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Strategically Enriching your Business Information Systems: Part 1 -- Introduction

Introduction to the principles of precision configuration and strategically enriching your business information systems

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Strategically Enriching your Business Information Systems: Introduction

This article introduces critical principles that every executive and manager should know in order to be able to derive full value from their business information systems investments.  These principles apply to your ERP and other financial systems, your business intelligence systems and your general operational software systems.

These principles, correctly applied, will enable most organizations to substantially improve the strategic and operational decision support information yield of their business information systems facilitating better decision making and more effective and more profitable enterprise operation.

They are equally applicable to nonprofit and governmental organizations.

This article discusses actions you can take immediately and other actions that will require careful planning and whose implementation will take some time.  It headlines a number of typical problem areas and steps to correct them.  Further articles are planned that will define the fundamental principles that underpin the application of these recommendations and provide recommendations with regard to implementation.

Factors which will indicate whether it is worthwhile to read this article include:

Ten steps you can take to strategically enrich your business information systems

These notes apply to differing degrees to every module of every business information system from every software vendor on the planet.  They do not relate to technology, they relate to how information is organized to make maximum sense to human beings and in order to facilitate maximum ease of electronic processing.

They relate to principles that are well understood in certain quarters but hardly understood, or if understood, imprecisely applied in the majority of business information system installations.  These factors are the most significant factors behind Gartner's finding that "most organizations are not making better decisions now than they did five years ago".

These suggestions apply whether we are speaking of financial transactions or product records, whether we are dealing with the General Ledger Chart of Accounts, the Product Class, the Item Master, the Materials Group, Personnel Class or any other database table large or small in any system.

I will primarily use examples from the Chart of Accounts as this is more universally applicable than any other information list and any other Master Data.

Many technologists will look at what is presented here and tell you "but FRED (the name of your system), is so powerful it can handle this!"  Do not listen to them, this is not about technology it is about organizing information in meaningful ways that accurately model the real world so that the full potential of the technology can be unlocked and the data is easily and quickly interpreted by managers and executives.

If you follow the steps set out below and systematically and progressively apply them to your systems you will find in a few years' time that you are getting much more information faster and easier and that your business is running smoother and better.  You may even find that some of your mid-level administrative personnel are much more gainfully employed or that somehow the headcount has reduced without you really planning it.

The principal requirements of executives

In considering what follows I suggest that the principal requirements of executives for any business information system include:

  •  The answers to questions I have not yet thought to ask;
  •  Enable me to run the business MY way;
  •  Accurately model every aspect of my business;
  •  Totally integrated solution;
  •  Entirely reliable and dependable;
  •  Fundamentally support the essence of the business and how it thrives (strategy);
  •  Fully support my day to day operational functions

What is presented here is designed to assist you to reach the above goals.

All that follows relates to the classification lists, attribute lists, Chart of Accounts and other classification and grouping lists that exist in all software to varying degrees.  These are the classifications that are used to order, group and analyze data.  If they are well structured, well designed and well maintained the software is a pleasure to use, if not ...!

I stress that this information is relevant at the executive and senior manager level -- once you understand the real issues then you can manage the problems referred to above out of your systems.

1. Ambiguous item names

Account or item names are ambiguous resulting in different personnel posting differently e.g. "Smelting and refining" -- Asset or Expense?  Clean up the lists and make names unambiguous "Smelting and refining operating expenses".

2. "Clumping" of transactions

A single item or account covers substantial numbers of diverse transactions monthly e.g. the "Smelting and refining operating expenses" example above is a £100 million asset with hundreds if not thousands of expense transactions monthly.  Break this down into five to ten major categories and, in this particular case, break each of those down into between five and ten categories.  Assemble this into a very carefully designed hierarchical list (taxonomy), code it using structured codes and immediately you will be able to analyze your expenses much more exactly.

The level of detail should model the real world at the finest level of detail that you will ever ask questions on.  The computer can only drill down automatically to the finest level of detail that you capture and maintain and it can only group automatically to the extent that there is logic in your code scheme.  Well-designed lists and codes = easy to post accurately, easy to analyze, electronic drill down and summarization.  The opposite = lots of manual work in Excel or complex reports or both.

Consider the following real world example:

Typical Credit Note Reason Codes


They look reasonable ... don't they?

Versus Strategically and Systematically Designed Reason Codes

With the first list you will struggle to answer most management questions, with the second you will answer almost any conceivable management question -- same software, same business, different classification data.

3. Cannot get answers to simple questions easily

The example above gives you the answer.  Survey your staff, find out where they are struggling to get answers, examine the classification lists, make changes in line with the example above.  I intend to give more guidance on how to do this in subsequent articles.

4. The information you need is not there

You are asking questions that are important, for example with regard to market trends, and you cannot get the answers without putting a fairly senior person onto spending days with Excel and direct research to arrive at an answer that no-one has confidence in.

Add the relevant characteristics to the master data e.g. buying patterns for golf clubs are influenced by the sound they make relative to the sound of the clubs used by the top players on the circuit.  Fashions change and it is desirable to monitor trends.  Add "Golf Club Sound" as an attribute on your Product Master record -- an hour or two to add the attribute to the database, some days to classify all the products and immediately you have real time tracking of trends for ever at almost no extra cost.  Just make sure you do the job properly first time -- the Engineering Approach!

You can quickly and easily add any number of attribute lists to your master files in this way and with a bit of effort you can classify all your products and capture the extra data.  This applies to personnel data, to production data, to equipment spares, you name it you can add attributes and it costs almost nothing to do this relative to what you have spent in total on your systems thus far.  And the return on investment is very substantial!

Vital to do this to a high standard or rigour and precision in order to experience the full return.

The key question to executives and senior managers should be "what are ALL the possible attributes that you can possibly think of to describe a ... (e.g. golf club)" -- brainstorm, classify and, if in doubt, add it anyway.

5. Duplicate items

Quite frequently different departments define their own sets of classification codes to suit their purposes.  For example I once found an Item Master where exactly the same earth moving machine tyre occurred in three different places.

Evaluate the logic of the list, select a single instance of the item and close the others down.  If you keep getting incomplete reports or reports from different departments do not agree this is frequently the answer.

6. Lots of spreadsheets with manual manipulation

You have a significant number of mid-level and even senior staff with spreadsheets producing the monthly Board Pack and other management reports.  When you question the numbers the query has to cascade down through the ranks until the operator at the bottom extracts required data and the hierarchy of managers and accountants process the data back up through their spreadsheets.  Expensive, frustrating and a total waste of time.

Look at the data that is giving the problems and develop overarching logical code schemes from first principles that accurately model the real world.  Introduce these into the Transform layer of a new instance of your data warehouse and transform the data into logically structured hierarchical classifications that you can roll up electronically.  A significant project but will give substantial benefits and probably reduce administrative costs.  I plan to discuss how to do this in more detail in future articles.

7. Different departments have different definitions

I once came across a large multi-national organization where operations, finance and human resources had three different systems -- SAP in the finance domain, another instance of SAP in the human resource domain and a completely different operational system used by those who actually produced the output of the business.  The employee classification and grouping in the three systems did not agree at all to the extent that even the most elementary employee category related analysis was to all intents and purposes impossible.  It is vital to have a single harmonized standard across the enterprise, this standard needs to be driven from the office of the Chief Executive as the custodian of the integrated view of the business and must be extremely well engineered to the highest standards of what I am advocating here.  Once in place huge benefits will result.

8. Cannot correlate measures of customer satisfaction with the hard data

Soft measures like customer satisfaction, employee satisfaction, etc are seldom correlated with actual production and sales data for all of the reasons given above and others.

Modify your customer satisfaction instrument (questionnaire post card, etc) so that it is issued in such a way that it has a unique bar code or other identifying code discreetly printed or in some other way linked back to the specific transaction associated with the issue of the questionnaire.  Scan the results back into your system and use the unique code to join the customer satisfaction data with your operational data.  You will immediately be able to monitor performance of a wide range of matters electronically in ways you previously might only have dreamed of.

9. Your major lists are badly structured and a nightmare to navigate

Point 6 above will start pointing you in this direction.  Critically examine your Item Class, Product Class, Material Group, Employee Group, Chart of Accounts and other major lists in the light of what you read here and what I plan to share with you in the months ahead.  My experience tells me that you will almost certainly discover that they are extremely badly organized with little or no logic, innumerable haphazard groupings, if there are any groupings at all.

If you dig further you may well find that it takes ages for new staff to learn how to post accurately, that new staff may even give up and leave, that posting errors are prevalent, that supervisors and even managers expend significant time working around the badly ordered data, that no one actually trusts the data and that the people who get the job done rely on their own pieces of software and spreadsheets outside of your core systems.

The extract from a Chart of Accounts shown here is an example of an extremely badly designed Chart of Accounts, so much so that the client was running their business almost entirely with Excel.

Interestingly the software vendor told me that his software, call it FRED, "is so powerful it can handle this data".  The client failed to take my advice and is now in Business Rescue.

The answer is not to buy new software, it is to build new classification lists -- by doing this you will dramatically raise the quality of management information and realize the true value of your systems.   This is a classic example of the underlying fundamental behind "most organizations are not making better decisions now than they did five years ago."

10. Allocation of overheads to production business units is approximate and highly manual and financial reporting generally is cumbersome

Finally you may find that the allocation of overheads is a source of contention and uncertainty.  You may find that your managers are managing off Excel spreadsheets with little or no regard to the financial system.  In extreme cases you may find that from an operational point of view only the Accounts Department and the Auditors really make use of the Financial Suite.  You may also find that the audit costs much more than you would like it to and takes much longer than you think it should.  Look no further than a badly designed Chart of Accounts that does not accurately model the real world with numerous management journals that have no place in the core financial records.

A Chart of Accounts should accurately model the business in a sophisticated compound code scheme that incorporates every element of the business in distinct code segments comprising Divisions, Locations, Functions and Accounts.  These are fundamental logical entities with information management rules as hard as concrete that must be rigorously and precisely defined in highly structured hierarchies and coded to engineering standards of precision.  I use custom developed software to ensure the consistency of the code scheme when I build such Charts of Accounts.  Be aware that people will tell you that their Chart of Accounts complies with what I have just said.  In my experience they almost never approximate the level of engineering rigour that I regard as non-negotiable.

This model then forms the basis of how the entire business is represented to the diverse computer systems that form the administrative backbone of every organization.  Application of this approach can take place in the Transformation layer into the Data Warehouse and, in time, the operational Financial Suite can be reimplemented.

To follow

I aim to follow this article with further articles discussing in detail the principles to be applied in this field of Strategic Information Architecture.

I also aim to provide guidance on the approach to be used in implementing these recommendations.


If you recognize that there is NOTHING more important than the configuration data that we have been talking about and that, correctly addressed, remediation of all the above items can make a huge difference.  And your recognize that this should be undertaken to high standards of precision, as you would in any engineering endeavor, you will open the door to add very substantial value to your organization and unlock huge value from your existing business information investment. 

A hundred fold increase in information value is entirely achievable and, coupled to this, greatly improved management efficiency and business competitiveness leading to increase profitability and growth.

I offer advisory services with regard to the application of these principles and would be delighted to discuss how I might be of assistance.  I also offer a light touch diagnostic service to evaluate the state of your information tables and advise how to remediate them.

Yours faithfully

Dr James Robertson PrEng

Previous articles:

Random Selection of Articles by Dr James Robertson

Std 025 The Engineering Approach to Business Information Systems Defined

Throughout this website I make reference to The Engineering Approach.  The Engineering Approach is central to who I am and the way I think about projects.  It was core to my original intention in 1989 "to bring the disciplines of Engineering to the IT Industry".  This article provides an overview of my understanding of The Engineering Approach 25 years on
SNw 044 Robust Procurement: Part 1 -- Introduction

An overview of a robust business information systems procurement method designed to ensure that a robust and enforceable contract is entered into before a project commences
Std 006 Procurement: 00c Confidentiality and Non-Disclosure Agreement

A simple confidentiality and non-disclosure agreement which you can tailor and elaborate on as you see fit and which may vary depending on your legal jurisdiction and your attorney.  I recommend that this initial document is kept simple as you want ALL persons attending the initial tender briefings to sign this

You would possibly have a much more comprehensive agreement for your short list bidders and possibly more comprehensive still for your final choice although I personally hold that very detailed documents of this sort tend to be excessive

TxM 102 Taxonomy Manual Part 3: How to do it, Case Studies and White Papers and other References

Discussion of how to do it, real world complexity, challenges and opportunities, preparatory steps, design and development, coding conventions and standards, a series of case studies in which dramatic benefits accrued through use of Precision Configuration and other references
SNw 023 What is computer software? REALLY? and ERP? And what determines the sustainability and maintainability of business software?

Many people have mistaken ideas regarding what constitutes computer software.  This article seeks to provide understanding

Dr James A Robertson PrEng The Business Information Systems Doctor

Business Systems NOT delivering?

Call the Business Systems Specialist

Dr. James Robinson

Dr James A Robertson -- has been involved in the effective application of Business Information Systems, including but NOT limited to ERP, since 1987 and in the profitable and effective use of computers in Business since 1981.

Drawing on a diversity of experience, including formal military training in Quick Attack techniques at the Regimental Commander level, Dr Robertson has developed highly effective methods of investigating any sub-optimal Business Information Systems situation -- be it an established system or a stalled project or any other source of Executive frustration -- quickly and concisely diagnosing the root cause of the problem and prescribing concise practical actions that Business Executives can effectively act on see the Pulse Measurement page and also the Sample Reports page for redacted real reports.

He has also developed highly effective methods of strategically enriching systems to unlock the full potential of existing investments, see the Precision Configuration page and couples this to architecting small pieces of clever software that harness the full potential of your investment, see the Software page.

If you are having problems with your systems, your project or your IT Department, call The Business Systems Specialist

Business System Failure is RIFE -- we offer insight into why this happens AND WHAT is required to prevent it.

Failure is at epidemic levels with massive damage done to client companies -- if you are NOT aware of the extent of the problem please visit the About Failure page for a catalog of major failures running to billions of Pounds and Dollars.

All evidence indicates that the established players do NOT know how to deliver stable, reliable high value solutions that WORK.

There HAS to be a better way!

This website provides information relating to that way with a large collection of white papers, presentations, standards documents, etc that you can use to start bringing the situation under control

We also offer high level advisory services with regard to the application of the principles advocated on this website

We offer an ENGINEERING APPROACH to addressing these issues

Click here to read more about the Engineering Approach

By Engineering I mean the formal, structured, highly disciplined, highly systematic, highly practical approach that consistently delivers results in ALL areas of human endeavor where formally trained and certified engineers are the ONLY practitioners permitted to operate -- think large buildings, factories, motor vehicles, aircraft -- highly complex systems that work at a level that we take it for granted that they WILL work and where failure is all but unthinkable and, when it happens, attracts immediate public attention and rigorous investigation directed at ensuring that such failures are prevented in the future -- in fact, everything that the management consulting industry that implements complex software systems is NOT

This approach is discussed further on the Engineering Approach page.

Search Articles

Book -- The Critical Factors for Information Technology Investment Success

In 2003 I undertook an in-depth analysis of all the information and experience that I had gathered with regard to the factors giving rise to Business Information System failure including ERP and general IT and classified this information into a number of categories including "The Factors Causing Failure" and "The Critical Factors for Success" based on this I developed a two day Course "The Critical Factors for Information Technology Investment Success" which is still offered today.

Based on this I wrote the book of the same name, which is available in electronic form here for download:

Random Selection of Articles by Dr James Robertson

Cnf MVw Most Viewed Presentations

The following presentations are those that have been most viewed since posting on Slideshare giving some indication of where the focus of interest lies
Cnf 082 A strategic approach to corporate planning, management and governance

Considerations with regard to governance of information technology and business systems taking account of the abstractness of information technology solutions
SNw 050 The Real Issues in BIS: Part 3 – Strategic Alignment and Precision Configuration

Strategic alignment, the alignment of system concept and solution architecture with the strategic essence of the organization, why it exists and how it thrives, such that the systems enable management and staff to do the right things well as determined by the customers of the organization together with the need for Precision Configuration the very exact development of data content to model the business, are discussed in this section
Std 025 The Engineering Approach to Business Information Systems Defined

Throughout this website I make reference to The Engineering Approach.  The Engineering Approach is central to who I am and the way I think about projects.  It was core to my original intention in 1989 "to bring the disciplines of Engineering to the IT Industry".  This article provides an overview of my understanding of The Engineering Approach 25 years on
Prd 043 Strategic Guidance and Advisory Services

Overview of the full range of services that are offered by James A Robertson and Associates
SNw 054 What does a HIGH VALUE Business Information System Solution look like -- White Paper

An overview of the attributes of a high value business information systems implementation measured in terms of the business outcome some years after the system has been fully commissioned
Cnf 081 Insights of Knowledge Management in a Global Recession

A discussion of the importance of Precision Configuration as a vital component of unlocking the full value of business information system investments as part of a Knowledge Management culture

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Articles by James A Robertson and Associates

There is a large body of white papers, articles and other content produced by Dr James Robertson available on this website

Please click here to visit the detailed listing of articles

ArticleTagCloud for Articles Published by James A Robertson and Associates

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writer     

Table of Contents


About Dr James A Robertson PrEng -- The Business Systems Doctor -- and Other Topics

Catalogue of Major Business Information System Failures

About the Engineering Approach

James Robertson's Value Add

Attributes of a HIGH VALUE solution

Recognizing Business System Failure

The Critical Human Foundation

Old Software IS Viable

From South Africa

Competencies of Dr James A Robertson PrEng

About Professor Malcolm McDonald

Table of Contents

About my relationship with the Almighty Creator, Yah the Eternally Self-Existing

Comments relating to the Business Systems Industry and other topics

Testimonials and other positive material regarding James Robertson

Reference Articles

List of Articles

Article Catalogue

Achieving High Value Business Information System outcomes

Executive Custody -- What is it and HOW do you get it?

The REAL Issues in Integrated Business Information System Success

Part 1: Introduction

Part 2 -- Mythology and Lack of Executive Custody

Part 3 – Strategic Alignment and Precision Configuration

Why your ERP is NOT delivering and HOW to FIX it

IT Project Management

Pulse Measurement

CEO Anthony Lee Comments on his experience of the Pulse Measurement

No Charge Guarantee on the Pulse Measurement Service

Examples of Pulse Measurement Outcomes

Critical questions regarding the Pulse Measurement™

The Pulse Measurement Workflow

The Critical Factors for Business System (ERP+) Investment Success in the Pulse Measurement

Indicative Pulse Measurement Durations

What is a JAR&A Pulse Measurement?

Survival of the fittest – why it makes sense to measure the pulse of your business

Examples of Pulse Measurement Outcomes over 24 years

Sample Pulse Measurement Reports


Strategic Essence: The Missing Link in Business Information Systems

Strategic Essence: Overview

Strategic Essence: Part 1 -- Strategy Defined

Strategic Essence: Part 2 -- Differentiation

Strategic Essence: Part 3 -- The Essence IS Different

Strategic Essence: Part 4 -- The Essence should be the Point of Departure

Strategic Essence: Part 5 -- Discovering Strategic Essence

Strategy -- the Essence of the Business: What is it and how do you develop actionable strategic plans?

Simple Steps to Increase the Strategic Value of your ERP Investment

Free Strategic Snapshot Toolset and Manual

A strategy focused planning system beyond traditional budgeting

Tough IT and ERP Procurement and Contracting that Works

Robust Business Systems Procurement

Part 1 -- Introduction

Part 2 -- Bill of Services, Laboratory, Go-live Certificate, etc

Part 3 -- Executive Engagement, Bid Compliance, Adjudication and other matters

Procurement Documents

Guidance and Advisory Services

The Art of Project Leadership

Why Regular Communication with the CEO is Vital

The Business Simulation Laboratory

Precision Configuration and Strategic Business Information Architecture

Precision Configuration based on Strategic Engineered Precision Taxonomies

The JAR&A Cubic Business Model

Highly Structured Strategic Chart of Accounts -- a Vital Element of your Corporate Information Arsenal

The Product Catalogue -- an Essential Element of any Precision Configuration

Attributes -- answers to the questions you have NOT yet thought to ask

Case Studies of Notably Successful Projects with high value Precision Configuration

092 Doing things differently and better -- ASCO Case Study 2-- BPM Summit 2013

088 Strategic ERP Invesment -- ASCO Case Study -- Service Management Conference and Exhibition Africa

026 Information Architecture and Design of FIS for Rennies Group -- Financial Information Systems Conf

018 CRM Risk Control: Designing and Implementing an Integrated Risk Mgmt Sys -- Integrated Risk Mgmt Conf

011 V3 Consulting Eng: Benefits of MIS to Professional Practice -- SAICE 15th Ann Conf on Computers in Civil Eng

Strategically Enriching your Business Information Systems

Part 1 -- Introduction

Part 2 -- Principles of Data Engineering

Part 3 -- Steps in applying these recommendations

Simple Steps to increase the strategic information value yield from your Business Systems Investment

The Full JAR&A Taxonomy Manual

Part 1: Introduction, Problem Statement, Definitions and Examples

Part 2: Why Use JAR&A, Required Knowledge and Experience, Cubic Business Model and Chart of Accounts and Taxonomy Software

Part 3: How to do it, Case Studies and White Papers and other References

Example General Ledger Manual

Business Process -- Irrelevant, Distracting and Dangerous

The RIGHT Approach

Custom Strategic Software Design and Oversight of Construction

Standards for Custom Software Specification

What IS Software?

IT Effectiveness

Organizing Outlook

Critical Factors for I.T. Success

A Moral and Ethical Dilemma -- Systems that Fail

Case Studies examining Business Information System failures

The BBC Digital Media Initiative Debacle

The Bridgestone -- IBM Conflict

Speaking and Training

Showcase of Conference Presentations

Most Viewed Presentations

Briefings and Seminars

Why your ERP/BIS is NOT delivering and HOW to FIX it

ERP and IT Procurement that Delivers Results

The Critical Factors for IT and ERP Investment Success

Other Seminars

Conferences and Public Presentations

Conferences 80 to 99 -- 2009 to Present

Conferences 60 to 79 -- 2005 to 2009

Conferences 40 to 59 -- 1996 to 2005

Conferences 20 to 39 -- 1994 to 1996

Conferences 01 to 19 -- 1989 to 1994

On-Line Seminars (Webinars)

Webinar on Preparing and Presenting Webinars

Contacting James A Robertson and Associates Limited