Section 3.1

Why not do it yourself without JAR&A?

 Section 4.1

How to give executives REAL information

Strategic engineered precision taxonomies (SEPT) are THE way to give executives REAL information:

1.       Not about technology, about INFORMATION

2.       Strategic understanding

3.       Fundamental first principles

4.       Long term view

5.       Complex, challenging and costly BUT substantial net value

6.       Perhaps the greatest "I.T." BUSINESS VALUE opportunity at present

7.  Do not scrap your existing systems UNTIL you have thoroughly evaluated and costed this option - look at customisation and re-implementation

Section 4.2

The Power of an Executive with a Blank Sheet of Paper

(Reprint from one of my newsletters)

For many years I have encountered executives who when interviewed with regard to their sub-optimal ERP or IT investments say something to the tune of "Dr Robertson, I do not understand IT, I may be wasting your time."

In the last few months I have gained new insight into this statement AND how to rectify the problem.

1.  "I do not understand – maybe I am stupid"

Many times when undertaking a pulse measurement (diagnostic assessment of an ERP or other IT implementation that is not meeting management expectations) I find in conducting executive interviews that executives make a statement to the effect that they do not understand IT.

This time I was sitting with the Chief Financial Officer of one of my clients and he made the statement about some work that I had done in the preceding weeks.

I had facilitated a series of workshops with him and his team and then undertaken one on one working sessions with team members.

The goal was a Chart of Accounts that would work for all divisions across the business.

I thought we were making good progress.

BUT

The Chart of Accounts did not make sense to him and he was almost embarrassed to admit it.

I wonder how many times this has happened before, work for days or weeks, think you have a good solution and the executive sponsor is too embarrassed to admit that the work done does not make sense – after all, IT is magic and he might expose his ignorance if he said anything!?

 

2.  We stop here until this makes sense to you

This time though, I did something different – I said something to the effect of "that is important, I need to understand why you say that and we are not doing anything until I understand what is concerning you and we have a solution you are entirely satisfied with".

I actually had to talk quite hard to get him to agree with me.

He was convinced he was missing something and that if we continued it would eventually all make sense.

Problem is, I have learned that if it does not make sense today it is not likely to make sense tomorrow and, if the person it does not make sense to happens to be an executive, a solution that does not make sense is a recipe for executive opt-out (as opposed to executive custody) and that is a recipe for disaster.

So, I suggested we start with a clean spreadsheet and start from scratch.

 

3.  The power of an executive with a blank sheet of paper

It was an interesting experience.

He pushed back hard, he was concerned he was wasting time and, by implication, money,

I pointed out that the work that had been done served as a brainstorm list and that we would go through the whole list in due course to make sure that all the information we had gathered was retained in the final design.

But I managed to persuade him to start with a clean slate.

I explained the principles of taxonomy design, the emphasis on strategic (thrive) decision support, putting the most strategically important information at the top of the list, aiming for about seven items at any level in the hierarchy -- and so we got going.

In one day we captured the entire high level structure of the key elements of the Chart of Accounts design and, most importantly, the client was enthusiastic about what we were creating.

He could now see how what we were creating would impact executive information and decision making long term going forward.  His view of the business and strategic priorities were being accurately reflected.

He was excited!

 

4.  What is a taxonomy? And why is it important?

We were creating a taxonomy, in this case a General Ledger Chart of Accounts, but the same principles apply to any classification scheme in your ERP or other IT system.

Examples of taxonomies would include your Product Class, Item Master, Customer Class, Supplier Class and all other drop down lists and validation lists in your system.

What IS a taxonomy?

It is a logical semantic (word) structure which provides a precision vocabulary of preferred terms which conveys understanding between human beings with relevant knowledge and experience.

An example of a taxonomy would be:

•     Animals
  

o   Antelope

o   Dogs

o   Elephants

o   Cats

§  Lions

§  Leopards

§  Domestic Cats

·   Persian Cats

5.  Executives are the custodians of the thrive (strategic) view of the business

Increasingly I am realizing that in defining the taxonomies for your ERP system implementation, it is the executives of the business who should be primarily involved -- assisted by the staff who report directly to them.

It is the executives who are the custodians of the strategic executive (thrive) view of the business and therefore they are the most important people when it comes to defining how the business is modelled strategically through the taxonomies.

Executives hold the integrated holistic view of the business, its customers and markets, its suppliers, its personnel, its future direction.

They are the people who know best how they want these items segmented in terms of the three, five or ten year view of where the business is going.

Accordingly they are the most important people to consult when it comes to developing taxonomies.

The MOST important output of an ERP or any business system is information that enables executives to make better strategic (thrive) decisions.

It is not difficult today to get technology to facilitate processes, enforce policies, etc but that is not enough for the organization to thrive.  An organization will thrive if the correct decisions are taken by those at the top.  So an ERP must facilitate the supply of the information that is required for such thrive decisions to be taken.

 

6.  The most important requirement – answer the questions I have not thought of

By extension this means that the ERP must be able to answer the questions that executives have not yet thought of.

That sounds crazy, doesn't it?

After all, traditional ERP and other business systems implementations spend days, weeks or even months on user requirements workshops specifying all the reports that are required and now I am saying that is not required or not enough or both?

Well, at the start of an ERP project what matters is what the outcome will be in five or ten  years' time, NOT what the outcome will be at go-live.

The issue is answering questions executives and managers have not thought to ask.

How do you do that?

Firstly, ASK, what the business will look like in five or ten years' time – what expansion, what acquisitions, etc – executives do not necessarily have all the answers but at a headline level they have CLEAR views of where the business is going WHEN you ask them and WHEN they think about it.

But most of the time IT and ERP implementers never ask the question.  They ask lots of operational and tactical questions but they seldom ask the really important questions and so they start off the journey going in the wrong direction based on the right answers to the wrong questions.

And then, what questions will you ask that you have not thought of yet?

No, I don't think you will find the answer that way!

 

7.  Model the business accurately – large numbers of small bins

In order to answer that question there is something else you must do.

Ask them to identify ALL the possible attributes of the components of the business, the products, the customers, the suppliers, the staff members, a widget, etc.

You goal is to classify every attribute that can realistically be identified because, IF you have all the attributes that they use consciously AND unconsciously to define a product or whatever you have the information that is required to answer most, if not all, of the questions they might ask in the future.

And, if you configure or customize the software in such a way that all these attributes are available, with drop down lists configured with carefully thought out taxonomies AND you make provision for additional fields to be added, you are likely to have a lot of the building blocks in place to answer those difficult questions sometime in the future.

Then, in addition to this, make sure that the level of detail in your taxonomies is sufficiently fine that the taxonomy divides your products or whatever into a large number of small bins (categories).  This means that the data can be added up just about any way you want.

And, if you do this at the design stage it costs almost nothing to make provision for this.

The relevant metaphor is screws in a hardware store – if you go to a hardware store to purchase screws you expect to find them stored in little plastic sleeves or bins neatly organized by length, diameter, head type, etc – in other words, you expect to find a taxonomy.

If the screws were all dumped in one large bin that you had to scratch in you would go to another hardware store.

This is often why companies replace their ERP systems, they are frequently configured with large haphazard bins with little or no taxonomic logic with the result that the systems are clumsy to use and do not package the data in such a way that intelligent analysis is possible.

So, the obvious conclusion is that we have bought the wrong ERP -- not so?

No, the problem is almost NEVER the software, it is the way the software is configured and implemented!

In such a case there is frequently an opportunity to reconfigure and re-implement the same software or fix the data in the Data Warehouse.

 

8.  Use the technology appropriately to its full potential appropriate to the business

Re-implementing your ERP is frequently a major consideration in achieving the full potential of the software.

Another aspect of getting the full potential of the software AND of ensuring that the scope of an ERP project is correct is to apply the same principle – a blank sheet of paper – to the specification of the requirements for an ERP project.

In simple terms a key element of the requirement for an ERP project should be "implement this software in a manner that fully exploits the capabilities of the software to add real value to the business in a practical manner" – in other words, do not expect the business to tell you what it wants, other than a highly effective and efficient (thriving) business, understand the business, understand the software and then identify ALL possible synergies that will enable the tool properly used in the business to add value.

Rather than expending massive amounts of time trying to understand the "as is" condition of the business, understand the essence of the business and what causes the business to thrive (the strategy), understand the full potential of the software and then facilitate the EXECUTIVES of the business to define the high level requirement based on how the software can best be utilized to assist the business to thrive.

This could give rise to a three year or five year implementation plan during which the functionality of the software is progressively mobilized to support the business in achieving its strategic objectives.

Do NOT constrain the executives or the business by spending detailed time on what they currently do, they KNOW THAT, focus on where they are going and what they need to get there.

 

1.  The factors causing Integrated Business Information System (IBIS) failure

The factors discussed in my book "The Critical Factors for Information Technology Investment Success" and refined in the intervening years – see section on these factors in the Handbook.  Includes "IT Mythology", lack of executive custody, lack of strategic alignment, lack of an engineering (rigorous) approach, lack of change facilitation and inadequate information engineering (the subject of the Taxonomy Handbook).

 

2.  Lack of executive level facilitation

The development of really effective taxonomies, or at least the development of the high level frameworks of such taxonomies requires a senior facilitator who can engage with client executives and guide the design process in order to ensure that the framework is strategically relevant at the executive level.

Most lists in business systems are developed by mid-level or even junior consultants working with mid-level or junior client personnel who are focussed entirely on operational issues or do not even understand the need for some form of logic with the result that at best the configuration might be described as "clerical".  Often these personnel do not really even understand the "business of the business".

 

3.  Do-it-yourself mind-set

Many clients try and develop lists themselves without an understanding that the development of really effective taxonomies requires detailed knowledge and experience.

 

4.  Process-centric approach

Many clients and implementers place high reliance on "Business Process" not realizing that executive decision support should be the primary driver in defining the contents of lists and that process related definitions flow naturally from an executive strategic decision support focus with proper senior facilitation.  The result is that lists are defined "back to front".

 

5. Failure to fully understand and apply "strategic", "engineered", "precision" or "taxonomy"

Elsewhere in this document the concepts of "strategic", "engineered", "precision" and "taxonomy" are defined in detail.  Most clients and most implementers do not know or understand any of these principles in the context of taxonomies let alone the integrated concept of all of them applied at once and accordingly the lists created frequently only partially comply with these principles, if at all.

 

6.  Insistence on backward mapping

Perhaps the single biggest mistake that is made is that people try and build new lists based on old lists – the old list is a vital source of information in terms of what is required to be included in the new taxonomy but UNLESS the old list is extremely well structured it should NOT under any circumstances form the basis of thinking with regard to the structure of the new list.  And, since if the old list was well structured there would be no need to replace it, there is never a basis to build the new list using the old list as anything else but a brainstorming list and then doing detailed mapping at the end.

 

7.  Lack of software to enforce and maintain precision

I have progressively come to see that in the medium to long term it is very difficult for organizations to maintain the precision of taxonomies and for this reason we are developing software for this purpose.  I am of the opinion that the use of software is a vital component of maintaining taxonomies and this implies that the taxonomies are developed in the first place to the standards and conventions applied by the software.

 

8.  Failure to implement effectively

The implementation of effective taxonomies is not trivial and includes the facilitation of the change process, proper testing, proper training and general preparation to use the tools effectively and this includes making sure there are adequate reports on the new taxonomies from the start.

It is a serious mistake to assume that because the taxonomies make so much sense that people know how to implement them intuitively.

It is also a mistake to assume that people know how to exploit the taxonomies and use them to their full potential without guidance.  People are so locked into a mind-set of mundane detailed mapping of very basic and very simple reports that very few people seize the opportunity to build sophisticated reports and models and do complex analysis which is opened up by really précised engineered strategic taxonomies.

 

1.  All SEPT issues

All the issues relating to Strategic Engineered Precision Taxonomies apply to Charts of Accounts as well.

 

2.  Failure to recognize hard reality and real complexity

Failure to understand that the Cubic Business Model is a reflection of hard, real world, logical reality and business complexity resulting in lack of precision in the model.

 

3.  Resistance to change by finance staff

Finance staff and accountants are trained to resist change – we do NOT hire creative accountants – they therefore find the substantial change in working practices and ways of thinking difficult to accept and may well resist.

"There is something wrong with this" – is a response quite frequently encountered.

Robust executive adoption of the concepts and the design and involvement in the implementation is therefore vital.

 

4.  No software to maintain the integrity of the model

It is extremely difficult to maintain the integrity of the Chart of Accounts and the model without software to assist.

 

5.  Seeing the project as an Accounting project not an Information Engineering project

Treating the project as an Accounting project and looking to accountants for all the answers instead of seeing the project as a strategic information engineering project and looking to information engineers for the solution.   The Do-It-Yourself phenomenon coupled to "that is too much money" are extensions of this issue.

 

6.  Failure to go to the finest level of detail

It is seductive to say "we will add the detail later" but it is advisable to go right down to the detail in the project.

 

7.  Failure to recognize that the Cubic Model is also a Governance Model

The Cubic Model is also a logical Governance Model, if this is not recognized and taken into account in implementation problems can result.

 

8.  Failure to implement effectively

There are many change implications that can get in the way of a successful implementation.  It is vital to treat the project as a full blown technology implementation project and manage accordingly.

1.  Definitions:

a.  A laboratory is a facility that provides controlled conditions in which scientific research, experiments, and measurement may be performed. (Wikipedia)

b. Engineering is the discipline, art, skill and profession of acquiring and applying scientific, mathematical, economic, social, and practical knowledge, in order to design and build structures, machines, devices, systems, materials and processes that safely realize improvements to the lives of people.

The American Engineers' Council for Professional Development has defined "engineering" as:

The creative application of scientific principles to design or develop structures, machines, apparatus, or manufacturing processes, or works utilizing them singly or in combination; or to construct or operate the same with full cognizance of their design; or to forecast their behavior under specific operating conditions; all as respects an intended function, economics of operation and safety to life and property. (Wikipedia)

c.  A prototype is an early sample or model built to test a concept or process or to act as a thing to be replicated or learned from. (Wikipedia)

A prototype is a carefully and professionally constructed test sample of a system that in final form is intended to be put into economic operation by the developers (Robertson)

d.  Implementation is the realization of an application, or execution of a plan, idea, model, design, specification, standard, algorithm, or policy. (Wikipedia)

e.  A test can be considered as a technical operation that consists of determination of one or more characteristics of a given product, process or service according to a specified procedure.

f.  In software engineering, a walkthrough or walk-through is a form of software peer review "in which a designer or programmer leads members of the development team and other interested parties through a software product, and the participants ask questions and make comments about possible errors, violation of development standards, and other problems".

A walkthrough differs from software technical reviews in its openness of structure and its objective of familiarization. It differs from software inspection in its ability to suggest direct alterations to the product reviewed, its lack of a direct focus on training and process improvement, and its omission of process and product measurement. (Wikipedia)

2.  Prototyping environment

The laboratory is a rigorous, carefully controlled prototyping and testing environment managed by a very senior, very practical and very detail oriented manager who clearly understands the critical role of the laboratory.

 

3.  Representative data

The laboratory is populated with comprehensive, carefully selected representative data – perhaps 1% or even 0.1% of the data that is in the live system but representative of all possible scenarios.  There are very specific principles to be applied in the selection of this data.

 

4.  Fully equipped

The laboratory is situated in a permanently assigned, well appointed and well furnished room with five to ten high performance workstations, a high performance server, high performance backup device, data projector, flip charts, white board, etc.

 

5.  Life of project

The laboratory is established at the very start of the project and runs until the data warehouse and business intelligence environment are fully operational.

 

6.  Accurately model the real world

All configuration settings are tested in the laboratory until they accurately model the precise desired operation of the business and all required customization and custom development has been comprehensively and rigorously tested and accepted.

Executives and managers must be able to undertake structured facilitated walkthroughs of the laboratory configuration and see their business at all times – if it does not make sense to the CEO the process stops until the configuration has been modified so that it does make sense to the CEO.

 

7.  Break it till it breaks no more

The primary goal of the laboratory is to break the configuration and once it cannot be broken to optimize it, document it, develop training material and CBT in it, use it as a training environment, use it for the testing of reports and establish the data warehouse operating against it.

 

8.  Basis of go-live certificate

The configuration does NOT go-live until it has been comprehensively tested in the laboratory and accepted by all senior project team members.

The go-live certificate will be issued at the end of a structured walkthrough of the entire configuration by the entire top management of the project – this walkthrough may take several days and may have to be suspended several times for minor adjustments.

If the top team are not satisfied with the results of the walkthrough further walkthroughs, will be held until all members of the top team are willing to accept the configuration.

 

9.  Basis of live instance

The laboratory configuration forms the basis of the live instance of the software – the entire configuration is to be copied onto the production server and rigorously tested software used to clear out all transaction data files and reset all counters – this reset software must be supplied and certified by the software vendor who shall be liable for damages should the reset software be found to be defective.

The final empty configuration will be reviewed and tested during a trial run of the start-up process in the laboratory.

Section 5.1

The JAR&A SEPT Cubic Business Model

and Group-Wide Chart of Accounts

One of the cornerstones of the JAR&A Strategic Engineered Precision Taxonomies approach is the Cubic Business Model which, in turn, relates to the Group-Wide Chart of Accounts.

This section discusses this particular component:

1.  Our flagship SEPT offering based on 22 years of experience built on 1,000 hours of R&D – huge opportunity

In 1987-88 I was directly involved in the design, construction, testing, commissioning and implementation of a fully integrated "Management Information System" for the firm I worked for.  The system included fully integrated Debtors, Creditors, General Ledger, Work in Progress and Time Based Billing and Management.  In today's terms it was a fully-fledged ERP.

We designed the entire solution to be tightly integrated at the data level and created a seamless integration that has gone on to underpin the dominant specialist ERP in the Consulting Engineering fraternity in South Africa, "ProMan" – which stands for "Professional Practice Management Information System" and which is installed in over 70 firms including many of the largest.

We struggled for weeks to get the General Ledger integration to work exactly the way we wanted and spent many late nights ticking transactions until eventually we discovered that there were some very rigid technical rules underpinning the geometry of financial data in terms of location – function – account and that, unless one got these dimensions absolutely precisely defined the full richness of the integration was not achieved.

We incorporated the findings into the software design and it has operated reliably ever since with what is probably still the tightest integration I have ever seen in the ERP space, and I have seen dozens of ERP implementations across the full spectrum of brands.

In 1989 I left the Engineering firm concerned and set out on my own with the objective of bringing "the disciplines of engineering to the Information Technology (and by extension ERP) industry".

As I have described elsewhere this was the start of a long and arduous journey that has brought me to the point where it now finally seems appropriate to write this manual.

In 1990 I was approached by another firm of consulting engineers to assist them to implement the software referred to in their business.  Flushed with the success of the previous implementation I confidently quoted for 40 hours of my time to design a Chart of Accounts for their business – which was larger and more complex than my previous employer.

Very aware of the importance of the Cubic Business Model as I started to call it I decided to generate the Cubic Model using spreadsheet macro's.

1,000 hours later I finally hit the button and generated the full Chart of Accounts having learned a whole lot more critical lessons with regard to the effective design of financial data taxonomies.

The lessons learned in this painful period of unremunerated Research and Development have remained with me to this day and the standards and conventions developed then infuse the entire Strategic Engineered Precision Taxonomy and Precision Configuration approach that is discussed at length in this manual.

I have not encountered any other person who has attempted what I achieved in 1990 and I have not encountered anyone else who is fully aware of the underlying principles and complexities that I uncovered at that time and which underpin the whole SEPT approach set out in this manual.

I can therefore say with a high level of confidence that it is improbable that another firm has the intellectual property in this area to create a solution of the strategic robustness and value that is being discussed in this section.

I honestly believe that the SEPT Cubic Business Model and Group-Wide Chart of Accounts approach discussed here is head and shoulders above any other offering that I have ever encountered and that this therefore represents a MAJOR OPPORTUNITY to create strategic value for any significant organization.

 

2. An integrated governance, leadership, accountability and management model in addition to an accounting model

Inherent in the approach that is advocated as part of the SEPT Cubic Business Model and Group-Wide Chart of Accounts approach discussed here is an integrated governance, leadership, accountability and management model IN ADDITION to an accounting model.

The approach produces a Chart of Accounts that is designed for ease of management application, that ensures high levels of accountability and therefore facilitates ease of delegation and overall improvements in governance by providing precise measures of financial performance for every unit and sub-unit of the business to whatever level of detail is required by Executive Management.

It so happens that this design is ALSO easy to use from an accounting point of view (although it does require significant training and re-orientation of financial operational personnel) AND it is largely self-auditing so that the duration and cost of the audit are drastically reduced in most cases once it is bedded down and operating effectively.  This of course assumes that the Chart of Accounts is properly integrated with the ERP with SEPT taxonomies throughout the ERP or Data Warehouse and that all change and other issues are dealt with during the implementation in order to ensure that the tool is used to its full potential.

 

3.  BUT James, you are an engineer – what do YOU know about accounting?

Some years ago the Chief Financial Officer of a client rejected what I was proposing on the grounds that I was an engineer and therefore in his opinion knew nothing about accounting.

At one level he was right, I AM an engineer and I do NOT claim to be an expert on accounting practices, standards, conventions, interpretation of financial statements, etc.

I DO claim to be an expert on information engineering, taxonomies, decision support and other elements that are necessary to ensure that computerized information systems fully support the business in a manner that results in high value implementations.

I hold that one of the fundamental principles of what I term "the engineering approach" is that engineers work in multi-disciplinary teams – for example, it takes about 250 different professional disciplines and trades to design and build a 50 story office building ranging from the senior strategic architect, through the architectural draftsman to the tradesman who lays the carpet.

Accordingly, I hold that it is desirable that I am NOT an accountant – I work closely with the Chief Financial Officer and other financial personnel of client organizations and, where necessary, with the senior partner responsible for their account from their auditors.

I have also designed numerous charts of accounts with diverse clients and therefore have the benefit of insight into different ways of thinking and, the reality is, there ARE different schools of thought in the Accounting fraternity on how things should be done.  That is desirable, each business is different and the goal is to craft the best Chart of Accounts for the client organization.

My role is as a facilitator and thought leader in terms of the mechanics of Chart of Accounts design, the Chief Financial Officer, the CEO and other senior executives are the customers for the resulting output and the Chart of Accounts must make perfect sense to them – when they look at the Chart of Accounts I want them to have an "Aha" moment and say "YES, this IS MY business!"

So I support the client to develop carefully thought out hierarchies, make sure the progression of content follows strategic logic, ensure fine granularity of posting level accounts that models the real world and generally make sure that the final product is a high value taxonomy that will serve the organization well for many years to come – I hold that a well-designed and well maintained JAR&A financial taxonomy (AKA Chart of Accounts) should easily last for twenty years or even longer.

I look to the Financial officers of the client, assisted as necessary by their Auditors and other financial advisors in order to ensure that the taxonomy we produce complies with accounting standards such as IFRS, GAAP, etc.

In doing this I have found that provided the level of detail in the Chart of Accounts and the overall model are fine enough compliance with accounting standards is very simple, it just follows automatically from an experienced professional (the CFO) defining his or her information needs in a logical and structured manner assisted by an expert information engineering facilitator.

The same applies to alternative accounting treatments and report groupings such as are necessary to compute EBITDA and other ratios, etc.  Once the data is extremely well organized all these alternative accounting forms are easily accommodated, far more easily than with the legacy Charts of Accounts I see in all organizations I evaluate.

Thus, to answer the question, I think it is an advantage to my clients that I am an engineer...

Oh, and by the way, I CAN draw AND interpret T diagrams!

 

4. Ties the entire enterprise together in a systematic structured manner – a group consolidation model and an integration model

The JAR&A SEPT Cubic Business Model and Group-Wide Chart of Accounts coupled with the full range of JAR&A SEPT hierarchy design and coding conventions provides an information CONTENT mechanism to tie the entire organization together in a logical structured manner that permits "slicing and dicing", "drill-down" and "roll-up" to be done quickly and easily harnessing the FULL potential of whatever investment in Information Technology the client organization has made to this point.

Using this approach your ERP will fly, so will your Data Warehouse and so will whatever query and reporting tools, Business Intelligence tools, etc that you may have purchased.

Even your Excel spreadsheets will be easier, faster and more reliable and all sorts of advanced analyses that currently you may only dream off will become easily and practically achievable.

The Cubic Business Model provides a Group Consolidation model that will accommodate the most complex organization structures through a systematic approach to modelling the real world legal complexity of the organization.

The entire logical solution provides a foundation for tying together all aspects of the integration of your ERP or Business Data Warehouse information in a manner that facilitates drill down from one line of inquiry and drill up into other sources of information – launch an inquiry into the asset costs in the General Ledger and drill up easily into the Assets Register or Plant Maintenance Module to obtain the detailed analysis of well-structured financial AND OTHER information in those modules.

 

5.  Facilitates strategic (thrive) financial analysis

By starting the design in consultation with the Executive Team and Chief Executive and then working in depth with the Chief Financial Officer constantly testing against the strategic goals and parameters of the organization all dimensions of the model (Locations, Functions and Accounts) are hierarchically described in a manner that places strategic information in the forefront of the default reporting sequence and therefore in the forefront of all query and reporting and even posting of information in the entire ERP environment.

This ensures that one consistent strategic view of the business is conveyed throughout the organization.

There is no "gee wiz" in this, it is simply the consequence of a senior and very experienced facilitator working with the executives of the client organization to design a high level structure that accurately reflects the strategic parameters of the organization – the essence of why it exists and how it thrives – the essential economic and other fundamentals of the business.

There is no short cut; the ONLY way to achieve a high value strategic focus is to start with the custodians of the strategic view of the business – the CEO, CFO and other members of the Executive team.

 

6.  Structured financial taxonomy that covers the entire enterprise and ties it all together

The final result is a structured financial taxonomy that covers the entire enterprise and ties it all together.

The cubic model – made up of individual businesses, locations, functions and accounts is all designed at the executive level to accurately reflect the real world in such a way that executives, managers and supervisors down to a fine level of detail are each presented with an accurate and entirely consistent income statement and balance sheet for the part of the business for which they are personally DIRECTLY ACCOUNTABLE.

Coupling this to accounting disciplines and policies ensures that journal entries are minimized and ownership of information is maximized.  Other JAR&A principles in the design greatly reduce the need for overhead apportionment journals and the like.  This approach is a radically better paradigm for most organizations.

Having said this it is important to recognize that the vast majority of business units in most organizations manage expenses and to a lesser extent assets so, in most cases, the sub-unit financial statement is purely a very detailed expenditure statement that can be readily measured against planned budgets and rolled up to achieve views for individual plants, functions, business units – any grouping that is relevant.

The Cubic Business model provides a robust model of the real physical world – locations are places you can walk to and kick, functions are tasks for which you will find personnel and sometimes machines doing things aligned with the fundamentals of the business.

The governance of this physical model sits in another layer, a reporting model that is implemented ABOVE the Chart of Accounts, NOT in the Chart of Accounts – the impacts of corporate restructuring and other reorganization are minimized and generally reduced to different groupings of the same building blocks in the reporting layer.

 

7.  Radically improve accountability, governance, decision support, empowerment …

As indicated above the Cubic Business model is designed from a fundamental first principles strategic (essence of the business) approach that accurately reflects the physical (location) and functional dimensions of the business at a level of fine granularity that allows the business to present every executive, manager and supervisor with a precise financial statement that reflects ONLY those expenses and other components over which they have personal control and accountability.

Correctly implemented the Cubic Business Model can eliminate private calculations of performance and gets everybody managing off the financial system as they should.

With strong emphasis on holding all who control expenses and other financial components accountable for their exact numbers and through ensuring that those exact numbers come directly out of the General Ledger we find that the entire enterprise starts managing off the same source data.

The result is that the General Ledger becomes largely self-auditing – everybody is using it, everybody knows exactly where every transaction came from and everybody is held accountable.  This is NOT a technology thing – the JAR&A SEPT Cubic Business Model and Group-Wide Chart of Accounts provides the logical content mechanism to make such rigorous use of systems possible BUT management focus and commitment to making the model work is VITAL to achieving a the benefits touched on above.

Once these mechanisms are in place the high levels of accountability immediately has a dramatic impact on governance AND leads to empowerment – as long as Joe is performing relative to budget and everybody trusts the numbers his superiors can leave him to run his business unit or sub-unit and concentrate on strategic issues and growing the business.

Because Joe has accurate, dependable, up-to-date numbers Joe can make better decisions and manage better and in his own right assist the organization to thrive.

The logical next step is that the audit bill goes DOWN!

The first time this happened I was caught completely by surprise – the audit was cut from 6 months to 6 weeks and the balance sheet was unqualified for the first time in 15 years!

 

8.  Supported by sophisticated "GL Builder" software

As I mentioned in the history of the approach, I have always used computer software to help me assemble the model, it can be done manually in a spreadsheet but that is extremely tedious and error prone and maintenance becomes a MAJOR headache.

We have developed a suite of software which we call "GL Builder" which we use to assist us in building the Chart of Accounts and the Cubic Model.

This tool allows us to select the locations, functions and accounts that apply to a particular business unit, then select the functions and accounts that apply to a particular location and then the accounts that apply to a particular cell (location – function intersection) on the cubic model.

Thus we have an absolutely harmonized Chart of Accounts for each cell on the matrix – "Sales Personnel Commission" is ALWAYS the same account across the entire model, even if we have 500 branches in 50 countries we will always be able to compare like with like across the entire enterprise.

And the above matrix concept can be used as a presentation tool over the entire Chart of Accounts to display specific costs for example across the entire enterprise – your imagination is the limit in terms of what you can do in your Business Intelligence Tool and the data will now SUPPORT your imagination instead of getting in the way.

 

9. Can be implemented as a mapping layer in your Data Warehouse and used for acquisitions

Much of the above discussion has related to the use of the Cubic Model in an ERP, however, it can be used very effectively in the mapping layer (Transform element of the Extract, Transform, Load mechanism) of your Data Warehouse to unscramble the spaghetti on a 20:80 basis – 20% of the cost and effort to give you 80% of the strategic benefit.

Because of the highly structured nature of the Cubic Model and Chart of Accounts and the use of computer software to generate the model a model can easily be created for a potential acquisition at a summarized level and used in due diligence investigations in order to evaluate the viability of the proposed acquisition.  The standard financial reports of your organization can be easily and quickly applied to the Trial Balance of the target organization so that you can evaluate their figures against your proven reports and analytical techniques.

For the same reason, once an acquisition goes through it is a relatively simple matter to map their existing Chart of Accounts onto your operational SEPT Chart of Accounts and start reporting to the same standards as the rest of your group.

 

As with all information technology the realization of the benefits outlined above requires effective implementation, proper training and rigorous discipline in the use of the computer based solution.

Section 5.2

Benefits of developing group wide

Precision strategic master taxonomies

and data attributes to JAR&A standards

The following are conceptually the major benefits of implementing group-wide master taxonomies to the standards of precision, structure and discipline that I advocate.

Relative value is expressed in percentage out of total value delivery from the complete solution through the different factors – total for all factors is 100% -- these numbers are indicative based on my observations over the years and will vary from organization to organization.

In presenting these benefits it is perhaps important to note that my benchmark is the first commercial business computer solution I ever developed which enabled the client to double their turnover in twelve months because they could do things that competitors many times larger could not do by making better investment decisions.

1.  Strategic executive view of the data – 2%

All data is sorted and grouped in a manner that makes most sense from a strategic executive perspective of the organization.

Hierarchical taxonomies sorted from most strategic (essence of the business / thrive) information at the top of the taxonomy down to the most routine at the bottom with ease of drill down that reflects the strategic perspective on the business ensures that all users of the data share the same strategic view of the strategic priorities of the business.

If these taxonomies are deployed in operational software then these priorities are communicate throughout the organization simply by use of the software.  In principle, however, it is recommended that these taxonomies should FIRST be deployed in a tailored data warehouse.

The remainder of this document assumes that taxonomies are first deployed at the data warehouse level.

These benefits are material, but they are NOT where the true return on investment lies.

 

2.  Presentation of detail, roll-up and drill down are logical, intuitive and fast – 4%

Hierarchical logic and supporting code schemes make presentation of detail and roll-up to summary logical, intuitive, flexible and fast.

The strong hierarchy design principles ensure that there are generally between five and ten items at any level in the hierarchy which facilitates ease of use, speed of interpretation and speed of drill down.  These design principles recognize the cognitive span of the human mind and take account of the psychology of decision making.

The code scheme and hierarchy design rules that I apply ensure that the drill down capability of all reporting and analysis tools operates at peak performance, in some cases orders of magnitude improvement in ease of report construction with associated reductions in development and maintenance costs result provided that developers understand the logic and conventions and work with them.

 

3. Operational reporting and system operation is streamlined and operational efficiencies result – 6%

Because the raw data is so highly structured and classified operational reporting and system operation is streamlined and operational efficiencies result provided that reports etc are designed to work WITH the taxonomies.

An extension of the previous point in terms of delivery of value.

 

4.  Emphasis on content precision improves data quality – 8%

Emphasis on content precision improves data quality throughout the organization with resultant low-key second order efficiency and presentation gains – reports, etc are neater and more accurate.

This is an overall cultural benefit that I did not anticipate but was lifted out as a key element by a client a few years ago.

 

5.  Datawarehouse mapping is greatly simplified resulting in a much higher level of report and model reliability and sustainability – 10%

If the precision strategic taxonomies are introduced between the ERP / Business Information System layer and the data warehouse / business intelligence layer ETL (extract, transform, load) is simplified and a much higher level of report and model reliability and sustainability is achieved.

If the taxonomies are introduced in the ERP the ETL in the Data Warehouse is massively simplified.

Providing highly structured strategic business logic in the input mappings to the data warehouse with either scenario opens the door for massive improvements in effectiveness and efficiency in the business intelligence layer – this is where the real benefits are delivered.

Implementing the taxonomies in the operational software must go hand-in-hand with a comprehensive re-implementation or new implementation of the business information systems and I am increasingly seeing that this should only happen once there is a comprehensive solution in the data warehouse space.  Refinement of code schemes in the operational software will be necessary during data warehouse design and construction.

The points that follow assume that the taxonomies are implemented in a clean, green fields data warehouse instance built from scratch to maximize the effective exploitation of the taxonomies.

 

6.  Enables greatly improved due diligence and ease of integration of acquisitions – 12%

This approach makes it possible to rapidly map data from potential acquisition targets during due diligence in order to evaluate performance using standard reports and models in use for the rest of the Group.

This same capability opens the door for greatly accelerated integration of acquisitions into Group standard analysis reports and models.

This is a spin-off benefit that may not be that material in your organization, however, if you are considering acquisitions this benefit alone could more than pay for the entire investment.

The key benefit of this approach is that because you have the tools to quickly and easily map source data to the new highly structured taxonomies you can then easily apply standard reports to the mapped data and produce comparative analysis of the target firms' financials and other data using exactly the same reports and models you use for the rest of the Group.

Effectively what this does is it enables you to analyse the target as though it was already part of the Group and get a good feel for its real performance using your own metrics.

By extension, immediately the acquisition has taken place these same mappings can be used to start reporting on the new member of the portfolio to the same standards of the rest of the group from month one.

This obviously assumes your acquisition is in the same business as the rest of the companies in the group.  If you are a bank and purchase a fleet of fishing trawlers there will be challenges – you will have to extend your existing taxonomies to accommodate the new business area first!

 

7. Greatly improved sophistication of management reports improves operational and tactical (things right) decision support dramatically – 18%

Because of the highly structured logic of the data much more sophisticated management reports and graphs become readily achievable giving a quantum improvement in sustainable management information which greatly improves the quality of operational and tactical decision support.

At this point the investment really starts to pay for itself by enabling the capability to build robust reports and analysis tools that evaluate whether the business is doing things right.

A significant investment is required over and above the development and deployment of the taxonomies in order to develop reports to the same standards of precision and excellence that are inherent in the taxonomy approach which I advocate.

Once this investment has been made it becomes orders of magnitude faster and cheaper to produce reports and undertake more complex analysis which in most organizations would be impossible with the sort of data that is in general existence.

In order to understand this point it is important to note that I am coming from a perspective of practical experience in the application of really sophisticated graphical and statistical techniques which are seldom understood by people in the IT or management space and which few people know how to apply.

These techniques, if appropriately applied, open the door to a much more meaningful and much deeper understanding of the business, trends, relationships, sensitivities, correlations, etc than is possible with the data that is typically found in business information systems.

This is the point at which the concept of a dashboard as a range of precision instruments taking precision measurements starts to become really valid.

 

8. Enables advanced sophisticated analytical models with greatly improved support for strategic (right things) decision making – 40%

This in turn makes it possible to construct sophisticated economic and other analytical models and use sophisticated analytical techniques which greatly improve the quality of strategic decision support information which facilitate decisions that enable the business to do the right things well (thrive).

This is where a quantum level of return on investment results IF executives exploit the resources created in order to make better competitive decisions.

This builds on the previous point but extends it into advanced economic and other models which permit the executive team to really manage the future long term direction of the business and supports them with the information they need in order to achieve exceptionally high value business decisions.

One high quality business decision that results in a high value sustainable business investment or divestment decision will pay for the investment in technology and services with geared multiples that cannot be realistically quantified.

The real value of an executive lies in the strategic decisions they make and the real value of what is being proposed here lies in the ability of the information infrastructure that is created to support such high value decisions.

The true value of your organization being able to make much better decisions than its competitors cannot be quantified in currency terms – it could be the difference between being the target of a take-over as opposed to being the acquiring firm in a take-over.

In moving into this dimension it must be stressed that it is necessary to bring in information that is not contained in the operational business information systems.  This would include soft information and there are robust techniques which, if implemented to the same standards of rigour, precision and taxonomy design will provide all sorts of possibilities in terms of analysis and decision support.

1.  Logical concept

The most essential element of the Cubic Business Model is the logical concept – the realization that each of the dimensions of the model are as hard as concrete and must be precisely and consistently defined and maintained.

It is a highly modular concept and therefore scalable and portable to any enterprise.  I have applied the model conceptually in a wide diversity of enterprises including National Government Departments and large multi-business commercial groups.

 

2.  Divisions – the real commercial elements

This is where the commercial reality is modelled, certain principles apply to take account of foreseeable growth, restructuring, etc.  Operating divisions / business units / legal entities – as big and as complex as the biggest organization.

Highly modular and hierarchical – SEPT taxonomies apply.

 

3.  Locations – walk to and kick it – WHERE we do what we do

The physical dimension of the business – actual places where things happen – you can always associate a person or an asset with a location.  Ships and aircraft are movable locations.

Highly modular and hierarchical – SEPT taxonomies apply.

 

4.  Functions – people (and machines) doing things – WHAT we do

A function is about what we do – it is a collection of activities performed by a person or group of persons, frequently utilizing one or more assets in order to perform a function that is necessary for the operation of the organization.

Highly modular and hierarchical – SEPT taxonomies apply.

 

5.  Accounts – Revenue, Assets, Liabilities, Capital and Reserves

The accounting dimension determined by the CFO in conjunction with Executive Management – exact logic varies from organization to organization:

• Revenue structured from core revenue to ancillary revenue and "Other".

• Assets structured from least liquid Assets to most liquid.  High level categorization of fixed Assets carried through all areas of asset related accounts.

• Liabilities structured from long term to short term and "Other".

• Capital and Reserves to standard accounting conventions.

Highly modular and hierarchical – SEPT taxonomies apply.

 

6.  Accounts – Expenses – critical element of the model

Expenses are listed here separately because, in practice, in most enterprises there are far more units in the Cubic Model that have expenses than have the other categories of account.

Generally there are far more personnel who are managed in terms of expenses than in terms of the other elements.

The expense chart needs to be very carefully thought out from a strategic (essence of the business) perspective and takes by far the most time to define and refine.  It is really important that all lists, but particularly expenses, are as comprehensive and finely granular as practical.

Highly modular and hierarchical – SEPT taxonomies apply.

 

7.  Logical sub-modules

As mentioned under Assets, there are logical sub-modules, for example the main headings under which Fixed Assets are reported in the General Ledger ranging across Asset Cost, Accumulated Depreciation, Insurance, Repairs and Maintenance, Spares, Leases, etc, etc.

Similar categorizations may apply to Personnel costs, products, related parties, etc.

There are important rules relating to how these are all defined in order to ensure that the categorization across all modules of your systems is harmonized and exactly consistent so that reports in one module integrate seamlessly with those in others thereby allowing you to use software in your Data Warehouse to quickly and easily drill down and drill up between modules in order to get answers to your questions – including those questions you have never previously thought to ask.

Highly modular and hierarchical – SEPT taxonomies apply.

 

8.  Assembly of sub-charts per location and function

The GL Builder Software enables the rapid selection of the accounts for every sub-chart of accounts across the entire model and the assembly of these sub-chart blocks to build the entire Chart of Accounts so that the account codes are 100% uniform and consistent across the entire enterprise.

 

9.  Reporting and modelling layer

In understanding this approach it is vital to understand that a whole lot of management accounting "things" and reports are removed from the General Ledger and instituted in the Data Warehouse.

• The modelling and reporting of current governance should NOT be in the Chart of Accounts or in the General Ledger at all.

• The distribution of overheads should NOT be in the General Ledger.

• These are best accommodated by sophisticated query and reporting and modelling capability within the Data Warehouse and Business Intelligence environment.

This enables a high level of stability in the General Ledger and a high level of confidence in the figures which in turn results in all personnel managing from the General Ledger and the reports and models in both the GL and DW / BI components.

 

10. Way of working

Ultimately, the most important element of the JAR&A SEPT Cubic Business Model is that it is a WAY OF WORKING, it is a culture, it is a set of rules and protocols and practices that take the management of financial information to a new level of precision and value add for the enterprise.

1.  Journal corrections fall away

Experience indicates that in a properly configured and properly implemented SEPT GL environment journal entries to correct posting errors hardly occur.

 

2.  Operational people distrust journals

Probably the biggest single reason that most operational managers and supervisors do NOT use the General Ledger for management information and decisions is because of the presence of management journals such as proportional overhead distribution, split invoices, etc.

Frequently the basis of attribution of these journals is not made clear or is disputed and, as a consequence, most managers and supervisors ignore reports from the GL and maintain their own records which reflect the reality of their part of the business – which generally is the real view anyway.

Part of the SEPT concept is to provide an alternative method of allocating overheads and introduce disciplines to minimize or prevent split allocations.

This document outlines a proposed method for allocating overheads that builds on the logic and structure of the JAR&A SEPT Cubic Business Model and Group-Wide Chart of Accounts.

 

3.  Post to the unit that incurred the cost

Since in most cases we are concerned with expenses I will use language relating to costs.

The fundamental principle is that the costs should be posted to the unit that incurred them, or that signed the order.  Provision should be made for the complexities of the real world and for notional accounting business units, with real designated managers, that account for:

 

• Location costs that cannot be allocated directly to function – electricity is frequently an example – generally there is one set of electricity meters serving the entire location.

 

• Function costs that cannot be allocated to specific locations – for example the development of Human Resources policy incurs external costs which cannot be allocated to a particular location and which should be applied across the entire enterprise or at least across all locations.

 

• Corporate costs that cannot be allocated to locations or functions – for example much of your financial balance sheet such as bank accounts, debtors control account, etc frequently are located here.

 

These and other rules are determined as the model is constructed in the GL Builder tool.

 

4.  Functions are categorized into major categories

In general I recommend that Functions are divided into the following categories:

 

• Revenue is categorized separately so that all operational business units have costs allocated on the same basis without having revenue distort the operational financial reports – this does NOT impact the macro corporate financial statements which are driven off the Master Chart of Accounts

 

• Core – the essence of the business (the strategic heart of the business) e.g. the factory

 

• Core – support, that which we do to make sure the essence of the business operates effectively e.g. the technical service and engineering staff who look after the machines in the factory

 

• Some clients separate out "Sales, Marketing and Distribution" although these can be separated out using other techniques

 

• Administration – all the other stuff which is not core or core support e.g. business administration, finance, etc

 

Some clients use the same categorization in the Chart of Accounts.

These major categories of functions provide a mechanism for consolidating and rolling up costs off overhead business units onto production business units and then tying them in to revenue.

The following sections explain how this works.  As you develop understanding of how this model works you will be able to add in additional layers of cost distribution.

 

5.  Build the model OUTSIDE the General Ledger

In the steps that follow please see this model as built either in a spreadsheet (OK for prototyping but NOT recommended for long term operation) or in a model in the Data Warehouse and Business Intelligence environment which is what is recommended.

Alternatively this can be constructed in a consolidation tool.

The model should be modular and incremental and designed in such a way that all cost drivers, ratios, etc used in the model can be quickly and easily changed to allow scenario computations to be performed.   Cross casting and other spreadsheet quality control techniques and disciplines are VITAL – the bottom line of the income statement must always be the same at all levels of the model as a minimum quality check, there are many others that should be incorporated.

 

6.  Corporate costs independent of location and function

Take the costs from the cell named "Corporate costs independent of location and function" (bottom right above) and spread them over the entire model on a pro-rata basis using appropriate cost drivers.

 

7.  Location costs independent of function

Take the costs from the "function" named "Location independent of function" (third row from bottom) and spread them UP THE COLUMN over the functions for that location only.

 

 

8.  Function costs independent of location

Take the costs from the "location" named "Function independent of location" and spread them ALONG THE ROW over the locations for that function only.

 

9.  Administration costs

Take the costs from all the cells corresponding to functions categorized as "Administration" and spread them UP THE COLUMN over the Core Support and Core functions above them.

 

10. Core Support costs

Take the costs from all the cells corresponding to functions categorized as "Core Support" and spread them UP THE COLUMN over the Core functions above them.  This leaves you with only Core functions and Revenue Functions.  If you have categorized "Sales, Marketing and Distribution" separately you would distribute them up the column first.

 

11. Core costs onto Revenue

Take the costs from all the cells corresponding to functions categorized as "Core" (which now contain the ENTIRE spread of costs) and spread them UP THE COLUMN over the Revenue functions.

If you have been thorough and accurate in the determination of cost drivers, which costs to apply them to and how to distribute them up the model this should leave you with a very precise activity based computation of net profit contribution for each of your major revenue streams.

This model will take significant work to develop and calibrate but, provided it is well designed and well built, it will provide you with a learning environment in which you will progressively gain greater insight into the real cost dynamics of your enterprise.

With a well-designed model it is now possible to produce income statements for each cell which show the attribution of overheads to that cell in such a way that the custodian of that cell may engage with the model and management and assist in making the model more precise over time.

Fundamental to this approach is that performance incentives are ONLY computed based on the measures over which the manager or supervisor has direct control plus an agreed logic for the overheads IF it is intended that the manager should influence other parts of the organization to manage their contribution more effectively.

Section 6.1

Why Taxonomy and Configuration Management software is necessary

Having outlined the conceptual elements of an ERP configuration management software suite the question arises "why is this necessary?"  The points that follow headline the reasons why such software is vital to any organization:

1.  Precision

Consistency and precision of hierarchy and code schemes is central to the concept of precision configuration and therefore the use of software is vital.

 

2.  Only to JAR&A standards

Software is only possible with precision configuration to JAR&A standards and then all sorts of powerful automation and intelligent processing become possible.

 

3.  Alternative is expensive people

Rule based taxonomy and ERP configuration management without software can only be achieved by highly trained and expensive personnel with robust succession planning.  Alternatively clever software must be used.

 

4.  The concept powers the opportunity

The very patterns that make precision configuration so powerful as a source of management information ALSO open the door for automated software tools to assist with building precision configurations.

 

5.  Greatly improved long-term taxonomy and configuration quality

The use of precision ERP configuration management software greatly improves quality.

 

6.  Software cuts in where manual costs escalate

Manual taxonomy construction becomes increasingly costly as the detail expands exponentially down the hierarchy but at roughly the same point that manual construction and coding become unwieldy and costly software will start to perform at its best.

 

7.  Reduced life time operating costs

ERP configuration management software will drastically reduce ERP life-time operating costs IF consistently and reliably employed AND greatly improve sustainable ERP performance with particular emphasis on the quality of management information.

 

I am firmly convinced that an investment in ERP configuration management software will serve any organization extremely well and will offer a sizeable return on investment.  This is the way of the future for ERP and business information (including BI and DW) generally.

Section 6.2

What is the JAR&A taxonomy software?

What is the James Robertson and Associates taxonomy software?

1.  Tools

The JAR&A taxonomy software is a set of software tools designed to assist with the development, deployment and maintenance of high precision taxonomies to JAR&A standards

 

2.  Standards

JAR&A standards lend themselves to the creation of software tools and require high levels of taxonomy precision in order to operate at full potential.  These tools facilitate the creation of taxonomies to these high standards of precision and the high standards of precision in turn make the tools possible.

 

3.  Taxonomy Builder

The basic taxonomy builder elements are a range of tools to assist with the creation and manipulation of hierarchies, addition of suffixes and coding of hierarchies to high levels of consistency with high levels of compliance with JAR&A standards.

 

4.  GL Builder

General Ledger Builder is a sophisticated suite of software specifically designed for the precision specification and assembly of three dimensional code schemes such as the Location – Function – Account structure that is fundamental to the assembly of precision General Ledger Charts of Accounts – first prototype developed in 1990 as part of a 1,000 hour research and development project.

GL Builder is one of the two deployment modules that form the commercial software suite – the other elements are included in both of these modules as they relate to the main module concerned.

5.  Complex List Builder

The complex list builder contains many of the other elements of the software designed as a sophisticated tool for the construction and maintenance of classification schemes associated with lists such as the SAP Materials Master, Lawson M3 and Infor LN Item Master, etc.  The tool caters for very complex open ended coded logistical taxonomies and other complex lists.

The same tool is used for simple taxonomies.

Complex List Builder is the other deployment module that forms the basis of the commercial software offering – the other elements are included in both of these modules as they relate to the main module concerned.

 

6.  Taxonomy maintainer

The taxonomy maintainer functionality is an integral part of the solution and provides facilities for code scheme maintenance.

It is one thing to build a precision taxonomy with a highly experienced facilitator, it is another to maintain the precision over time as people change and forget the finer nuances of the code scheme.  Code scheme maintenance functionality  provides tools to only allow addition of entries in valid locations, maintain the integrity of hierarchies and code schemes, check for duplicates and then generate the update files for all dimensions of all tables to be updated.

 

7.  Report and BI builder

The Report and BI builder functionality are a planned future module that will exploit the highly structured list designs to provide the ability to rapidly generate and deploy diverse standard reports, dashboards and BI models taking account of the full complexity of the taxonomies.

This functionality is based on the realization that the full potential of the investment is only realized when information is delivered in a format that will give rise to high quality high value business decisions – this capability was first developed as a prototype in 1993.

Taken together this suite of tools offers clients an unsurpassed opportunity to obtain value from their existing business information system investments in ways that were never previously possible on a sustainable basis.

It is planned that the current versions of the software will eventually form the basis of a range of products to be marketed internationally.

To the best of my knowledge there is nothing that even vaguely compares to this software and methods available elsewhere.

Section 6.3

Why use the JAR&A taxonomy software?

Why should you use the James Robertson and Associates taxonomy software?

1.  34 years' experience

James Robertson has been developing and building taxonomies and catalogue schemes since 1977 and developing taxonomies for ERP and other business information systems since 1987.  This software provides expert guidance – like having James to help you.

Benefits: improves quality, reduces risk of poor design, speeds up work.

 

2.  Expert guidance for maintenance

Where taxonomy development has been facilitated by James these tools provide expert guidance to assist with the maintenance of taxonomies designed by him in order to maintain the integrity of the design.

Benefits: improves quality long term and reduces or prevents degradation, reduces support costs.

 

3.  Tools used by James

Many of the tools have been designed for use by James to help speed up taxonomy development and to ensure high precision consistent lists.

Benefits: precision, quality, time, reduced costs.

 

4.  Enable larger and more complex taxonomies

The tools make it easier to accurately build large and complex code schemes – for example James will not attempt a Cubic Business Model Chart of Accounts project without the GL Builder software module.

Benefits: major time savings, greatly improved accuracy, ability to do things that are impossible manually.

 

5.  Full Material and Item Master complexity only possible with tools

The complexity of content and the open ended nature of Materials Master and Item Master tables is so great that it becomes almost impossible to build and maintain the full-house complexity of such lists manually.

The Complex List Builder provides the tools to do this.

A later edition is planned to include full intelligent Master Data maintenance capability.

Benefits:  support full potential of Materials Master and Item Master tables, unlock full potential value of ERP software, support greatest intelligence with highest quality on a sustainable basis.

 

6.  Avoid degradation of taxonomies

When a new taxonomy is deployed those involved in its development understand it intimately but as time passes and staff change, or just get out of touch, the quality of taxonomies tends to degrade 

In some cases degradation significant enough to fundamentally damage the functionality of the taxonomy can occur within weeks without proper training.

The taxonomy maintenance tools provide expert guidance to minimize degradation and prevent it altogether when used by a well-trained senior staff member.

Benefits: sustainability, minimized cost of operation, maximize reliability, ease of maintenance, preserve investment.

 

7.  Precise maintenance

In complex taxonomies where the addition of one entry can generate multiple entries the taxonomy maintenance functionality automates the generation of update entries for uploading into master data tables.

Benefits: ensures that updates are precise and easy to load, guarantees accuracy of updates even in complex taxonomies like the GL Cubic Business model for a large and complex enterprise.

 

8.  Support sophisticated and comprehensive reporting

Building taxonomies is the foundation of the investment, it is only when there is a comprehensive collection of reports ranging from simple tables to complex models that fully exploit the potential of the taxonomies that value is truly unlocked.

The Report and BI Builder tools will provide a mechanism for replicating reports across the full range of taxonomies together with a report library management facility.

Benefits: ease of replication and management of reports, move from a scrappy collection of ad-hoc reports to a well ordered portfolio of well-designed reports designed for all eventualities, particularly important with the Cubic Business model in order to give every supervisor and manager a comprehensive portfolio of operational management reports.

The JAR&A Taxonomy software provides a range of tools that open the door to levels of strategic, tactical and operational information efficiency that have been promised for decades but seldom if ever delivered.

Section 6.4

Further information on the use of software

to develop and manage Taxonomies

and Precision Configuration

Following are headline comments on the technical approach supported by software that I think is most appropriate in developing and maintaining taxonomies:

Fundamental concept is to design and maintain precision configuration sustainably.

1. High level structure of main taxonomies including – Item Master / Material Master / Product Master, Chart of Accounts, Customer and Supplier Line of Business, Locations, Functions, Assets and Machines, People categories, etc developed manually in Excel using standard JAR methods.

2. Attributes of all the above – standard system attributes to use and NOT use and clear definition of those used and of client and industry specific attributes logically and hierarchically grouped on maintenance forms that correspond to different categories of products and services for ease of access and posting and to Item coding.

3. Custom Screen forms to capture data – rule based from attributes.

4. Grid based (Excel like) view of configuration master files with ability to hide levels of hierarchy and columns based on the attributes, drag and drop, etc to quickly and accurately configure master files all the way through to process files, routers, Bills of Materials, etc.

5. Master file maintenance – dropping default parameters down the hierarchy as done at ASCO all the way to the SKU.

6. Auto-build the Item code and other code fields from the attributes dropping down the hierarchy including provision for counters (sequence numbers).

7. Write content into target ERP data tables.

8. Documentation of coding standards and conventions in such a way that they can be printed as manuals or used in on-line help.

9. Generation of simple standard reports based on the hierarchies – rich variety of standard reports quickly and easily maintained.

10. Maintain code functionality – limit the addition of items, build the code for insertions of items, look for synonyms, etc tightly linked to role based permissions and access control with knowledge based rules to control additions.

More sophisticated reports and models in business intelligence environment based on hierarchies.

Section 6.5

Benefits of taxonomy software

Following are the benefits which will result from use of the JAR&A software:

1. Senior users will be able to add additional line items into a taxonomy using a well trained staff member without needing external consultants.

2. Reduce the overall cost of developing, deploying and maintaining large taxonomies like the Item Master / Materials Master / Product Master and the Chart of Accounts.

3. Greatly improve the ability of own personnel to extend hierarchies to accommodate growth in the business with improved precision over manual techniques and reduced cost relative to bringing in a consultant.

4. Greatly reduce risk of degradation of hierarchies and code schemes with resultant increase in risk of making bad business decisions based on poor data – safeguard the investment.

5. Facilitate and enforce standards and allow narrow focus of responsibility for different people in different business areas to maintain codes in a way that does not adversely affect the rest of the business, reduce risk and reduce long term operating cost.

6. Codes built largely by the software ensuring consistent application of standards and improved sustainable quality.

7. Precision engineered strategic configuration coupled to strategic customization can deliver a threefold or greater improvement in performance from an ERP which is easily lost if hierarchies and / or code schemes degrade.  The software greatly reduces the cost of maintenance and risk of degradation thereby improving overall reliability of reports, dashboards, models, etc.

8. Greatly reduces time and cost of master data configuration and maintenance of master data.

9. Greatly improves quality and reduces time and cost of mapping old codes onto new taxonomies.

10.Deliver many of the benefits of having James Robertson maintain the hierarchies himself at much lower cost and greater convenience.

11.Largely eliminate finicky and highly time consuming drudge repetitive work while building hierarchies and code schemes.

12.Facilitate much more complex code models like the cubic business model in the GL which because it is so abstract is very difficult to build and maintain manually.

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Business Systems NOT delivering?

Call the Business Systems Specialist

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

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

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

If you are having problems with your systems, your project or your IT Department, call The Business Systems Specialist
James@James-A-Robertson-and-Associates.com

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

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

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

There HAS to be a better way!

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

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

We offer an ENGINEERING APPROACH to addressing these issues

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

This approach is discussed further on the Engineering Approach page.

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

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

Click here to send us an email subscribing to our free newsletter -- all articles posted by James Robertson will be emailed to you

James has a very detailed profile on LinkedIn should you require further information about him.

You can also connect with him on LinkedIn at http://www.linkedin.com/in/DrJamesARobertsonERPDoctor

James has an open networking profile -- click on "Connect" and use email address James@LinkedIn-at-JARA.com.

You can contact us on

Email: James@James-A-Robertson-and-Associates.com

LinkedIn at http://www.linkedin.com/in/drjamesarobertsonerpdoctor

Facebook at https://www.facebook.com/james.a.robertson.393

Mobile: +44 (0) 776-862-2875

Landline: +44 (0) 207-059-0007

Fax: +44 (0) 844 774 4580

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

Please click here to visit the detailed listing of articles

Home

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

Catalogue of Major Business Information System Failures

About the Engineering Approach

James Robertson's Value Add

Attributes of a HIGH VALUE solution

Recognizing Business System Failure

The Critical Human Foundation

Old Software IS Viable

From South Africa

Competencies of Dr James A Robertson PrEng

About Professor Malcolm McDonald

Table of Contents

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

Comments relating to the Business Systems Industry and other topics

Testimonials and other positive material regarding James Robertson

Reference Articles

List of Articles

Article Catalogue

Achieving High Value Business Information System outcomes

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

The REAL Issues in Integrated Business Information System Success

Part 1: Introduction

Part 2 -- Mythology and Lack of Executive Custody

Part 3 – Strategic Alignment and Precision Configuration

Why your ERP is NOT delivering and HOW to FIX it

IT Project Management

Pulse Measurement

CEO Anthony Lee Comments on his experience of the Pulse Measurement

No Charge Guarantee on the Pulse Measurement Service

Examples of Pulse Measurement Outcomes

Critical questions regarding the Pulse Measurement™

The Pulse Measurement Workflow

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

Indicative Pulse Measurement Durations

What is a JAR&A Pulse Measurement?

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

Examples of Pulse Measurement Outcomes over 24 years

Sample Pulse Measurement Reports

Strategy

Strategic Essence: The Missing Link in Business Information Systems

Strategic Essence: Overview

Strategic Essence: Part 1 -- Strategy Defined

Strategic Essence: Part 2 -- Differentiation

Strategic Essence: Part 3 -- The Essence IS Different

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

Strategic Essence: Part 5 -- Discovering Strategic Essence

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

Simple Steps to Increase the Strategic Value of your ERP Investment

Free Strategic Snapshot Toolset and Manual

A strategy focused planning system beyond traditional budgeting

Tough IT and ERP Procurement and Contracting that Works

Robust Business Systems Procurement

Part 1 -- Introduction

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

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

Procurement Documents

Guidance and Advisory Services

The Art of Project Leadership

Why Regular Communication with the CEO is Vital

The Business Simulation Laboratory

Precision Configuration and Strategic Business Information Architecture

Precision Configuration based on Strategic Engineered Precision Taxonomies

The JAR&A Cubic Business Model

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

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

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

Case Studies of Notably Successful Projects with high value Precision Configuration

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

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

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

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

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

Strategically Enriching your Business Information Systems

Part 1 -- Introduction

Part 2 -- Principles of Data Engineering

Part 3 -- Steps in applying these recommendations

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

The Full JAR&A Taxonomy Manual

Part 1: Introduction, Problem Statement, Definitions and Examples

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

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

Example General Ledger Manual

Business Process -- Irrelevant, Distracting and Dangerous

The RIGHT Approach

Custom Strategic Software Design and Oversight of Construction

Standards for Custom Software Specification

What IS Software?

IT Effectiveness

Organizing Outlook

Critical Factors for I.T. Success

A Moral and Ethical Dilemma -- Systems that Fail

Case Studies examining Business Information System failures

The BBC Digital Media Initiative Debacle

The Bridgestone -- IBM Conflict

Speaking and Training

Showcase of Conference Presentations

Most Viewed Presentations

Briefings and Seminars

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

ERP and IT Procurement that Delivers Results

The Critical Factors for IT and ERP Investment Success

Other Seminars

Conferences and Public Presentations

Conferences 80 to 99 -- 2009 to Present

Conferences 60 to 79 -- 2005 to 2009

Conferences 40 to 59 -- 1996 to 2005

Conferences 20 to 39 -- 1994 to 1996

Conferences 01 to 19 -- 1989 to 1994

On-Line Seminars (Webinars)

Webinar on Preparing and Presenting Webinars

Contacting James A Robertson and Associates Limited