Whose System is it, Anyway?

There are many stages a computer system goes through during an implementation.  At first, it is just an idea perhaps starting with frustration with the current system or a sudden new requirement that the current computer (if there is one) can’t handle.  At this point, all you know is that you need a new system.

The Hunt

Then you start looking.  Maybe you ask colleagues.  Maybe you initiate a Request For Proposals (RFP), asking a number of vendors a series of questions about what their system can do, and inviting them to bid on your business.  Maybe the system has already been chosen for you by a parent company.

Then come the demonstrations and the system becomes more real.  You compare different products.  You talk to consultants and the customers they offer as reference sites.  You do your homework and you make your decision about which system to buy, but it’s not your system yet.  Even though you may have signed a contract, taken delivery of the software and paid for it, your staff has not taken ownership of the system.

The Implementation

Next comes the detailed planning, the configuration, the set-up, the training and the conversion of the data from the previous system.  What can the new system really do?  What fits and what doesn’t?  You add additional software.  Maybe the new system doesn’t have Electronic Data Exchange (EDI) for orders and payments to large retail companies, so you add an EDI package.  Maybe you need workflow to handle your online orders or document imaging to get rid of the tedious searches through filing cabinets, so you turn to iDatix.

At this point, you examine your internal processes.  You look for formerly manual steps that the system can now do.  With the workflow system now reminding people to submit their expense forms, move the person who used to phone all the salespeople to a higher value task, such as following up on customer payments.

By this time, your staff should start to feel like they own the system, that it is their responsibility to make it their own and work with its strengths and weaknesses.  Unfortunately, after many years of implementations, my experience has been that they often don’t.  All of a sudden, the old system looks better.  The new one seems clunky.  There’s always something that worked better before.  The staff doesn’t remember the issues they had when the old system was new.  They don’t remember the workarounds they had to come up with.  They don’t have enough time or patience for the new system.

Naming the Beast

Accounting systems are complex.  In a medium sized implementation, there may be over 500 data files.  In a large one, there are literally thousands.  When you layer on tax requirements, Generally Accepted Accounting Principles, industry standards, vendor/customer complexities, etc. etc. even the best planned systems require extensive work to fit.  One simple thing you can do to help your staff take ownership and really commit to the new system is to name it.  It sounds like a small step, but it underlines the fact that it has been customized for your company.  The system is no longer SAP, Oracle, Microsoft, Sage or even Quickbooks, it is yours.  So, if you were the Leamington Manufacturing Corporation for example, you might call your system Lexie (Leamington’s EXtended Information Environment) and have one of the more artistic members of staff find a suitable image.  Give the system a good start by throwing a party, and when people complain, make sure to take their complaints seriously, but also ask them to have patience with Lexie.  After all, she is the newest member of the team.

Re-posted with the kind permission of iDatix:  http://www.idatix.com/insider-perspective-whose-system-is-it-anyway/

Putting the Customer First - Really!

You, the software vendor, are making your pitch.  It breaks down into three sections:

1. Microsoft has amazing software,
2. You are an amazing Microsoft representative, and
3. Here's how you would address my needs.

It's very logical, isn't it?  The problem is that every vendor I see has the same pitch.  It's like Microsoft has pre-packaged the sales presentation (actually, Microsoft does do that, but that's a story for another day).  Another problem is that my eyes have glazed over by the time you get to the good stuff.

Really.  I'm stifling yawns by the end of the first section.  You see, I can predict what you're going to present, so I lose interest.  There's no way you're going to say that Microsoft is anything other than perfect or that anybody might have a better team than yours.

What if we turned the whole presentation around?  What if the presentation started with my problems?  What if instead of filling the screen with the logos of the other companies that use the software, it was filled with diagrams showing what I need?  You'd have my attention.

Really.  I'd be on the edge of my seat.

Then, once you've got my attention by showing me that you understand me, what if the salesperson stands back and lets the team speak?  That would show me that you have confidence in the people who are going to do the work.  YES, let the techie speak!  Coach him/her before hand.  Tell them it's OK to be nervous, but let them say something like, "I spoke to your technical staff about your current hardware.  We think you can continue to use your existing workstations and network.  All that will be required is a separate server for the Microsoft system."  Then, your implementation manager could give me a run down of a sample implementation for a company my size.  I would get a chance to assess the chemistry between my staff and yours.

After that, I'd be all questions.  Have you done this kind of implementation before?  Who are your other clients?  Can the Microsoft system handle my requirements?  You could then do the rest of your presentation, and get through all of your material without a single yawn from me.

Really!

Fragile Giants (2)

This is how a team falls apart: Remove a key player, and the social bonds that keep their friends on the job weaken. Before you know it, you've got a group of employees collecting paychecks, not a team working for a goal. Bugs go unfixed; servers crash; the design becomes ugly; and users flee. This could well happen to Flickr. Back up your photos now!

If that happens, what it tells us is that the culture of Flickr was always illusory — one built on personal ties rather than more lasting devotion to a cause. If so, the notion of exporting it to Yahoo was a delusion. That's the problem with turning a community into a commodity: Take away the people, and you have nothing left.

That is how the Valleywag blog described the layoff of a key member of the Flickr team: George Oates. It struck me how close this analysis was to my musings in Fragile Giants. Owen Thomas is talking about those same elusive values that take a company from Good to Great, whether a giant or not.

I disagree with Owen on the value of devotion to a cause as opposed to personal ties. I don't think that principles alone fire the human spirit unless they come in human form. We really need living, breathing principles that can show us the way past obstacles and help us see our potential. In other words, devotion alone is not enough. We need a leader, preferably one as principled as (s)he is charismatic.

I also wouldn't call the culture of Flickr illusory, but I would call it fragile.

Fragile Giants

When I looked up "Business Management" on the Amazon web site, I was greeted with more than 171,000 titles. How do you decide which ones are worth while? What I do is wait. Most of the management books I read are five or six years old. If they are still recommended by my friends after the buzzwords have died away, then I will crack the cover. Using this system I completely avoided TQM. Don't even ask me what it stands for!

My latest read is Good to Great by Jim Collins (2001, Harper). It is a rigorously researched study into what creates lasting success in companies. Now, here's the other reason why I read old business books: you get the benefit of 20/20 hindsight when looking at the company examples they use. For example, the companies cited in Good to Great include Fannie Mae, Freddie Mac and Circuit City. Just take a look at their share prices now!

I know that sounds like a cheap shot, and I don't mean to pour cold water on Collins' excellent research. The fact that some of his examples would no longer be classified as great companies does not invalidate the research. No, for me the lesson is that companies, even the huge great companies, are fragile. Their golden towers can be breached, and all it might take is a string of bad years, a major lawsuit or a technological innovation in a competitor's hands.

Value Your Values

Collins goes to great lengths to identify the keys to a great company. I'm not going to repeat them here, because they are meaningless without the accompanying analysis, but he does say that corporate values are one of them. He is careful to say that different great companies have achieved success with different values. For example, not every great company is customer centric or believes in a high quality product.

My point is that once you've found that sweet spot, hang onto it for dear life. Train everyone in it. Guard it with your whole corporate existence, because what the experience of the fragile giants shows is that once those values are lost, the slide from greatness can be fast.

Creative Conflict

A friend recently quoted these words to live by: "if two people always agree, then one of them is redundant." I firmly believe that there is a role for conflict in every organization. If I, as the accountant, am the steward of the organization's financial resources, then I have to be sure that they are well deployed. Inevitably that will lead to my asking probing questions of other company managers. We will probably disagree on major points, but if we continue to respect each other and listen to each other's arguments, then the result will be a better company.

Risk

How many companies really assess the risks they face? These days, "risk management" has become a euphemism for insurance, but business risks go far beyond the perils that insurance companies are willing to write policies for. For example, did the big 3 North American automobile manufacturers assess the business risk of their product line decisions? If they did, then clearly their analysis was faulty.

I am reminded of the words of Thomas Carlyle, "To the blind, all things are sudden", as quoted by Marshall McLuhan. The position of the big 3 has been being challenged for years by smaller, more efficient foreign cars. Despite the words of the top executives when they went, cap in hand, to the Senate, the only thing that we couldn't predict was exactly when the dam would burst.

Are we accountants fulfilling our role as the voice of prudence and financial stability? Are we still respected members of the senior management team? Or are the deals being made behind our backs?

Like a Marriage

Marriage relationships mature and change over time. In the early years, you have the excitement of facing obstacles together. Even though they may have been poor and struggling, if you ask people who have been married a long time when they were happiest in their marriage, many will point to those early years. I believe working at a company that is striving for greatness can be like that. The early times are exciting. You see yourself as the proverbial David, slaying the giant. Later on, when the goals have been met, how do you keep complacency from seeping in? Apple has been accused of eating its young, by launching new products that compete head to head with the existing product line. Maybe this is to keep the managers sharp as well as the technology.

Bottom Line

At the Church, we spend a lot of management, staff and volunteer time discerning what our ongoing purpose is in the world. Why are we here? What principles and priorities should guide our actions? Whom should we help? What are we being called to do? Even if you are not a church, you would be wise to ask those questions and live by the answers.

Accounting vs. Operations

Accounting versus Operations? Shouldn't the Accounting Department support Operations?

Absolutely.

But sometimes, accounting results can lead to the wrong operational decisions. Let me give you a couple of examples:

• A client of mine sold high grade tool steel in pre-cut sizes. If a customer ordered an eight inch round (for example) and they didn't have any in stock, they would take the next higher size (e.g. nine inch) and cut it down. All of the profit for that sale ended up as scrap on the floor, but at least the customer relationship was preserved. The problem came when they ordered more steel because the accounting system recorded it as a sale of the nine inch size which meant that nine inch would be reordered instead of what the customer wanted.

• Another major issue is sales between divisions. The easiest way to track these sales is to sell at cost. That way there is no profit recognized on what is really an internal transfer. But how does that effect the profit shown by the two divisions? If the bonuses of the division managers are based on division profit, selling at cost may not reflect the economic results of the two. Selling at cost also removes any incentive to the producing division to be efficient. The correct response: let the two division managers negotiate a fair price. Additional entries may be necessary at year end, but the operational results will be much better.

Accounting must serve Operations, not the other way around!