1.  Like engaging an architect to design a complex building

As a general guideline, the process of designing a suite of SEPT Taxonomies and Configuring your system is like the architectural design of a large and complex building.  It requires a highly experienced architect with an intuitive ability to discern what is best for your organization to design a building that really "works" for you.

So it is with a suite of Taxonomies, the high level architecture needs to be crafted in close consultation with your executives by a senior architect and then fleshed out to give the total design.  This work needs to be performed with painstaking attention to detail.  JAR&A offer such services.

 

2.  Years of experience

James Robertson has over 22 years' experience building taxonomies in the ERP, DW and BI domain and 43 years' experience with taxonomies.  The design of really well designed taxonomies is abstract and complex.

 

3.  Exceptional outcomes yield exceptional returns

The value of an exceptional, high value outcome is huge and dwarfs the investment in time and money many times over.  It is not wise to place this return at risk.  This is NOT the place to economize.

 

4.  Mediocre outcomes are not immediately evident

A mediocre or poor outcome is not evident unless you really understand the real potential of what has been missed.  You will only recognize a mediocre outcome if you dig into the standards and protocols that JAR&A apply and by then it will be too late.

Once you have fully configured and fully commissioned a business information system the cost of reconfiguring it is huge and out of reach of even the largest organization.  This really is a "once in a lifetime" opportunity and it is therefore important to do it right first time J

 

5.  High precision outcomes cut costs

High precision designs properly implemented drive operating costs down and dramatically increase business benefit.  This requires mature knowledge and experience to unlock the full solution potential.  Cutting corners and saving money at the start is NOT the right thing to do.

 

6.  Mediocre solutions drive up costs

A mediocre or poor design, whether well implemented or badly implemented, will drive operating costs up in perpetuity with no easy way to remediate the sloppy investment.

 

7.  20:80 -- NOT the place to economize

The SEPT precision configuration represents the 20% of the investment that will deliver 80% of the value return – this is NOT the place to economize.

 

8.  We will train your staff

We will work hand-in-hand with your staff and train them in our methods to the extent necessary for them to deploy and maintain the solution but we will provide the high level strategic facilitation to ensure that the proper precision strategic framework is created.

JAR&A are the best route to follow to provide you with this service.

Section 3.2

Introducing Dr James Robertson, PrEng

The ERP Doctor

Why should you engage with Dr James Robertson to advise you with regard to your IT and ERP issues?

Deep understanding of why IT and ERP investments do not deliver what was promised and how to rectify this problem

In 1989 James Robertson set out to "bring the disciplines of engineering" (high reliability, high value outcomes) "to the IT and ERP industry".  He soon discovered that 70% of IT investments fail outright and only 10% meet or exceed expectations.  By 1991 he was speaking regularly at public conferences on these findings and outlining methods to solve the problem.

As a consequence he has been engaged by numerous clients to evaluate failed and sub-optimal IT and ERP installations, turning most around but in a very few cases, advising clients to terminate the investment.

In 2003 he catalogued his findings and wrote the book "The Critical Factors for Information Technology Investment Success".  That same year the Financial Mail reported that "19 out of 20 ERP implementations do NOT deliver what was promised".  Gartner subsequently reported that "most organizations are NOT making better decisions than five years ago".

Since 2004 James has presented regular courses, advised numerous clients and continued to refine his techniques.  This has brought us to a point where today Dr Robertson is a significant thought leader with regard to effective application of ERP in South Africa and possibly worldwide.

An executive level advisor for over thirty years – discusses IT and ERP in language executives understand

James first consulted to senior executives in Europe in 1982, he has been comfortable in the executive suite ever since.

As a consequence he knows what is important to executives and is able to speak their language.

James is an executive advisor first and an IT and ERP specialist second.

Over thirty years' experience in economics and decision support – understands the REAL issues required for your business to prosper

James "cut his teeth" in economics and decision support in 1982 and has a thorough grounding in the essential principles of economics.  From this grounding he has developed a thorough grasp of the sort of information that executives need to make high value business decisions.

His first commercial IT project enabled the firm to double their turnover by taking on new international clients.  This dramatic growth was as a consequence of capability conceptualized and implemented by James that enabled the firm to do things that much larger firms were unable to do.

A strategist with deep grounding in strategic thinking and methods – quickly grasps the essence of your business and how it thrives and how to use IT and ERP to support strategic functioning

James demonstrates an intuitive grasp of strategy and has been speaking about the importance of the strategic alignment of IT and ERP since 1990.  He has pioneered the StratSnap critical issues thinking method and toolset and facilitated many strategic sessions for clients.  The method systematically and rigorously leads clients through a step by step process to develop robust critical issues based strategic plans, requirement definitions, etc which focus on the essence of the business and how it thrives.

James regards strategic alignment as an integral and non-negotiable element of any IT or ERP investment and seeks to understand the essential drivers of the client business from his first engagement interview with new clients.

An engineering approach to IT and ERP – Engineers design bridges NOT to fall down

In seeking to "bring the disciplines of engineering to the IT industry" James has clearly identified that the design, deployment and operation of IT and ERP systems is fundamentally an engineering endeavour – a rigorous, precise and systematic method of working fundamentally attuned with creating new systems that fully meet client executive requirements.

At the same time, James has recognized that traditional engineering training fails to provide grounding in the soft issues like facilitation of change, strategy, corporate governance, communication, etc and he has integrated all of these disciplines into the approach that he advocates and the methods that he uses.

During this journey one of the fundamental observations that he has made is that:

"Engineers do NOT design bridges to stand up . . .

. . . Engineers design bridges NOT to fall down"

This understanding supports James' fundamental approach to "design for success by engineering against failure", an approach that underpins all the work that he does.

James maintains that it is not possible to produce a successful IT or ERP outcome without being blunt about the issues that are causing failure and systematically eliminating those factors from the project or operational environment.

Rapid and effective diagnosis of IT and ERP ills – the "Pulse Measurement" – what is wrong and how to fix it in 1 to 10 days – frequently saves clients millions

Since 1989 and the outset of his Professional Consulting Business Systems Engineering practice, James A Robertson and Associates, James has specialized in short sharp diagnostic interventions.  These concentrate on the critical issues required to deliver the required business outcome in the shortest possible time.

This critical issues approach led to the creation of his flagship offering, the IT and ERP "Pulse Measurement" – a one to ten day intervention in which he systematically investigates the health of the designated IT or ERP system, department or other operational or project area that is giving cause for concern to executives.

These interventions always commence with interviews with the Chief Executive and other executives.

A key goal in these interviews is to understand the strategic essence of the business and the "burning issues" of concern to the executive team.

Informed by this high level understanding of the issues facing client executives, James then interviews mid-level managers responsible for the operation of the systems in question.  This is followed by sessions with the operational staff and service providers culminating in a hands-on look at the systems and sometimes an end to end "walkthrough" of the system in order to understand the exact technical elements that are contributing to the problem.

The deliverable from the Pulse Measurement is a concise report listing approximately seven Critical Findings which are prioritized and weighted in terms of their relative importance in giving rise to the problem in question.  These are followed by approximately seven Critical Recommended Actions, also prioritized and weighted, this time in terms of their importance in rectifying the problem.  The findings and recommended actions are presented in simple language that is entirely understandable to executives.

James is able to deliver this high value outcome in such a short period of time by operating in much the same way that a Medical Practitioner is able to rapidly diagnose a medical condition and prescribe treatment.

He does this by holding up key observations against a body of thirty years' experience of what works and what doesn't and so a simple phrase like "I cannot get the information I am looking for from my ERP system" (a frequent complaint) instantly enables James to access a body of knowledge based on thousands of hours of practical experience as to what causes such a problem and how it can be fixed.  Further investigation is geared to confirming the initial diagnosis and homing in on the specific issues.

Recommendations can be as simple as a change in policy or as drastic as a recommendation to abort a project or system and return to the previous systems.  Recommendations frequently address issues of governance, executive custody, staffing, strategic alignment, communication and diverse other issues.  The exact mix is unique to every organization but the range of diagnoses and treatments prescribed are frequently variations on themes encountered many times before.

Pulse Measurements frequently lead to significant changes in direction and sometimes save clients millions of Rands.

In all cases, the executives of the client organization have a much clearer view of the way forward and what the REAL ISSUES are once the Pulse Measurement is complete.

Clients regularly engage James to advise at some level with regard to the implementation of his recommendations.

Specializes in the practical high value application of IT and ERP in business – how to unlock the true potential of your ERP investment

James says "I get my adrenalin rush out of solving problems no one else can solve, I like achieving practical outcomes that work and I hate failure".

Based on this ethos, James has invested huge amounts of unremunerated time to understand the real issues in IT and how to achieve successful outcomes and how to achieve the true potential of ERP investments.

The techniques that James has pioneered are so innovative that it has recently become apparent that the standard of implementation of ERP that James regards as essential are such that dramatically better business outcomes are achievable for similar capital investment and lower operating cost than traditional approaches as illustrated in the figure below.

The right hand bar represents the standard of excellence that Executives think they bought (and that James champions) whereas the left hand bar represents the standard that is commonly delivered.

Strategic Engineered Precision Taxonomies (SEPT)

Over forty years ago James had his first encounter with taxonomies in a zoological context with taxonomy projects at school.

Subsequently he researched cataloguing principles and standards for classifying the test specimens for his award winning PhD research and was later exposed to the NATO document classification scheme.

When he first started working with ERP and other IT projects James automatically started applying taxonomies and rapidly achieved some major successes.

At first he thought that what he knew was common place and therefore he did not place much emphasis on it but has now come to realize that the standards that he developed in 1990 and has applied with great success on a number of projects constitute a standard that he has come to refer to as Strategic Engineered Precision Taxonomies which enables users of ERP's and Data Warehouse / Business Intelligence systems to raise the bar dramatically, as indicated by the diagram above.

In the process James has designed software to assist with taxonomies and there is a major development project in process at the time of writing.

If you have not yet spoken to James about Precision Taxonomies please give this serious consideration.

Conclusion

If you are frustrated that you cannot get the answers you need when you need them, feel that your IT staff live on a different planet and do not understand your needs, are not sure whether to replace your ERP or data warehouse, are being told you have bought the wrong ERP or Business Intelligence tools or are in any other way dissatisfied with your current IT or ERP dispensation James Robertson may well be the person to help you.

Section 3.3

James Robertson's knowledge and experience

as applied to taxonomy development

Following are some thoughts on the knowledge, experience, etc that I apply in doing ERP and other taxonomy work which I hope you will find of interest and value.

In reading this please keep in mind that you have probably never seen a taxonomy suite that meets the standards set out below, they are very few and far between.

The absence of such precision strategic taxonomies is, I am increasingly seeing, the BIGGEST SINGLE REASON for sub-optimal ERP and other sub-optimal IT implementations:

1.   Business knowledge and experience

Broad based understanding of the different aspects of business that the taxonomies under development will address.

Includes understanding of headline accounting principles (balance sheet and income statement) if working on financially related taxonomies.

Headline understanding of all the components of business.  Detail understanding is where client personnel live their lives, it is the responsibility of the taxonomist, in consultation with executives to lift out the high level order and hierarchical logic that will make the system implementation strategically valuable and model the real world of the business.

When an executive sees any final taxonomy they should immediately say "YES, that is my business".

2.   Strategic insight

Rapidly grasp the essence of the business and how it thrives (strategy) and how this impacts reporting and therefore taxonomies.

Without strategic insight the outcome is a ho-hum configuration that does not support high value decision making.

Taxonomies designed with primary focus on the essence of the business, the business fundamentals, the core drivers, the basis on how the business competes and differentiates itself will ensure that this critical information is at the forefront of reporting and analysis and, indeed, at the forefront of how the software is operated in practical terms in the business.

This will facilitate and support optimum high value decision making as the primary deliverable of the ERP and, it so happens, will result in optimum operational and tactical decision making as well.  Coupled with well designed, logical and intuitive code schemes and rigorous hierarchical taxonomic layout strategic insight in taxonomies results in drop down lists, validation lists, charts of accounts, materials master lists, item master lists, employee categories, plant categories, asset categories, product classes, etc, etc that are intuitive and easy to use.

Clerks remember the codes more readily, navigate to the codes they do not know faster, make fewer posting errors and overall operation of the system becomes easier and more fluid with proper training.

The precise modelling of the real world means that reports can be segmented precisely to correspond to the staff accountable for particular expenditure and revenue and management reporting down to the most junior supervisor becomes more precise and more convenient.  This results in operational efficiencies, improved delegation and resulting broader effective span of control.  The same management team can do more with the same overhead resources.

Strategic focus in all code schemes ensures that when making decisions the focus is always first on the most strategically appropriate information and activities and this, in turn, assists the business to become more competitive and more profitable.  Non-profit organizations will focus most appropriately on their core reason for existence.

3.   Decision making principles

Basic principles of decision making, governance, accountability, reliability of information, cognitive span, drill down, fundamental first principles design.

Understanding how people make decisions and how to present information to facilitate high value decision making, as summarized under the previous point is vital to designing taxonomies.

Information that is laid out in a manner that facilitates rapid and precise inquiry, the ability to get answers to questions that have never previously been asked and were never foreseen are essential elements of a well-designed ERP implementation.

From a decision making perspective the fundamental requirement for an ERP is "provide the answers to every question for which data can reasonably be expected to be in the database".

The flip side to this requirement is "ensure that all classifiers regarding every item of information in the ERP are presented as well structured precision strategic taxonomies and that ALL classification information is contained in the ERP -- add custom fields as necessary".

A further extension of this is "ensure that you activate and productively employ ALL modules of your ERP that have relevance to your business".

Yes, it IS possible to account for everything in the General Ledger, a General Ledger IS just a large book with lots of columns so you can account for anything you like in the GL if you really want to.  BUT there are other modules that are more appropriate to managing components of your business such as projects, plant, people, production lines, product marketing, etc, etc.

Depending on the size of your business you should move more and more information out of the general ledger into sub-ledgers and sub-systems.  A one man business is quite able to manage everything in the GL, a business turning over billions and with thousands of employees should be operating a diverse suite of specialist modules to manage these components.

Each of these modules should be strategically implemented with one overarching taxonomy architecture that extends end to end through the entire suite of business software with the same code segment used everywhere.

The ease of use that results from such rigour and precision in taxonomy design and coding gives huge benefits in terms of ease of use, precision of inquiry, ability to quickly and easily ask and answer questions that would otherwise be difficult, time consuming and expensive to answers.

Executives, managers and supervisors do NOT want to spend time trying to figure out how to ask the question and get the answer, they want an immediate answer to the question or a rapid answer to complex questions and then they want to be able to ask more and more questions.

Inherently this implies that the data from your operational database will be uploaded daily into a data warehouse equipped with an appropriate business intelligence tool (read sophisticated data analysis and reporting tool) which enables them to quickly and easily make complex inquiries.

BI tools are ONLY truly powerful, valuable and cost effective WHEN they are commissioned to sit on ERP and other data that is highly structured with highly effective precision strategically aligned taxonomies.  In the absence of precision strategically aligned taxonomies NO software (ERP, CRM, ECM, etc, etc) will deliver high value strategic outcomes.  There are ADDITIONAL factors that must be addressed which are discussed at the Executive Briefing listed at the end of this email and also discussed in various previous newsletters and articles copies of which are available on request.

Where it can be reasonably foreseen that a particular measurement will be required at some time in the future this should be accommodated in the ERP implementation, either by user defined fields or through customization or the development of supplementary tables alongside the ERP.

Medium sized businesses and larger businesses should employ a full time or part time analyst to design and execute sophisticated queries, build complex economic and other models and generally assist the business to harvest the strategic insight that well designed taxonomies give into operational data.

4.   Semantics

Semantics of the target language (English or other) for the taxonomy are vital.

The words in the drop down lists, chart of accounts, etc are the ONLY basis on which the operator or the person producing a report have to choose where to post or what to report on.

Precision choice of language and abbreviations is absolutely essential, choose words that accurately and distinctly describe a specific line in the taxonomy.  “Hear” what the client is “actually” saying and interrogate inconsistencies and anomalies.  Meaningful abbreviations and, where applicable, code mnemonics.

In developing taxonomies give the client what they NEED NOT what they say they want.

The role of the strategic taxonomist is to understand the business sufficiently to engage in the facilitation process in such a manner that where client representatives use language which is not precise they pick this up, ask questions and investigate until the correct languaging and hierarchical content is defined.

This can be a tedious and at times frustrating and even emotional process.

People are used to using imprecise language such as "factory" when they mean "manufacturing" and such-like inconsistencies.  The problem is that the person who types in factory may know they actually meant manufacturing but the next person to post to the taxonomy or to draw information out based on it will NOT know this and will frequently make mistakes.

Note that very few code schemes that I have seen in implementations across the full spectrum of small and big ERP products would meet even the most basic criteria to be classified as taxonomies, let alone hierarchical taxonomies and even less Strategic Engineered Precision Taxonomies (SEPT).

In reading this article it is vital to consider that I am writing about something that you may NEVER HAVE SEEN IN PRACTICE!

5.   ERP / IT knowledge

In order to design really effective ERP taxonomies it is vital that the taxonomy architect knows how ERP's work, the essence of IT, the essence of databases, what programming languages do, the basics of numeric processing, the reality that computers work with binary data, principles of grouping, etc.

The ability to quickly grasp how the individual tables will interact with one another and the software, the distinction between configuration relating to parameterization and configuration relating to integration, etc must all be understood.  A clear headline understanding of entity relationship mapping and other data modelling concepts is also vital in the context of deducing the entity relationship model on which the software is based and identifying the optimal code design and information gathering approach for that software and business.

There must also be informed insight as to alternative courses of action in cases where specific data is required which the standard product cannot accommodate.  When to use user defined fields, when to add custom tables and custom software functionality.  The taxonomy architect must understand the technology in sufficient detail to give guidance with regard to all aspects of the technology implementation and to steer the overall project to the desired strategic outcome.

This includes a robust understanding of the compromises that result from failing to use all relevant modules in an ERP, the problems associated with overloading the General Ledger with detail that should be managed in sub-modules, the implications of using third party modules instead of the modules that come with the EPR and the basis of decision making whereby a third party module would be selected in preference to a standard module.

Together with this must be a very high level of awareness that integration is primarily a data and corporate politics (people) issue and a strong focus on achieving integration by maintaining precise data and taxonomy harmony and correlation between software from different suppliers that may not integrate at all electronically but which share the same data.

Awareness that the best ERP implementations are meticulously planned and that the coding schemes are developed as part of a single over-arching integrated view of the business and ALL modules is vital.

Taxonomies are one of the front end inputs to an ERP implementation and are FAR MORE IMPORTANT THAN PROCESS MAPPING.  Headline level understanding of business processes is relevant at the start of an ERP project but the DETAILED specification of business processes is a project OUTPUT and should be defined in concert with the laboratory stage.  Thereafter the process specifications should ideally be embedded in Computer Based Training  (CBT) material.

The solution architect should insist on rigorous testing in a formal laboratory where a laboratory is a test set up which accurately simulates the real world and rigorously tests ALL valid scenarios with small quantities of high quality representative data that tests every facet of the implementation at a level that can be signed off by the auditors BEFORE GO LIVE.

6.   Coding / taxonomies

Fundamental principles of taxonomies and code schemes.  Different types of code schemes (I have identified nine distinct categories), coding principles, use of delimiters, when mnemonic codes are appropriate, principles of numeric and alphanumeric coding, how people interact with code schemes, how taxonomies and code design drive ease of use and value delivery exponentially.

Formal training in a taxonomic discipline such as Information Management (Library Science), Zoology, Botany, or similar is helpful (I have formally studied and applied zoological taxonomies in detail and also studied and applied information management catalogue design in detail in my PhD research, knowledge and experience of large corporate filing systems is also a relevant source of experience.

I have experience in all these areas and first applied this knowledge practically and in depth with regard to ERP implementations over 23 years ago.  Ever since then "data engineering" or "precision strategic taxonomies" have been a central and vital element of my approach to every ERP implementation I have been involved in.

The benefits are huge, a wealth of management information, the answers to every practical question, greatly improved efficiencies, better decision making, increased profitability, leaner growth, operational efficiencies including unplanned headcount reduction and reduction in audit fees to name but a few.

I have been using complex taxonomies since 1978 and structured taxonomies with ERP and other IT projects since 1987 with great success and huge productivity and strategic decision support benefits.

I suspect that there is an element of "I do not know what I know at a conscious level"

 7.   Attention to detail and precision

Precision in code table design and maintenance is vital to a high quality, sustainable outcome that is truly efficient and effective.  An effective suite of software tools will assist with this.

 The person doing the detail design of the taxonomy and the coding scheme must be a high detail person who is naturally precise to a level of being pedantic and who will be rigorous and consistent.

It is a reality that many people do not have the knowledge and experience to develop precision strategic taxonomies and code schemes so the personnel to be deployed in this area must be carefully selected and trained.

The use of Pshychometric instruments such as the Predictive Index and others should be seriously considered to help select the right people.

It is vital that the person who maintains the code schemes after deployment has training in these principles and is precise.

The opening of a single code or account in completely the wrong location leads to an IMMEDIATE DEGRADATION in the effectiveness of operation of the ERP or other IT system in the same way that leaving one bolt out of a critical component of a motor car can result in major damage.

The value of a dedicated coding professional, even if only on a part time contract basis, cannot be overstressed.

8.   Analytical thought leadership

The person who leads the taxonomic (and solution architecture) functions must analyse the requirement from a fundamental first principles perspective and tie semantics, business understanding, ERP understanding, etc, etc together to deduce what will actually work in practice and guide the client to a high value outcome.

The client knows their requirement in broad terms but seldom if ever in a structured manner.

As a general principle it is a mistake for the client to lead the project and dictate strategic architecture and taxonomy design decisions.  The strategic solution architect is the translator who is required to understand the essence of the clients business and interact with the client to facilitate a high value outcome.

It is a serious mistake to undertake any major ERP or IT project without a highly experienced strategic solution architect leading the team.

This person must have strong analytical and deductive skills, excellent command of language and the ability to distil the essence of the problem and the requirement and develop a solution architecture and high level strategic design that will deliver exceptional lasting business value.

9.   Other

There may be other elements I apply without thinking but I think these are the main knowledge and experience areas that I use in developing taxonomies.

Excellent taxonomies are the difference between ho-hum or frustrating outcomes and high value outcomes.

There ARE many other facets to achieving successful outcomes such as executive custody, strategic alignment and architecture, change facilitation, an engineering approach to project design and operation, etc but the ONE factor above all others that will destroy value in an ERP implementation if not correctly executed is the data engineering in the form of precision strategic taxonomies.

Section 3.4

Knowledge and experience required for a senior SEPT taxonomist

This document outlines what currently seem to me to be the requirements for a taxonomist.  I have encountered a few people who seem to intuitively understand taxonomies because they have been working with data and classification schemes for a long time and I regularly encounter people who think they understand but do not.  It seems that there may be more women than men who have this aptitude.

It is important to understand that there are taxonomies that work and taxonomies that get in the way – there is a lot of skill required to produce a taxonomy that really works – once complete they look deceptively simple and it is not always immediately apparent that a taxonomy will not work – the art and science of the facilitator is a BIG factor here.

This is an area that requires a highly knowledgeable and highly experienced person in the appropriate fields as set out below.

1.  English

Excellent command of English – the development of a taxonomy is fundamentally an advanced English language semantic exercise – I think an A or B Matric Higher Grade may be a minimum requirement with a Bachelor's degree majoring in English perhaps the ideal.

 

2.  Track record with cataloguing

I find that people who do not have significant experience with cataloguing and adding logic to data struggle with taxonomies to the standards we are talking about here and most of them simply cannot get it right.

First prize would be a Bachelor's degree in Information Management (Library Science) and about five years post graduate experience or similar cataloguing qualification.

In the absence of a formal degree I think that at least five years experience or on-the-job in a related field is likely to be required.

 

3.  Business understanding

Solid understanding of the basic principles of business – preferably some sort of business course or a good few years of hands-on business experience.  Must be able to determine the essence of the business and how it thrives – strategy.  Or, alternatively can only work under a senior taxonomist fleshing out detail.

 

4.  Information system understanding

In order to produce taxonomies that work in an information systems context the aspirant taxonomist must understand how computerized information systems work, the basics of database design, etc so that they can ensure that there are discrete logical entities in each table and can identify when different entities or attribute lists need to be defined.

The taxonomist facilitator must be able to provide thought leadership and guidance to workshop delegates.

 

5.  Practical common sense understanding of the real world

Sadly many personnel from the Information Technology space are out of touch with reality and do not have a solid practical common sense understanding of the real world and the ability to act as interpreters and translators of the inexact language that business people use and convert this language into precise taxonomies.

Careful selection of candidates requires that they have a practical sense of the real world.

 

6.  Strong grounding in logic (mathematics?)

Hierarchical structured taxonomies are intensely logical devices, a Matric pass in Mathematics at least a grade C higher grade may well be necessary otherwise candidates must demonstrate exceptional logical ability.

 

7.  Communication and facilitation skills

The facilitator must have well developed communication and facilitation skills and must be able to lead a group of frequently strong willed delegates down a road of progressive discovery to develop a viable taxonomy.

Time management is a critical skill.

 

8.  Patience and other personal attributes

The facilitator needs to be patient, pay high attention to detail, systematic, methodical, precise.  Precision taxonomies are very finicky and require fine attention to detail, logic, etc.

The facilitator must be willing and able to spend hours away from delegate groups cleaning up the results of workshops, adding structure, correcting logic, etc so that they can revert to the delegate groups with a quality working draft.

The above may look like a rather onerous specification, it is, there are very few people who I have met who have real skill when it comes to taxonomies.  This is an area where a client cannot afford to cut corners, mediocre taxonomies will undermine the entire investment.

Section 3.5

The Factors

Causing Integrated Business Information System (IBIS)

Investment Failure

The Critical Factors causing failure were identified starting in 1990 and were catalogued in 2002.  They have been refined over time to the factors set out below:

1.  I.T. Mythology – 30%

All the mistaken and false beliefs, believing computer are magic, believing you can have anything you say, using traditional methods that have consistently failed and expecting a better outcome, do-it-yourself mentality, delegation of executive level decisions to junior staff, the audit project model, process obsession, lack of precision, etc.  Expecting computers to do things only people can do.  Thinking you can use any team who work any way they like and it will work.

 

2.  Lack of Executive Custody – 19%

A huge issue.  The CEO must be the custodian of the IBIS / ERP / DW / BI investment – see article on this subject.  Executives must drive the project and the taxonomies and high level configuration must be determined by executive level advisors assisting client executives.

SEPT taxonomies are one manifestation of a project with excellent executive custody and their absence is generally an indication of poor or absent executive engagement.

 

3.  Poor strategic architecture and alignment – 16%

Lack of a clear definition of the essence of the business and how it thrives, lack of focus on configuring the fundamentals of the business, failure to accurately model the real complexity of the business.  SEPT taxonomies result in part from excellent strategic definition and engagement and their absence is frequently an indication of a lack of strategic engagement.

 

4.  Poor or absent Information Engineering – 14%

While the SEPT taxonomies and precision configuration are a reflection of the previous weaknesses they are an essential component of a high value configuration.  They are the piece that stays behind when all the stuff in 1, 2 and 3 above and 5 and 6 below have moved on.

SEPT Precision Configuration is THE ESSENCE of a high value configuration.

 

5.  Soft issues – change impacts – 12%

All change produces resistance.  It is vital that this is managed by way of high levels of strategic executive direction, leadership and custody, excellent and compassionate communication, effective training, proper support, etc.  SEPT configuration, by being practical and making sense reduces the resistance to change.

 

6.  Lack of an Engineering approach – 6%

Lack of rigour, sloppy work, use of poorly trained or untrained personnel, lack of precision, everything that is the antithesis of "engineering" contributes to project failure.

 

7.  Technology issues – 3% or less

Today technology is hardly an issue.  For the most part major hardware or software failures are relatively infrequent.  It is the way the technology is configured and commissioned that causes the problems.  Poor software configuration can make software clumsy and difficult to use and in extreme cases can render it unusable – consider the big brand ERP implementation where the business was being run on Excel.

Section 3.6

The Critical Factors

For Integrated Business Information System (IBIS)

Investment Success

The Critical Factors for information system investment success (includes ERP, Data Warehouse, Business Intelligence, legacy systems, etc), derived from the factors that I identified about nine years ago and which are documented in my book "The Critical Factors for Information Technology Investment Success", updated recently are:

 

1.  Executive custody – 22%

This includes the CEO as sponsor for any overarching information integration project (see the paper on this topic), the role of the strategic solution architect, the role of the business systems executive and the appointment of an executive level strategic advisor to provide guidance on the project and personally provide high level facilitation on the high level frameworks of the SEPT taxonomies, etc.

 

2.  Effective change facilitation – 20%

Today just about any significant project involves replacing systems or methods or classification schemes, etc that are at some level working.  The psychological resistance to change is frequently very substantial and must be very carefully managed, preferably using a facilitator and advisor with a formal qualification in Psychology and considerable experience in the field of facilitating change.

 

3.  Strategic solution architecture – 19%

Effective solution architecture that accurately reflects the essence of the business (the business fundamentals) and how it thrives is vital.

This architecture most critically manifests in the design of the SEPT taxonomies and configuration.

 

4.  Information engineering including SEPT and Precision Configuration – 17%

The entire Strategic Engineered Precision Taxonomies and Precision Configuration domain as set out in the JAR&A Taxonomy Handbook.

 

5.  An engineering approach – 14%

A robust, rigorous approach which seeks to succeed by engineering against failure (engineers design bridges NOT to fall down) – understanding what causes failure and preventing its occurrence.

Summed up by the statement that "if you contract an engineer to design a bridge you will get the bridge that you asked for and it WILL stand up".

 

6.  Business integration, training, processes, CBT, etc – 6%

All the aspects of fitting the solution into the business – training, computer based training materials, process mapping and automation, etc.

 

7.  Technology – 2%

Technology is only an issue when it does not work.

Section 3.7

There ARE visible differences in quality of taxonomies

Recently I made the assertion that a particular taxonomy was "a 0 or 1 out of 10" as a quality rating.

One of the people in the meeting challenged me as to whether it was possible to rate configuration data.

It is my assertion that this is categorically so, refer to the section on "What is NOT a Strategic Engineered Precision Taxonomy?" in the Taxonomy Handbook for some really weak examples.

Such a rating is inherent in the diagram below which summarizes the relationship between Precision and Value:

Following is a rating scale from 0 to 10 out of 10 where 0 = absolutely no precision, could not be worse and 10 = best in the world, could not be better:

0.  Abysmal -- could not be worse

I once saw a list that I would classify as a zero, there was absolutely no logic whatsoever.  Characteristics of such a list include assets, liabilities, income and expenditure all jumbled together, highly variable granularity from very coarse large bins to very fine bins, ambiguous wording, child and parent elements on the same level, messy capitalization and spelling, duplication of items, totally devoid of logic, totally lacking semantic precision, codes are meaningless.

With such a list it is extremely difficult to produce even the most elementary report – in one case a lady with a Bachelor of Commerce degree and five years post graduate experience was unable to produce a reliable income statement after trying for six months.  In the same organization the senior bookkeeper took six months to produce a list of 16 pages of accounts out of an original list of 25 pages where the accounts removed were either not applicable, redundant or in some other way inappropriate.  A portion of this item is shown below.

1.  Extremely weak

Slightly better than above but not materially different from a practical point of view. 

2.        

3.  Very weak

Slightly better than above.  Following is an example of a Chart of Accounts that I would rate at 2 to 3 out of 10:

 

 

This list is only classified as a 3/10 because it is possible to produce an even bigger mess.

4.        

5.  Weak

6.        

7.  Mediocre – some elements of precision taxonomies but inconsistent and not fully functional

8.        

9. Very strong – limited deviation from standard – the point at which real value starts to be unlocked in the long term

 

10. World class – exceptional

Fully compliant with the SEPT standards presented in the JAR&A Taxonomy Manual.  Developed by a senior taxonomist in close consultation with executive and senior management.

The following Chart of Accounts is probably about a 9.5/10 – there is some room for improvement but it is very close to the standard that I regard as essential.

 

 

It is vital to understand that the total cost of ownership of the Chart of Accounts in the figure above is WAY LOWER than the total cost of ownership for the list categorized as a 3/10 – I hope from sober consideration of the two lists you will be able to see the difference.

In fact, the total cost of ownership drops as dramatically with precision as the value increases.

Section 4

Important principles

I would be happy to discuss how we can assist you to implement effective taxonomies and give a new lease of life to your existing ERP or create a platform for unlocking exceptional value from your new ERP.

Section 4.3

Why ERP can make the blood boil

(Reprint from one of my newsletters)

The apparent tension between high precision strategic configuration and operational / tactical configuration is arguably the greatest challenge within ERP implementations today.

Introspection of several key aspects and grey areas will hopefully make the situation a lot clearer.

The conundrum – 19 out of 20 dissatisfied vs most are satisfied

It is an all-too-familiar conundrum in business – surveys that emerge with completely opposite conclusions about the same subject. There have been surveys that state ”19 out of 20 ERP implementations do not deliver what was promised" and yet others that indicate a high level of satisfaction with ERP.

The resolution of this conundrum lies in the disparity between the successful tactical and operational implementation of ERP and the near total failure to implement ERP as a strategic resource in support of corporate competitive decision making that enables the organisation to thrive.

ERP is necessary for most medium and large businesses to compete

The reality is that ERP is necessary for most medium and large businesses to be credible contenders in the current global and local economy.

Without the inventory, warehouse management, replenishment and other operational and tactical agility that is afforded by big brand ERP systems, many organisations would not make it onto the playing field at all.

An ERP is necessary to support the ever increasing complexity and velocity of business in most sectors. Many implementers are able, to some degree, to successfully implement ERP at this level -, albeit frequently with massive cost and time overruns.

The problem arises when executives want answers to strategic and competitive questions, and justifiably expect their ERP to supply the necessary hard measurements required.

Process efficiency is generally tactical NOT strategic

Process efficiency or ‘business process optimisation’ or other similar nomenclature is viewed by many as being synonymous with ERP and represents the core emphasis of the vast majority of ERP implementations.

Due to the fact that process efficiency is inherently operational most ERPs are implemented by the operational personnel in the organisation and not by the strategic personnel - and particularly not the executive team.

In focussing on process most implementation companies and most software companies lose sight of the fact that process efficiency is a natural outcome of a strategically implemented ERP.

It is not necessary to place great emphasis on process efficiency PROVIDED that the implementation of the software accurately models the real world in which the business operates at a strategic level. In other words, it models the ESSENCE of the business and how it thrives.  Once this is done process efficiency almost ‘falls out of the tree’ – it is inevitable. 

Thus, a large amount of the effort that is devoted to traditional ERP implementations is, in fact, not required IF the ERP is strategically implemented – a significant amount of the time on operational configuration is replaced by comparable time and effort on top down strategic configuration.

And this, in turn, as a by-product, gives rise to greatly increased efficiency of operation of the ERP and resulting reduced life-time costs and in many cases reduction in overall implementation cost.

Automatic micro level daily replenishment is increasingly necessary for many businesses to compete and grow

The speed of replenishment and complexity are vital to competing in many sectors today.

A visit to your local big brand supermarket will show what I mean.  There is massive complexity in terms of the mix of products on the shelves and, in the case of low volume products, there may only be one or two items on the shelf. 

Replenishment takes place daily and the entire manufacturing network and supply chain is geared to this level of just-in-time micro replenishment.

A retailer that is not able to maintain these micro levels of inventory replenished daily will be rapidly defeated by others that have this ‘licked’.  The same comment applies to logistics and distribution organisations and to manufacturing organizations.  It also applies to banks and, interestingly, even applies to the national Revenue Service – ERP HAS enabled MUCH greater levels of complexity and flexibility at the operational level than was the case a few years ago.

But most organizations are NOT making better decision than they did five years ago?

Countering this, Gartner reported a few years ago, following a survey of 1,300 CIOs of major corporations that had made substantial investments in ERP and Business Intelligence software, that "most organizations are NOT making better decisions than five years ago".

And so we find ourselves faced once again with that apparent conundrum – ERP and BI have enabled many businesses to maintain their competitive edge and even become more operationally competitive, but executives are not making better decisions than they did five years earlier.

One of the great promises of ERP is failing to deliver.

Why? Because a bottom-up operational ERP or BI implementation will never tie the logic of the business together strategically.

The implementation must start top-down commencing with a high level strategic view of the business and where it is going to be in five or ten years' time.  Then it must drill down to the detail within this high level strategic framework.

The core frustration

One of the core elements of frustration can be summed up by the statement "I cannot get answers to the questions I have only now thought to ask".

It is a fallacy of modern ERP implementation that “User Requirements Workshops” that are focused on the current reports and ways of doing things, will do anything other than deliver a new system that works the way the old system worked – not meeting the strategic needs of the business.

At the strategic level the issue is NOT "can I get the report I have had for the last ten / five / two years?” it is "can I get the report I have never previously thought to ask for".

And, can I get it NOW?!... Will it be accurate and reliable? And if I ask the question three or five or ten different ways, will the answers correlate and be consistent and congruent?

After all, surely it is reasonable to expect that if the data is in the system I can get answers to any question I can conceivably think to ask?

Yes, of course it is reasonable!

Problem is that most implementations are executed in such a way that it can take days, weeks or months to get answers and it is quite common that the answer is simply not available without massive manual effort or even not available at all.

Why? Because the system was not implemented with this goal in mind.

In order to achieve this outcome the software must be configured from the ground up to contain strategically logical "information bins" in the information warehouse that is the ERP database.

This requires design at a sufficiently fine level of strategic granularity that the data can be added up every conceivable way possible in accordance with a clearly defined high level strategic (thrive) view of the business, one that accurately models the essence of the business and how it thrives.

This applies to the Item Master or Product Class, the Customer Class, the Supplier Class, the General Ledger Chart of Accounts, the plant maintenance classifications, etc, etc. AND it applies to the fine nuances of what differentiates products, services, etc viewed from the perspective of the executives of the business AND their customers.

Precision engineered strategic configuration and taxonomies – the greatest ERP opportunity today

The answer to the problem outlined above is what I term "precision engineered strategic configuration" at the heart of which are "precision engineered strategic taxonomies". These taxonomies catalogue every possible attribute of the business, its products and its services in such a way that they can be quickly and rapidly summarized in ways that make sense strategically in response to questions that have never been asked before. 

Coupled with this is the use of advanced statistical and other analytical tools operated by highly qualified statisticians, economists, engineers and the like in order to better understand the economic dynamics of the business and optimize the operation of the business in accordance with the insights that flow from precision analysis of the data.

The big opportunity today is – precision taxonomies coupled to precision configuration coupled to precision operation of the ERP coupled to precision analysis of the information in the data warehouse resulting in significantly better business decisions than the competition are making. 

Thus, the taxonomies and the analysis of data made available via the taxonomies are essential attributes of a high value ERP implementation.

Increasingly I am recommending to clients that in addition to the taxonomies, they look at hiring an analyst with a Bachelor of Commerce degree majoring in statistics and economics with ten years' experience in advanced statistical economic analysis.  The challenge is that the analyst only becomes economically viable once the precision taxonomies and configuration are in place.

The total cost of a precision strategic configuration with precision taxonomies is roughly the same or less than the cost of a conventional configuration. However the life-time operating cost is substantially less and the strategic and competitive return on investment is orders of magnitude greater.  Software is under development by the writer in order to maintain the integrity of the configuration and taxonomies.

Section 4.4

The CEO MUST be the custodian of ERP

(Reprint from one of my newsletters)

The debate over who should serve as guardian over an organisation’s ERP can be settled with one answer - the Chief Executive Officer.

My ERP is not integrated and I do not have an end-to-end view of the business

I regularly encounter executives and managers who complain that their ERP is not properly integrated or that they do not have an end-to-end view of products, costs, inventory, etc.

The implication is that the ERP is defective or that the ‘wrong’ ERP was purchased. But this is not accurate.

Such problems are indicative of a poorly configured ERP which has not been implemented with end- to-end strategic information objectives in mind.

The most significant reason for this problem is inappropriate governance of the ERP project during the implementation - and the key issue here is that the only person who can provide this governance is the CEO and the CEO is seldom the custodian of the ERP implementation project, or, for that matter, the operation of the ERP.

The worst big brand ERP implementation I ever saw reported to the Legal Affairs executive – they had an amazing contract but the rest of the implementation was a mess and the contract was worthless.

ERP under finance – a historical disservice to business

Historically ERP has mostly resided under finance. The result is that finance irritates other functions by forcing cooperation and, more seriously, the ERP implementation ends up as a finance implementation with the other operational elements tacked on as an afterthought.

The worst example I ever encountered was a big brand ERP with a domineering Chief Financial Officer who forced everything from people, to plant to projects into the General Ledger - and then verbally abused anyone who suggested that the solution was technically fundamentally unsound. 

The organisation could not get the plant maintenance module to work because most of the information was in the General Ledger and not in the operational modules of the ERP.

Many organisations resolve this problem by having financial (or commercial) systems reporting in to finance and operational systems reporting into manufacturing, production, mining, etc because they cannot get end-to-end cooperation in the business.  These silos feed on themselves creating more and more problems because the two camps cannot collaborate in a constructive manner.

Only the CEO can resolve these problems.

The CEO is the custodian of the integrated view of the business and hence the ERP

Fundamentally the CEO is the custodian of the integrated view of the business. It is one of the principal functions of the CEO – to get all the divisions and functions of the business to pull together coherently.

Inherently, therefore, only the CEO can be the custodian of the ERP, or the data warehouse and business intelligence systems.

There is no practical alternative.

I have repeatedly seen sub-optimal ERP implementations (and I have seen dozens) where the lack of CEO custody is a significant and frequently dominant factor in an unsatisfactory situation.

Frequently the viability of the business is placed at risk.

Only the CEO has the authority to get all functions and divisions to collaborate as peers without bias and domination

Getting an ERP properly configured and operating effectively requires that all business units and functions operate collaboratively in the best interests of the collective whole that is the entire enterprise.

This requires that all disparate business elements work together collectively and harmoniously for the good of the whole.

This requires trade-off, strong leadership and guidance.

Firm discipline may be required if one or more business units fail to contribute and collaborate as peers.

Only the CEO has the authority and mandate to demand such collaboration and make it happen.

Where the CEO abdicates, massive system problems will follow which are frequently taken to be technology problems.

But the CEO does not have the time / knowledge / … to manage the ERP – not so!

I have been told by more than one client that the CEO does not have the time or the knowledge or the interest or the … to manage ERP.

Well, if the CEO does not know how the business should operate as an integrated whole then the business has greater problems than the ERP. If the CEO does know how the business should operate as an integrated whole then the CEO does know how the ERP should work.

A fundamental principle of an excellent ERP implementation is that the ERP implementation should accurately model the REAL WORLD characteristics of the business.  Any executive or business user should be able to look at the configuration of the ERP and say "yes, that IS my business".

If you cannot say that about your ERP it is because it is badly implemented.

When an executive says to me "Dr Robertson, I do not understand IT" experience has shown me that this translates to "I have seen the jumbled mess in my ERP and I cannot comprehend how that can do all the things the consultants say it can do, so, obviously, I do not understand IT"

NOT SO! The correct translation is "the consultants clearly do not understand my business and the way they have implemented this system bears absolutely no correlation with my strategic understanding of the business and this is a multi-million Rand mess" – the problem is NEVER your big brand ERP, it is how it was implemented and the almost universal lack of precision engineered strategic configuration in the form that I regard as essential and non-negotiable.

If the CEO does not have time to take custody of the ERP then, in the world of 2011, you should probably start looking urgently for a buyer for your corporation whose CEO does have the time. The future of business today will increasingly be determined by the ability of executives to take high value strategic decisions that lead to growth - while those that cannot do this will be taken over by those that can.  Otherwise it may be more cost effective to replace the CEO than it will be to replace the ERP!

I am NOT advocating that the CEO spends a lot of time managing the ERP, but I AM advocating that the CEO gives high level guidance and takes custody – once effective governance is in place this should require at most a couple of hours a week.

If strategic decision support, that relies on information in your ERP, is necessary for your business to thrive - then it must be managed by a person reporting to the CEO

If you want to manage your business at a strategic level from information in your ERP then it is essential that the person who manages the ERP reports directly to the CEO.

Depending on the size of your organisation this is NOT necessarily an executive but should at least be a senior manager and they should at least be present at EXCO when system related matters and matters that impact systems are discussed – which is probably all the time J

This person should NOT be a technology person but a business person.

If necessary appoint an executive level strategic advisor to assist with bridging the technology to business gap – someone who can operate at a peer level with the CEO and who understands both business AND ERP.

Strategic decision support NOT process is the essence of the investment case for ERP and resides with the CEO

The general view of ERP is process, but process is operational and at the bottom of the organisational pyramid.

There is no such thing as "the strategic process". If there were it would look like:

Identify need for decision --> convene EXCO --> present information --> deliberate --> take decision …

Reference to "strategic process" is one of the absurd ‘jargonistic’ sayings that characterise the mystical mumbo-jumbo of the management consulting and IT / ERP fraternity and clouds the issues. The real issue is to supply the right information to the right people at the right time and in the right form in order to make the RIGHT DECISION.

In the absence of the "right decisions" the business will eventually go out of business – highly optimised business processes will simply help it to go out of business faster!

With consistent "right decisions" the business will thrive and optimized business processes will assist with this.

Professor Malcolm MacDonald defines strategy as "doing the right things" and, since the CEO is the custodian of the right (strategic) things the CEO must be the custodian of the systems that supply strategic information to support strategic, high value, decisions.

Overall governance of the ERP rests with the EXCO – precision configuration starts with the EXCO and so executives must understand the essence of the business and own the BUSINESS outcome

From the above it will be apparent that overall governance of the ERP flows from the CEO to the EXCO and then to the rest of the business.

Accordingly precision configuration starts with the CEO and EXCO and therefore executives must understand the essence of the ERP and own the business outcome of the use of the ERP.

By way of example, I am currently busy with a series of workshops with the EXCO of a mid-size South African company to develop the high level structure of all major taxonomies in their ERP system in order to ensure that the configuration of the ERP reflects their strategic view of the business.

This is the only way that we will ensure that the default view of the information in the ERP reflects the strategic executive view of the business and its long term priorities.

Only 15% of executive decisions are based on hard information, but without that information they are flying blind - strategic decision support should be the primary consideration in ERP implementation

But, I hear you cry, "executives only base strategic decisions 15% on hard information" – that is true, BUT, if they do not have that information they are flying blind on gut feel or by the seat of their pants.

That hard information is critical BUT it must be packaged in a way that accurately reflects the essence of the business and how it thrives (the strategy of the business). That is why the CEO - and through the CEO the EXCO, must be the custodians of the ERP.

Precision strategic taxonomies can be retrofitted to an operational ERP implementation through a data warehouse

I have written previously about the importance of precision engineered strategic taxonomies and configuration in ERPs.

Problem is that the cost of completely re-implementing an ERP in order to introduce rigorous precision configuration is more than most organisations can justify spending, particularly considering that at an operational and process level the ERP is probably working quite well – so we find ourselves faced with having to spend 80% of the budget re-implementing the stuff that is working in order to fix the 20% of the stuff that is causing 80% of the strategic pain.

There is, however, an alternative – leave the ERP implementation largely unchanged, develop precision engineered strategic taxonomies for all the tables in the ERP. Then map the old codes onto the new codes and transform the data in the load component of the extract, transform, load (ETL) portion of a new data warehouse and then build high value reports, graphs and models in the business intelligence environment.

This will require some changes to the configuration of the ERP but they will be incremental – provided they are carefully planned by someone with strategic insight into what is REALLY important.

Over time the high quality taxonomies and other configuration elements can be dropped into the ERP in small controlled deployments. As such unexpected impacts can be carefully trapped and managed until after a year or two a reasonably high quality precision configuration has been achieved in the existing ERP.

This represents a major opportunity for many businesses with established investments in ERP today.

The metaphor is one of taking a badly maintained and operated factory and systematically refurbishing it, one part at a time, until after a couple of years the whole factory has been refurbished.

CEO custody is critical to successful long term high value ERP operation

As with all the other components identified above, CEO custody and direction is vital to achieving a high value integrated business outcome cost effectively and sustainably.

Where necessary the CEO should seek to secure high level strategic advisory services at an appropriate scale to support them in taking on this responsibility.

Section 4.5

Understanding strategy and how ERP fits in

(Reprint from one of my newsletters)

The high level of dissatisfaction with ERP amongst executives is compounded by the absence of strategic alignment in virtually all ERP implementations. The inevitable, unavoidable truth is that ERP must fit into strategy.

Strategy is one of those strange words that is widely used but seldom understood.

Ask ten people to define "strategy" in one sentence and you will get a wide diversity of answers with interpretations that range from plans to tactics to deceitful manoeuvres to …

In 1990 I wrote a paper on the importance of aligning IT with business strategy and then found that I could not define strategy in one sentence.

As I sought an answer to this conundrum I encountered various definitions and found that even internationally acclaimed and recognised ”gurus” did not have concise definitions that matched.

I also found that very few organisations were successful in developing strategic plans that worked and even fewer organisations actually managed to execute strategic plans successfully.

In my search I encountered the work of Professor Malcolm McDonald who defines strategy as "doing the right things" as determined by the customer with tactics defined as "doing things right". 

McDonald plots this on a matrix with strategy horizontally and tactics vertically and asserts that if an organisation "does the right things well, it will thrive" and that if it "does the wrong things well, it will die quickly".

The essence of the business and how it thrives

As I investigated further I encountered other definitions of strategy but always came back to the concept of doing the right things in order to thrive.

Painstaking research has led me to the conclusion that strategy is “the essence of the business and how it thrives".

That has become my focus in delivering high value solutions – understand the essence of the business and then put in place measures to assist clients to use Information Technology / ERP to support high value "thrive" decisions.  All the rest, the operational benefits, etc follow automatically from an ERP implemented with strategy as its focus.

Generally I commence my Pulse Measurement interviews with questions directed at establishing the "essence of the business and how it thrives".

ERP versus IBIS – the mixed bag of software

ERP stands for "Enterprise Resource Planning" and many organisations do NOT use their ERPs for ERP.  Frequently the resource planning for the enterprise gets done somewhere other than in the ERP.

Frankly, if you scratch beneath the surface you will find that most ERP implementations are actually accounting and workflow implementations and there is little or no RP done in the so-called "ERP"!

If the resource planning IS being done in the ERP it is being done in a very tactical and operational manner with absolutely no thought to strategic considerations.  Huge unstructured lists are the order of the day associated with huge maintenance bills for expensive contractors on an on-going basis.

As far as the application of information systems in business is concerned, it is better to think in terms of "Integrated Business Information Systems" or IBIS ("ERP Plus" if you like).

Fact is that in my experience I have not encountered a single ERP installation that is not surrounded with other pieces of software.  Most ERP implementations live in a sea of customization, Excel spreadsheets and other custom development such that many times the business is hardly using any of the ERP at all.

"Zero customization" is seductive but in real life it is almost universally a myth.  As a basic minimum sub-optimally configured ERP systems immediately create a substantial requirement of customization and custom development outside the ERP.

Accordingly, in evaluating your current system, whether it is labelled "ERP" or not, consider ALL the surrounding systems and custom development and soberly assess how you will replace that system with another system without falling into the same traps again.  It is very easy to believe that your organisation does things differently and therefore customization is called for.

The real criterion of customization is what I term "strategic customization" – custom development that is necessary to support the business to thrive, that is that supports the essence of the business.  This criterion requires robust and sober assessment at the executive level associated with high level strategic advice that ensures that only customization that is really required and that really adds value is entertained.

And remember that you may well end up retaining many of your satellite systems because they are industry specific or perform functions that standard software does not cater for – so replacement of your ERP requires very careful consideration.

ERP implementations are typically tactical and operational not strategic – 80% of effort for 20% of value

As noted above, very few ERP implementations are truly strategic, most are operational and tactical.

They address the 80% of the configuration and implementation that will deliver 20% of the value while the strategic elements are largely or entirely overlooked.

One of the major reasons this happens is as a consequence of a lack of strategic guidance from the executive suite and the lack of strategic translation from an executive level strategic solution architect advisor to the CEO.  These are vital requirements for a high value implementation that supports high value decision making.

Leaving your ERP to your mid-level operational and administrative staff to implement and operate guarantees you what you have commissioned: a mid-level operational and administrative system. If you want executive information out you must provide executive level input across all domains of the business into the ERP implementation project.

Strategic decision support – the essence of how an organisation thrives – the right decisions

It is my contention that the major reason any organisation should invest in upgrading or replacing its current ERP should be to support strategic decision making – that is to supply the information that allows executives, managers, supervisors and staff to take decisions which enhance the essence of the business with a view to enabling the organisation to thrive – that is, the right decisions.

The absence of this decision support is the fundamental reason why a survey of executives in the Financial Mail found that "19 out of 20 ERP implementations do not deliver what was promised" and why a Gartner survey of 1,300 organisations in Europe reported that "most organisations are not making better decisions than five years ago".

Precision engineered strategic configuration and taxonomies – the 20% of the effort that will deliver 80% of the strategic value

How does this work in practice? All of the issues touched on above may seem very theoretical – how to do it?

Firstly, define, document and publish "the essence of the business and how it thrives". Then define precision engineered strategic taxonomies as discussed in previous articles.

These taxonomies must be highly structured, highly hierarchical and strategically focussed.

What do I mean by "strategically focussed"? Simple – every level of the taxonomy should have between five and ten items in the hierarchy (seven is optimal).

These should be ordered where appropriate in such a way that the most strategic elements are at the top of the list and the most operational at the bottom of the list with the caveat that where there is a logical progression viewed in terms of the essence of the business then this logical progression should dictate the default sort order.

Once the content of every taxonomy in each module has been determined this way, it will form the basis of precision configuration of the entire ERP and associated systems to one consistent, congruent and uniform standard across all systems in the enterprise and all modules in the ERP.

Uniform and consistent taxonomy standards rigorously enforced with stringent discipline across the entire enterprise will ensure that all systems integrate seamlessly.

There is a catch, however, the real cost of a comprehensive, engineering standard (zero probability of failure) full blown ERP implementation is very substantial.  If the basic ERP is functioning reasonably well at a tactical and operational level, it is almost impossible to justify the real cost of a full implementation or re-implementation.  A full blown re-implementation will re-do the 80% of the work that is already working more or less reliably before the 20% of strategic investment can be leveraged.

There is, however, an alternative course of action.

Precision engineered strategic taxonomies and the data warehouse – the REAL opportunity

One of the reasons most organisations do not get executive value is that the operational ERP implementation is so poorly structured that it is extremely time consuming and costly to extract the most basic strategic information let alone to create a competitive resource.

This manifests frequently in a sub-standard or almost non-existent data warehouse or a data warehouse that is extremely costly to operate but which fails to deliver strategic information.

This introduces an interesting and highly attractive opportunity. You could leave the operational ERP configuration largely unchanged, save for limited incremental enhancement and introduce an excellent new data warehouse implementation using the same strategic taxonomies as described in the previous section - with the exception that you may not develop the taxonomies in master lists like the Item Master or Materials Master down to the full level of detail.

Map the unstructured data in the operational ERP onto the new precision engineered strategic taxonomies and then build the data warehouse reports, models, dashboards, etc. on top of the strategically transformed data.

This should take place in a new data warehouse instance and the existing data warehouse should remain in operation until such time as the new data warehouse is able to fully replace the old warehouse.

This will deliver the 20% of the strategic information that will deliver 80% of the value of the strategic investment for a fraction of the cost of a full ERP re-implementation, I estimate probably about 20% of the cost of a full implementation.

Once this is in place and a comprehensive suite of strategic reports, models, dashboards, etc. are in place you can trickle the new taxonomies down into the operational ERP on an incremental basis over a number of years until the operational ERP is configured to the new standards, again on an 80:20 basis – make the 20% of the configuration changes that will provide 80% of the investment value.

While this will take longer than a full blown ERP re-implementation it will cost much less, the business disruption will be greatly reduced and the risk to the business will also be dramatically reduced.

I am convinced this is the highest value, lowest risk opportunity facing virtually all corporations of any size that are currently operating a brand name ERP and are dissatisfied with the decision support outputs at an executive level.

Section 4.6

Risks and common mistakes

when developing taxonomies and configuring systems

Following are the major risks and common mistakes when configuring systems and should be read in conjunction with other sections in the Taxonomy Handbook:

These are the major factors that I have encountered that result in sub-standard or non-existent precision in the configuration of systems.

Section 4.7

Risks and common mistakes

when developing Group-Wide Charts of Accounts

Following on from the previous section dealing with risks and common mistakes with regard to Precision Taxonomies generally, this section looks at Financial Taxonomies and Group-Wide Charts of Accounts based on the Cubic Business Model specifically.

The following risks and common mistakes frequently are made:

Any of the above, if not properly dealt with, will cause problems.

Section 4.8

What is an IT Pulse Measurement?

Do you have concerns about your I.T. function or about a specific project?

Are you debating whether to replace your existing financial and operational systems with a new E.R.P.?

Are you concerned that your company is not keeping pace with I.T. or is going in the wrong direction?

Are you wondering where you can obtain an independent third party opinion?

An I.T. pulse measurement by Dr James Robertson may be just what you need.

What IS an IT Pulse Measurement?

Dr Robertson's pulse measurement is a structured, interview based investigation into a problem that YOU define.

The pulse measurement comprises:

1. One on one interviews with your executive team.

2. One on one interviews with key business users of I.T. at various levels as appropriate to the focus of the investigation.

3. Interviews with I.T. staff and service providers coupled with review of critical systems as appropriate to the focus of the investigation.

4. A structured analysis resulting in a concise structured report based on the factors discussed in Dr Robertson's book "The Critical Factors for Information Technology Investment Success".

This analysis identifies and prioritizes the "Critical Findings" and recommends prioritized "Critical Actions" arising from the investigation.

This is accompanied by a concise evaluation of the problem under investigation in terms of the criteria presented in the book.

5. Optionally the report may be followed with a formal presentation or briefing to your executive team and possibly other audiences.

6. Optionally Dr Robertson offers a critical issues workshop process to formulate specific response to the findings, such as definition of critical business requirements for a system (new or existing).

7. Optionally Dr Robertson offers advisory services with regard to implementation of his recommendations. This can comprise ad-hoc consultation or scheduled consultation which can take place on a retainer basis if that is appropriate to your requirements.

The I.T. pulse measurement has been developed to give a concise assessment of the health of your I.T. or other organizational issue through a limited scope, limited cost professional intervention that will give you greatly improved understanding of the problem in question and how to resolve it.

The findings are presented in a practical, no nonsense, manner that cuts to the chase in terms of the action required.

The pulse measurement is tailored to your exact requirements and will typically require from two to ten days of Dr Robertson's time giving a cost effective, high value, high impact diagnostic intervention.

"The lights have just gone on" -- exclamation by Executive Director of a client organization at the end of the second day of a pulse measurement when Dr Robertson provided a summing up of the investigation to that point and diagnosed the root cause of a project that was nine months behind schedule.

Over the years Dr Robertson has conducted dozens of pulse measurements for organizations of all types and sizes with regard to the full diversity of business systems, ERP’s, etc.

Outcomes have included turning around a decision of a client executive to scrap a system based on a one day investigation, turning around a failing four hundred million Pound Sterling project with a one day visit to London, identifying a fundamental defect in an implementation that was in the process of putting a client organization out of business and equipping the chief executive to take a new direction. There have been many other cases of IT departments turned around and major expenditure prevented.

It is not uncommon for an IT pulse measurement to save a client millions and sometimes even tens of millions.

Section 4.9

Defining an ERP Implementation Engineering Laboratory

Following are the major components of the ERP Implementation Engineering Laboratory approach which is applicable to full-scale ERP implementation or re-implementation based on the Strategic Engineered Precision Taxonomy and Precision Configuration models.  This only applies to ERP implementation or re-implementation and NOT to data warehouse implementation:

For years people have been trying to develop technology that compensates for mediocre or poor data quality.

This approach allows the organization to progressively build more complex and more reliable costing models based on accurate measurements linked to cost driving activities and become a learning organization.

Section 6

Why taxonomy software?