work, a company work, a society work, a civilization work." - Vince Lombardi

I would like to turn Mr. Lombardi's quote around:
“The network’s commitment to individual effort – that is what makes an individual successful.”

After leaving a career at a Fortune 100 corporation to manage my own consulting business, I relied solely on networking to start up. I firmly believed that, as a consultant, people would help you if they liked you! And the only way to get people to like you – is to meet people.

However, if you want more out of networking than just a nice chat over coffee, you better be prepared to sell your ‘product’ – you! This is what I did:

Prepared my elevator speech – a 30 second delivery about what you do
Wrote a detailed resume. Having a detailed resume forces you to go through the process of writing down your accomplishments. This resume is not to be given to anyone unless it has been edited down to suit the reader.
Met with people I knew for coffee, breakfast, lunch or after-work beers. The price of self-marketing. Objective of meeting was to get referral contacts (I tried to get at least 3 names for the price of a lunch).
Met with people I did not know, but who had been referred to me by mutual friends. This was the opportunity to deliver the elevator speech and follow up with the adjusted resume.
Built relationships; developed an addiction for Starbucks; and had fun
Got my first project work – within 4 months of leaving the mother-ship

Furthermore, there are great networking tools for the serious professional networker. LinkedIn and Open BC are the best professional networking tools that I found on the web. Also, find professional organizations in your area. Join-up and/or attend their events.

And yes, once the networking pays off and you get that first project - you must deliver! Deliver on your promise to your network and yourself. Do you have any good networking lessons to share?

"To get a foot in the door, people must like you; to stay in the house, you must deliver value."

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SMALL BUSINESS VIEW

Networking is probably why you are successfully running a small business. This is one area where big business can learn from small business. This is what makes small business nimble, attuned to the market, and able to manage through change better.

Forecasting Demand Part 1: Is a Demand Forecast a Sales Target?

2006-05-10T20:50:00.000-05:00

How many companies realize that sales forecasting is difficult and then invest in correcting problems caused through bad planning? We keep safety stocks and high inventory levels, both in process and finished goods; we invest in increasing production capacity - machines and manpower; we spend a fortune on marketing in the wrong markets; we purchase sophisticated planning tools to reschedule production more efficiently; ... and the list goes on!

So much waste is generated in organizations because we don’t understand the markets that we are trying to sell our products into. Of the total capital tied up in high inventories alone, what percentage is spent on generating and measuring sales forecasts daily/weekly? If we could forecast accurately, by how much could we reduce our inventories and improve the quality of our plans?

Most forecasting is judgmental and intuitive. Unfortunately, many times companies use judgmental forecasting where they should not. In many cases forecasting is confused with goal setting!

If sales people are asked to forecast sales, these figures then become their sales targets and the yardstick by which they are measured. These sales forecast are normally driven to a great extent by budget. What does this really have to do with actual customer demand?

Statistical forecasting separates the process of forecasting from that of goal setting. The forecast will then be objective and the process will remain flexible to change as the market changes. This forecast is thus much more valuable to the business than the sales goals. Sales campaigns and promotions designed to meet sales targets can be modeled into these tools as events. This all make the demand forecast a number that can be used for planning and against which actual results can be measured so that the accuracy of this number can be improved over time.

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RELATED ITEMS

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SMALL BUSINESS VIEW

In a make-to-order business (as many small businesses are), your demand forecast is driven by your order book. However, with this, you have a fairly short planning horizon. So, how do you see beyond the order book to plan growth in your business? Find the demand forecasting technique that works for you and use it to plan your business; monitor actuals vs planned; and avoid surprises.

Organizational Restructuring

2006-05-08T19:58:00.000-05:00

"Today's environment is beginning to threaten today's organizations, finding them seriously deficient in their nervous system design.... The degree of coordination, perception, rational adaptation, etc., which will appear in the next generation of human organizations will drive our present organizational forms, with their clumsy nervous systems, into extinction." -Douglas Engelbart, 1970

The observation that the American inventor, Douglas Engelbart, made in 1970 may shed some light on the cycle of restructuring that most companies find themselves in. In the many years that I have worked in companies, big and small, change has meant one thing for most of the time -> Organizational Restructuring.

How many of us have been in these situations? For many of us who have been long enough with the same company, we know that new management seem to feel like they need to “make their mark” by changing people around and restructuring the organization. Who has heard or repeated the comments: "Here it comes again!" or "Shifting the deck chairs on the Titanic again?"

In industrial design, experts know that "form follows function"; business schools teach "structure follow strategy". So why is it that some companies tend to be in a never ending cycle of restructuring? Is strategy changing that much? Are the fundamentals of the business changing so much that you need to change the organizational structure?

The top reasons why organizations change:

Innovations in product, technology, materials, work processes, organizational structure, and organizational culture
New and shifting markets
Actions of global competitors, work force values, demands, and diversity
Regulatory and ethical constraints from the environment
Individual development and transition

These are all solid reasons for change. However, organizational restructuring in these situations should only follow after the BUSINESS STRATEGY has been changed - for the very same reasons. Very seldom have I seen an Organizational Change process that does enough due diligence around the strategy of change. Such a due diligence process is proposed below.

Getting to effective Organizational Restructuring.

Assess the impact of internal and external factors causing change on the business strategy.
Commit to a new business strategy to address the changes in market, technology, regulations, etc.
Assess as-is business processes to determine the impact of change on the organization. This will include the impact of process changes on existing roles. This will define the ‘gaps’ in existing roles which will make any structural changes effective.
Design/ align roles to support the changes in the business.
Develop and execute an organizational change management plan to address and define the drivers of any structural change, as well as the impact on the business of the change options.
Define performance metrics. Measure before and after the change to ensure that the change is effective.
Understand the cost of organizational change.

Project Management Resources

2006-04-11T11:39:00.001-05:00

Here are a few Project Management Resources on the web that I have found useful recently. I will add to this item as I find others. Feel free to send me links that you have found useful.
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The Project Management Institute is the grandaddy of all PM sites. This is the 'duh' site for PMs where you get information on events, 'know-how' and certification - and so I have included it here.

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Association for Project Management is the UK-based PM association. They have a good site with links to great PM resources. They have recently released the 4th edition of the APM Body of Knwoledge to APM non-members.

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Ever looked a template for a project deliverable. Ganttheat has great resources for PMs, including good documents & templates to accelerate your project documentation.

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The Project Management Podcast
Cornelius Fichtner, PMP does a great job with this Blog. He seems to work hard to get the latest and greatest from the PM world, and so this Blog has useful links to PM resources and relevant news. I enjoy the Podcast as well.

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IT toolbox - Project Management Knowledge Base.

ITtoolbox is a great knowledge base for IT topics in general and specifically around IT Project Management. They also have a Wiki which helps to grow their knowledge base. Good stuff.

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TechLINKS is an online technology magazine focused on Georgia businesses (they also have a print edition). They have a Community Publishing area where you will find some interesting items on Project Management too.

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Mario Alexandrou is a IT PM based in New York who has a nice website. His Methodologies page is a good primer for IT methodologies.

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OTHER PROJECT MANAGEMENT ITEMS

Consulting Ethics: Stand like a rock, or swim with the current?

2006-04-01T09:17:00.000-05:00

"In matters of principle, stand like a rock!

In matters of taste, swim with the current."

- Thomas Jefferson.

It may be easy for some people to tell the difference between principle and taste, but it's a bit more complicated in the consulting profession.

Your reputation as a consultant will be created by thousands of actions, but may be lost by only one. There are many jokes about consultants based on the actions of a few. For this reason, it is important that as a consultant, or as a client of a consultant, you are aware of the guidelines and ethical standards that set the 'rules to play by' in this game.

The Georgia Chapter of The Institute of Management Consultants has a Code of Ethics for it's members that relates to Clients, Client Engagements, Fees and the Profession in general. In computer consulting, a good resource is the Independant Computer Consultants Association Code of Ethics. Another good resource on the web for advice on the ethics of various business transactions is The Ethics Resource Center.

Large consulting firms have their own Codes of Ethics that may be valuable to look at. Two good examples of these are Price Waterhouse Coopers and Deloitte.

Consulting Ethics links:

Driving Business Benefits from your ERP Implementation

2006-03-10T22:41:00.000-05:00

Companies spend millions on implementing ERP Systems like SAP every year. Many of these implementations are global in nature, integrating several business units across the world. Generally this major investment is supported by a solid business case based on expected business benefits.

But, what happens when these business benefits are not realized? You cannot go back to where you were before the implementation. You cannot unspend your money. More and more companies are tackling this exact issue today. How to exploit your investment in a large ERP system with minimal cost to drive the maximum business benefit.

You need a solid business-centric process to solve this challenge. Implementation teams are pretty good at getting complex ERP systems to go-live and then to support them after go-live. However, immediately after going live, performance, productivity and morale usually decline as people adapt to the new system and processes. This is the "DIP" in the a new system's lifecycle. Most teams are not structured, or funded to help the business recover from this dip, as this is generally not planned for. So how do companies recover from this dip to stabilize the operating environment as soon as possible; and better still - to achieve the benefits of an integrated system?

The answer is a Continuous Business Improvement process. Such a CBI process has 3 phases:

Adopt: Business ownership of the ERP system and new business processes.
Sustain: Business ownership of the ERP system and new business processes.
Exploit: Drive business value through continuous improvement of the ERP system.

Successful execution of this program depends on the following key factors:

The establishment of stewardship programs and clear links between the ERP solution and business directed initiatives at all levels of the organization.
Formalization of methods and drivers related to identifying and prioritizing opportunities that will drive business value.
Defined process for managing improvement opportunities and ensuring business benefits are met.
Movement of resources from rollout/support-driven to exploitation-driven environment.

More here about the CBI Model, or contact us for a full copy of this paper.

Managing Requirements

2006-02-27T15:41:00.002-05:00

“Analysts report that as many as 71% of software projects that fail do so because of poor requirements management, making it the single biggest reason for project failure" - CIO magazine, Nov 15 2005

Managing requirements on software development projects has always been critical to the success of these types of projects. The tools and methods around these are well documented (try Google-ing “Requirement Management Tools”). However, Managing Requirements is rarely appears as an activity on system implementation projects.

System implementation methodologies will include the definition of requirements. For example, the SAP ASAP methodology (now incorporated in SAP Solution Manager) includes this during the Blueprinting Phase. However, this and most other implementation methodologies, assume that these requirements will not change. And in a perfect world, they will not, and you can design, develop, test and implement a business solution based on these stated requirements.

However, the world is not perfect!

People change their minds for many reasons, and do so on a regular basis. They'll be working with an existing system and realize that they missed a requirement. Or, during system build they'll realize that what they asked for really isn't what they want after all. If you try to "freeze" the requirements early in the lifecycle you pretty much guarantee that you won't build what people actually need, instead you'll build what they initially thought they wanted. That's not a great strategy for success.

Requirements management involves establishing and maintaining agreement between the business and the project team on both system and business related requirements. This agreement forms the basis for estimating, planning, performing, and tracking project activities throughout the project and for maintaining and enhancing the developed solution. Key activities include:

planning the requirements phase
establishing the requirements process
controlling requirements changes
minimizing the addition of new requirements (scope creep)
tracking progress - tracing built-to requirements against original requirements
resolving issues with customers and developers
holding requirements reviews

Ensuring that requirements are managed in projects assures that the system that is implemented most closely supports business requirements; and thus has the greatest chance of success.

OTHER PROJECT MANAGEMENT ITEMS

Data Rich, Information Poor?

2006-02-20T20:48:00.000-05:00

Ask any Project Manager or business owner about the objectives of an ERP project, and they will probably include better business information and improved reporting in the list. However, talk to any Project Manager about the area of the greatest project scope creep, or any business owner for the area that is most neglected in any ERP implementation, and they will probably say ... you guessed it ... Reporting! Why is this? Is there not enough attention given to planning the development of reports? Is the definition of reporting requirements not clear enough? Are project teams not structured with the right resources to address reporting effectively during solution design & development? Yes.

For many companies that are already too "data rich, information poor", the implementation of new systems will worsen this situation if this issue is not addressed.

So, if the objective of most sytem implementations is to make better information available to the business, why is this generally so badly done? I have found that very often the answer is that most system implementation projects are too 'systems-centric'; too focused on getting the technical solution design and developed; and not focused enough on the user interface. The user interface is where the end-user 'meets' the system. This will be done via a transaction screen, a display of some sort or a report. THIS is where the success of the system implementation is determined.

When reporting is addressed as part of the system implementation project, implementation tasks include determining what the current (as-is) reports are, and then trying to develop solutions in the new system to replicate these. From a business owner's perspective, does this result in better reporting, or better information for improved decision making? If so, this is generally only an incremental improvement. Normally this just gives you the reports that you have always used, but now sourced from the new system. Normally this also results in incremental development costs in the project, as generally these reports are not standard, and need to be custom developed.

Have you seen this in system implementation projects? If so, how has resporting development and implementation been done? Was it successful?

The full article can be found at Egoli Solutions Publications website. The article was also published on Techlinks.

RELATED BLOG ITEM:- 5 Questions for Better Business Reports

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SMALL BUSINESS VIEW

As a small business owner, you should consider the following:

What information do you need to operate your business?
What business purpose does this information support?
Can you formalize reporting to deliver this information in a timely manner?