Monthly Archives: August 2014

One ERP System or Many?

Why completely consolidating ERP systems may not be the right answer.

I just finished reading an interesting article published in TechTarget and authored by Linda Rosencrance, Freelance Writer and Editor, titled “Is Consolidating Disparate ERP Financial Systems worth it?” 

The essence of this piece is the pros and cons of integrating or merging an enterprise’s collection of ERP and other financial and accounting software applications into a single instance ERP software solution and whether it is even practical to do that.  Since many large enterprises, and numerous smaller organizations employ multiple ERP and financial systems, often by multiple software vendors, the debate on whether to consolidate everything into a single solution (and the potential benefits) becomes tempting and often valid.

Wouldn’t it be great to have a single instance ERP solution, where data across the entire enterprise resides in one database; financial operations are consolidated in the same database, and financial statements are produced from data that rolls up from the various business units, while all relevant intercompany transactions are properly eliminated in the same database, under a set of rules embedded in the database, and so on and so forth.

The reality, however, is usually different.  The main reasons an organization ends up with many and varied systems are business acquisitions, rapid expansion, diversifying business operations and sometimes keeping older systems in place, while adding more current or industry specific applications.  The end result is often a myriad of software programs installed in many physical locations, employing numerous servers and IT processes designed to maintain these operations.  To that add the many interfaces among the various systems where data is transferred from one system to one or more other systems.  Sounds grim, but is it really that bad?

That depends, as the above-mentioned article tries to explore.  My experience working with very large companies, some global, shows that having several or more systems in place can work reliably and economically, when IT and business processes are well defined and executed.  To me, whether the data is manipulated in one application and stored in one location or whether it travels all over the globe and is bounced around many file servers and storage locations is less relevant than whether the business processes and their supporting IT functions are well defined and executed.

Looking at it a different way (and somewhat more amusing):  Even the largest global enterprises’ data is comprised, at the system level, of 0s and 1s (or low voltages and high voltages in the electronic circuits that make up all these computer systems).  It fundamentally makes no difference whether these 0s and 1s travel within one or many systems.

Even within a single instance ERP system there are many internal interfaces and numerous data manipulations and transformations.  These 0s and 1s simply don’t care whether they are tossed around one set of file servers in one location or thousands of servers around the world, while passed around from application to application.  It is however fair to say that the more complex the system and the more connections there are, etc., the less reliable it can be.  However, there are many IT controls that mitigate these risks, which inherently exist even within a single system in one location, or a single system with multiple storage and processing locations.

What really matters is how the process is designed, maintained and controlled.  As the article concludes, consolidating everything into a single instance ERP solution may not be practical or economical, or even feasible for even the largest organizations.

However, not being able to reduce the number of systems to just one should not be the reason why simplification should not be contemplated.  In many cases, companies are able to reduce the number of their ERP solutions and other financial or manufacturing software packages, while striking a balance between total project costs and ultimate benefits.

Overall, I’d rather see more effort put into process controls than embarking on lengthy, massive and costly ERP consolidation projects with sometimes unpredictably disappointing results.

The Determining Factor in Choosing Business Software

Find the right application, embrace its benefits, and accept its imperfections.

If you are a frequent user of a particular software application (most business software users are) you become comfortable with its features and operation and learn to live with its inevitable quirks and other so called “bugs” that unless they are severe and cause your system to crash, you’ve most likely found workarounds or learned to ignore them altogether.

When I was in the software development and publishing industry it was common to call these odd behaviors “undocumented features”.  Our customers realized that our software was continually being updated, with new features added and as additional testing was performed, the majority of these issues were corrected.  They also realized that software designed for serious business use was always in a state of development and change, much to the benefit of its users.

Today, as an end user of advanced business applications, primarily in the areas of accounting and finance, I find myself doing a lot of research in an attempt to locate the best software solutions for my own use and also as a service to my clients who are searching for specific applications.

I work with accounting software, ERP software, planning / budgeting and Business Intelligence solutions and several industry vertical packages.  Regardless of how complex the software, or how compatible it is with a specific industry or user need, there is always something to be desired, and we’ve all seen these software feature wish lists, which software developers often encourage their customers to submit to them.

The most important lesson I have learned in both software development and as a user or consultant to users of business software is that what really matters is the overall utility and usefulness of the application and realizing that it won’t always have the exact look I am looking for or the exact features.

To get exactly what you want, customization is required, often at a great expense.  Hopefully, this is thoroughly evaluated and done for the right reasons.  Generally, we see this more often in very large organizations with hefty IT budgets and the ability to engage their software vendors and their internal IT departments in customization projects of specific applications or components (modules) of these applications.

In small to medium size organizations (SMB), software customization is less common and users must always make sure that the application they are considering was designed for its intended purpose and will actually deliver on the promises and claims made by its vendor.  The application delivery method becomes less critical (e.g., on premises vs. web based), and the overall look and feel, while still important, should not be the only determining factor in the selection process.  We caution our clients to never fall for a catchy, good looking interface and vendor claims that cannot be realistically substantiated.  Functionality and overall utility are far more important than the appearance of the product.

A good example that comes to mind is the budgeting, forecasting and BI application Budget Maestro with Analytics Maestro, published by Centage Corporation (www.centage.com).  I’ve used this software for over 12 years now and have been through all of its major and minor releases and updates, yet I still have my on-going little wish list, which at times is shrinking, yet at other times increasing, of additional features and capabilities, and perhaps needed changes to the user interface the way I see it.  I’m sure other users have wish lists of their own and their opinion on how the user interface should be organized.

However, the reason I use this application and welcome every new release and upgrade is its functionality and value.  While other similar products, designed for the SMB market, may have a somewhat more appealing user interface (although this is open for debate), no application in this category has the usefulness and utility that Budget Maestro with Analytics Maestro have.

In fact, Budget and Analytics Maestro deliver on all 10 must have points I mention in the “10 Must Have Features of a Budgeting & Business Intelligence Solution” blog entry, making it the most comprehensive and practical to use solution, with year-round benefits.  These direct benefits should be the determining factor when evaluating such application for potential implementation at any organization.

While looks can be deceiving, solid performance, value and utility have always been my top priorities when selecting business software applications.

Questions you Should Ask During the Planning and Analysis Process

And the Planning and Analysis tools allowing you to ask these questions

Recently, there was an article published by SearchCIO.com (a TechTarget publication) and authored by Nicole Laskowski, Senior News Writer.  The title of this article is: “Want Better Analytics? Start asking ‘crunchy’ questions.

One of the main points delivered in this article is that by using key performance indicators, aligned with strategic goals and specific questions used to query the data, business intelligence can be developed and customized to each company, regardless of industry.

Another point is that visualization of data can help a person to better understand it, which means that decisions made using this visualization will be made with greater confidence and are likely to be more accurate in the long run.

A few days ago I was speaking to a financial software analyst about Budget Maestro and Analytics Maestro from Centage Corporation (www.centage.com), relaying my experience with the software and why I thought this solution was so well designed and targeted at the SMB (small & medium business) market.

Some of the points I mentioned to him seem to coincide with the points delivered in the above-mentioned article.  Of these, KPI’s, accomplished through use of drivers, become a very powerful and useful function in the planning and budgeting software (Budget Maestro), while visual analysis is performed in Analytics Maestro, where planned and actual data are seamlessly linked to the analytics software and display the data in any format, size, color and other parameters chosen by the user.

Questions you need to ask regarding performance in different areas of your organization will help you better understand how to established key performance indicators.  These, combined with drivers you enter in the planning and budgeting software, will allow Budget Maestro to automatically create the logic that is used with your assumptions.

Combining this with the basic budget data you enter in your plan will result in system calculated and visually displayed financial results.  These results can be a full set of projected financial statements along with a full set of actual financial statements automatically transferred from your accounting or ERP software into the planning software (Budget Maestro).  Both can be visually displayed in any format and appearance you choose in the analysis module (Analytics Maestro).  Other reports in unlimited formats can also be obtained using this set of applications.

Imagine having a visual display of your chosen KPI and financial ratios for the entire budget duration and for all available actual data (as it becomes available immediately after period-end close).

Example of questions you can ask:
a.    How is my IT spending going to change as I add new employees?
b.    How is my headcount going to change in response to projected increase in revenue (which will also affect item a. above, among other things)?
c.    How is my utilities expense (e.g., power) going to change in response to change in production demand (derived by projected revenue change)?
d.    How are my payroll related expenses going to change in response to item b. above?

As you can see, many of the questions you’ll be asking are going to be interrelated; however, with the proper use of drivers you can obtain the answers you are looking for and with very little effort once the drivers are put to use.

The real good news is that all of this functionality is available to users of Budget Maestro without ever having to write a single line of code or even place formulas and links anywhere in the software.  Now you are finally able to perform exactly the type of analysis relevant to your business.