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The Forklift Upgrade?

forkliftAn interesting article by Andy Kessler, author and former hedge fund manager, published October 7th in the Wall Street Journal suggests that we may be in line for a big uptick in business productivity soon.  It will be the result of what he terms a Forklift Upgrade in modern business computing.

In his article, Kessler posits that we are now embarking on the fourth major era of computing.  He counts mainframes of course as the first, which “automated back offices and transactions, bringing efficiencies and lower costs.”

The second era was marked by the desktop era of the 1980s and, in particular, the 90s.  Essentially, a lower cost option to do many of the same tasks mainframes did (with, we might add, the added benefit of vastly enhanced personal productivity gains: think spreadsheets).  The third era was the Internet era, with the web allowing us to buy goods and services “through the magical Internet.”

Now we’re moving into the mobile era, or stage four.  There are now more mobile users out there than desktop users, including nearly two billion people using the web on their phones.  It’s a computer in your pocket, always there when you need it.

In the business world, companies are rethinking their entire infrastructures.  We see it all around us.  Microsoft recently at its Microsoft Dynamics NAV “Directions” conference touted – heavily – its new catchphrase “Mobile first.  Cloud first.”  Companies are moving some functions already to the cloud.  Mobile is everywhere (including ERP solutions now bringing their supply chain capabilities to pads and phones).  Companies running on infrastructure built in the 80s, 90s and 00s, are now “figuring out that they need a mobile and cloud platform to save money and offer a better service.”

This is where the “forklift upgrade” phrase comes into play, according to Kessler: “Companies lift and remove the existing system and drop the new in place.”

As the author points out, this takes much planning.  In our own dealings with clients, we’re finding that process analysis, process reengineering, education and workflow improvements – all ultimately aimed at leaning the firm out – are at the foundation of all this change.  The challenge then becomes to find appropriate systems, software, technology and new processes to supplant the old, reduce the redundancies and the separate silos of information — in turn making companies more competitive and able to offer goods “better, cheaper, faster.”

Kessler points out that while these well-thought-out changes have resulted in a temporary lull in in capital spending, that’s about to change.  These changes are difficult, expensive and “too important to mess up.”  The technology must be made to fit the business purpose (always!).

But as it does occur (and it will and, in many cases, already is…), companies will start growing faster “as lower costs work their way through the enterprise.”  As profits increase, companies reinvest.  They use their cheaper technology to hire and gain market share.  And the cycle feeds on itself.

Given the (several trillion dollar) size and scope of the tech changes rising today, in the transition to a mobile and often cloud-based world, the global economy will head right there in stride.

avalara_picIf you sell or have nexus in multiple states, then you know how complex filing taxes and maintaining exemption certificates has become, and this post if for you.  Our friends at Avalara, the online sales tax experts, have produced a white paper in which they outline five key things a business should do to ensure they are in compliance with all the various state requirements for exemption certificates.  Here are a few of the things that most commonly go awry:

» Missing a signature or does not include a signature of an accepted signer

» Missing an issue date

» Incorrect claim type or any certificate not accepted

» Document not recognized by the state authority

» Includes name or address other than the direct buyer and seller

» Showing State ID applicable to the wrong state

Avalara lists five “survival tactics” for increasing efficiency, avoiding waste and lowering the risk of the all too common audit fines and penalties (and if you’ve been through an audit, you know what they’re talking about):

Survival Tactic #1 —Understand the nature of the exemption – Sales can be exempt for many reasons based on the nature of the use, the goods or services, or the buyer.  The more products sold, the more risk and difficulty.  To dos include:

» Create systems to track changing rules regarding the tax-exempt nature of each transaction.

» Track sales tax holidays, product and service related exemptions, and exemptions based on use.

Survival tactic #2 —Determine validity of exemption certificates.  Which form?  What jurisdiction?  What needs to be on the form?  To dos:

» Review exemption certificates submitted and ensure they contain key elements including type of exemption, names & addresses, descriptions of goods, tax number, signature.

» If the state you’re dealing with is one of the 23 SST (Streamlined Sales Tax initiative) states, use the recommended forms.

Survival tactic #3—Know the rules.  Tracking tax-exempt transactions based on use, tax holidays, and source of the transaction requires super human strength and agility.  To dos:

» The Sales Tax Institute publishes a list of sales tax holidays by state.

» Know whether to collect a resale or exemption certificate and whether one form can be used for both.

Survival tactic #4—Determine product and service-related exemptions.  Tax rules change constantly as states seek more sources of revenue.  Over and under charging sales tax can result in a higher audit risk.

» Review taxability matrices available on many departments of revenue websites here.

Survival tactic #5—Automate.  Manual tracking of exemptions and sales taxes is not only time-consuming and cumbersome, it also raises the risk of audit.  Something as simple as automatically tying each exemption certificate to each transaction can save hours of time and reduce risk of fines and penalties. Other advantages of automation include:

» Automates collection

» Tracks the progress of collecting certificates

» Helps to ensure the completeness of certificates

» Eliminates lost certificates

» Tracks certificate expirations

» Improves the exempt customer experience

This, of course, is Avalara’s specialty (why else write a whiter paper?).  You can find them at www.avalara.com.  We work with them, so we’ll be happy to introduce you, or forward you a copy of their white paper.  Just ask.

 

 

 

directions 2014PSSI recently returned from the annual “NAV Directions” conference in San Diego, where Microsoft and its many partners provided sneak peeks of the latest version of NAV, dubbed simply “NAV 2015”.  As NAV 2015 is released this week, we thought we’d share a few highlights from the NEW version…

  • NEW: Dynamics NAV for tablets – A new user interface redesigned for touch on tablets.  Elegant and fast, it puts content first.  It’s NAV, but with the look and feel of Microsoft Office.  Role tailored.  Available on App Store, Google Play and iOS App stores.
  • NEW user experience enhancements, like Enhanced Cues including customizable color (or ‘sentiment’) codes (Red for hot, Green for okay, or whatever you choose) and other controllable format options, like custom values, or almost any computed value in NAV.
  • NEW Office 365 integration – Sign into the Windows NAV client using your Office 365 account.  Drill down, analyze, share.
  • NEW: page simplification – Show only what’s needed, swiftly and cleanly.  A more modern Office 365-style design.  Fewer pages needing fewer clicks.  Simplified setup from role centers.

    - Chart up to 8 KPIs on “master data cards” in the role center.

    - Create mandatory fields, totals on sales and purchase documents and auto-filled number fields.

    - Simplification is a foundation for building solutions with a simpler user experience (UX) with focus on basic sales and purchase scenarios for small business solutions.

  • NEW: Use Microsoft Word 2013 as a layout editing option for document reports (like invoices, POs, etc.).  Customize document reports.  Change fonts, insert a holiday greeting, or add images in a WYSIWYG environment.

 – Also, report scheduling

  • Enhanced cash management features and improved bank management integration; new bank file conversion tools (from AMC).
  • Improved upgrading tools (Yay from a reseller!).  New merge utilities to simplify code upgrades and data upgrades for moving from older NAV to new, thanks to a new object called the upgrade codeunit.

For your convenience, we’ve attached a PDF of these changes below.

new in nav 2015

cloud_economistA recent article in The Economist (Aug 30, 2014) reminds us again that companies are embracing the cloud much more slowly than its proponents had expected.

According to research firm IDC, businesses will spend about $100 billion on cloud computing this year.  That sounds like a lot, until you put it up against the roughly $2 trillion that companies will spent overall on I.T.  That’s about 5% of computing budgets, including large companies, going to the cloud.  A bit underwhelming, considering all the press and the hype of the past few years.

To overcome this reluctance, the big cloud storage providers – like Amazon, Google and Microsoft – are slashing cloud storage prices radically.  Prices are likely to fall even further.  The article quotes marketing firm IPG Mediabrands CIO Samuel Chesterman, saying “Every cloud provider will bend over backwards to match rivals’ prices.”

The cloud promises and indeed probably presages a Cheap Revolution.  It should make storage cheaper and cheaper, while bringing down the cost of managing applications.  And indeed, for things like file storage and archiving, email and a host of web services it has.

But in other areas, inroads have been modest at best.  In one of our previous (March 27th) posts, we noted Panorama Consulting’s recent survey that indicated that cloud usage in the ERP space had suffered a severe decline (of nearly 50%) in the past year.

Meanwhile, security foibles are certainly not helping cloud’s reputation.  The recent and much ballyhooed scare over hacked celebrity photos from Apple’s iCloud, along with recent Internet outages at places like Facebook are not helping.

But in the long run, these are merely speed bumps.  I’ve long held the view that the cloud is inevitable.  More tangibly, the cloud will be to the 21st century what the grid was to the 20th: always on, ubiquitous, everywhere.  It’s just a matter of time.

And in the short run?  Probably, a hybrid-cloud solution makes the most sense.  You utilize the cloud for the uses for which it’s optimized.  Again, storage… backup… email… and an unending library of applications.

But for the business world, some things are just too valuable – and the cloud still immature and insecure – to risk it all.  For these applications – and our specialty, ERP for manufacturers, surely fits this bill – local hosting still makes sense.  If I’m a small business owner, I want to be able to walk down that hall, pat that server on its proverbial head, and know that my data and applications are right there where I can see them.  With sufficient backup and power precautions, I know I’ll rarely be down for long, and I know my data can be kept safely where it is.

To be sure, precautions are necessary.  I.T. providers exist for a reason you know.  But at the end of the day, with my business on the line, I want my data secure, my applications local, and my business away from the eyes of snoops, hacks, even the government (nowadays).

Give cloud its due.  Hybrid too.  And local hosting.  For everything there is a season.

In the meantime, try to keep your nude selfies to a minimum.

panorama extended durationsPanorama Consulting recently released its 2014 report entitled “Clash of the Titans” (available here)

in which they explore the various advantages/disadvantages customers encounter during implementation of three well known ERP offerings: SAP, Oracle and Microsoft Dynamics.  They do this periodically, and of course each product scores its various highs and lows against the other (although it is worth noting that the first two tend to be very high-end, expense, complex “Tier 1” solutions, whereas Dynamics, mostly, is suited for the small to midsize (SMB) market).

But one trend we saw in their report spoke volumes about the truth about ERP.

About midway through their report, the report’s authors looked at “Reasons Behind Extended Durations.”  This was led by a chart (at top here) listing 9 reasons, of which seven had gotten worse over the last three years (2011-2013), most significantly worse.

The main reasons noted in the report for ERP implementations extending well beyond their expected durations were:

  • The initial project scope was extended
  • Organizational issues
  • Data issues
  • Unrealistic timelines

In fact, the report singles our “unrealistic [project] timelines” as being the single greatest point of increase over three years.  Panorama went on to say:

Organizations want to get their ERP system “plugged in” as soon as possible and don’t understand all of the components that are required to make an ERP project successful – organizational change management, data cleansing, optimization and standardization of processes, training, etc. Due to this lack of understanding, companies set unrealistic timelines for their ERP implementation and the result is that their projects run over-schedule.

Experience bears out the importance of the lesson here.  Despite software publishers who wish it were not so, the truth is, ERP implementations are hard, time-consuming, and fraught with ‘gotchas’ large and small (the large ones however are definitely avoidable with proper planning).

Companies like Oracle, SAP, Microsoft, and many others make their money selling software – the more and the faster, the better.  Clients and consultants need to constantly remind themselves of what is in the client’s best interests, not the publisher’s.  The answer, of course, is a quality and well-planned ERP implementation that comes out reasonably on-time and on-budget.

That starts with a realistic timeframe and budget, based on a well-executed process analysis from the start. 

Eventually, doing so will help turn around Panorama’s trend of missed expectations when it comes to extended durations.  It can’t come too soon.

 

ediMassachusetts based software company RedTail Solutions is a long-time provider of EDI solutions.  Recently they published a paper (which you can download here) entitled “Implementing EDI for the First Time” that provides some simple steps to getting started and engaging your organization for an EDI implementation.

Electronic Data Interchange (EDI) is simply a common set of technology protocols between companies that enables electronic interfacing with many of your suppliers, vendors or customers.  It’s a common way to transmit forms and data including purchase orders, sales orders, shipping notices and other common business documents.

Following are a few of their key points on Getting Started, and then, on Engaging Your Organization for an EDI deployment:

Getting Started: Planning, Red Tail notes, is as always essential.  Some of your own internal processes will be changed along the way.  Here’s what to do in your planning stage:

  • Define which trading partners to implement and in what sequence
  • Identify trading partner contacts, resources and required documents
  • Summarize results of your implementation discovery process with your EDI provider
  • Outline integration requirements for your EDI/ERP system, including custom tailoring
  • Define roles for functional teams and management
  • Describe roles for internal/external tech resources
  • Establish timelines and milestones.

Engaging Your Organization: EDI will change how some of your staff (sales, accounting, order fulfillment) will work.  Communication is critical in this stage.  Functional teams and management should work together to present:

  • Why are we using EDI?
    • (Labor/error reduction; improved ROI from ERP; support business growth; as a platform for other ROI like Warehouse Management (WMS), etc.)
  • How the quote-to-cash (or at least, order-to-cash) process will change post-EDI
  • What steps and sequences will we need to follow for EDI?
  • How much time will it take?
  • How will each team member be involved?

Red Tail’s report goes on to talk about installation… activating and maintaining trading relationships… being a good supplier… and managing change in your organization.  You can see the full report, linked above, for the rest of their advice on EDI implementation.

 

7 symptoms forecasting illness“According to a recent Business Finance survey, two out of three finance executives expected their 2009 budget targets to be obsolete within the first six months of the year.”

In a 2010 white paper from IBM the authors, Steve Player and Steve Morlidge, blame antiquated processes and tools combined with misconceptions about forecasting accuracy for the “illness” of most forecasting systems in business today.  In their paper Seven Symptoms of Forecasting Illness (© IBM 2010) they point to 7 symptoms of potential forecasting trouble, which we’ll highlight below.

  1. Semantic Confusion: Does your firm find it uncomfortable to cope with unexpected or unwelcomed forecasts? Like the manager who is asked for a “best estimate” and then is held accountable for it, or criticized for “making changes” in a forecast update, or one which management doesn’t like.  The bottom line is the blurring between “forecasts” and “targets” (or goals).  Resolution involves more honest, open and direct communication from the top down.

 

  1. Visual Impairment: Are you obsessed with the year-end forecast number to the exclusion of everything else? Or surprised by early-year unexpected developments?  The root cause here tends to be inflexibility or lack of adaptability to changing conditions, and is best resolved via use of a rolling (i.e., cumulative/adjusted monthly or quarterly) type of forecast.

 

  1. Delusions of Accuracy: Are you obsessed with accuracy, pouring too much quality managerial time and talent agonizing over a forecast’s development, trying to hit it on the nose? The price paid for error here may include bonuses, promotional expense, or losing sight of what’s possible “as internal views obscure external learning.”  Here again, forecasting more periodically and being quickly adaptive to outside changes will help.

 

  1. Systemic Overload: Are forecasts too detailed?  Is there too much pressure to provide greater detail and analysis?  These cause the system to become bloated and unwieldy in a downward spiral of frustration.  The fallacy is in believing that more data is always better.  Instead, the authors opine, limit your forecasting to a few key critical drivers that truly affect company performance.  Use the 80/20 rule, and emphasize analysis over data gathering in extremis.

 

  1. Prosperity Syndrome: Do your forecasts tend to trend up over-optimistically regardless of industry or conditions? Are they too biased toward growth?  Ignoring the reality of industry or economic cycles exposes any firm to strategic missteps.  Don’t mistake a happy event for a trend.  And above all, don’t neglect your key customer-satisfying strategic differentiators.  Instead, recognizes your biases, focus on current, key market and economic realities, and competitive realities.

 

  1. Lack of Coordination: Are forecasting views internally characterized by chaos and conflict? Do different departments see the future differently?  Are managers’ biases reflected in their (conflicting) forecasts?  Lack of integration by management of key forecasting projections is at the root.  A system is required company-wide that users can believe and have faith in – one that does not discourage differing views, and inspires collaboration.

 

  1. Asocial Behavior: Does the firm routinely manipulate or distort forecasts even when not in the company’s long-term best interests? Is knowledge withheld or manipulated?  You could end up rewarding sand-baggers and masking problems (or opportunities) in the marketplace and obscure the firm’s true potential.  If so, take a look at bonuses, comp and reward systems for undesirable links between forecasting and performance, or incentives not well aligned with overall company goals.  Reward employees for the value they create rather than the targets they negotiate.

 

The full IBM White Paper can be found at the website of proformative.com.  You should be able to find the link here.

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