Business Process Improvement

May 1, 2007 from CAmagazine and written by Michael Burns – “This month, we will lay the groundwork for a series of articles on business process improvement. A BPI project may be initiated for a number of reasons. If a new ERP system is required, you should consider it the best opportunity you will ever have to overhaul your business process….”

Windows Vista Update

In April, I (Michael Burns) wrote an article on Vista and Office 2007 that was published in CAmagazine. When I wrote the article, I learned that my computer would not support Vista and the article was therefore based on a demonstration performed by Microsoft. I have now purchased a new laptop with an Intel Core DUO Processor running at 1.60GHz and with 2GB of memory. I thought I was ready for Vista when I installed Office 2007. Vista does come with a utility that makes it fairly easy to transfer your files and settings from your old computer. I initially thought things were looking good.

A week later, I was ready to go back to XP and Office 2003. First, performance on Outlook 2007 had been abysmal. I often needed to wait a few seconds until my typing appeared on the screen or for my scrolling to actually take place. I have archived and deleted messages as I have read that Outlook files greater than 2GB can have problems. My Outlook file is now 275MB. I also installed an Outlook upgrade dated April 13, 2007 that according to Microsoft “fixes performance issues that occur when you work with items in a large .pst file”. I also turned off indexing, which dramatically improves finding files based on any keyword search. I had 2 security systems working and I removed one of them. Despite all these steps, Outlook 2007 continued to crawl.

So I contacted Microsoft support, who spent 1 ½ hours on the phone with me trying to resolve the problem. Most of the time spent was trying to remove Outlook add-in programs that might have caused the problem. We tried a few but no luck. Unfortunately, some of the add-in programs including those from Microsoft could not be removed. The support person logged this as a problem to be followed up by Microsoft. I was told that the problem should be fixed by launching Outlook in safe mode. You don’t need to load Vista in safe mode - you just need to run Outlook in safe mode. Good news – Outlook 2007 is now working well in terms of performance. You do lose some functionality in safe mode including preferences cannot be saved and additional features and programs are not automatically loaded. A few days later, Microsoft called back and fixed the problem. I was told to disable User Account Control (UAC), which is a feature in Windows that can help prevent unauthorized changes to your computer. I was then able to disable the culprit add-in that caused all the problems. It turned out to be an add-in from Cyberlink, which was one of the programs that came preloaded on my laptop. With Cyberlink disabled, Outlook 2007 runs great.

I did have another problem that was also resolved. My personal folders disappeared after using the system for about a week. Outlook reported that errors had been detected and that I should run a program called Scanpst.exe, which I did. The program went through multiple phases of analysis, backed up my file and “repaired” my file. However, there was no change after the repair. However, I soon figured out that I had multiple Outlook files and then I repaired the right one and my personal folders were back.

Other problems have been learning where all the commands are now located in Excel and Word. If you’re an old dog, you might have a hard time learning new tricks. Although the layout of the toolbars and commands may be ultimately more logical, I could happily go back to the old layout. Another problem has been getting some programs to work. For example, my version of QuickBooks 2005 does not work with Vista. I needed to purchase (not update) QuickBooks 2007, which is Vista ready. It seems vendors like Intuit (developers of QuickBooks) will make a windfall profit as their customers are forced to purchase the new version.

The morale of the story is to always be very careful when investing in new systems. It’s not just the cost of the software – it’s also the opportunity cost of making it work.

Culture clash at SAP

May 17, 2007 from InfoWorld - “Agassi accumulates more and more power, hires thousands of developers in the United States and India, decentralizes product development into eight global centers of excellence, and ultimately gets put in charge of all SAP product development. Then the questions begin: Will greater speed jeopardize quality? Will SAP abandon its tried-and-true proprietary ABAP (Advanced Business Application Programming) language? Do customers even want all the new stuff?

The biggest questions were cultural, as it turns out. Germans, like Americans, are generally afraid these days of losing good jobs overseas. Plus, they feared the business impact of the "Americanization" of SAP, as Americans flooded into top management positions. They may have a point: SAP succeeded by giving the world a very German software model -- highly structured, with enforced standardization of business processes -- the discipline that global customers needed. Not exactly the chaotic entrepreneurial American way."

180 View – It seemed unlikely that an Israeli, Shai Agassi, could become the leader of the German SAP empire. He brought the innovation and Americanization that SAP seemed to need to compete in today’s market. But something happened along the way and he resigned from SAP on April 1, 2007. It’s not clear what happened, but it probably was a culture clash. It’s unlikely that we have heard the last of Agassi. Click here to learn a little about Shai.

Deltek opens office in Canada

April 26, 2007 – based on an interview conducted by Michael Burns of 180 Systems – Deltek is one of the leading providers of Enterprise Applications Software for project-focused organizations. They have acquired many competitors over the years including Wind2, Sema4 and Harper and Shuman. They have been very successful in the US public service sector with their own Costpoint system. A few years ago, they released their Vision system, which, along with Costpoint, GCS Premier and Enterprise Product Management, is one of Deltek’s four product lines. Vision is one of the few Professional Services Automation solutions that not only includes all the operational functionality required by professional service-based organizations (project management, time and expense management, client billing…), but also includes financials.

Vision is targeted to companies with 50-5,000+ employees. There is also a Vision Small Business system that contains the same code but preconfigured for smaller firms. Deltek has about 12,000 customers worldwide (1,200+ on Vision), with aggressive plans to expand. They recently opened up a new Canadian office and now have 5 employees. Deltek will provide implementation services direct for their larger clients and their business partners will provide implementation services for the smaller clients.

Exact Software

May 18, 2007 - based on an interview conducted by Michael Burns of 180 Systems – In the recent past, Exact Software focused their marketing efforts on Globe Enterprise (ERP) and e-Synergy (CRM). Their other products including Macola and JobBOSS were not getting much attention. Now Macola is being promoted and enhanced as the solution for discrete manufacturing companies; JobBoss as the solution for Tool & Die and Job Shops and Globe Enterprise for project centric companies.

Exact Software like some of the other ERP vendors has realized that Business Intelligence has become a major requirement for customers. Business Intelligence means turning data into information useful to make decisions. There is a spectrum of tools but top of the list are dashboards and Online Analytical Processing (OLAP). Exact Software now includes some OLAP features out of the box. Power users can get more functionality with additional investment. Another trend is opening up ERP functionality over the internet through portals. Exact Software has built many portals for their clients including employee self service, requisitioning and compliance tools and it’s available at a compelling $100 per user

Infor's ambitions

May 11, 2007 from ITBusiness.ca – “Infor Global Solutions was only founded about five years ago by a group of investors from Golden Gate Capital, but it has used that time to purchase close to 20 smaller companies. This includes the takeover last August of SSA Global, which owned the Baan product line, for US$1.4 billion, and more recently Toronto's Workbrain, a human capital management company, for about US$227 million. Infor now claims more than 70,000 customers, 8,100 employees and US$2.1 billion in annual revenues, putting it in third place in the overall business applications market...

Instead, Infor is developing what Frichol called Open SOA, a services-oriented architecture that will provide interoperability between Infor's products and those of other vendors…”

“Customers don't want to hear there's a migration strategy, a convergence strategy or those types of things. They want to continue with their product line essentially unchanged,” Frichol said. “We are not attempting to smash the products together into a single solution set.”

180 View – Infor also includes Visual Manufacturing, Syteline, Mapics, Systems Union, GEAC and many other systems. Infor speaks of continuing to invest in these systems and building links between the systems so that they can work together and complement each other. However, there is a lot of overlap between systems, and Infor will need to better explain their product roadmap.

Proposed Replacement of Instrument Relating to Internal Control Reporting and Certification Requirements

On March 30, 2007, the Canadian Securities Administrators (CSA) released for comment a revised National Instrument (NI) 52-109 - Certification of Disclosures in Issuers’ Interim and Annual Filings. The revised proposals sets out the CSA’s approach for reporting on the effectiveness on internal control over financial reporting (ICFR). To understand what this means and its implications, we asked Horwath Orenstein LLP.

The new proposals are effective for year-ends ending on or after June 30th 2008. In addition to the current certification requirements in place, key points that will have a significant impact on senior management are CEOs and CFOs are required to:

• evaluate the effectiveness of the issuer’s ICFR as of year end and disclose their conclusions in the annual MD&A
• disclose in the issuer’s annual MD&A the process for evaluating the effectiveness of ICFR
• disclose in the issuer’s MD&A reportable deficiencies in the design and operation of ICFR
• identify in the issuer’s annual MD&A the control framework used to design ICFR, or the fact that no framework was used
• disclose to the external auditors, board of directors and audit committee any fraud that involves management or employees involved in the issuer’s ICFR

In addition, the CSA also released Companion Policy NI 52-109CP which provides guidance on the design and evaluation of DC&P and ICFR. The proposed guidance suggests a top-down, risk-based approach for management to identify significant accounts and processes, determine financial reporting assertions, and evaluate the design of the components of ICFR.

What Are the Implications of the CSA Approach for Senior Management?

• CEOs and CFOs are now required to conduct an evaluation of their ICFR and conclude on its design and operating effectiveness based on a risk-based, systematic, and disciplined review process with sufficient documentation prepared to support their conclusions.
• It is not sufficient for CEOs and CFOs to rely on the internal control audit review performed by the external auditors as part of the year-end audit for the basis of their conclusion on the effectiveness of ICFR. The CEO and CFO are required to perform their own independent and objective review. The external auditor’s review of internal controls can be used to corroborate senior management’s conclusions, not replace it.
• The review of ICFR should be based on an internal control framework in order to evaluate the overall effectiveness of the design of the issuer’s internal controls. The most common internal control frame work is the Committee of Sponsoring Organizations (COSO) – Internal Control over Financial Reporting.
• Sufficient due diligence should be performed during the review process to support senior management’s assertion that a robust investigation was performed on the effectiveness of ICFR and at a minimum, meets the CSA Companion Policy NI 52-109CP requirements for certification.
• The review of ICFR should consider the possibility of fraud as it relates to individuals responsible for internal controls and corporate governance.\
• The audit committee should understand senior management’s review process for ICFR and ensure that reportable deficiencies are appropriately disclosed in the MD&A. This is particularly important given the civil liability action provisions of Bill 198 for secondary market disclosure.

180 View – If you have questions, we suggest you call Rob Crawford, who is the Director of Risk Management Services at Horwath Orenstein LLP. Robert can be reached at 416-596-6767 Ext 252

SAP to buy OutlookSoft to get closer to CFOs

May 8, 2007 from InfoWorld – “Business applications vendor SAP is making another acquisition aimed at filling out its product portfolio to better meet the needs of CFOs. The company announced late Tuesday plans to buy U.S. corporate performance management software company OutlookSoft for an undisclosed sum…

180 View – In March, Oracle purchased Hyperion. Both Hyperion and OutlookSoft are Corporate Performance Management (CPM) solutions, which includes strategic planning, scorecarding, budgeting and forecasting, consolidation and business intelligence. For more about CPM, click here. A few years ago, ERP was extended to include CRM. Today CPM is being added to the mix.

Follow the Money

Advertising

May 18, 2007 from CIO Today – “According to Microsoft CEO Steve Ballmer, Microsoft's purchase of aQuantive for $6 billion in cash represents the next step in the evolution of Microsoft's advertising network, with MSN and the broader Microsoft network that includes Xbox Live, Windows Live, and Office Live serving as key components of that strategy.”

Web Conferencing

May 18, 2007 from CFO.com – “Cisco Systems's $3.2 billion purchase of Web-conferencing leader WebEx was more than just another deal for the acquisition-mad networking giant. In shelling out so much for an established Web-services firm, Cisco made it clear that it intends to move beyond its base in networking hardware and take on rival Microsoft in the nascent "unified messaging" market…

Jain predicts the Web-conferencing market will triple, to $21 billion, by 2011 and expects Cisco to make other sizable acquisitions as it attempts to dominate the space."

180 View – You can expect to see a lot more content on the internet that will justify the investments being made in advertising.

Web conferencing is a great tool already but will only get better as live video is added and prices fall as the vendors fight for market share. There is thankfully less need to hop on an airplane to make a business call, which can’t be good for the airlines.

Are Great Teams Less Productive?

April 23, 2007 from Harvard Business School – “Learning promotes performance—is there any argument? Without learning, organizations, teams, and managers are stuck in yesterday's world.

In fact, says Harvard Business School professor Amy Edmondson, there are built-in tensions between learning and performance, which smart organizations must learn to recognize and deal with. For example, an organization that has just completed a learning initiative may see a drop in productivity, at least in the short term…”

180 View – From our vantage point, this Harvard Business School article is ‘right on the money’.

Like Harvard Business School professor Amy Edmondson, Lawrence Young has often observed employees that are ‘…thoughtful, caring individuals that were stymied in their genuine desires to make a difference at work-that is, their desires to help make their organizations more effective and responsive’.

This is most disturbing, given that today’s workplaces are for the most part understaffed, and need to shrink further in order to remain competitive in today’s ever-changing world.

So what’s driving this unfortunate phenomenon? A simple question without as simple an answer!

The first reality is that study after study has shown that for the most part, North American business leaders do not embrace organizational change as readily as, say, their counterparts in Asia. This can largely be explained by the fact that organizational change is often painful-it’s disruptive, rarely goes according to plan, and costs are incurred upfront while benefits typically accrue well into the future. This creates significant tension when business leaders feel constant pressure from stakeholders to produce better and better short-term results.

The second reality, as the author’s research showed, is that changing from ‘what is’ to ‘what needs to be’ involves learning-‘…learning occurs in reaction to changes in the world that require brand new responses’. Furthermore, ‘…there is a natural relationship between learning and performance in a changing world. That is, performance cannot be sustained over time without learning, because yesterday’s performance is inadequate in today’s world. So, to maintain or improve performance, learning is required’.

So, if we accept the fact that learning is a fundamental component of change for the better, then we also must accept the fact that ‘even if we are learning the right things, there is a transition to get through’. And during the transition, we will inevitable have to deal with failure!

As the author states-‘…learning processes by their nature involve facing failures-problems, mistakes-head on. The presence of problems or mistakes doesn’t signal high performance to most people who might be watching’. As well, ‘in well-led teams, a climate of openness could make it easier to report and discuss errors-compared to teams with poor relationships or with punitive leaders’.

And thus the third reality which we must acknowledge is that most business leaders have a very low tolerance for failure. This is quite paradoxical, since these same leaders were often praised when they ‘failed’ as a student i.e. getting an ‘A’ in a course when you get a score of 80 % means that you ‘failed’ to answer 20 % correctly. Therefore, we are conditioned to believe that a certain degree of failure is acceptable when we are students, but much less so when we enter the typical workplace. But as the author states, ‘…if learning is about identifying error, in the short term, performance will appear to be weak (error ridden) while learning is occurring. At the very least, if learning involves trial and error, the error part does not resemble most people’s idea of good performance. So, they’re at odds’.

So, what does this all mean? In short, business leaders must accept the fact that while continual learning is necessary for an organization to remain successful in today’s quickly changing world, productivity will likely drop in the short term. In other words, there will assuredly be some “short-term pain for long-term gain”. In other words, there will likely be incremental costs incurred in the short-term with no corresponding benefit until the mid to long-term.

According to Lawrence, the key challenge that managers face during a change activity such as learning is to better understand what will occur during the transition, and set realistic expectations for all participants, including corporate leaders. “After all” says Lawrence, “inconvenience is temporary, but progress is permanent-just ask any bodybuilder who feels pain as his muscle is being strengthened!”