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Links to previous articles at the end
of this article
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The
first article in this thread summarized the seven
factors that cause failure, as well as the seven
critical factors for success with regard to Business
Information System implementation. The
second article
discussed the specific role of Mythology and Lack
of Executive custody in system procurement and implementation failure.
These factors are vital to
understanding situations such as those that have
recently occurred at BMW
and Bridgestone
, and numerous other
companies around the world.
They are also vital to understanding why the business systems industry
is, in large measure, going in the wrong direction. There is
significant evidence that the business systems implementation industry
is getting better and better at doing the wrong things.
This article presents the next two factors that cause implementation
failure in more detail. These factors are Lack of Strategic
Alignment and Lack of Precision Configuration.
The percentages assigned are roughly indicative of the relative
frequency of these factors in causing sub-optimal and failed outcomes:
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3. Lack of effective strategic alignment and strategic solution architecture -- 16%
The
series of articles on "Strategic
Essence: The Missing Link in Business Information
Systems"
discusses in depth the importance
of strategy, defined as "the essence of the business and how it thrives" in
specifying, configuring, customizing and commissioning business
information systems. The failure to address these issues is a
major factor in sub-optimal and failed business information system
implementations.
The major components of this factor are:
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3.1. Lack of strategic definition
Failure to accurately define the
essence of the business and how it thrives.
Without this definition seriously inappropriate
decisions can be taken, decisions that can compromise or
seriously damage the organization. The strategic
definition must be robustly communicated to all parties
on the systems implementation project, and used as a
basis for selecting the implementation firm and
software. Refer the recent article on Strategic
Essence as the point of departure
for business systems projects.
Definition and management of the Strategic Essence relative to
your systems is equally relevant in the day to day management of
those systems -- if neglected the operation of your system will, over time,
degrade relative to the strategic essence of the organization.
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3.2. Lack of a strategic advisor
This
point is addressed in the previous
article on Executive Custody
. A highly strategically
literate and very experienced strategic advisor to the executive sponsor, who
is entirely aligned with the client organization, is an
absolute requirement. Without such a person on the team, real success, defined as
"a high value outcome that enables the organization to thrive", (thrive in
turn defined as "grow steadily and profitably on a
sustainable basis", is unlikely. This person is a strategic solution architect
and NOT a project manager.
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3.3. Failure to engineer strategic essence into solutions
It is one thing to define the strategic essence. It is
another thing to actively and constructively engineer it into the project
and the solution. By " engineer" I mean systematically,
intentionally, precisely, methodically, reliably, ... This engineering approach
should be central to the procurement, the contracting, the discovery,
the customization, the configuration, the acceptance testing, the
laboratory testing, the commissioning and the operation -- that is, every
single aspect of the system. The entire approach advocated in
this article thread, and all three companion article threads, are
components of this strategic engineering approach to business systems
implementation and operation.
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3.4. Failure to select software and implementers on the basis of strategic essence
A major factor in the business systems failures that I encounter is
that procurement fails to focus on the strategic essence of the
organization. Failure to ensure that the software supports the
strategic essence gives rise to many problems. Software designed
in such a way that it cuts across or weakens the strategic essence, is a
major cause of failures. Appointment of an implementation firm
which cuts across the strategic essence, does not understand it, or
obstructs it, is an even bigger problem.
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3.5. Failure to configure strategically
An outworking of several of the previous points is failure to
configure strategically. The configuration of a piece of software
is the fundamental determinant of system performance. Well
configured software will align closely with the business and help the
business to soar. Badly configured software will generate geared
inefficiencies and, in the worst case, cripple the organization.
Strategic configuration ranges from
the simplest validation lists such as the "Credit Note
Reason codes" example given previously in the thread
on Strategically Enhancing Business
Systems, through to the Product Catalogue,
Chart of Accounts and other large and complex
listings. Refer to the thread on "Strategically
Enriching your Business Information System"
for an in-depth discussion of
Precision Configuration.
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3.6. Lack of strategic attributes
As a
specific element of the previous point, also addressed
in "Strategically
Enriching your Business Information Systems"
, the addition of strategic attributes to every master
file is one of the most important
practical steps to unlocking strategic
decision support information.
Comprehensive
provision of strategic attributes, correctly facilitated and correctly populated and
coded, opens the door for "answers to the questions we have NOT yet thought
to ask" and, in association with this, dramatically increases the opportunity
for "strategically clever" custom development, which can add huge
competitive and operational value to the organization. This aspect
is almost NEVER catered for in traditional system implementations and
constitutes a substantial opportunity for most organizations.
Precision Configuration is discussed in
more detail below.
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3.7. Lack of strategically intelligent information
The
absence of strategic alignment culminates in
strategically inept solutions that add little value, or
destroy huge value, because they lack the ability to
deliver strategically intelligent information. The
resolution of all the above issues can lift the value
delivery of a business system by as much as several
orders of magnitude, and create a strategic resource
that dramatically facilitates the competitiveness,
profitability and, where desired, growth of the
organization. All of this is associated with a
thriving organization which is doing the right things
well (McDonald)
.
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The lack of some or all the above items results in solutions that at
best do NOT add value and at worst destroy value, to the point of
putting the organization out of business. I offer comprehensive
services to assist clients to resolve all the above items.
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4. Lack of Precision Configuration -- 14%
A major distinction between the average business information system and
the average engineering design is that engineering systems are designed
literally to the last nut and bolt.
Business systems are generally
configured to inexact tolerances with limited or no
strategic insight by mid-level personnel on both the
implementer and client side, who have no grasp of the
fact that the precision of the configuration of a system
can result in variations of at least a factor of 100 in
level of value and performance delivered. Process
obsession, discussed in the
previous article in this thread
, is a factor that gets massively in the way of
precision configuration much of the time.
The following major factors contribute to failure in terms of Lack of Precision Configuration:
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4.1. Failure to recognize Precision Configuration as THE most fundamental factor
On completion of a business systems implementation two
tangible components remain apart from the hardware and software -- the system
configuration in terms of settings, validation lists and Master Data,
together with the knowledge and experience or lack thereof in the heads
of the personnel of the organization, together with whatever training
materials are left behind.
Given
that people move on and forget and training materials are seldom used,
it becomes apparent that the configuration is THE most important factor
in terms of the final deliverable. The configuration determines
how the software behaves, how data is captured and classified,
how queries are structured and answered, etc. Every aspect
of the use of the software is at some level determined by the
configuration.
A
badly designed Chart of Accounts can be a management
accounting and even operational accounting nightmare,
that can get in the way of sound business decisions and
drive audit costs through the roof. A
strategically designed Chart of Accounts implemented
with a code scheme that I refer to as "The
Cubic Business Model"
delivers
standards of excellence that will raise business decision making to a
new level, reduce admin headcount and generally reduce audit costs.
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4.2. Failure to engage with and facilitate executives effectively
The
previous article discussed the issue of "Lack
of Executive Custody"
and
explained why Executive Custody and engagement with the Chief Executive
and the rest of the Top Team
is vital.
One of the many areas of
the implementation impacted by inadequate Executive
Custody is configuration. It is NOT possible to
design and implement a comprehensive business system
solution without significant executive level
involvement.
Only executives can determine the attributes of customers, products,
etc that are important to them from a strategic analysis
perspective. Only executives can determine if the content and the
classification scheme will align with their reporting and analysis
requirements.
Certainly you can leave these things
to mid-level members of your staff and mid-level
consultants, but you will then get a mid-level view of
what is important and you should NOT be surprised if you
are NOT able to get the information you need to make
high value business decisions, the
syndrome reported by Gartner
.
See
the video
on Executive Custody
for more information on
Executive involvement. The art is to engage sufficiently with
executive team members to get the structure right and then engage with
less senior personnel to flesh out the content, returning regularly to
the executives to vet and refine the design.
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4.3. Failure to engage a strategic level advisor with expertise in configuration
In
order for this level of executive engagement to happen,
a strategic executive level facilitator with a deep
understanding of business, business systems and the
classification of information is a vital component of
the project team. As discussed above and in the
previous article
.
This is NOT a technology position; it is a strategic business
information management advisory position. The right advisor will
assist executives to quickly lift out the critical elements in terms of
attributes required, content of attribute lists, structure and
classification of attribute lists, implementation, design of custom
software to exploit the resulting data and production of high quality
strategic level reports and analytics. A very diverse experience
set and maturity is called for.
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4.4. Failure to accurately model the REAL world in the attributes
A fundamental requirement for successful Precision Configuration is
that when, after days of hard work, the team produce a set of validation
lists, Chart of Accounts, Product Classification, Customer
Classification, Employee Classification, Asset Classification, etc
executives, stakeholders and staff can look at them and say "YES, THAT
is my organization".
Until the configuration / validation / classification data accurately
models the organization, the system is of limited value as a strategic
resource. Once the hard work has been done to examine and analyse
the full complexity of the organization and develop classification
schemes that fit, you have then taken the first critical steps in the
journey to unlocking the full potential of your business systems
investment.
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4.5. Failure to develop comprehensive highly structured content
The content of the lists must address all reasonable growth and
expansion going forward as well as everything that has occurred in the
past and which might realistically occur again.
To this end the existing classifications and existing
transaction data serve as a "brainstorm list", NO more. Do NOT let "the
history" drag you down, start with a clean sheet of paper. Once you have
developed the high level structure of a particular list, inspect the
existing data to ensure that nothing has been overlooked. Then
work systematically to validate this conclusion.
Ultimately it will be necessary to tick the new list against the
old list and existing transactions in order to ensure that the final list
is comprehensive. But do NOT allow the configuration of the
existing system to dictate the configuration of the new system -- it may be
comfortable for the staff but it is NOT what is required. If you
are going to carry the old configuration and Master Data forward, why
are you buying a new system?
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4.6. Failure to develop hierarchies that respect cognitive span
In every case it is vital to develop hierarchies where there is any significant amount of detail.
In developing hierarchies, or taxonomies -- structured lists that
take account of the fundamentals of the business -- it is vital to recognize
cognitive span, the ability of the human mind to quickly and accurately
scan information and interpret it.
The average cognitive span of human beings is seven plus or minus
two. People with limited education generally have limited
cognitive span and will find a list of more than five items difficult to
quickly and accurately engage with and make a selection. People
with higher education generally have a higher cognitive span but nine
or, at a stretch ten, items in a component of a hierarchy is the maximum
that they will easily engage with. I offer a critical issues
facilitation service to lift out the critical issues based on
recognition of cognitive span, see the offer at the end of this
document.
The relevance of cognitive span is that once all lists are structured
with five to ten items at any level of the list, operators move more
rapidly and more accurately to the correct classification value, reports
are easy to write and the data is easily summarized in ways that
support effective use of presentation techniques, ranging from pie
charts to line graphs and on to sophisticated multi-dimensional models
and advanced statistical techniques. When these summaries are
presented, people with insight into the data will almost instantly
interpret the graph or tabular data, leading to further questions and
analysis and, in due course, high value decisions.
Very few organizations achieve the level of structure and logic that I
am describing here with the result that their business information
systems constantly deliver sub-standard information that in turn results
in less than optimal decision making and costly rework in spreadsheets.
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4.7. Lack of semantic precision -- "sloppy" wording
Once
the logic of the list has been developed the exact
wording is also vital. I recommend the use of
indents in the descriptions to make the logic more
visible, and this should be coupled to careful use of
words, the use of carefully thought out abbreviations
including the use of mnemonic prefixes and suffixes, to
reflect the details of the hierarchy. See
the thread on Strategically Enriching your business
systems for some examples.
Sloppy wording which sees "Factory" as an expense AND an asset
is typical of the semantic issues that give rise to
problems. "Factory" in a badly structured Chart of Accounts will see one operator
posting expense type transactions to the account, while another posts
asset type transactions to the same account. Potentially serious
business damage and, at least, dramatically increased audit costs
result. Not to mention the loss of any meaningful management
information.
This is but one of many factors that result in managers NOT
trusting "the system" and maintaining their own records and spreadsheets on the
side.
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4.8. Failure to employ codes that accurately mirror the logic of the list
Human beings only understand explicit language; computers
only understand bits and bytes. Thus it is vital to develop lists
that respect cognitive span, are carefully and accurately worded, that
use indents to make the hierarchy of the taxonomy visible,
etc. However, this ONLY takes care of the needs of the human users of
the system. The computer has need of bit and byte patterns that it
can recognize -- alpha, numeric or alpha-numeric codes carefully thought out
so that the pattern the computer sees in the code data EXACTLY mirrors
the logic of the list.
With thoughtful use of coding conventions software can draw substantial
apparent intelligence from the data. The data is NOT in fact
intelligent, it is the code scheme and its associated rules and
conventions that allows simple software to sometimes do very impressive
things.
There is a fairly widespread myth, particularly prevalent relating
to "Web based" applications, that structured lists and codes are
obsolete. This is simply NOT so, a well-structured list allows
users to quickly and accurately select the right item and the code
provides a correspondingly structured pattern for the computer. If
the hierarchy is accurately modelled, queries become much easier, and
much more powerful queries become possible. A well designed code
is also relatively easy to remember and so operators post faster and
more accurately by knowing the codes for the most common items on a
Pareto basis (80:20).
Some also suggest that "Google" type searches replace the need for structured
data and analytics. Again this is NOT so, unstructured searches are
fine for finding information in unstructured data in an unstructured
way, this does NOT produce structured numeric data that is capable of
even relatively simple graphical analysis, let alone the use of more
complex methods.
Failure to
fully grasp and apply these principles is a major factor contributing to why
executives cannot get the answers they want to new questions when they
want them. In fact, many executives cannot even get the answers to
OLD questions when they want them. Not without excessive costs in
terms of mid-level personnel undertaking the analysis in spreadsheets
and often with the assistance of costly consultants.
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4.9. Failure to manage data quality on an ongoing basis
Having developed high quality configuration data in the form of
validation lists, classification lists and overall master data, it is in
the nature of things that without proper quality control the quality of
the data will degrade. It is therefore vital that a senior
manager be made personally responsible for data quality, specifically
relating to the quality of keyboard and mouse input at the time
transactions are captured. This has a lot to do with human
discipline and little or nothing to do with technology.
High quality data will make your systems, reports and models fly --
poor quality data will drag your systems and your organization down.
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4.10. Failure to exploit the Precision Configuration with clever software
Another myth is that business should never customize or custom develop
software. This is roughly equivalent to saying that once you have
purchased a factory you may not make any custom improvements to it and
the machines it contains for whatever reason.
One
of the significant opportunities that results from
Precision Configuration is the opportunity to design and
develop small but clever pieces of add-on software that
enable the organization to do things that add
significant value, but that the standard software cannot
do. See
the case study on my website for more
information
.
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4.11. Failure to develop comprehensive reports and Business Intelligence models
Finally, it does not help to have high quality data if one does not
have high quality, flexible and comprehensive reports and Business
Intelligence models that exploit the wealth of information that you now
have available in your data.
One of the substantial benefits of Precision Configuration is that
reports are easier to create and there is more diverse information to
report on. Further, because the data content architecture is
robust and stable, it is viable to invest time and money in developing
advanced reports and analytics that exploit the intelligence that now
exists in the data. Every project should have a material budget
for this component.
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The
above discussion outlines the factors that are necessary
for a high value Precision Configuration solution.
The thread on "Strategically
Enriching your business systems"
provides more
information on the HOW of doing this. Absence of the above
radically cripples massive investments and prevents them adding the
value that is expected.
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To follow
5. Failure to address soft issues, business engagement and change impacts -- 12%
6. Lack of an Engineering Approach -- 6%
7. Technology Issues – sub-optimal or defective software, hardware, network, etc -- 3%
The Critical Factors for Success
1. Effective Executive Custody -- 25%
2. Effective Strategic definition and alignment – the Essence of the business -- 22%
3. Effective engineering solution design and implementation approach -- 17%
4. Effective Precision Configuration -- 16%
5. Effective Business Simulation Laboratory operation -- 12%
6. Effective business integration, training, change facilitation, process specification -- 6%
7. Reliable technology -- 2%
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Conclusion
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If you address all the above together with the other factors causing
failure and the Critical Factors for success, and you treat your major
investment as one of the most far reaching projects your business is
likely to ever undertake, and therefore invest the appropriate level of
executive time properly facilitated, you will find that application of
these principles will have a huge beneficial impact.
I
offer advisory services with regard to the application
of these principles, and would be delighted to discuss
how I might be of assistance to your business. I
also offer a light touch diagnostic service that I call
a "Pulse Measurement" to diagnose the root cause of
problems and how to fix them for both operational
systems and projects that are not meeting
expectations.
Yours faithfully,
Dr James Robertson PrEng
James A Robertson and Associates Limited
Assisting clients to thrive through effective and efficient application of Business Information Systems
Seeking
to serve the Almighty Creator in all
things
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Strategically Enriching your Business Information Systems
Discussion of practical specific measures that can be taken in order
to greatly improve the information yield of business information
systems at both the operational and executive strategic level. A number
of simple steps that can be taken immediately and more complex
measures that can be taken over time. This thread is intended to
discuss increasing business system and data warehouse value yield
using techniques that lead to significantly improved business
intelligence capability, including support for the ability to"obtain answers to
questions we had not previously thought to ask". This builds on
the content in the Strategic Essence and Real Issues threads.
Articles to date include:
1:
Introduction
2:
Principles of Data Engineering
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Robust
Business Information Systems Procurement
In order to fully apply the methods and
principles discussed in the threads above with regard to new systems it is vital
that a robust and effective approach to procurement is
applied. This requires a tough procurement approach directed at
achieving a tough business outcomes orientated project that ensures
a high value outcome. This thread discusses the components of such a procurement
approach, including the individual documents and processes that make up
the approach. Thereafter the components will be discussed in more
detail. Articles to date include:
1:
Introduction
2:
Bill of Services, Laboratory, Go-live Certificate,
etc
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