TxM 005 Section 1.3 Problem description Created by James on 6/26/2013 3:46:32 PM
At a very practical level what are the problems your organization might be experiencing that would point to the JAR&A Strategic Engineered Precision Taxonomy approach being relevant?
Following are some problems I frequently encounter:
1. Spent millions – no answers
A frequent complaint I hear from executives is "we have spent millions but I cannot get answers to simple questions even though the transactions are being processed".
SEPT configuration is the answer to this problem.
2. No accurate production unit costs
Executives frequently complain they cannot get accurate production unit costs – one CEO whose company was developing a new mine said to me "James, I have spent 27 million on … (big brand ERP), I have ONE tunnel, they cannot tell me how much it is costing per meter to drive that tunnel, in one years' time I will have eighty tunnels, what am I to do?"
I subsequently learned that that same organization employed a highly competent lady with a Bachelor of Commerce degree and five years of post-graduate experience who had not managed to produce a viable income statement in six months and that the senior bookkeeper had spent six months whittling down the Chart of Accounts to 16 pages of accounts from 25 pages based on what she considered relevant. It finally turned out that the Chief Financial Officer was managing the finances in Excel and merely pretending to use the ERP!
They had the second worst Chart of Accounts I have ever seen – a Chart of Accounts which did not comply with any of the principles advocated here. Yet a Chart of Accounts with regard to which the big brand ERP software vendor declared "… is so powerful it can handle that" – totally ignoring the fact that the Chart of Accounts made no logical sense whatsoever, a characteristic of many Charts of Accounts which results in implementers making a fortune with ongoing support while executives mistakenly believe they do not understand IT when they should instead be taking a stand for quality taxonomies.
A badly designed Chart of Accounts recently contributed to a Chief Executive of a large listed company being fired after a badly configured big brand ERP was reporting increased profits while, in fact, the profit was a loss because some expensive consultant had accidentally reversed the posting accounts for the debit and credit side of certain transactions in the configuration.
A series of SEPT taxonomies would have solved both of these problems.
3. No accurate end- to-end product costs
Another CEO of a manufacturing group in which several business units added value to basic materials to create high value products complained that he could not get sight of the end to end chain of value addition and cost addition for his finished products. Once again badly classified and badly configured data was the cause.
A SEPT Item Master taxonomy coupled to precision configuration would have solved his problem.
4. Nobody trusts the system
I constantly encounter businesses where most of the business is run in Excel and add-on software packages because people do not trust the data in the system.
SEPT configuration properly implemented and operated is the answer to this.
5. Reports do not agree / do not make sense
It is an everyday occurrence in most corporations that they have numerous simple reports that do not agree or do not make sense, each person has their own variant which they trust but the overall totals do not agree. Frequently this relates to badly designed and badly configured validation lists and Master Data.
SEPT configuration is the answer to this.
6. Still getting huge bills from implementers
It is a regular occurrence that organizations continue to pay huge monthly fees for support of their systems or to employ expensive personnel to maintain reports and general configuration because the configuration is so clumsy and imprecise that the consultant or staff member is frequently the only person who can make some sort of sense of the data.
SEPT configuration is the answer to this.
7. Our data does not make sense
Executives frequently tell me that they do not understand IT – on closer examination this translates to the data being so badly configured that it makes no sense at all and does not in any meaningful way model the real world -- so executives, when they cannot make sense of the data, assume there is something magical that IT people know that they do not in order to make things work, frequently ignoring the harsh reality that it is the same people who are responsible for the mess in the first place.
Ultimately the CEO MUST be the custodian of any integrated system such as an ERP, Data Warehouse or Business Intelligence installation and the configuration MUST make sense to the CEO. This requires a SEPT configuration designed and implemented from the executive suite.
8. Lack of an effective group consolidation model
Most corporations lack anything approaching a comprehensive Group Financial Consolidation model that is anything more than a set of summarized financial statements. The JAR&A SEPT Financial Taxonomy solution (Cubic Business Model and Group Wide Master Chart of Accounts) provides a solution that enables comprehensive Group Wide financial analysis and modelling.
It also provides a mechanism for rapidly mapping and analysing the financial performance of potential acquisitions during due diligence and of rapidly integrating acquisitions when they come on board.
There are numerous other problems that you may be experiencing that are giving rise to frustration, doubting the software you have bought, etc. In the vast majority of these cases a comprehensive SEPT configuration coupled with Strategic Customization well designed and well implemented to JAR&A standards and well operated is the answer.
Strategic Engineered Precision Taxonomies really can make a huge difference to your Integrated Business Information System (IBIS), ERP, DW or BI investment and enable you to massively leverage your existing investments.
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