The following are the drivers of cost in building taxonomies:
1. Strategic executive top down approach
The strategic executive top down approach requires a very experienced executive level facilitator (and therefore expensive facilitator) for the upper levels of hierarchy development working closely with client executives and senior managers and guiding them to the optimum solution – cost cutting at this level compromises the long term strategic outcome of the investment – the right facilitator can add HUGE value for decades after they have completed their assignment.
2. More complex and more abstract than it seems
While the final deliverable seems simple and obvious the process of getting there takes far more time than one would expect – it is only finished when all executives and managers can look at the product and say “yes, that is my business”.
3. Facilitator must learn the business
During the first few iterations the facilitator is learning about the business at quite an intense and intimate level of detail with the result that the process is slower than one might expect.
4. Client personnel must learn the approach
During these same interactions executives and managers are gaining a practical understanding of the application of taxonomies to their business and frequently are understanding taxonomies in depth for the first time. This frequently causes their thinking to evolve drastically in the first few iterations with the result that two or three re-starts are quite common.
5. Limitations on availability of senior client personnel
Because it is vital to get all the appropriate executives and managers in the room for specific sessions it is seldom possible to schedule sessions of more than 4 to 5 hours although full day sessions are generally more time efficient from a facilitator cost point of view – this can result in reduced facilitator efficiency and increased costs.
6. Constraints on workshop frequency
For the same reason it is difficult to hold more than 2 or 3 sessions a week which is optimum from a technical progress perspective – this may necessitate shorter early morning or late afternoon or evening sessions in order to keep things moving forward within the constraints of executives and managers dairies – this can result in reduced facilitator efficiency and increased costs.
7. Absence of key personnel generates rework
Trying to force progress by running sessions without all the appropriate people in the room frequently results in time consuming rework and frustration all round at subsequent sessions where the missing person or persons need to bring their component – slower is faster is frequently the harsh reality.
8. Need for continuity and frequent sessions
In addition to the above it is vital that sessions progress at relatively closely spaced intervals – at least one and preferably two sessions a week. Where there are gaps of several weeks both the business team and the facilitator lose the thread of the logic that is unfolding which results in wasted time as people get back up to speed and pick up the threads of previous sessions. A gap of two or more weeks can result in as much as an hour or even more being lost at the start of a working session as people pick up the threads of the previous session.
This in turn can result in unintentional tangential thinking that requires loop backs and rework and further time loss and increased costs – intervals of no more than a week should be scheduled as far as possible and allowance made for increased costs where longer intervals are unavoidable.
9. Understanding of hierarchies takes time
The logic of the hierarchy only becomes fully apparent when the hierarchy has been coded and the hierarchy can be collapsed using the codes. Coding requires considerable behind the scenes cleaning of the hierarchy and can often result in a partial or complete recode being required.
This can give rise to considerable low visibility time and budget impact. The longer the time intervals between working sessions, the more not all people are present in sessions, etc the more iterations of restructuring are required and therefore the more iterations of re-coding are required – the composite effect of these factors can drive considerable increases in cost for no visible benefit.
10. All drive costs – tight management is essential
All the above factors drive costs. Some are unavoidable while others can be curtailed in the event of close cooperation and time management by the client team and facilitator guided by the project manager.
The cost of a worst case scenario in terms of time efficiency can easily run to two or three times the cost of a best case well managed scenario.
Since so many of these cost factors are driven by client specific considerations it is only practical to work on a fixed fee basis where there is very strict time management on both sides which must include willingness by both parties to work overtime at any point where unexpected complexity is slowing progress
11. Master data configuration
Once all the above taxonomy development stages are complete there is still considerable work required in terms of table specific configuration, particularly in the case of items such as product catalogues where potentially dozens or even hundreds of fields may need to be carefully populated for thousands of records. The use of taxonomy based software to facilitate this process is strongly recommended. The precision of the use of the ERP and related software will ride on the level of precision of the configuration down to the last product or material record.
12. Reports, models, etc – the Analytical Suite
Having created highly structured intelligent data™ all we have done is laid the foundation.
It is then necessary to create a rich variety of reports and models in order to harvest the value that is now embedded in the data – this should be done first in the Data Warehouse under almost all circumstances.
In the Financial General Ledger domain we have recently specified and commenced development of the JAR&A Analytical Financial Suite™ which is a comprehensive range of reporting and analytical tools and models that can be rapidly connected to data built to our standards in order to deliver a rich yield of “touch of a button” management information tools and resources – refer separate literature.
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