The Planning Process

The Planning Process 10% from Planning, Startups, Stories by Tim Berry Picture yourself in front of a group of 20-30 business owners. They are computer or software resellers, dealers of Progress Software, Autodesk, Solidworks, or a personal computer manufacturer. They are mostly men in their 40s and 50s. Most of them have been in business for themselves for 10-20 years. Most of them have 3 or more employees, a few have 25, 50, and one or two 100. If you ask this group how many of them regularly review their business plans and revise them as needed, roughly 10% of them will raise their hands. You can explore the details in front of the group. The ones who regularly review their business plans will be the stronger and healthier businesses in the group. If they've been around for a while, they'll be the ones with more employees and more market share. If they're younger and newer companies, they'll be the ones with more growth. You want actual data, numbers, and better yet names? Yeah, me too, I wish I'd done that but it was enough to run full-day planning seminars, each one took a lot of energy, and there just wasn't enough bandwidth for me to be managing the seminars and populating a database at the same time. What I will give you, though, is accumulated experience. When I run one of these seminars I can count on my 10% number enough to take the risk of setting myself up in front of the group, at the beginning of the day, with those people as leaders. Throughout the day I can call on them confidently for comments and details and anecdotes, and they'll have the right kind of useful responses. These people are my stars. They don't all plan the same way, they don't all have the same process, but they have process. I can count on them. They get it. Here's a concrete example: during part of the seminar I want to illustrate the paradoxes of planning, say "business plans are always wrong." I have my two or three stars in the room and I can be sure of getting a useful response from one of them when I deal with this issue for the group. I'll ask, "Ralph, Mabel, Mary ... what do you say? Why do I say that?" And I'll get back a response about how they're wrong because assumptions change, which is why they need to be kept alive and managed. Or they'll say something like that. I don't like to take risks easily when I'm in front of a group. This 10% rule, however, has worked consistently for me for years. Now I realize having a set of numbers to display would be stronger than my anecdotal evidence, but then so many sets of numbers are flawed anyhow, and give the wrong impression. My people in the seminar aren't a random sample by any means, so the numbers wouldn't be statistically valid anyhow. So who are these people? Starting in the 1980s I did some seminars for Apple Computer dealers in Latin America, and then in the 90s in Japan and Singapore, then HP dealers in different places, then Data General, UNISYS, and more recently for dealers of Autodesk, Solidworks, and Progress Software. Does this same 10% apply for other industries? I can't be sure that that my anecdotal data applies; but I'll bet it does. -- Tim

Identifying and Measuring Cost Drivers

Identifying and Measuring Cost Drivers

Craig Borysowich (Chief Technology Tactician)

For each of the activity cost pools, a cost driver must be determined.

There are basically three types of cost drivers:

· Volume: The cost driver is based on units of work (e.g., number of orders.) The cost of the activity increases as more units are processed.

· Time: The cost driver is based on the length of time taken to complete the activity. The cost of the activity increases based on the length of time required to complete the activity. It does not matter how many products are produced (e.g., when retooling machines, the cost driver is the length of time required to complete the retooling of machines).

· Charge: The cost for the entire activity is charged directly to the cost object (e.g., all costs associated with the retooling of machines for a product is charged directly to the end-product).

In general, a charge-type cost driver is used very rarely. The most common drivers are volume and time. The driver used depends on the nature of the activity. The cost of the activity may increase based on the number of units handled or based on the length of time required to complete the activity. It could also be a combination of these two driver types. For example, the time required to test a product may vary based on the product under test and the number of units to be tested. The costs of testing increase as more products are tested. As well, the testing time will vary based on the complexity of the products (e.g., a complex software program takes longer to test the a simple software program). Say it takes four hours to test a simple program and ten hours to test a complex program, and all other costs are the same with respect to testing the two types of programs. The cost of testing two simple programs (i.e., 2 programs * 4 hours/program = 8 hours) is less the cost of testing one complex program (i.e., 1 program * 10 hours/program = 10 hours).

Measure the Cost Drivers

Once the cost drivers have been identified for the various activities, they must be quantified. For the same period that the costs were captured, the count for the activity driver must be determined. For example, if the driver for the Purchasing process is Purchase Orders, determine the number of Purchase Orders processed during the period for which costs have been captured.

Look to existing systems for cost driver measurements. For example, if the purchasing function uses a computer system, it should be fairly easy to determine the number of purchase orders processed in a given period.

Tips and Hints

Identifying cost drivers can be difficult. The key thing to remember is what is driving the activity or process. What causes this process to happen? For example, the business process of Purchasing is driven by Purchase Orders. The drivers may not be apparent if only the costs from the general ledger (G/L) are used. Look back at the process maps and flowcharts.

ERP Packages Feature Comparison

ERP Packages Feature Comparison

Elisabeth Rainier (Sr. Consultant)

CIOs have expressed growing concerns over the Total Cost of Ownership (TCO) of enterprise software and have highlighted costs as a contributing factor in the decline of IT investments. As a result, software vendors are trying to develop more structured "Ownership Experience" strategies and, in some cases, have focused R&D efforts and resources on improving the ownership experience for customers. In response to these executive concerns, PeopleSoft launched its Total Ownership Experience (TOE) initiative 16 months ago, followed by other major application vendors with varying kinds of programs for, and degrees of success in, controlling costs and improving the overall ownership experience.
A team of consultants each with over 15 years of expertise in enterprise application software and every phase of the ownership lifecycle, has reviewed and evaluated key software features that directly impact the ownership experience of enterprise applications. Some of these feature sets included: advanced data loading and moving during the implementation phase, task-oriented navigation for the usability phase, and user-centric performance testing for the maintenance phase. This research offered an objective assessment of these detailed features, validated through in-depth interviews with the panel of consulting experts distinguished by multi-vendor and multi-lifecycle experience.

The resulting study provides a comparative, multi-vendor assessment across the three major phases of the application lifecycle: implementation, application usage, and ongoing support and maintenance. The players and software versions evaluated in the study included:

• Microsoft Great Plains version 7.5 and previews of Microsoft Great Plains version 8.0
• Oracle E-Business Suite 11.5.9
• PeopleSoft Enterprise 8.8 and 8.9 and EnterpriseOne 8.11
• SAP mySAP Business Suite R/3 4.6 and SAP R/3 Enterprise 4.7
• Siebel 7.5 and Siebel 7.7.

From a summary perspective across the ownership lifecycle, PeopleSoft demonstrates consistent advantages for the key features evaluated in this study. The research validates PeopleSoft's leadership for key ownership features in three categories:

Implementation:

PeopleSoft features for implementation rated higher than Microsoft's, SAP's, and Siebel's in enabling implementation teams to install, implement, and deploy enterprise applications through comprehensive configuration wizards and pre-packaged integration packs for all major enterprise application vendors. Oracle also rates consistently high in the areas of configuration, data loading, pre-packaged integrations, and web services. PeopleSoft has made more progress than other vendors in enabling and streamlining its configuration and integration tools.

Usability:

Across the features evaluated, PeopleSoft and Siebel rated highest in terms of the usability features evaluated. The task-oriented organization of application screens and the consistency of screen layouts across all modules in PeopleSoft applications improve end user productivity and enables end users to complete tasks faster and with fewer errors.

Microsoft Business Solutions usability is limited due to a continued reliance on a "thick client" architecture for most of the applications, and SAP was found lacking in task-oriented dashboards.

Maintenance, Support, and Upgrades:

PeopleSoft rated consistently high across the maintenance feature set primarily due to the ability to proactively and rapidly isolate and resolve application issues through embedded diagnostics scripts, thorough test scenarios and scripts, and streamlined upgrade process. Specifically in relation to Microsoft Business Solutions, PeopleSoft's complete web enablement streamlines the upgrade process compared to an offering like Microsoft Great Plains, which operates in a client-server environment and requires the client to be upgraded as well.

The results of this evaluation by this consulting team can provide guidance to decision makers on how to evaluate the major enterprise application vendors relative to the ownership experience, which impacts both the cost of ownership and the value derived from the applications.

Key Research Findings

Each phase of the enterprise application lifecycle has potential pitfalls that can affect the ultimate success or failure of the ownership experience. For example, if an enterprise software application is not installed completely or correctly, then the rest of the implementation will have problems. Maintenance costs often reflect repetitive tasks, such as upgrades performed many times over the lifecycle of an enterprise application, while poor diagnostics tools lead to unpredictable downtimes and business disruption. Finally, usability features affect end user adoption, and poor usability can lead to increased costs due to lost productivity.

The experts looked at these potential outcomes and identified the key feature sets that enabled implementers, IT, or end users to successfully implement, maintain, or use the applications of the five vendors.

Then, based on its primary and secondary research, the team rated each vendor as to whether it offered the feature and then rated how successfully each implementation, usability, and maintenance feature set contributed to the ownership experience. Vendors received either a full circle for a full offering, a half circle for less than a full offering, and an empty circle for no offering. The following analysis represents a compilation of a detailed vendor-to-vendor comparison by application.

Implementation

The implementation phase includes the initial installation of the software, its configuration, the initial load of data into the new application, and any work that might be required for the application to interface properly with the IT environment of the customer, such as integration with other applications, and whether the integration is batch or real time.

The implementation phase is typically broken into three major steps:

1. Software installation
2. Configuration
3. Integration.

The installation step is important since an incomplete or incorrect initial installation of the software can lead to significant lost time in further steps of the implementation.

Streamlined configuration tools are critical in keeping an application implementation project on time, since, during configuration, all the specifics of customer business requirements are captured and shared across implementation staff.

Finally, the integration step is typically one of the most challenging - with many hidden and unanticipated costs. Three factors - the complexity of the applications to interface with, the complexity of the business processes between applications, and the complexity of the integration tools that may require multiple experts and multiple types of expertise - make it difficult to establish detailed project plans and thus to accurately estimate project costs. For
the analysis and comparison of vendor approaches to implementation, the experts utilized seven criteria:

1. Application installation wizard
2. Advanced configuration
3. Process modeler
4. Advanced data loading and moving
5. Process-oriented integration
6. Pre-packaged integration between vendor applications
7. Built-in web services integrations.

PeopleSoft and Oracle emerge with the most comprehensive feature set for the
implementation phase. PeopleSoft excels in the areas of application installation wizard, advanced configuration, advanced data loading and moving, pre-packaged integration between vendor applications, and built-in web services integration. Oracle shows strength in advanced configuration, the process modeler, advanced data loading and moving, and builtin web services integration, but not in pre-packaged integration between vendor applications. SAP and Siebel slightly address all seven criteria, while Microsoft is clearly
lacking in four areas - advanced configuration, process modeler, advanced data loading and moving, and process-oriented integration repository.

Let's examine each of the seven feature sets in the installation category.

• Application installation wizard

Both Microsoft and Siebel offer a streamlined installation wizard that is comprehensive and well packaged. PeopleSoft offers an application installation wizard that removes manual steps and automates key installation processes, including the configuration of the underlying database. By contrast, while SAP also uses wizards, its installation procedure and wizards are proprietary and more complex and very often require the implementers to step out of the automated process to handle tasks that were omitted during the planning phase. Oracle has improved its installation wizard tremendously over previous releases, but still the wizard is inconsistent across modules and requires additional manual steps to be accomplished outside the wizard.

• Advanced configuration

PeopleSoft has gone further than any vendor in enabling the application to be configured by product or by business processes. For example, the PeopleSoft Setup Manager configuration tool enables implementation staff to connect to
documentation online and navigate through the documentation by selecting product and features directly from the configuration screen. Both Siebel and Oracle provide advanced tools to support the definition of business processes and data flows. SAP provides tools that are more complex and require more technical expertise. Microsoft limits end user ability to fully configure applications.

• Process modeler

PeopleSoft provides 1,200 pre-defined models that cover PeopleSoft best practices business process flows. Oracle Workflow allows for business processes
to be modeled using a drag-and-drop designer and produces a visual diagram of the business process. With Siebel, customers can add pre-defined or custom business processes, branching, and sub-processes to create a workflow process tailored to their unique business requirements. SAP offers functionality in process modeling only within the context of its own applications. The ability to manipulate existing business processes within Microsoft Great Plains is limited and requires customization work. Process modeling is independent from integration but is a critical step for developing processoriented integration (see below).

• Advanced data loading and moving

Microsoft simply does not allow advanced data loading and moving. Oracle iSetup automates and simplifies the initial setup of data. Oracle iSetup is a question-driven wizard that automatically generates applicationrelated parameters and flows such as chart of accounts, expense policies, and rules.
PeopleSoft provides advanced data-loading and moving capabilities, including the ability to load data online from Excel spreadsheets into PeopleSoft applications through component interfaces. SAP provides a free set of tools and procedures that make it possible to transfer data from a variety of sources without any programming. Siebel has a set of proprietary tools for the data load; the tools can be used as batch loading for information that must be reloaded on a regular basis, once the mapping of data is done.

• Pre-packaged integration between vendor applications

PeopleSoft Process Integration Packs deliver all levels of required integration: data transformation, routing, cross-reference maps, and standard-based connectors/adapters for a complete end-toend integration. PeopleSoft currently provides five pre-packaged integrations for key SAP and Oracle business processes out of the box. These pre-packaged integrations replace the need for custom integrations, thereby saving customers up to 60% off the cost of custom integration. While not offering pre-packaged integration packs, Oracle
maintains adapters to most commonly used applications. Its adapters do help reduce the effort for custom integration. SAP encapsulates integration tasks within its NetWeaver platform, but still requires deep technology expertise to complete the integration. Siebel Universal Application Network provides a common interface layer for Siebel Application to interface with non-Siebel applications but requires third-party components. Microsoft introduced a toolbox for integration to replace Great Plains integration tools (Integration Manager). It is reported to be a great improvement over the previous proprietary tools but has not yet reached a level of usability and completeness comparable to other vendors.

• Process-oriented integration

Within Oracle E-Business Suite, Oracle Workflow supports basic process-oriented integration and the modeling of it. Siebel's approach to process-oriented integration is to publish all its process-oriented business services as
web services. PeopleSoft's new interactive integration repository enables customers to display integration points from a business process point of view and generate integration process plans. SAP's integration approach has been very focused on business processes, but it relies heavily on proprietary technologies. Microsoft Integration Manager includes a set of templates that allow the control of the underlying business logic.

• Built-in web services integrations

PeopleSoft provides built-in web services and fully supports industry standards for web services. In addition, Oracle supports web services integration at every layer of its application framework (database, middle-tier, and application layer) using open connector standards such as SOAP, WSDL and UDDI. Siebel's strategy is to expose all its business processes as web services to deliver
business services-driven integration. SAP provides integration based on web services through its SAP NetWeaver platform.

Usability

The usability phase includes all key functionality that is related to the application ease of use. Usability covers topics such as ability to perform tasks with the minimum amount of errors, intuitive use of the application, end user productivity, ability to learn how to use the application effectively with the minimum amount of training, number of screens or clicks required to perform a specific task, support for novice as well as advanced users, alignment with industry standard interfaces, response times, and ease of adapting application
terminology to customer business cases. With this kind of scope to the issue of usability, it does provide value to evaluate and build an objective comparison on the usability of various applications.

Usability, in fact, can impact positively or negatively the total ownership experience. First and foremost, usability has a direct impact on end user adoption, which can make or break a deployment. Poor usability can lead to on going hidden costs through lower end user productivity, error-prone applications, or applications that are misaligned with a company's business processes.

Five criteria were involved in the analysis assessment of usability:

1. Task-oriented navigation
2. Navigation configurability
3. Task-oriented dashboards
4. Web client
5. Integrated office productivity.

Both PeopleSoft and Siebel have obviously made usability a key deliverable to customers and, among the five vendors, provide the fullest feature set for usability, including taskoriented navigation, the ability to configure navigation, task-oriented dashboards, and web clients. Only SAP provides no task-oriented dashboards, and Microsoft provides no web clients.

Let's examine each of the five feature sets in the usability category.

• Task-oriented navigation

A task-oriented navigation is designed to allow users to use business process based navigation to complete tasks. PeopleSoft delivers an easy-toread
graphical layout that displays task-based terminology and icons representing the
portal registry content. Navigation pages not only have a consistent layout throughout the application, but users can more easily and quickly locate navigation items by scanning the new 2-level navigation shortcut collection. This process based flow for the application is consistent from the top level portal page down to the specific application pages, where application pages have process driven recommended actions and selectively show only the fields that are relevant to the current stage of a specific business process. To ensure optimal design of this task based navigation metaphor, PeopleSoft performs usability tests with at least 100 customers per application per release. This continuous investment in customer driven solution design enables PeopleSoft to continually improve usability and explains the high degree of usability
compared to other vendors. Oracle's screens can be rearranged slightly to align better with the customer's business processes and tasks, but this ability is not systematic across all modules and requires a high level of expertise in Oracle. Within SAP, navigation can be customized but requires custom development on top of the SAP Portal, which is part of SAP NetWeaver and is not currently used by most customers.

Both Microsoft and Siebel have focused much development effort on usability and both deliver a simplified user interface, leading to applications that are relatively easy to navigate.

• Navigation configurability

Most vendors provide tools to the technical staff and the implementation team to customize the application interface in order to better fit the business needs and business processes of the customer. Microsoft provides only limited
tools to customize the application interface. All modifications made to Microsoft Great Plains' interface and navigation are done through custom coding rather than configuration and wizard-driven, point-and-click tools. With PeopleSoft, Oracle, and Siebel, it is easy to create customized and personalized navigation pages and choose to use these pages in addition to, or instead of, the default navigation pages that are provided out of the box. SAP requires advanced programming to achieve a level of configuration and customization of the interface that might be fit for the average user.

• Task-oriented dashboards

Microsoft and Oracle offer only limited functionality with task-oriented dashboards. Through task-oriented, pre-built dashboards that organize key tasks, such as applicant job tracking and reporting, PeopleSoft delivers greater
productivity to end users. PeopleSoft is so focused on usability and end user productivity that new releases can ship only when a majority of new users tested can complete key tasks without any assistance in a timed usability exercise. Siebel also supports taskoriented dashboards that are end user-oriented. By comparison, vendors such as SAP have not fully migrated their interface toward a more task-oriented navigation and still require users to click back and forth between multiple screens to complete the various steps necessary for a specific business task.

• Web client

All PeopleSoft modules and applications, including PeopleSoft Enterprise One, are fully web-enabled and do not require the download of any application code on the end user workstation. This feature facilitates upgrades that are very transparent to the end users and that do not require the attention of either the end user or the technical staff regarding client side issues. Siebel has added 100% web deployment in the most recent version of its software. Previously with Siebel, some code had to be downloaded to the client. While Oracle claims to be 100% web enabled, some code components are still downloaded to the client. And unfortunately, Oracle's web architecture is not consistent across all Oracle modules. SAP is not yet fully web-enabled. By contrast, Microsoft's applications are still mostly client-server, and release upgrades can trigger
significant disruption to business operations through additional downtime and
unnecessary incremental costs to upgrade each end user workstation.

• Integrated office productivity

Microsoft has developed the most integration points between its business applications and its desktop applications, such as Microsoft Office and Outlook. Siebel provides basic integration between its sales force automation modules and email. Meanwhile, PeopleSoft CRM provides integration to standard
desktop software tools like Microsoft Office Suite and Lotus Notes as well as mobile devices including laptops, Pocket PC and Blackberry devices to ensure user adoption and enable new levels of user effectiveness. Integration with personal productivity tools is an area that remains underdeveloped for Oracle and SAP, but each vendor does offer some capabilities in this area.

Maintenance, Support, and Upgrades

The maintenance includes all post-implementation activities that are required to keep the application operational under normal and stressed conditions. It includes on going support, upgrades (patches and minor and major upgrades), all diagnostics and tuning activities managed by administrators to maintain the application running in optimal conditions, and the archiving of historical data.
Maintenance costs have an important impact on the overall ownership experience, due to the traditionally labor-intensive and repetitive nature of these activities. Diagnostics and tuning facilitate the upgrade process by staying current on releases, while poor diagnostics tools lead to unpredictable downtimes and business disruption. Seven criteria were involved in the expertise assessment of the maintenance phase:

1. Diagnostic and technical support
2. Remote and online support
3. Performance diagnostics and tuning
4. Patch management
5. Automated upgrade process and toolsets
6. User-centric performance testing
7. Data archiving.

In this phase, PeopleSoft offers the fullest feature sets covering diagnostic and technical support, performance diagnostics, patch management, user centric performance testing, and data archiving. PeopleSoft, Oracle, and SAP all offer full performance diagnostics and tuning. And PeopleSoft, Microsoft, and Siebel fully address patch management, while only PeopleSoft and Siebel fully address the issue of user-centric performance testing. All vendors have basic automated upgrade tools, and all have shown progress in addressing maintenance improvements to the ownership experience.

Let's examine each of the seven feature sets in the maintenance, support and upgrade category.

• Diagnostic and technical support

Microsoft, SAP, Oracle, and Siebel support is delivered the "traditional" way: a knowledge base on the web and phone calls with technical support. PeopleSoft is the only vendor to provide a built-in diagnostic framework through embedded diagnostics scripts that let customers send secure, realtime production system snapshots to PeopleSoft's support center. This unique capability ensures faster issue diagnosis and resolution. With SAP, Oracle, and Siebel, diagnostics and resolution information is exchanged between the customer and the vendor through tailored emails that depend on the availability, the responsiveness, and
the knowledge of the vendor's support staff. In some cases, support requires extensive communication and exchange of files such as log files that contain the exact configuration of the customer implementation.

• Remote and online support

All vendors provide some form of a remote support and online capabilities to help customers self-diagnose issues. Both PeopleSoft's and Oracle's online support databases are rich in content but can be time consuming to navigate. Siebel provides some support content over the web but, once a problem has
been logged online, always promotes interaction with the customers over web self service support. SAP has recently introduced multiple web sites to provide better post implementation information to its customers, but the efforts remain fragmented across various interaction points with customers.

• Performance diagnostics and tuning

Oracle, PeopleSoft, and SAP provide a built-in, instrumented performance monitoring tool that tracks the application performance in real time as well as by component. The tool provides comparisons to average performance levels to proactively identify and troubleshoot non-performing components. Siebel supports industry-standard application response-time management that implifies
performance tuning across all tiers of the Siebel Smart Web Architecture and supports proactive performance monitoring by a third-party ARM-compliant monitoring application. Because it requires third-party software, Siebel is not rated as highly. With Microsoft, performance monitoring is done at the platform level (Windows/NT); no specific application performing tools are available.

• Patch management

Applying patches to enterprise applications can be a very time consuming and disruptive activity. SAP, Oracle, and Siebel make their list of patches fully available on the web but provide limited guidance and automated tools to select
which patches are relevant to a specific configuration. PeopleSoft has streamlined this task by offering a Change Assistant toolset that supports the automatic checking of pre and post- requisites and by automatically selecting which patch should be applied for the customer to be current. Microsoft releases new versions of patches for its applications very infrequently (less than once a year), so the features with respect to patch management are well suited.

• Automated upgrade process and toolsets

SAP offers tools to identify pre-requisites and guide technical staff through the various steps of an upgrade. The SAP upgrade process is only partially automated, with many complex tasks to be performed manually. PeopleSoft provides Upgrade Assistant, an automated upgrade tool with well tested and
complete upgrade scripts. Starting with Enterprise Human Capital Management 8.9 customers, PeopleSoft has re-engineered the upgrade process from eight steps to five with Accelerated Upgrades. Now customers can use a visual compare tool to identify customizations and an ETL-based data migration tool to ensure downtime is less than a day. Oracle offers upgrade scripts and tools but with a lesser degree of automation. Microsoft provides basic upgrade automation tools that are adequate for Microsoft's low frequency of releases.

• User-centric performance testing

PeopleSoft allows customers to submit test cases, which are used as part of the application testing and release process. PeopleSoft is the only vendor to test functionality and performance using real customer data on volume database systems. Oracle relies mostly on its database performance test to validate the
performance of its application. SAP offers test services reported to be so expensive that very few customers opt to use them. Siebel has been focused on usability since it released its first CRM application, and user-centric testing is an integral part of its product development cycle. Microsoft delivers good usability but the functionality delivered is less sophisticated.

• Data archiving

Oracle only provides purge capabilities and does not allow customers to archive or restore/reinstate archived data into production. Both SAP and PeopleSoft
provide archive, purge, and restore capabilities natively. In addition, PeopleSoft provides rules-based archiving templates enabling administrators to set up different archiving rules for different regions for better global compliance support. Siebel and Microsoft do not directly offer archive, purge or restore capabilities.

Vendor Approaches to Ownership Experience

Microsoft

Microsoft has no formal ownership experience program defined. Microsoft has developed its cost management strategy based on a very low software price point and close to 100% out-of-the-box deployments with little ability to customize the software. As a result, Microsoft offers basic functionality that does not require extensive training, but it also does not necessarily deliver the full value expected by the customer in view of the ownership experience.

Oracle

Addressing cost of ownership is at the heart of Oracle's philosophy for Enterprise Applications. Based on the Oracle eBusiness Suite, an integrated suite of applications, Oracle claims that it can lower implementation costs by avoiding unnecessary costs, such as those associated with costly custom integration between applications. Although Oracle's approach has some merit - some measurable benefits have been highlighted through ROI case studies, serious concerns are still being raised regarding what Oracle has delivered to date.

PeopleSoft

Structured in a formal program, PeopleSoft dedicated over 1,000 developers and $800 million to improve the Total Ownership Experience for customers. Rather than focusing simply on best practices that improve the ownership experience, PeopleSoft has rethought its entire set of applications to ensure that they are built from the ground up to minimize deployment and maintenance costs.

SAP

Many users of SAP applications have, over the years, noted the complexity of SAP applications, the resulting high implementation costs, and consequent budget overruns. In response to these issues, SAP today highlights SAP NetWeaver as the centerpiece to SAP's product strategy for decreasing the complexity and cost of ownership for SAP applications. Currently, the impact of SAP NetWeaver on the overall SAP cost of ownership remains to be proven. SAP has not yet provided proof points validating that its customers benefit from
improved ownership experience through the implementation of SAP's latest technology.

Siebel

Siebel's customer experience initiative was first focused on customer satisfaction and high-level ROI measurements. It is only recently (12+months) that Siebel has focused more specifically on cost-of-ownership issues (mainly in response to customers' complaints). Siebel's improvements to its software development process are guided by the experience and insight gained from close examination of 200 Siebel 7.x deployments.

Research Methodology

For this study, the research was organized along key ownership experience criteria that allowed the research to capture quantitative and qualitative information across the major components of enterprise applications. The list of criteria was thoroughly defined to take into account the experience of not only the technical staff, but also end users who must accomplish specific business tasks with the application. The software versions that were compared included:

• Microsoft Great Plains version 7.5 and previews of Microsoft Great Plains version 8.0
• Oracle E-Business Suite 11.5.9
• PeopleSoft Enterprise 8.8 and 8.9 and EnterpriseOne 8.11
• SAP: mySAP Business Suite R/3 4.6 and SAP R/3 Enterprise 4.7
• Siebel 7.5 and Siebel 7.7.

The research also included functional areas such as Financial and Human Capital
Management Systems (FMS & HCM), Supply Chain Management (SCM), Customer Relationship Management (CRM); and application lifecycle phases such as installation, implementation, configuration, usage, maintenance, support, and upgrades. The team broke the entire process down into five steps:

1. Reviewed vendors' web sites and their positioning documents, as well as their online and hard copy documentation.
2. Utilized analyst reports, press articles, and technical reviews that are available to the general public.
3. Validated, using the defined criteria, the information collected in steps 1 and 2 through in-depth interviews with the consulting panel of experts. For the interview process, preference was given to respondents with multi-year experience and experience with the latest version of the application to ensure that the entire application lifecycle was properly covered.
4. Compared and analyzed findings from this primary and secondary research to generate a rating for each vendor on specific criteria. In this comparison and analysis, the respondent's experience with multiple vendors was leveraged as well.
5. Aggregated comparisons and ratings along three major phases of the enterprise application ownership lifecycle.

This research study was funded by PeopleSoft but designed and executed by this consulting team group as an independent, analytical evaluation of the key features important to the ownership experience of enterprise applications. The feature ratings contained in this report provide a summary level comparison among vendors and there may be minor variances based on specific vendor product modules.

Sales doubles company troubles

Sales doubles company troubles

from Planning, Startups, Stories by Tim Berry

[This is based on a true story. I've changed only names. --Tim]

Leslie is 15 years older now, approaching 50, still running a network consulting business with Terry, still married, and still living in the same West Coast university town. He's happy with the way things ended up, but I can see the wrinkles in his face and the gray in his hair as he talks about that time in the mid 1990s when sales doubled. Like the opening line of A Tale of Two Cities, "It was the best of times, it was the worst of times."

Flash back to 1994. Mozilla was available and the World Wide Web was beginning to reach a few commercial users. FedEx had a site, so did Disney, and people were starting to catch on. Clinton was president. The dot-com boom hadn't happened.

Leslie and Terry had a small office downtown and a reasonably good business, billing about $30,000 a month, taking home about $5,000 each per month after overhead, expenses, and, of course, taxes. Call their company Local Network Services. They'd been doing a lot of work for a few pioneering local businesses wanting local area networks, electronic mail, and such. Things were pretty good, they got along well, their offices were pleasant, but they could have used more money. Life can be expensive in a nice West Coast university town.

Then came the bonanza. A contract with the university. Both Leslie and Terry were alums of the school, and they'd happily maintained contact with some of their former professors, so it wasn't that unexpected, but still delightful news. LNS was asked to manage a very ambitious new project to rewire the campus for Internet access. It meant new servers, new routers, new switches, new software, and a lot of consulting. This was going to be worth something like $150k, maybe even $250k. I had lunch with Leslie during that period. He was excited. Growth is good. He was rubbing his hands together in eager anticipation. Those were good times.

The deal was landed, and a contract was signed. Depending on how they delivered, Leslie and Terry would essentially double their business in two or three months.

And things stayed good as they delivered on promises. They hired contractors, freelance consultants who were mostly friends, they got to work, did a good job, finished milestones, delivered as promised, and turned in their invoices. Okay, they weren't real quick to turn over their invoices, because they were doers, not administrators, but the invoices did get delivered.

In a matter of 10 weeks, LNS sales had doubled. Profits more than doubled. Life was good. Leslie and Terry celebrated. They moved to new offices, not much fancier -- they were techies, after all, not MBAs -- but bigger and better wired. They became quite popular with their contractor friends. Each of them leased a nice new Mercedes. It reminded me of a television commercial they used to show in Mexico City, when I lived there, for some luxury car: "for the man who has conquered his place in the world."

I sat with Leslie at some point during the euphoria weeks. We had coffee at a local place; he didn't have time for lunch but he was happy. It was fun to watch. There was the feeling of making it, success, wow, it's great to be an entrepreneur. Thank goodness he had left the big company to partner with Terry in LNS. He drove off happily in his Mercedes.

I heard the ugly "rest of the story" about six weeks later, from my wife, who used to see Terry's wife every so often. It came to me at that point as a kind of morality play, sending a message. Had I heard about the whole thing turning bad? my wife asked. They went crazy and overspent, she said, and now they were in real trouble. They had to take out second mortgages on their houses, just to cover expenses. Terry's wife was particularly unhappy; I heard, second hand, that on the day they had to sign the mortgage papers, they drove there in "that damned Mercedes."

Terry was one of those people who liked to share good news but not bad news, so there were no pleasant lunches during this time. I didn't see him again until the crisis was over; LNS had weathered the storm and would survive and continue to grow.

What happened? Cash flow happened. The rest of the story is painfully anticlimactic, and painfully common. Neither Terry nor Leslie stopped, during all the excitement, to think about accounts receivable. When they turned those invoices over to their friend at that university, he signed them, approved them, but he didn't pay them. He turned them over to finance, which, at the time, was sort of like sending them into a black hole.

It isn't that the university didn't pay its bills. It's just that it didn't pay them fast. The process would take several months.

In the meantime, LNS had to cover its costs. They had to pay the new rent, the moving expenses, and, most importantly, those contractors. The contractors weren't just business expenses, they were people with families to support and mortgages to pay. Terry and Leslie needed to pay them.

They didn't feel comfortable going back to their main contact to complain. After all, he had signed and approved the invoices immediately. They didn't want to be polluting their business relationship with this important new buyer by bugging him about the cavernous and slow-moving university finance department he depended on. And they didn't know anybody in finance.

So they shut up and borrowed money. And that required putting up collateral, which became second mortgages; one second mortgage for each of the two partners. They were lucky they had house equity because that's what saved their business.

What should have happened? Business planning should have happened. Here's where the story gets sad. Had Terry and Leslie been running a decent business planning process, they would have seen immediately upon signing that contract that a cash flow crunch was coming. They could have gone to their bank three months in advance, with a plan illustrated by tables and charts, showing how they were going to double sales and profits but they would need working capital to support the expansion.

Think of the contrast: how does the banker react when you've landed a big new contract and you know, because of your plan, that it will take working capital to support? Okay, and how does the banker react when it's Tuesday and you need money by Friday to make payroll or to pay the rent and not get kicked out of your space? Which scenario would you rather be in? That's why you want to plan.

Summary: Business planning didn't happen. Stress, pain, and heartache did happen. All of hurt, suffering, worry, and I do mean all of it, was unnecessary.

-- Tim

List of Great Books

From Seth's Blog by Seth Godin

Josh points to his list of great business books.

Need for ENTERPRISE RESOURCE PLANNING

Below is very interesting article which explains the need for ERP application for any SME.

Below article is from /www.erpfans.com/

ENTERPRISE RESOURCE PLANNING

Preamble:

Enterprise Resource Planning is the latest high end solution, information technology has lent to business application. The ERP solutions seek to streamline and integrate operation processes and information flows in the company to synergise the resources of an organisation namely men, material, money and machine through information. Initially implementation of an ERP package was possible only for very large Multi National Companies and Infrastructure Companies due to high cost involved. Today many companies in India have gone in for implementation of ERP and it is expected in the near future that 60% of the companies will be implementing one or the other ERP packages since this will become a must for gaining competitive advantage.

In the present business environment, role of a Chartered Accountant is considered to be very important and inevitable. Chartered Accountants as managers, consultants, advisors or auditors play an important role in controlling, managing, and supporting the business.

As the business needs are very complex in nature, the implementation of an ERP package needs Chartered Accountants with functional skills for evaluation, Business Process Reengineering (BPR), Mapping of Business requirements, Report designing, ensuring Business controls, customization of the package for the specific requirements, Documentation etc.,

Sooner or later a Chartered Accountant without the knowledge of ERP may feel as if he is a fish out of the bowl. By this article it is attempted to highlight various aspects of ERP and specific areas of ERP that are relevant for Chartered Accountants.

Evolution of ERP

In the ever growing business environment the following demands are placed on the industry :

• Aggressive Cost control initiatives
• Need to analyze costs / revenues on a product or customer basis
• Flexibility to respond to changing business requirements
• More informed management decision making
• Changes in ways of doing business

Difficulty in getting accurate data, timely information and improper interface of the complex natured business functions have been identified as the hurdles in the growth of any business. Time and again depending upon the velocity of the growing business needs, one or the other applications and planning systems have been introduced into the business world for crossing these hurdles and for achieving the required growth. They are:

• Management Information Systems (MIS)
• Integrated Information Systems (IIS)
• Executive Information Systems (EIS)
• Corporate Information Systems (CIS)
• Enterprise Wide Systems (EWS)
• Material Resource Planning (MRP)
• Manufacturing Resource Planning (MRP II)
• Money Resource Planning (MRP III)

The latest planning tool added to the above list is Enterprise Resource Planning.

Need for ERP

Most organizations across the world have realized that in a rapidly changing environment, it is impossible to create and maintain a custom designed software package which will cater to all their requirements and also be completely up-to-date. Realizing the requirement of user organizations some of the leading software companies have designed Enterprise Resource Planning software which will offer an integrated software solution to all the functions of an organisation.

Features of ERP

Some of the major features of ERP and what ERP can do for the business system are as below:

• ERP facilitates company-wide Integrated Information System covering all functional areas like Manufacturing, Selling and distribution, Payables, Receivables, Inventory, Accounts, Human resources, Purchases etc.,
• ERP performs core Corporate activities and increases customer service and thereby augmenting the Corporate Image.
• ERP bridges the information gap across the organisation.
• ERP provides for complete integration of Systems not only across the departments in a company but also across the companies under the same management.
• ERP is the only solution for better Project Management.
• ERP allows automatic introduction of latest technologies like Electronic Fund Transfer(EFT), Electronic Data Interchange(EDI), Internet, Intranet, Video conferencing, E-Commerce etc.
• ERP eliminates the most of the business problems like Material shortages, Productivity enhancements, Customer service, Cash Management, Inventory problems, Quality problems, Prompt delivery etc.,
• ERP not only addresses the current requirements of the company but also provides the opportunity of continually improving and refining business processes.
• ERP provides business intelligence tools like Decision Support Systems (DSS), Executive Information System (EIS), Reporting, Data Mining and Early Warning Systems (Robots) for enabling people to make better decisions and thus improve their business processes

Components of ERP

To enable the easy handling of the system the ERP has been divided into the following Core subsystems:

• Sales and Marketing
• Master Scheduling
• Material Requirement Planning
• Capacity Requirement Planning
• Bill of Materials
• Purchasing
• Shop floor control
• Accounts Payable/Receivable
• Logistics
• Asset Management
• Financial Accounting

Suppliers of ERP

There are many numbers of ERP suppliers who are very active in the market. Some of the companies offering renowned international ERP products include:

• Baan
• CODA
• D&B
• IBM
• JD Edwards
• Marcarn
• Oracle
• Peoplesoft
• Platinum
• Ramco
• SAP
• SMI
• Software 2000

BPR and ERP

Business Process Reengineering is a pre-requisite for going ahead with a powerful planning tool, ERP. An in depth BPR study has to be done before taking up ERP. Business Process Reengineering brings out deficiencies of the existing system and attempts to maximize productivity through restructuring and re-organizing the human resources as well as divisions and departments in the organisation

Business Process Engineering evolves the following Steps:

• Study the current system
• Design and develop new systems
• Define Process, organisation structure and procedure
• Develop customize the software
• Train people
• Implement new system

The principle followed for BRP may be defined as USA principle(Understand, Simplify Automate)

i.e., Understanding the existing practices, Simplifying the Processes and Automate the Process. Various tools used for this principle are charted below:

Understand Simplify Automate

Diagramming Eliminating EDI

Story-boarding Combining ERP

Brain storming Rearranging

Selection of ERP

Once the BPR is completed the next task is to evaluate and select a suitable package for implementation. Evaluation of the right ERP package is considered as more crucial step. Evaluation and selection involves:

• checking whether all functional aspects of the Business are duly covered
• checking whether all the business functions and processes are fully integrated
• checking whether all the latest IT trends are covered
• checking whether the vendor has customizing and implementing capabilities
• checking whether the business can absorb the cost
• checking whether the ROI is optimum

Implementation of ERP

Implementing an ERP package has to be done on a phased manner. Step by step method of implementing will yield a better result than big-bang introduction. The total time required for successfully implementing an ERP package will be anything between 18 and 24 months. The normal steps involved in implementation of an ERP are as below:

• Project Planning
• Business & Operational analysis including Gap analysis
• Business Process Reengineering
• Installation and configuration
• Project team training
• Business Requirement mapping
• Module configuration
• System interfaces
• Data conversion
• Custom Documentation
• End user training
• Acceptance testing
• Post implementation/Audit support

The above steps are grouped and sub-divided into four major phases namely 1)detailed discussions, 2) Design & Customisation, 3) Implementation and 4) Production. The phases of implementation vis-a-vis their tasks and respective deliverables are as below:

Detailed Discussion Phase:
Task :- Project initialization, Evaluation of current processes, business practices, Set-up project organization
Deliverables:- Accepted norms and Conditions, Project Organisation chart, Identity work teams

Design and customisation Phase:
Task :- Map organisation, Map business process, Define functions and processes, ERP software configuration and Build ERP system modifications.
Deliverables :- Organisation structure, Design specification, Process Flow Diagrams, Function Model, Configuration recording and system modification.

Implementation Phase:
Task :- Create go-live plan and documentation, Integrate applications, Test the ERP customisation, Train users
Deliverables :- Testing environment report, Customisation Test Report and Implementation report

Production Phase:
Task:- Run Trial Production, Maintain Systems
Deliverables:- Reconciliation reports, Conversion Plan Execution

Benefits of ERP

The benefits accruing to any business enterprise on account of implementing are unlimited. According to the companies like NIKE, DHL, Tektronix, Fujitsu, Millipore, Sun Microsystems, following are some of the benefits they achieved by implementing ERP packages:

• Gives Accounts Payable personnel increased control of invoicing and payment processing and thereby boosting their productivity and eliminating their reliance on computer personnel for these operations.
• Reduce paper documents by providing on-line formats for quickly entering and retrieving information.
• Improves timeliness of information by permitting, posting daily instead of monthly.
• Greater accuracy of information with detailed content, better presentation, fully satisfactory for the Auditors.
• Improved Cost Control
• Faster response and follow up on customers
• More efficient cash collection, say, material reduction in delay in payments by customers.
• Better monitoring and quicker resolution of queries.
• Enables quick response to change in business operations and market conditions.
• Helps to achieve competitive advantage by improving its business process.
• Improves supply-demand linkage with remote locations and branches in different countries.
• Provides a unified customer database usable by all applications.
• Improves International operations by supporting a variety of tax structures, invoicing schemes, multiple currencies, multiple period accounting and languages.
• Improves information access and management throughout the enterprise.
• Provides solution for problems like Y2K and Single Monitory Unit(SMU) or Euro Currency.

CA and ERP

A pertinent question one Chartered Accountant may ask is "How does an ERP matter for me?". As mentioned earlier the role of a Chartered Accountant in any business either as a Consultant, Auditor, Advisor or Manager is inevitable.

CA as a Consultant:

Implementation of ERP solutions is one of the largest drivers of growth in the consultancy business. The introduction of such a large and complex software like ERP, which enables an organisation to integrate their manufacturing, finance and marketing operations at all levels, is in itself a challenge, since it calls for technical and functional skills and a change in user mindsets. And therein comes a role of a consultant. CA as a Consultant will play a major role in implementation of an ERP solution.

CA as an auditor:

Assuming a situation where the client has implemented an ERP solution. If the auditor is aware of ERP he can make use of the features of ERP and thereby:

• ensures that the internal controls and checks are consistently maintained.
• ensures that the provisions of Income tax or other fiscal laws are not ignored e.g., one can control the payment of cash in excess of Rs.10000 for expenses or Rs.20000 as loans and advances, The TDS deductions and payments are automated etc.,
• ensures that the Accounting Standards are consistently followed across the company.
• Improves the quality of the reporting.

CA as an Advisor:

As an advisor to a company a Chartered Accountant can participate in various stages of ERP implementation. It goes without saying that advising without the knowledge of the current trends and modern management techniques will prove to be a wrong advice and may have a negative impact on the growth of the client.

CA as a Manager:

By now one should be knowing that the ERP is a high end sophisticated software solution that reduces the pressure and work load of the Managers and provides accurate, timely information for taking appropriate business decisions. Chartered accountants as managers with knowledge of ERP will be able to achieve their targets and goals by proper implementation of ERP system in their organisation. In fact Managers are expected to translate the business rules and requirements for Mapping them into ERP software. Managers as representatives of the Organisation have to coordinate with Vendors, Consultants, Auditors etc., for a proper implementation of ERP package.

Conclusion

The growing information needs of an enterprise make it imperative to improve or replace old systems. Especially under the present Indian business environment, where the globalization has been initiated, full convertibility is coined, Infrastructure Projects are nearing completion, and it is expected that the whole business system will undergo a major shift. Thus by being a proficient ERP consultant, Chartered Accountants will prove their commitment to the business world and modern management.

New Look

Welcome to Ria Lb Com Sdn Bhd official Blog.

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Marketing Team

Ria Lb Com Sdn Bhd