Frank Buytendijk, vice president of research at Gartner Inc, at the firm's Business Intelligence Summit in London said "most organizations are not making better decisions now than they did five years ago."

Some months ago Bloomberg Personal Finance and many other websites reported "BMW Owners Vent Anger at Months-Long Wait for Spare Parts" relating to a SAP Warehouse implementation in which IBM was also involved.

Mark McDonald of Gartner reports "McKinsey Report Highlights Failure of Large Projects: why it is better to be small, particularly in IT"

What is notable about the above reports is that they all originate from highly reputable international sources and relate to mainstream products implemented in leading global corporations, clearly something is not right!

The McKinsey report is interesting in that it recommends small projects as being safer, seemingly oblivious to the reality that the construction industry regularly successfully executes mega projects with little fuss and consistently reliable outcomes.

I live less than a mile from one of many constructions sites on the £16 billion Crossrail project in London that is building a new railway line end to end under London, billed as the largest construction project in Europe at present.  There is little fanfare but consistent reports of steady and reliable progress and no indication of the sort of problems experienced by Bridgestone and BMW.

No one is suggesting that Crossrail should be scaled down because big projects are difficult.

Crossrail also dwarfs the Bridgestone and BMW projects.

So what is going on?

On one hand engineers just get on and make things work, consistently, reliably, day in and day out and we take it for granted that our roads, railways, buildings, factories, etc will be built and will work.  Yes sometimes there are overruns but the level of failure that is at epidemic proportions in the Business Information Systems arena is entirely unthinkable.  If engineering structures failed the way Business Systems projects fail and under-perform we would all be living in wattle and daub structures in the country and riding horses in order to keep clear of the massive failure levels that characterize Business Systems projects.

What to do?

I am a Civil Engineer by training, schooled in the use of computers for engineering applications, coupled to formal qualifications at the Regimental Commander level in the Army Engineer Corps.  As a consequence of a series of unexpected events I found myself involved in running projects to design and implement Business Information Systems.  In the process I gained experience in economics and in general business management as well as working as a practicing Professional Engineer for a number of years.

As I gained more experience with business computer systems I concluded that the business information systems industry lacked engineering rigour and that there was an opportunity to "bring the disciplines of engineering to the business systems industry".

I have been on that journey since 1989 and, in the process have learned a huge amount about what works and what does not work.

Because I had the benefit of never being exposed to the methods and thinking of the business information systems industry, I developed my methods from a first principles engineering perspective built on the fundamentals of the application of computers in rigorous engineering practice and self-taught business computer software design and development methods.

The result has been that my methods are significantly different and my world view of business computer systems is also different and, since they are based on deeply ingrained engineering disciplines and practical experience, I hold them to be better as well.

In 1990, having started out in business for my own account I rapidly came to understand that many IT projects, as we called them then, were failing, in fact about 70% were never commissioned and only about 10% actually met expectations.  Statistics which the Bridgestone, BMW, McKinsey and many other examples suggest are unchanged or worse today.  I started to speak about these statistics at conferences and found myself called in to investigate failed and sub-optimal projects and at times, turn them around.  Accordingly I built up a considerable body of experience.

In 2003 I analyzed all this information and developed what I termed "The Critical Factors for Information Technology Investment Success", I developed a course and wrote a book which is available on my website

Since then I have continued to consult and present courses with regard to these principles.  I have also gained considerable hands-on practical experience in the application of these factors.

Recently I have refreshed the fundamental analysis.

This article is the first of a series of articles in which I plan to share the different facets of this approach and, I hope, afford you the opportunity to take a fresh and better look at the way you relate to business information systems.

Whether projects or your existing operations.

The Factors for Success comprise two elements, the factors that cause failure that must be managed out of the project and the factors for success that must be managed in.  Managing the factors causing failure is, I suggest for your consideration, one of the key differentiators in what is being discussed here.

In this article I will give the headlines and then in the series of articles which I plan for you to receive in the months ahead I will discuss these components in more detail and give guidelines on how to manage them in order to achieve high value outcomes.  Articles in other threads that I intend to publish will elaborate on some of these themes as, for example, the thread relating to Strategic Essence that I started publishing recently.

A fundamental principle of engineering is that engineers do not design for success, they design against failure.  In other words, " engineers do not design bridges to stand up, they design bridges not to fall down".

It is a fundamental principle that a well-designed system that does not fail will succeed yet success is achieved by preventing failure as consideration of any undergraduate engineering curriculum will show.  "Factor of safety" and "probability of failure" are concepts that student engineers learn in the first weeks of their education and spend the rest of their lives understanding how to apply.  This is one reason why IT people struggle to understand engineers.  IT people are prone to hyping up their projects with road shows and flashy presentations, engineers insist on focusing on what is not working and then making it work.

The result?

Engineering structures stand up while companies like Bridgestone launch $600 lawsuits against mega IT companies for failed and sub-optimal project outcomes.  In the process the IT industry focuses on getting better and better at doing the things that got them in the mess in the first place and no one seemingly steps back and questions whether they are getting the fundamentals wrong.

I will leave you to read on and form your own view of whether there is something being presented here that is different from what the business information systems industry practices.  It is my deep conviction that if you engage with these articles and look for what is different not what seems the same, you will find some useful principles that will help you to push your business systems to a higher level.

The percentages in the points that follow are indicative of the relative importance of these factors in my experience and are also roughly indicative of the relative frequency of these factors in causing sub-optimal and failed outcomes.  I plan to discuss each of these items in more detail in subsequent articles:

This is a huge subject.  The business systems industry is rich in mythology, hype and tradition and light on delivery.  Perhaps the biggest myth is a seemingly deep conviction that the current ways of doing things, that have such a poor track record will, one day, if executed really well, turn around and produce different results.

What I term "process obsession" is perhaps the single biggest myth around.

The governance and policies of major business information systems projects is frequently flawed.  Projects which are directed at business outcomes are handed over to the Chief Information Officer to run when, in fact, the Chief Executive as the custodian of the integrated view of the business is frequently the only person with the mandate and the insight to give direction to the project.

The level and mandate of other key project members is also frequently defective.

If you have not read my series of articles on "strategic essence" you might consider doing this now, the full article is available on my website

As the examples in that article demonstrate, clear understanding of the strategic essence of the enterprise and how to translate that into practical components of system configuration, software customization and overall commissioning and operation are vital to successful high value business information system investments.  In fact, without support for the strategic essence your massive high end business information system will be little more than a glorified clerical transaction processing system -- a major factor in why Gartner reports that organizations are not making better decisions.

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 is a factor that gets massively in the way of precision configuration much of the time.

"Change management, we do that!" I hear many IT people cry losing sight of the fact that change management as traditionally applied is frequently a blunt instrument to force intelligent staff to do stupid things because the system is badly configured and badly commissioned.  True engagement with the business results in systems that are easy to use, require little training and work consistently and reliably.  Yes, there is a need to train, including training standard methods of working, policies, protocols, etc but I am really talking about system configurations that are harmonized with and flow with the enterprise.

I am also saying that putting in systems to cut head count instead of putting in systems to grow the business with the existing headcount is an intensely negative and massively destructive morale and loyalty destroying practice.

The only reason the Engineering Approach has such a low score is that the other aspects have greater impact and, that said, the rigour, discipline and design against failure of the engineering approach must permeate every element of the project.

Technology is virtually never the problem today and when it appears to be the problem it is generally the consequence of the other factors that are discussed in this article that manifest in bad technology decisions, configuration or commissioning.

Having managed failure out of the project we can now focus on success.

Incidentally, you should have a senior project team member who has as a key project responsibility, to manage against failure.  They should sit in project meetings and listen for the factors causing failure, trap them and manage them off the project.  They should also review all project documentation, ranging from the requirements definition through to eliminating the hype from the presentation to the Board.

The factors, weighted as above, are:

The right organizational executive in charge of the project.  A strong single individual as client project leader.  An equally strong single individual on the implementer side as project leader.  A strategic advisor to the executive sponsor who is not caught up in any other aspect of the project and, above all, NO steering committee!

Simply put, if you boarded an aircraft and found a steering committee in the cockpit I suspect you would run to get off the plane!

The extension of the point on strategy above, work the strategic essence into the entire fabric of the project, the configuration, the customization, the testing, the commissioning and the operation of the system.  Do not allow any person who does not demonstrate a deep and empathetic understanding of the strategic essence to give overall direction to any aspect of the project.  Capture the strategic essence in every validation list, every classification table, the Chart of Accounts

Enable the system to support the organization to do the right things well and thereby to thrive.

Introduce the rigours of standard engineering practice into your project.  Problem is that most engineers do not understand business systems and business and business systems people do not understand engineers so they miss each other totally if you are not careful.

Also be careful as to what type of engineer you engage with and who you commission to brief them and induct them.  Things can go horribly wrong but if you get it right they can go really right.

Precision configuration as opposed to the "sloppy", inexact configurations that commonly occur in business systems are vital.  Your multi-million pound business software system is a precision machine, ensure that it is configured with extremely precise strategic information that is extremely well structured and which makes use of structured code schemes to model the hierarchies and logic in the lists.  I plan to produce a separate thread that will discuss elements of precision configuration.

An engineering laboratory is a place where key parameters of the real world are precisely modelled.  It looks nothing like the real world but it models the real world.  The business simulation laboratory is the same.  It is designed to test the configuration to destruction until it can no longer be broken, then all reports and business intelligence can be developed and tested, workflow can be optimized and embedded, training material can be developed and training can be delivered.  All this in a robust environment to engineering standards which simulates real business operations with war game type exercises that deal with all the exceptions and unusual circumstances.

The final goal is that all staff are fully conversant with the system before it is commissioned to run live in the business, analogous to the exhaustive performance tests that are applied to an engineering system before it is put into public operation.

Business engagement, integration, training, helping people to change, prescribing, configuring and adopting workflow (process) elements, etc.  These flow from the business simulation laboratory as a natural extension of the approach.

Handling the reality that sometimes people do become redundant.

Reliable technology is essential, never cut corners here.  Your goal should be exceptional response times and no compromise should be tolerated.  Do not allow some technology specialist with a mistaken idea that they need to save money here specify your hardware.  Demand high performance and specify accordingly.

The knock-on costs of underperforming hardware, networks, etc not only in terms of direct headcount cost but also morale, accuracy, etc cannot be under estimated.

If you address all the above in conjunction with a high quality technical team who know the software and a high quality business team that know the business and you treat your major investment as one of the most far reaching projects your business is likely to ever undertake 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.  I also offer a light touch diagnostic service 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

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.

These factors are vital in understanding situations such as those that have recently occurred at BMW and Bridgestone , and numerous other companies around the world.

They are vital to understanding why the business systems industry is, in large measure, going in the wrong direction.  There is significant evidence that the industry is getting better and better at doing the wrong things.

The figure below summarizes the seven factors causing failure.

This article presents the first two factors that cause failure in more detail.  These factors are Mythology and Lack of Effective Executive Custody.

The percentages are roughly indicative of the relative frequency of these factors in causing sub-optimal and failed outcomes:

Mythology relates to a wide diversity of issues in terms of common practices that give rise to major problems, but which cannot be classified technically.  The main components of mythology are:

Different implementation consultants will achieve radically different results.  Every piece of software in existence can be configured well and therefore utilized in high value ways, or it can be configured badly and, in many cases fail to work at all.  If the effectiveness of implementation is scored in terms of business value on a scale of 0 to 100, the most effective implementation will deliver a business outcome of 100. The majority of implementations are scoring in the area of about 5, whilst 100 probably does NOT exist anywhere on the planet today.  The worst implementations can and do destroy businesses.  This is not understood by most clients and therefore implementers are selected on the basis of inappropriate criteria that result in highly sub-optimal outcomes.

A sales hype driven industry that punts technology and makes claims that are unfounded, unprovable and seldom realized because implementations are tackled in the sub-optimal manner mentioned above.  Uses terminology like “vanilla” that is totally meaningless but which creates mystique.

Outright lies, an industry where a significant number of sales proposals contain outright lies, deliberately understate costs, exclude items in fine print against future "upselling", etc.

Much of the industry has a culture of blaming the client.  Projects are structured and run such that client personnel are manipulated into playing roles and taking on responsibility that in any other industries (e.g. construction) are the responsibility of specialist contractor staff.  When things go wrong, it is always the clients' fault and the client has to pay.

The problems that are experienced have been broadly the same for the last twenty years at least.   About 70% of projects fail outright and never reach production.  At most 5% meet client expectations and these numbers have not changed or, according to some, are getting worse.  The industry fails to learn from its mistakes and continues to seek to get better at things that do not work, rather than from a perspective of making money.

The concept of "change of scope" is an almost universal ill, even on supposedly fixed price contracts.  The implementer determines the requirement in a sloppy fashion, documents it in a sloppy fashion, has the client "sign off" on it (in a sloppy fashion) and then, when it does not work, hits the client with claims of "change in scope",, with additional costs as an end result.

One of the reasons why the incompetence inherent in what is described above does not go away is that it pays better than doing the job right.  A well configured and commissioned system will require limited support, which can be provided by in-house personnel.  A badly configured system requires ongoing "expert" support because nobody in the client organization really knows how the system works.  It also requires continuous custom development in order to provide answers to problems that should be catered for by the core systems.  By doing this implementation houses generate substantial "annuity income".  This highly profitable incompetence makes it extremely difficult for large sectors of the industry to change their approach.

Because of the above phenomena it is not that important who does the work (it will be sub-optimal anyway) and so personnel with limited relevant knowledge and experience are employed.  Frequently these under qualified personnel are allocated to the project full time for months.  This gives rise to something that I call "the audit model".  System configuration and commissioning is fundamentally an engineering endeavour, but it is seldom run like that.  Where engineers are involved in business systems projects, they are often sucked into the wrong thinking of those who subscribe to the bad practices discribed in this and other sections.

One of the greatest myths relates to "business process" -- really business workflow.  We are going to demolish the bridge and build a massively bigger and better bridge and associated infrastructure, so we undertake detailed measurements of the old winding road through the gorge in order to determine how to build the new bridge over the gorge.  This is an interesting money printing phenomenon.

What is required is "strategic discovery", understand the essence of why the organization exists and how it thrives.  This should be coupled to headline documentation of the current "way we do things round here" in enough detail to inform the new design.

Then design the new solution to achieve the long term goals of the business (five years plus) with strategic essence (thrive) focus.  Yes, we do need to know how the business functions, but the most important consideration is how we want it to function in the future, and this should be prescribed by the executives and senior managers of the organization as part of the solution design.  Detailed flow charting, "swim lanes" and the like are a total waste of time and money.  Remember that "thrive" is about gut issues, intuition, not workflow so "process" is simply not as important as the industry believes.

These factors individually and collectively result in the client being intimidated and frequently "bamboozled" into paying unnecessarily and for unproductive and unnecessary services that produce little or nothing of lasting consequence.  In many cases client expectations have been "dumbed down" over the years.  Robust procurement methods coupled to tough contracts and certification of compliance are an essential prerequisite to preventing Mythology from taking hold.  Ongoing monitoring of the project for signs of Mythology and rooting out of Mythology when it occurs is also critical.

The next most important factor giving rise to failure relates to corporate leadership, executive custody, overall project and system governance, and corporate and project policies.  The major elements of this factor are:

Most business system implementations of any significance should be implemented with a strong strategic, "thrive" focus.  This necessitates executive oversight.  On a division specific project, with little or no interaction with the rest of the business, the divisional executive should be the sponsor.  The moment that the system straddles multiple business units, divisions or functions, the human and business integration of the system becomes paramount.

As the Chief Executive is the custodian of the integrated view and management of the business, it follows that the Chief Executive must be the sponsor of any major integrated business information system project.  This is non-negotiable and failure to recognize and respect this system principle contributes to many sub-optimal and failed outcomes.

The strategic application of systems in the best interests of the client should be directed by the Chief Executive or sponsor guided by a part time or full time Strategic Advisor depending on the scale of the project.  The Advisor should be in a staff advisory position or a contract position with little or NO line responsibility.  They should have decades of experience with the effective strategic application of business information systems, and NO allegiance to particular software products or implementers before a system and implementer are chosen.

This role is comparable to the lead architect in the design of a prestige office building.  They take direction from the client executive and give direction without fear or favour in the best interests of the client.  This person moderates and, where necessary, counters and directs the implementer in terms of the optimal strategic business outcome.  They serve as a translator to the sponsor and the business.  The tension that results is a necessary part of this role, and they must be supported by a strong Contract Manager to handle conflict, as strategic thinkers are seldom good at handling conflict themselves.

Various forms of inappropriate management occur:

A corollary of the above is abdication of the running of the project, including choice of system and appointment of implementers to the Chief Information Officer or, worse still, the IT Manager.  That person is responsible for the line management of technology, infrastructure, services and the like.  They are generally not strategically orientated and most have never operated at the strategic executive level.  They embark on a technology project instead of a strategic systems project with frequently highly sub-optimal results.  Where this person IS strategically orientated they are under such pressure with day to day line functions that they cannot devote the required time to guiding the project strategically.  This person can, however, serve as Contract Manager.

On integrated systems, given that the financial suite is a key element, it is seductive to place the Chief Financial Officer in charge.  In most cases this is a mistake.  Firstly, they have operational day to day priorities that are inflexible and cannot give the required time.  Secondly, accountants are NOT trained in the type of disciplines necessary to drive this type of project.  Thirdly, many CFOs focus too much on finance and downplay, and in many cases obstruct the solution in terms of operational functions.  Depending on the project and the person the CFO can sometimes be a suitable Business Team Leader.

The client counterpart of the implementer Project Manager is the Contract Manager.  The Contract Manager provides tough but fair management in terms of contract compliance, allocation of resources, etc.  This is a role that the CIO or IT Manager is generally well equipped to perform.

The Business Team Leader is an executive or senior manager, depending on the scale of the project, who is responsible for mobilizing the best possible business input for design, configuration, testing and commissioning.  This person is concerned with the practical engagement with the business, and the putting into operation of the system at a practical level.  They do NOT need to have systems experience, but they DO need to understand the desired business outcome.  They rely on the strategic advisor and the implementer technical team to guide them in terms of the effective implementation of the system.

Given that we are speaking of medium to large integrated business information systems, it is vital that NOT only the business but the implementer provide strategic level direction to the project.  Any project of any size should be led from the Implementer side by an executive of the firm.  As with the executive sponsor, this does NOT require a large amount of time - rather quality time, assisted by the rest of the Implementer team.

I have seen many projects fail because of inappropriate policies.  A project that commences predicated on a statement like "it must be FRED" where "FRED" is your favourite brand name business system, or the one you used in your last position, or the one your friend from school uses, frequently ends up in difficulty.  Firstly because the critical thinking and negotiation do not take place up front.  Secondly because sometimes FRED is simply NOT the right system for the business.  Thirdly because little thought is given to the choice of implementer, and they come by default with the package.  In most cases, choose the implementer most strategically suited to the business, and then go with the system they recommend.  There are many other policies that can get in the way of an effective solution.

The project governance that is put in place is frequently inappropriate and frequently results in what I term Project Schizophrenia -- more than one person in charge.  The two or more "heads" are expected to resolve differences in approach "collegially".  This does NOT work and is a recipe for conflict.  Of this, the "Steering Committee" is one of the most inappropriate approaches.  To understand why I say this: consider whether you would remain on an aircraft that was to be flown by a committee, or relocate to one that was flown by a Captain.  There must be unitary overall leadership and overall accountability, another reason why on medium to large projects the sponsor must be the CEO supported by the team that is indicated above.

Most business system projects are undertaken with little or no executive engagement (active intellectual participation) resulting in decisions that waste time and get in the way of the essence of the business.  On large integrated business information system projects there must be a significant level of interaction and consultation at the executive level.  Again the strategic advisor to guide, facilitate and translate in order to ensure that only necessary executive level interactions take place, is absolutely critical.

In some cases, generally as an outflowing of the above, one encounters a situation where the client is giving inappropriate direction to the implementer.  With an effective contract there are matters that are entirely the contractor's (implementer's) responsibility and others that are the client's -- these responsibilities must be clearly delimited.  Where they are NOT, all sorts of problems result.

It is vital that the above issues are resolved and that effective Executive Custody is in place.  See also the video on "Executive Custody -- What is it? and HOW do you get it ".

3. Lack of effective strategic alignment and strategic solution architecture -- 16%

4. Lack of Precision Configuration -- 14%

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%

Your investment in a major business information system, is one of the most far reaching projects your business is likely to ever undertake.  If you address the factors discussed above, together with the other factors causing failure, as well as the Critical Factors for Success, you will experience material 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 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

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:

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:

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.

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.

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.

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.

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.

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.

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) .

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.

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:

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.

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.

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.

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.

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?

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.

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.

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.

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.

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 .

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.

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.

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%

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

A discussion of how strategic essence should inform all business improvement projects and particularly business information system projects.  This thread is intended to discuss the analysis of strategy, the planning of strategy and feeding strategy through into business system specifications and the management of projects.  Articles to date include:

Summary
1: Strategy Defined
2: Differentiation
3: The Essence IS Different
4: Essence is the Point of Departure
Determining Strategic Essence

A discussion as to why business information system (and other business improvement projects) fail to deliver on expectations or fail outright, together with discussion of the critical factors that must be taken into account in order to achieve successful outcomes.  This thread is intended to progressively discuss more hands-on specifics of achieving high value outcomes and builds on the Strategic Essence series.  Articles to date include:

1: Introduction
2: The Real Issues -- Mythology and Lack of Executive Custody

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

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

To inquire about purchasing any of the above services simply email me on James@James-A-Robertson-and-Associates.com