THE QUEST FOR FINANICAL DIRECTION

The role of todays controller runs the gamut from the data gatherer to the big-picture observer. The corporate controller will still continue to drive reporting processes but now is also needed to help establish financial direction via hands-on intelligence that only that role can provide. However handson should not mean hands in the ERP system. There are now alternative solutions that can keep enterprises from diverting crucial finance personnel from strategic business opportunities.

From the vendor perspective, a valuable solution set will need to addresses core operations like accounting but also extend to address multiple types of financial reporting, internal controls, due diligence, audit support, tax process support and other specific financial services. Corefino offers this type of amplified finance support that will strengthen enterprise financial strategies.

Enterprises need to consider all options as the worldwide economic outlook, mid-2009, remains uncertain. Performing finance tasks as they were performed five years ago will not make sense for the future. New hybrid approaches that combine finance expertise, IT solutions and business process improvements are an attractive alternative to the past. This type of offering will only prove more valuable to companies as finance becomes even more complex and potentially disruptive but also integral to long-term enterprise fiscal health.

MEASURING SUCCESS

A successful finance transformation creates several benefits. These benefits include better utilization of corporate talent that is re-directed to address business management challenges and opportunities. Direct cost savings can be garnered through consolidation efforts of disparate financial functions and removal of redundant processes or IT solutions. Further cost savings can also come from areas such as:

* Migrating to one IT platform
* Moving finance departments to one business model
* Reductions in finance cost-to-revenue ratios
* More efficient business processes
* Savings realized through headcount reductions

These types of cost savings are the result of a successful finance transformation, resulting in finance roles, such as the Controller and the CFO, becoming high-performance players. Finance functions also become lower cost components of the enterprise overall. But, for most enterprises the problem in finance transformation is not a desire to achieve these savings, but where to start and how to begin.

Both CFOs and Controllers will also need to turn to trusted partners, for finance transformation support for important and recurring routine accounting functions as well as more strategic finance efforts. In the past, these partners have been mostly large enterprise software vendors and large business service providers or consultants. While these types of partners may understand the problems of finance, their costs and one-size-fits- all approach does not serve most enterprises well.

The need for consistent and reliable IT solutions and services is one critical aspect of any finance transformation project. An IT partner who offers access to finance applications for processes such as accounting, payroll and audit reports while also offering services that keep business process current and compliant with GAAP (or IFRS) practices, provides a large portion of necessary support for a successful finance transformation.

The new breed of IT provider, like Corefino, addresses the basic needs of finance that impact Controllers and CFOs alike. By looking at the need for finance efficiency and daily operations management, Corefino allows Controllers and the finance group overall to free itself from predictable transaction processing and establish financial directions for the enterprise. This solution removes non-value add processes from the enterprise scene and creates the framework for the strategic relationship between the Controller and CFO to deepen.

THE MISSING LINK: FINANCE TRANSFORMATION SUPPORT FOR ROUTINE ACCOUNTING

The need for consistent and reliable audit-ready financials is an established imperative, but whats not been defined well among organizations nor established, support-wise, by vendor partners is a finance transformation framework for Controllers. Controllers direct the preparation of financial reports, such as income statements, balance sheets, and analyses of future earnings or expenses, that summarize and forecast the organizations financial position. Controllers also are in charge of preparing special reports required by regulatory authorities. Often, controllers oversee the accounting, audit, and budget departments. So to achieve finance transformation for routine accounting, an enterprise will have to address three parts:

* Finance Support and Expertise
* Technology Solutions and Infrastructure
* Best Practices Framework for Improved Business Processes

These three parts are crucial to deliver different elements of support to the Controller, as shown in Figure 1. Finance staff is needed to deliver accounting expertise for everyday issues like expense and revenue accounting, cash management and tax preparations support. Technology solutions provide avenues (e.g., Software-as-a-Service, cloud computing configurations) for real-time access to data and financial information across business units. Finally, improved best practices and workflow frameworks support solid business process improvement for accounting, financial reporting and internal control, among other finance processes.

As important as this formula is to elevate the Controller and transform finance it is not easy to achieve. For many enterprises, these three elements that address people, IT and business processes are not best served via a traditional ERP approach. The buy-install-maintain software cycle is unfortunately still a large part of many job descriptions for Controllers and leading the integrations of new ERP systems can turn talented financial talent into second rate-IT personnel. To avoid this problem, enterprises need to look beyond traditional ways to help the controller achieve a big-picture view of finance. Therefore what is now needed for enterprises that cannot afford or dont want to allocate time and personnel to the black hole of standard ERP is a new approach and model.

What have emerged from this inefficient scenario are new IT solutions that are in turn creating new IT markets. Vendors, such as Corefino, have created unique offerings to not only address Controller issues but that resonate favorably with CFOs who are looking to achieve finance transformation.

By offering a hybrid IT solution-service approach to clients, Corefino directly speaks to Controllers and CFOs to remove problems from their overflowing plates of responsibility. This new type of finance model offers the professional expertise of business process outsourcing with the latest IT solutions for cloud computing and Software-as-a-Service, which addresses immediate controller needs but also broader financial goals. This type of support is crucial for a finance transformation that will create a more strategic position for finance as well as the individual roles of the Controller and the CFO.

Finance Transformation and Routine Accounting: Enabling the Corporate Controllers Role as a Strategic Contributor

Enabling the Corporate Controllers Role as a Strategic Contributor

Throughout the history of accounting, the first role of the Corporate Controller has been ensuring corporate financial controls and, as a very distant second, making strategic business contributions. That gap widened mightily near the end of the 20th century. The installation of on-premise ERP and accounting software corralled even the most business-minded controllers into the demanding role of financial software aficionado, or at the very least, caretaker.

Today, when controllers arent installing, adjusting, or adding to their software deployments, they are mentoring and monitoring their on-premise staffs to coax needed reports out of these systems. The goal, of course, is to facilitate operations to close the books, produce audit-ready reports and be ready to deliver whatever numbers their CFOs, CEOs or auditors want whenever they want them.

With so many responsibilities to address, finance transformation (the process of realigning and streamlining finance functions) for routine accounting would be logically a top priority for controllers. However, guidance and practical strategies to achieve finance transformation has been sorely lacking.

In fact, many finance stakeholders and related parties -- CFOs, accountants, auditors, service providers, consultants, and software vendors -- recognize the value in enterprise finance transformation, but the infrastructure/methodologies just havent been there in an economically viable way. Today there are now practical options coming from a new breed of vendor which enable finance transformation and, in the process, can help elevate the role of controller to strategic enterprise contributor.
WHAT FINANCE TRANSFORMATION ACCOMPLISHES AND HOW TO GET THERE

Efficient and cost-effective finance processes that are dependable, risk adverse and consistent are always necessary for an enterprise to truly thrive. But in todays economy, with mounting pressure for performance improvements, finance transformation is even more of an imperative for all businesses. The process of finance transformation is distinct for each enterprise. What will remain constant are the major elements that are a combination of redefined business processes, supplemental professional services, and IT solutions that support and define a transformed finance landscape. The perfect combination of elements in a successful finance transformation will accomplish three main goals:

* Optimize the financial business processes of an enterprise
* Create a framework to lower the total cost of finance processes
* Increase marketplace competitiveness of an enterprise

From a broader financial perspective, finance transformation addresses various issues, such as maintaining stability during non-routine business periods (e.g., mergers, divestitures, down economic cycles); addressing talent shortages; assuring internal stakeholders, such as the CEO and CFO, that regulatory and financial processes are defensible; and/or delivering more insightful data environment for financial decision making.

However, the one missing link in most finance transformation models is providing the Corporate Controller with a fresh approach to less time-intensive, people-heavy paradigms for delivering routine accounting information.
Addressing the Controllers Needs in Finance Transformation

To make a finance transformation project valuable to the Controller as well as other financial stakeholders (such as the CFO or accounting personnel) basic tactical requirements and problems must be addressed. Processes and solutions included in the finance transformation project must include those that impact the role of Controller such as:

* Monthly and annual financial reporting
* Financial regulatory and compliance issues
* Tax planning and annual audits
* Global tax compliance
* Financial planning and analysis (e.g., budgeting, forecasting, variance analysis)
* Internal controls and corporate governance

Many enterprises that have not undergone finance transformation still depend solely on basic ERP systems to supply the Controller with data and controls to address these issues. This is regardless of whether the ERP system can support budgeting, tax processes, internal controls or any of the crucial elements that falls under the controller responsibility umbrella.

Workflow Components

The individual components that make up workflow are rules and associated actions — tasks, field updates, and alerts.

In general, a workflow rule is the main container for a set of workflow instructions. It includes the criteria for when the workflow should be activated, as well as the particular actions that should take place when the criteria for that rule are met. Every workflow rule must be based on a single object that users will choose when they define the rule, as this object then influences the fields that are available for setting workflow activation criteria.

For example, if a user defines a workflow rule for the “Job Application” object in an HR application, he/she will be able to set workflow activation criteria based on the values of fields like “Job Application Number” and “Status”. Users can also set workflow activation criteria based on standard fields, like “Record Owner” or “Created Date”, as well as fields based on the currently active user when a rule is evaluated, such as their “Role” or “Time Zone”.

When a workflow rule is triggered, there are many types of actions that can occur, starting with a workflow task (or step), which assigns a task to a user according to a particular template. Just as in Microsoft Outlook, tasks include information about something that needs to be done by a certain time, such as making a telephone call, creating an order, shipping goods, or paying an invoice. Typically, assigned tasks appear in a user’s “My Tasks” related list on their home tab (or page) and generate reminder messages that pop up when a user logs in.

When an administrator defines a workflow task, he/she provides default values for data fields like “Assignee”, “Subject”, “Status”, “Priority”, and “Due Date” for tasks that are generated by its associated workflow rule. Administrators can also make sure that a notification email is sent to the assignee when a task is automatically generated.

In additon, a workflow field update changes the value of a particular field on the record that initially triggered the workflow rule, while a workflow alert sends an email according to a specified email template. Unlike workflow tasks, which can only be assigned to users of the application, workflow alerts can be sent to any user or contact, as long as they have a valid email address.

A workflow rule can include any combination of these actions when the rule is triggered. For example, one rule might send out an alert and update two fields on a particular record. The action that one workflow rule takes can also trigger the execution of another workflow rule.

Workflow-enabled Applications

Many enterprise applications today come with built-in workflow management capabilities, such as the Salesforce.com Enterprise Edition on-demand customer relationship management (CRM) suite and its on-demand Force.com (formerly Apex) platform, Agresso Business World (ABW) or Exact E-Synergy, to name only some.

Microsoft Dynamics CRM too includes a workflow module that users can use to automate their business processes based on the rules, logic, and actions that they design. Microsoft has revamped the workflow functionality in Microsoft Dynamics CRM 4.0 so that it now uses the Microsoft Windows Workflow Foundation (WF), whereas previous versions of Microsoft Dynamics CRM used their own proprietary workflow engine.

The result of the revised workflow functionality is that users, administrators, and developers can design and create business processes using the workflow tools with new features and a new UI for creating and monitoring the workflow processes.

Windows WF provides a comprehensive programming model, run-time engine, and tools to manage workflow logic and applications. The Microsoft Dynamics CRM workflow UI relieves users and administrators from the need to interact with WF directly. Therefore, users do not necessarily have to understand the underlying workflow technology to create workflow logic in Microsoft Dynamics CRM.

As a recap, a built-in workflow provides a tool to help companies set up and define business process activities (including the proper sequencing) that involved employees can use when working with the enterprise system’s data. Conceptually, one should think of a workflow as an application or service that runs in the background, 24 hours a day, 7 days a week, constantly evaluating the data and the multiple workflow rules in the company’s deployment.

When the workflow service encounters a trigger event, it activates the appropriate workflow rules to run the workflow actions. Typical workflow actions include sending an e-mail message, creating a task, and updating a data field on a record.

By implementing workflow processes in the enterprise resource planning (ERP), supply chain management (SCM) or CRM systems deployments, users can enjoy many benefits, such as:

1. Ensuring that users track and manage their customer data and processes in a consistent fashion — instead of relying on users to remember the appropriate steps for processing data, managers or administrators can create workflow rules that will automatically determine the next required steps and assign activities as necessary;
2. Processing the customer data more quickly so that, for example, new sales leads or customer service requests are assigned and routed immediately upon record creation; and
3. Allowing users to focus on more value adding activities — instead of having to perform a large number of manual repetitive steps.

It’s About Process (or Ability to be Responsive) – Part I

After several years (if not decades, even) of painstakingly corralling and setting up all their custom data, objects, tables and whatnot, and making sure that these static and/or dynamic transactional data are secure, many enterprise applications users have realized that the time is long overdue for them to start looking at ways to make their applications more process-savvy.

Companies are increasingly trying to adopt and implement standardized (and yet flexible and easily modifiable) business processes to help their operations run more consistently and smoothly. For example, the chief executive officer (CEO) might decide that as of, say, next month “All customer service cases must be resolved within 24 to 48 hours,” or, “We are going to institute a new sales process for all deals worth over US$100,000.”

However, these business processes often get communicated to employees in an ad hoc and unregulated manner. A process document with instructions may exist on a network file share, but people have not the foggiest idea that it’s there. And some employees might rely on word-of-mouth information from co-workers (so called “tribal knowledge”) to learn the processes for their jobs.

Consequently, standardizing and instituting new business processes can prove challenging for most companies, particularly larger organizations.

Indeed, until recently most enterprise applications have hardly been anything more than glorified databases — they could hold all of the information users may need and allow users to search for records based on various criteria, but they could not really help users to perform the functions of their daily jobs more effectively.

There’s still often no native automation and agility within the system that lets, e.g., a recruiter instantly know when the status of a candidate has changed or when a new position requisition has been entered into the system.

Indeed, when any changes are made somewhere in the organization, users have to remember to notify one another of the change or else rely on others finding the updates on their own. Neither solution is practical in the long term and invites the possibility that the software solution or best practice will not be adopted consistently by all employees at the company.

How can one then build processes into enterprise applications so that users won’t need to, time and again, rely on manual (pedestrian) methods of communication to inform others of changes, increasing the risk that many issues will fall through the cracks?

Introducing Workflow Automation

To that end, a built-in or an external standalone add-on tool (or capability) that can be used to solve the process automation problem is called workflow automation (or workflow management). Some will refer to it as business process management (BPM), and we will shortly try to point out the differences between the two – i.e., workflow and BPM.

Traditional enterprise applications typically feature some built-in functionality, such as a human resource management system (HRMS) or a procurement application, with some capability to tailor the base functionality through parametric configuration options (e.g., via “order types” that entail different mandatory and optional “order steps”) that users have to learn by heart.

To be fair, some enterprise applications have introduced workflow capability into their products to give users some ability to control the process behavior of documents such as an invoice or an engineering specification. But in most enterprise applications workflow is implemented through hard-coding, which means that programmers must develop and maintain the code.

In addition, workflow automation of the typical enterprise application is generally limited to a single document or task routing. This usually means that companies implementing an enterprise application must choose between accepting the vendor’s pre-built business process behavior or paying the vendor dearly to make expensive modifications to accommodate more complex processes, which will then make upgrades either costly or impossible.

In contrast, a specialized workflow tool enhances a single task and/or document routing by providing an integrated capability to include rich user interfaces (UIs), system integration, rule processing and event handling.

Rules are necessary to determine which path users should take next in a process that has multiple possible paths, e.g., an order worth less than US$1,000 does not need manager approval, but over that amount it does. On its part, an example of event handling would be a necessary step after a product recall: a “pull from shelves” notification must be sent throughout the distribution channels.

These capabilities can be pretty powerful, since in general, if users can come up with a standard rule that specifies when a particular event should happen, they can make it happen automatically with workflow. In other words, workflow becomes the magic ingredient that transforms many traditional transactions-capturing applications from a glorified database into fully functional tools that basically everyone in the company should find useful.

What’s the User’s Choice Then

As said in Part I, the BPM market remains quite stratified, whereby there seems to be a number of powerful and full fledged BPM software packages (e.g., from IDS Scheer, Appian, Tibco, Lombardi, Ultimus, Fujitsu, Oracle-BEA Systems, Metastorm, etc.), many of which can be found in TEC’s BPM Evaluation Center.

BPM is considered one of the most overlooked trends in enterprise applications today. In fact, it is increasingly becoming a native part of the IBM WebSphere (best shown by the recent acquisition of ILOG), SAP NetWeaver and Oracle Fusion Middleware platforms and applications, which could be a glimpse into the future of modeling, workflow, re-engineering, and continuous change, all around ERP.

For a typical implementation that leverages a comprehensive on-premise (which is still a dominant deployment model) BPM suite, companies should count on forking out up to US$500,000 to address a few meaningful processes in their organization. Moreover, potential hidden costs include (all on top of already hefty investments in existing enterprise applications):

* Having to license and deploy multiple development, test and/or production environments to support multiple BPM initiatives;
* Additional application and database server licenses;
* Additional staff to provide the care and feeding of these servers; and
* Internal cost of direct involvement from business users to participate in process modeling, business rule definition, user interface (UI) design, testing and rollout activities.

At the lower end of the market there are a slew of workflow-based software packages addressing specific processes, such as bug or issue tracking systems. While upper-range BPM packages address complex business processes and issue tracking systems typically deal with one simple workflow, a number of workflow (possibly BPM wannabe) vendors like FloWare, Skelta, Red Maple, Web and Flo, Quask, XALT Technologies, ZyLAB Technologies, etc. are addressing a space in between.

How About Workflow (and Eventually BPM) On-demand?

But again, not many of these solutions are delivered in true no-frills software as a service (SaaS) fashion, as they still require significant hardware, software and professional service resources to be deployed on the customer’s site. Also, some business processes, although mission-critical for the company, are not transactional in nature and do not necessarily need to be part of the back-office database.

In fact, trying to capture every step and status of every little case (e.g., a customer’s product complaint or improvement suggestion that needs to be investigated by several employees) would only unnecessarily encumber the ERP or customer relationship management (CRM) database.

Maybe mapping only some critical data between the case management process and ERP database (e.g., for inventory or invoice adjusting purposes), and doing application programming interface (API) exchanges only periodically in a batch fashion might make more sense there.

BPM — Much More than Integration

BPM is often used to integrate multiple enterprise applications and various internal and external users into a new process, but it goes way beyond mere integration. Whereas traditional enterprise application integration (EAI) products help companies to move data between applications, BPM adds interaction with people and the ability to support processes, which then become as manageable as data.

BPM integrates existing applications, Web services and people in order for companies to quickly change, destruct or construct processes as required. Again, BPM enables a company to more cost-effectively and quickly model and change its business processes to meet the specific requirements of a particular business. Via BPM, people can be involved in two ways:

1. From a rank-and-file employee point of view — BPM represents units of work from the business process as tasks, whereby each task contains work instructions, status, priority, due date and other attributes. Workers use BPM to monitor and execute the tasks that are assigned to them or to the workgroup to which they belong; and
2. From a manager or executive point of view — Managers and executives use BPM to monitor process performance by viewing graphical reports that summarize task status and alert them to process bottlenecks. They also frequently get involved with tasks by participating in approval or escalation process steps.

Thus, many BPM products provide real-time monitoring and insight into the process operation. The process flow model of BPM allows management the ability to not only easily identify bottlenecks and inefficiencies in the process, but also to more easily modify the process to improve productivity.

For instance, with industrial (plant-level) BPM deployments, companies can digitize their work processes and close the loop on performance with actual execution data. By applying BPM in manufacturing plants, companies can manage and audit their production more effectively and consistently thus improving their conformance, compliance, throughput, and ability to deliver. They can also empower their workforce by integrating people and their roles and by customizing individuals’ work styles and decision-making processes.

Astute BPM suites that focus on manufacturing can enable companies to close the loop on production process improvement, digitize good manufacturing practice (GMP) tasks, standard operating procedures (SOPs) and work instructions. They can also enable corrective action/exception management, Hazard Analysis and Critical Control Point (HACCP) monitoring procedures, and also orchestrate high-level processes and manage data between various disparate systems and empower domain experts to solve production problems immediately on the shop floor.

For more information on BPM, see TEC’s earlier articles entitled “Business Process Management: How to Orchestrate Your Business” , “Giving a Business Process Management Edge to Enterprise Resource Planning” and “Business Process Analysis versus Business Process Management.”

Special credit also goes to CIO Magazine’s articles entitled “ABC: An Introduction to Business Process Management (BPM)” and “Making Workflow Work and Flow for You.” All of the above articles were quite leveraged for this blog series thus far.

It’s About Process (or Ability to be Responsive) — Part II

Microsoft, for example, informally demarcates the Microsoft Windows Workflow Foundation (WF) focus on “internal processes” from Microsoft BizTalk Server’s “external BPM” use. Namely, the first tool (somewhat of a BizTalk spin-off) is used for automating processes within an enterprise (and its enterprise resource planning [ERP] system), whereas the latter is intended for inter-enterprise process orchestrations across several disparate enterprise applications.

BPM Suite Components

Full-fledged BPM system components thus include visual process modeling: a graphical depiction of a process that becomes a part of the application and governs how the business process performs when companies run the application.

They also feature Web and systems integration (SI) technologies, which include displaying and retrieving data via a Web browser and which enable companies to orchestrate the necessary people and legacy applications into their processes.

Another important BPM component is what’s been termed business activity monitoring (BAM), which gives reports on exactly how (and how well) the business processes and flows are working (for more information, see TEC’s article entitled “Business Activity Monitoring - Watching The Store For You”).

Optimizing processes that involve people and dynamic change has been traditionally difficult, and one barrier to optimization has been the lack of visibility and ownership for processes that span functional departments or business units, let alone different enterprises. In addition, the industry often changes faster than information technology (IT) departments can update the applications set that the business relies on to do its work, thus stifling innovation, growth, performance and so on.

But today, the pervasiveness of Web browsers and the emergence of simpler application integration technologies such as Web sevices, simple object access protocol (SOAP), extensible markup language (XML), business process execution language (BPEL), etc. have enabled IT staff to deploy technology that supports the business process across functional, technical and organizational silos.

In the broadest sense, BPM components address the issues of the following: process modeling, documentation, certification, collaboration, compliance, optimization, and automation (i.e., via a workflow engine that is rule-based).

Again, highly functional, top-of-the-range BPM suites use graphical (visual) process modeling tools that enable business users and business analysts (i.e., those people that are most familiar with the process) to implement and manage the process definition. To complete any transaction, the BPM suite must also call on various siloed legacy applications that hold necessary information, for example, customer, inventory or logistics data.

But to the ordinary user the complex process that runs over many enterprises and various systems should appear seamless. End-users should be spared the effort of hunting down the scattered information themselves, since the underlying BPM platform provides tools for:

* Business analysts to model (and change) the business processes and define the business rules that control how those processes behave;
* IT departments to integrate the necessary legacy systems;
* Joint teams to build applications for the end user that enforce the processes and rules; and
* Management to review process performance (e.g., the required time to resolve client return exceptions) and even adjust process parameters in real-time (e.g., increasing the dollar value threshold during peak periods to trigger management review and approvals of client returns).

Therefore, the most vital BPM attributes would be the following: being event-driven, orchestrated, intended for both internal and external processes/customers, and leveraging human-centric workflow and business analytics.

With the leading BPM platforms/suites, everyone in the company will be working on the same shared data and process model, so changes to the process can be put into action very quickly. This is because these sophisticated platforms provide integrated process modeling, real-time process monitoring, and Web-based management reporting — all working in unison to support rapid process innovation.

Microsoft’s Underlying Platform Parts for Enterprise Applications: Somewhat Explained – Part 2

concluded that Microsoft would not converge all of its diverse Microsoft Dynamics product lines into a single enterprise resource planning (ERP) solution. Rather, the vendor has been attempting to leverage the best practices and technologies across all of the products, where possible.

The idea is to deliver applications that have the following characteristics: are familiar to users within their organizations, fit with existing corporate systems, fuel business productivity, and enable confident and informed decision making processes.

Reporting, Analytics & Collaboration Enablers

To expand further on the use of the Microsoft SQL Server database that was discussed at the end of Part 1, all Microsoft Dynamics reporting capabilities will in the future come natively (which also means without new license fees) through SQL Server Reporting Services (SSRS) and associated tools. This was first developed within Microsoft Dynamics GP 9 and Microsoft Dynamics AX [evaluate this product], and will be adopted more broadly across other Dynamics products. In the Microsoft Dynamics AX 4 release, there was the capability of creating ad hoc reports, whereas most recently released Microsoft Dynamics AX 2009 also uses SSRS for all production reports.

Innovation is now surfacing as a result of integration between the Microsoft Visual Studio.NET (VS.NET) development platform and SQL Server. Namely, there is now the ability to launch Precision Report Designer and maintain the Dynamics AX semantic models in VS.NET and to pass the data in a closed-loop manner to and from Dynamic AX logic models. These models can in turn look into the Dynamics AX database (SQL Server) via database secure views. The future development will make these currently static models dynamic for report-customization purposes.

Along similar lines will be the use of Microsoft SQL Server Analysis Services (SSAS), whereby all Dynamics role centers within the user experience (UX) project (mentioned in Part 1) will feature embedded contextual business intelligence (BI). Currently, Dynamics AX 2009 has the cube generation capability, whereby analytics perspectives have been added to the business logic model, and which can generate Data Source Views (DSV’s) and Online Analytic Processing (OLAP) cubes. The future research and development (R&D) forays will likely enable the round-trip (between VS.NET and SQL Server) advanced features that will require similar features to the abovementioned reporting tools.

As a little caveat, these native reporting and analytics features will not be automatically available to the users of the proprietary Microsoft Dynamics NAV C/Side database (about half of the install base) and Dynamics AX Oracle instances. For Dynamics NAV customers using the older C/Side database, most of them upgrade to SQL Server when they move to a new NAV version anyway, while Dynamics AX users on Oracle can access the new reporting and analytics features by adding SSRS and SSAS to their deployment. Still, Microsoft will, for the foreseeable future, honor the ongoing support for these databases alongside its SQL Server.

Sharing SharePoint and Unified Communications

Microsoft SharePoint is the platform for portal-based collaboration and document management/enterprise content management (ECM). The product also works tightly with Windows Workflow Foundation (WF) and Unified Communications (UC), both Microsoft technologies that will be described in detail later on. This integration provides great visibility for workflows related to documents and document libraries, and improving collaboration through the “presence” and “click to communicate” features.

Today, SharePoint is the universal portal technology for the Dynamics portfolio; for example, in Dynamics AX 2009, the AX Enterprise Portal (formerly Axapta Enterprise Portal) is now based on SharePoint. The portal was devised from the standard SharePoint design experience, whereby a gallery of Dynamics AX Web parts is now available, making it very simple to bring to the surface Dynamics AX data (with the inherent AX security model enforced) on SharePoint portal pages.

In addition to Web parts, other strategies for SharePoint integration are its Business Data Catalog (BDC) Web Services feature (currently used within Microsoft Dynamics GP [evaluate this product] and Dynamics CRM [evaluate this product]), and data binding (within Dynamics AX). It is likely that BDC services will grow further in importance, and we should expect a broad Microsoft Dynamics consistency around this feature.

The abovementioned UC technology provides the ability for applications to identify users’ “presence” and enable “click to communicate” capabilities. Via Microsoft Office Communications Server 2007, Dynamics AX 2009 and Dynamics CRM 4.0 currently work with UC (which is envisioned for the upcoming Dynamics ERP releases too). For example, whenever a user sees a person in the application screen, he/she can also see a presence indicator showing if they are “out of the office”, “in a meeting”, “on a call”, or “available”. By clicking on the indicator, a user gets to pick the preferred method to communicate with them with a single click, whether it might be via email, instant messenger (IM), or phone, if the company has the computer telephony integration (CTI) capabilities.

The Microsoft Dynamics team is working together with the UC team to develop even more advanced scenarios that bring people closer to the processes represented in their applications. One such possible scenario, “Call Center of the Future”, was showed at Convergence 2008 during Steve Ballmer’s keynote speech. Expected scenarios for the next version of UC platform will revolve around how to factor in application embedding, advanced in-context collaboration scenarios, and blending UC and business process management (BPM).

What About the Microsoft .NET Framework Parts?

The situation is much less “crystal clear” when it comes to leveraging components of the Microsoft .NET Framework. Namely, on the programming and development platform side, only Microsoft Dynamics SL [evaluate this product] is leveraging Visual Basic.NET (VB.NET), one of the languages embraced by .NET. Having already abandoned the gut-wrenching route of a single code base, as noted in Part 1, Microsoft now has to live with the proprietary platforms within Dynamics GP (i.e., Dexterity) , Dynamics NAV (i.e., C/Side AL), and Dynamics AX (i.e., X++/MorphX).

But, on the upside, the abovementioned Windows WF technology, which is an application-hosted workflow orchestration engine, and with a VS.NET design experience, is much more pervasively used throughout Dynamics. WF tools are VS.NET-based tools for developers that add simplified analyst (information worker) experiences.

The technology originated in the Microsoft BizTalk Server team (to be described later on), and in a future major release of BizTalk, WF will become the orchestration engine for BizTalk. WF is used in SharePoint and within Dynamics applications (i.e., Dynamics GP 10, Dynamics AX 2009, and Dynamics CRM 4.0) as the workflow engine. A distinct feature is its Tracking Provider architectural design (Dynamics AX 2009 implements this) that allows users to capture process execution information in the same database as the transaction data.

There is the ability here to track and record data about WF instances as they execute, such as the current status of long running processes, time spent across parts of/the whole process, exception paths taken, etc. This enables an analysis like, for example, how much time or how many escalations is it taking the user to approve Purchase Orders (PO) for his/her preferred suppliers with PO’s value under US$25,000.

Furthermore, Windows Communication Foundation (WCF), formerly called Indigo and WinFX, is an application web services inter-communication framework, and can be used to access Dynamics AX 4 and 2009 business logic through web service interfaces. This provides a higher level document interface to the application for integration, complementing the .NET Business Connector which offers more granular, lower level component interfaces to the Dynamics AX business logic. Microsoft’s .NET Business Connector replaces the older Microsoft Component Object Model (COM)-based COM Business Connector.

What Else Might Come Down the Track?

As a glance into the future, Microsoft BizTalk Server, which delivers orchestration and integration capabilities between disparate applications while handling broad ranges of scale and volume, is envisioned to expand the Dynamics ERP and/or customer relationship management (CRM) products’ integration and BPM capabilities. Dynamics products occasionally work with BizTalk for tricky orchestration and integration between third-party systems, for example handling orders in business-to-business (B2B) commerce integrations, whereas WF is used for orchestration inside an individual Dynamics application.

Other potential ambitious undertakings in the future should revolve around Master Data Management (MDM), whereby the Stratature acquisition in 2007 should be a good start towards embedding MDM capabilities into SharePoint. The Dynamics products are seen as key drivers for scenarios in a future Microsoft MDM offering. Along similar lines should be the FAST acquisition in 2007, when it comes to the enterprise search capabilities (that entail both structured data and unstructured/rich media files).

Top 10 Ways the Transition to IFRS Will Impact Your ERP System

GAAP, or Generally Accepted Accounting Principles, have long defined the standards for accounting and related practices in the US. GAAP ensures that companies can produce documents that auditors can verify according to standardized accounting practices.

GAAP is also important because it provides for consistency across industries and companies. A company using GAAP can have its financials compared with similar GAAP-compliant companies.

IFRS, or International Financial Reporting Standards, is a standard that has been implemented in over 120 European and Asian countries. On August 25, 2008, the US Securities and Exchange Commission (SEC) published a proposed schedule for IFRS to supplant GAAP. The deadline for full conversion/compliance by US publicly traded corporations is 2016. Canada is expected to be completely IFRS-compliant by 2011.

The main effect of IFRS relates to a minimum standard for companies to recognize, measure, and disclose items in financial statements.

IFRS financial statements are significantly more complex than GAAP financial statements. Some (particularly those who earn their livelihood based on GAAP expertise) argue that this complexity threatens to undermine the utility of IFRS financial statements. Indeed, there is a real danger that the preparation of IFRS financial reports will become a technical compliance exercise rather than a mechanism for communicating actual organizational performance (to say nothing of financial position).

Because the transition to IFRS is so substantial, I decided to list my top 10 most important accounting-related business issues that are impacted by the transition from GAAP to IFRS. These are some of the ways in which IFRS will impact your ERP system.

Note that I do not mention SOX-related issues, since SOX is a topic that deserves a blog post in its own right (stay tuned for that…)

Extensible Business Reporting Language (XBRL) Back in the News Again

Visiting the Securities and Exchange Commission’s (SEC’s) web site, I came across this 143-page PDF file, which deals with XBRL. As a gung-ho proponent of automation, I’m calling attention to it here to show that the head of the SEC (Mr. Christopher Cox) and I are on the same wavelength when it comes to promoting cost saving automations. Here is some interesting stuff from the PDF, together with my comments.

The Christopher Cox modernization commission proposes that companies provide their financial statements to the Commission and on their corporate Web sites in interactive data format using the eXtensible Business Reporting Language (XBRL). A statement on Page 29 of the PDF states that the decision about this request becoming compulsory was to have been decided on December 15th, 2008.

XBRL was derived from the XML standard. It was developed and continues to be supported by XBRL International, a collaborative consortium of approximately 550 organizations representing many elements of the financial reporting community worldwide in more than 20 jurisdictions, national and regional.

The proposal is a significant one for Mr. Cox as he is a proponent of modernization and the use of current technology to reduce business and government expenses. His legacy will be the promotion of “interactive data” and modernization of SEC filings through the use of XBRL.

Mr Cox has decided to retire at the end of President Bush’s term. During Mr. Cox’s tenure, the regulator has convinced over 8,000 companies to use XBRL in various types of filings. Large international organizations such as Proctor and Gamble and Pepsi file with GAAP and IFRS, are using XBRL, and are on the very pro XBRL bandwagon.

About the only criticism I have about Mr. Cox’s plan is the timeline. CFOs balked at the aggressiveness of the schedule that SEC proposed. SEC wants them to aim for concrete results for 2010.

XBRL is the next big wave to the financial modules of ERP software packages. In subsequent blogs I will address this topic with gusto.

One Year Later at Deltek: More of the Same (And Then Some More) – Part II

explained Deltek’s ebullience despite a hostile and depressed environment. The continued cash-generating operation has been complemented by in-house developments, acquisitions, and partnerships.

The previous blog post also talked about the recent developments (and anticipated future developments) at Deltek’s Professional Service line of business, which is largely represented by Deltek Vision [evaluate this product]. Parts II & III will analyze the recent developments (and anticipated future developments) at Deltek’s remaining lines of business.

Government Contracting (GovCon) Market

Deltek has invested in a lot of research and development (R&D) in the GovCon market recently, with two major product announcements being the availability of the new release of Deltek GCS Premier [evaluate this product] and the release of the Deltek Performance Management (DPM) suite. GCS Premier 5.0 was a huge release for Deltek because the goal behind the launch was to put to bed perceptions that its competitors (most frequently Microsoft Dynamics and its network of partners) have been putting in the marketplace for a while.

Namely, GCS Premier has long featured an old technology foundation (with a “welcome to the 1980s” look-and-feel), and the market perception has been that Deltek is not really committed to improving the product. Deltek’s presumed strategy was to force GCS users to upgrade to the upper-range Deltek Costpoint [evaluate this product] suite. These assumptions could not be further from the truth, and the 5.0 release is proof.

Generally available from late August 2008, GCS Premier 5.0 delivers significant enhancements to the renowned and widespread project accounting solution for small-to-medium-sized government contractors. The release is focused on producing enhancements to the following three important areas:

1. Ease of use
2. Improved invoicing
3. United States (US) Defense Contract Auditing Agency (DCAA)-mandated compliance reporting.

GCS Premier 5.0 delivers a new user interface (UI) with a more versatile and contemporary look-and-feel, and bolstered billing capabilities that make invoicing faster and easier. The latter capability is accomplished by the addition of flexible invoicing to the billing process (Microsoft Office Excel-based) and the first installment of billing functionality improvements.

In addition to completely changing the product’s UI to make it more intuitive and modern, Deltek also updated reporting schedules and formats that reduce customers’ reporting workload. The release also added additional compliance reporting capabilities such as Incurred Cost Submission (ICS) reports, and important integration with Microsoft Office for billing. Some GCS Premier clients that have upgraded to the 5.0 version have reportedly seen billing times go from a few hours to 90 seconds (which should translate in a much better cash flow).

The familiar workflow graphics that GCS customers have traditionally liked remain in this new version. However GCS 5.0 also adds greater navigational ease with the new UI that features the Explorer-Tab-Icon combination, and that puts users almost instantly anywhere they need to go (a couple of clicks away from anywhere).

Incidentally, Deltek believes its decision to invest in GCS Premier was a wise one: it has been among the best-selling software packages within Deltek over the last year or so given the number of small government contractors that continue to enter the market. With Obama’s potential spending plans, GCS is likely to continue to have a strong run.

Furthermore, Deltek continues to invest in GCS Premier. In keeping with a performance management theme you will see below, the company is planning on releasing Executive Dashboards in 2009 and new reporting capabilities that will leverage all of the key data in GCS to allow government contractors to make better business decisions.

Nothing Without Business Performance Management

DPM was released in the late summer of 2008, and it was an important release for Deltek because – as we all know – analytics, dashboards, and business performance management (BPM) are all the rage these days. While companies could always do reporting within Deltek Costpoint, DPM puts the power of analytics into the hands of the end-users and out of the hands of the information technology (IT) department.

The idea was to empower all employees with self-service access to the information they need to make more informed decisions on a daily basis. DPM is based around IBM Cognos 8 business intelligence (BI) technology and includes 50 pre-built reports that are further configurable, 13 ICS schedules, 181 Sarbanes-Oxley Act (SOX) control screens, and has a standardized look-and-feel and drill-thru capabilities.

The offering is integrated and compatible with Deltek Costpoint 6.0 and 6.1 and with the Deltek Time & Expense 8.0 and 8.1 products. Sales of Costpoint and Cognos have evidently been so strong that Deltek was named Cognos’ original equipment manufacturer (OEM) partner of the year at Cognos’ recent conference.

For the future, Deltek’s major focus within the GovCon line of business is on the Costpoint side, specifically completely converting it to a Java 2 Enterprise Edition (J2EE) architecture (from the original Gupta/Centura blueprint) and continuing to invest in executive dashboards and scorecards for improved usability. Namely, the current Costpoint 6.1 release’s focus has been on enterprise-class scalability and performance, support for SOX via Segregation of Duties (SoD), auditing and other internal controls, and support for earned value management (EVM) via Deltek Cobra integration. Last but not least, there are improved GovCon project accounting capabilities via support for the Accounting Classification Reference Number (ACRN) Bills, Wide Area Work Flow (WAWF) Interface, and Award Fee Revenue.

Another important GovCon focus is on expanding the capabilities of Deltek GovWin, Deltek’s business development/capture management solution for government contracting. In this tough economy, responding to the right bids and winning business are more important processes than ever. With this upcoming release, GovWin will manage the complete business development lifecycle, from opportunity identification and management, to contract award.

The product follows this specialized sales lifecycle from gathering and tracking competitive, market and human intelligence to opportunity identification and management, pursuit decision management (bid/no bid), capture planning and proposal management. The release will also allow users instant access and search of all documents and information from competitive information to pricing and estimating information to existing contracts and proposals.

Deltek Enterprise Project Management (EPM) Portfolio

The Deltek EPM product portfolio has also been a top seller for Deltek over the last year or so. Compliance and tight project controls are paramount during these economic times, and the US government has stepped up enforcement and project auditing. According to the proverb “might makes right,” Deltek’s customers like government agencies’ contractors, systems integrators, aerospace & defense (A&D) manufacturers, and capital investment architecture, engineering & construction (A/E/C) companies have no choice but to comply.

Deltek is also gaining traction inside government agencies themselves who use Deltek EPM solutions to better manage their programs. Therefore, these companies badly need the likes of Deltek as they strive to do more with less while eliminating inconsistent project management practices and meeting a plethora of mushrooming compliance requirements. The overwhelming set of requirements could include:

* The Office of Management and Budget (OMB) 300;
* Defense Federal Acquisition Regulation Supplement (or DFARS);
* British Standard (BS) 6079;
* SOX;
* The US Department of Defense (DOD) 5000 2R, Part 11; and
* The American National Standards Institute (ANSI) 748-98A.

Particularly, having the EVM capability is no longer optional when dealing with the abovementioned federal agencies. Impacts from failure to comply and missed schedules can be devastating. For example, how would you feel about losing EVM accreditation and having up to 10 percent of supplier payments withheld by the agency for failure to adequately implement and maintain a validated EVM system?

Making matters even worse, the requirements from US agencies like Environmental Protection Agency (EPA), Department of Energy (DoE), National Aeronautics and Space Administration (NASA), General Services Administration (GSA), and Federal Aviation Administration (FAA) are continuing to expand into ever smaller projects (in terms of the contract value thresholds) with ever more reporting requirements. The ability to manage earned value is no longer just a nice thing to do (to impress the “big brother”), but is being rigorously enforced. There are the indications that the government is also considering lowering the dollar thresholds for all the projects where EVM is mandated.

The Deltek EPM solution set [evaluate some of these products] accordingly incorporates all aspects needed to manage project performance. From material management, time collection and cost accounting (within enterprise resource planning [ERP] systems like Costpoint) to cost management, EVM, scheduling, and risk management. This information rolls into analytic reporting and then down into dashboards for easy viewing via the Deltek WelcomHome project collaboration software.

The final part of this blog series will analyze the recent developments (and anticipated future developments) at the Deltek EPM line of business. Your views, comments and opinions, particular experiences with the aforementioned products, etc., are welcome in the meantime.

May a New Day Begin for Mature Enterprise Applications – Part 1

While attending a number of vendors’ annual user conferences and/or by being briefed by vendors about their future directions, I’ve lately discerned this trend: virtually every vendor is attempting to win its users’ hearts and minds (as well as wallets) via a more intuitive and appealing user interface (UI). But it would be a real understatement to attribute everything to improved screens without talking about improved (i.e., “rich” and targeted) user experience (UX) design as a whole.

Namely, a UI is a means to an improved UX end, and the recipe for success is to deliver forms and screens designed for a particular user’s role in the organization. In other words, employees can now log into their own role-tailored user profile and personal place in the business management system. The role-personalized UI displays only the selected tasks, metrics, alerts, and activities they need to perform, providing the users with an overview of what they’ve done and what’s next in line.

One of the most common problems plaguing business software users has been the deluge of data coming from all directions, especially in complex and expanding global supply chain networks. In addition to complex integration and disruptive heterogeneous system upgrades, a major global network’s challenge is confusing UX due to multiple views of information that come from independent resources (e.g., trading partners’ systems) and disparate business processes. Confusing UX means that users spend much more time interacting with business applications, searching for the right information, and consolidating data manually, rather than on actually acting on that information to create value.

The Role of Role-tailored UI and UX

One way to reduce this unproductive time is via a configurable interface that allows users to focus on key tasks, presenting current information from virtually any data source onto a tailored home Web page. Each user’s homepage is then replete with pertinent (contextual) reports and key performance indicators (KPIs) based on the specific user’s role in the company. This means that a modern functional UI has to create a holistic view of dispersed pieces of information that are drawn from various sources such as financial systems, Web storefronts, warehousing management systems (WMS), time & expense (T&E) management systems, and so forth.

Moreover, underlying enabling technologies like workflow management, event management, business intelligence (BI), enterprise portals, etc., bring information and action together. Actionable content means that users can drill down into disparate source systems for further analysis or to enter transactions (as necessary further actions).

The result is that employees have a central repository to find the information that they need in real-time to make decisions and complete their work. Each person then more clearly understands the progression of work in a way that is personalized to their specific job, regardless of whether they belong to the board room, the shop floor, human resources (HR), sales, warehousing/shipping, and so on.

As an illustration, employees in the procurement and sourcing departments can use the system’s consolidated data reporting to make business decisions that reduce excess expenditures and maverick spending, manage vendor compliance and viability risks, and identify opportunities to consolidate multiple vendors and suppliers. On the other hand, tailored reports could provide users in the sales department immediate visibility into trends in sales volumes and customer service levels, as well as the costs of servicing customers. Finally, finance and accounting can gain greater insight in less time into cash flow, total cost-to-serve customers, and other germane metrics that will enable them to make more informed decisions that improve profitability and productivity.

As a result, this modern UI and UX design reduces end-user dependency on assistance from the IT department. That is to say, programmers no longer have to build customized reports for each end user, who now can personalize their own views and the system outputs. In short, this UX approach enables everyone to focus on their tasks and organize their time in the way that works best for their company.

Enter Infor MyDay (Not Mayday, Folks!)

At the Inforum 2008 annual user conference in late 2008, Infor outlined its painstaking effort to incrementally build upon its vast portfolio of acquired products. I concur with Ray Wang’s estimate in his recent blog post that the vendor has moved on from collecting disparate (and sometimes antiquated) products to build a more cohesive strategy and value proposition for customers.

At the core of this ambitious endeavor is the Infor Open SOA architectural framework. Infor Open SOA is an event-driven architecture (EDA) and service-oriented architecture (SOA) that leverages a standards-based approach to distribute data between Infor solutions and non-Infor systems and data sources.

The grandiose idea behind Infor Open SOA is that Infor’s customers can relatively rapidly and economically add future Infor, third-party, and in-house software applications (and component-based enhancements) without the need to “rip-and-replace” software or interrupt other systems during operations. I should commend Infor for being quite up-front about how huge undertaking the delivery of the total Infor Open SOA (sometime also referred to as Infor Network) framework is.

The vendor frankly admits that it is only perhaps halfway done three years after embarking on the journey. This candidness has even lately warmed up some “doubtful Thomas” observers that are known for their customary harsh skepticism towards vendors. I refer here to a relatively positive blog post by ZDNet’s blogger Dennis Howlett.

Most of the Infor Open SOA framework’s components have been delivered by now (or will be delivered soon) and are free of charge to customers who are on active maintenance contracts. The major SOA platform’s parts start with the Development Studio that consists of the following components:

* Modeler - caters to UI Personalization, Dynamic Enterprise Modeler (DEM) Process Choreography, DEM Monitors, and Reporting Studio; and
* Eclipse open-source Integrated Development Environment (IDE) - contains Web 2.0 UI gadgets and Spring IDE plug-ins.

Then, the Administration Environment caters to Security Administration, User Logging & Auditing, Component Registry, Licensing Monitoring, Packaging (in accordance with the OSGi Alliance guidelines), Deployment, and User Management. Finally, the Run-Time Services module consists of the following components:

* Core Application Services – provide Master Data Management (MDM), Business Information Services (BIS), Infor MyDay, Hierarchies, and Resource Control;
* Core Platform Services – provide Monitoring, Workflow, On-Ramps, Configuration Software Infrastructure (CSI), Component Framework, and Enterprise Service Bus (ESB).

To explain some of these “ominous-sounding” components, Infor MyDay role-based user home pages are enabled by BIS, another major Infor Open SOA component that helps enterprises capture and consolidate data in a centralized and secure database for reporting processes. The analytic and reporting services come with built-in contextual analytics and support the ability to drill down to the original data source from the user’s home page (into both Infor and third-party applications).

For its part, CSI is a configuration infrastructure for messaging (not CBS’ famed TV series) that entails the technical details of how Infor provides standards-based connectivity. “On-ramp” is a term Infor uses for the connector or adapter for a specific Infor application. So, there will need to be an “on-ramp”–e.g., for Infor BIS database, Infor ERP LN, Infor ERP Syteline, Infor Warehouse Management, Infor EAM Enterprise Edition, and so on.

Given the several dozen Infor software assets that will require their own on-ramps, one can imagine the magnitude of the still outstanding development work when it comes to Infor Open SOA. Still, Infor can do some interesting things with on-ramps. When configured, an on-ramp essentially creates peer-to-peer (P2P) network messaging.

This network architecture has a fairly distributed (via a number of lightweight on-ramps) and “standardized” approach. In my opinion, however, “standardized” is a relative term, since standardization requires that you have other industry players who buy into that standard. We will have to wait and see if Infor will be successful there and exert some clout in the industry.

I also noticed a shift in the Infor Open SOA approach toward a P2P network, away from ESB, as initially stated and intended. As an explanation, a service bus is a hub-and-spoke architecture where the processes and decisions are made at the central hub, which undermines the supply chain nodes’ autonomy that network architecture promotes.

Moreover, Infor is moving to use OSGi to do the packaging of its software components to simplify the deployment and management of the environment, and current ESBs are not compatible with the standard (although Progress Software is moving to support it). In addition, the requirement to offer the SOA platform to customers as part of maintenance (the vendor has lately seen increase in maintenance buybacks from once off-maintenance customers) is simplified if Infor provides all parts of the solution, and is not dependent upon third parties’ ESB offerings.

Open SOA, So(a) What!?

So, why did I dwell this much on this SOA technobabble? Well, for the simple reason that without this ambitious framework, it would be difficult (if not even impossible) for Infor to viably deliver any refreshing value proposition to its customers (beyond merely milking the recurring support and maintenance revenue).

In addition to enabling flexible buying and deployment options for customers, the Open SOA framework is instrumental to taking companies’ current IT assets beyond transactional systems, to extended directive and prescriptive systems that can respond proactively to prescribed business rules and handle exceptions. The noble idea here is that the software can adapt quickly as business conditions change.

Infor Open SOA offers solutions to the abovementioned global supply chain network challenges (and remnants from inflexible enterprise-centric client/server architectures) via directive and prescriptive UX, a single network view of information, collaborative resource sharing, agile business processes, standard-based integration, and non-intrusive upgrades.

Such a platform is the “secret sauce” foundation onto which Infor hopes to plug its upcoming next-generation of paid for, value-add components. These upcoming solutions will mean new revenue streams for Infor while, either individually or bundled together, they could make possible the rejuvenation of customers’ existing software assets. This is a win-win combination of a sort.

5 Things You Should Not Confuse Business Performance Management With

If you search for business performance management (BPM) on Google, you’ll get around 700,000 results. Out of this huge number of results, you will presumably refer to a popular source—Wikipedia. According to Wikipedia, BPM is “a set of processes that help organizations optimize their business performance.” The same source affirms that some people see it as the next generation of business intelligence (BI). Both of these explanations—unfortunately—lack clarity.

Going back to the Google search, there are a few near-synonyms for BPM that one can choose from: business intelligence performance management, performance management scorecard, key performance indicators, and business performance metrics. Similarly, Wikipedia has four synonyms for BPM as well, including corporate performance management (CPM), enterprise performance management (EPM), operational performance management (OPM), and business performance optimization (BPO).

Confused? Is it BI, a set of processes, scorecards, performance indicators, metrics, or are all these equally valid parts of BPM? Since we intend to write a series of articles on BPM, we thought we might start this thread a bit differently and first try to explain what BPM should not be confused with.

1. Business Performance Management (BPM)
There is always a kind of confusion when using the same acronym (BPM) for different software packages (i.e., business performance management and business process management). In spite of the undoubted links between these two application types, they differ greatly for the majority of software users and IT professionals. Broadly speaking, a generic business process management system allows analysts and business managers to design and model business processes in a graphical and descriptive view, then execute them, monitor the processes, and finally, modify or optimize them.

There are similarities between business process management systems and enterprise application integration software and workflow automation solutions. By the way, notice yet another BPM abbreviation here: business process modeling, which is a substantial element of business process management. This is basically a business process capturing, visualizing, and description technique (or set of techniques) that provides companies a clear view on processes and helps them to analyze these processes in order to improve them.

2. Business Intelligence (BI)
Is BI part of BPM? Definitely! You can make any kind of business decision based on accurate information, and the efficient way to get that information is through a BI tool. Still, BI is not enough. The best BI tool in the world can give you the greatest dashboards, graphs, ad hoc reports, and so on, but they are completely useless unless you have a good idea of what to do with them.

It is safe to say that BI is the framework or the tool that will help you improve your business, but it will not complete this task for you. This is where BPM comes into play. A BPM provider should be able to support you in defining your business processes and objectives, as well as the metrics or key performance indicators (KPIs) you need to follow. Furthermore, your BPM provider will assist you in building the tools you need in order to extract the right data from the right place and then interpret it according to the already defined objectives.

3. Balanced Scorecard, Business Process Measurement, and Key Performance Indicators
When talking about business performance management, we should clearly understand that it is possible to successfully manage “something” as long as that “something” can be measured. In other words, in order to estimate how well your business is doing, some formal methodologies, criteria, and metrics are required.

However, it is not enough to estimate your company’s achievements using financial criteria only. There are other important activities which (while difficult to quantify and evaluate) are necessary to compare and evaluate in order to have a more complete picture. Balanced scorecard, business process measurement, and KPIs were developed as a systematic approach to help managers of all levels effectively control the company or departments within the company and to be able to quickly react to market and environmental changes and challenges.

These three concepts are really closely related to each other, but represent different views of the same process. Balanced scorecard is used mostly by the top management level of a company to monitor overall business performance towards strategic goals of the company. Mid-level and operation management usually use business process measurement parameters to visually examine routine and day-to-day processes towards short-time or current goals of the department or organization. Both of these methods utilize KPIs as a metric to count and analyze countable and often uncountable criteria. Those indicators usually look like set of diagrams and graphs that fluctuate dynamically depending on how the numbers change. Sometimes these sets of diagrams are called dashboards (using the analogy of a car or plane dashboard with a number of gauges on them).

4. Total Quality Management (TQM), Lean, and Six Sigma
At a first glance, these mechanisms, methodologies, and concepts can be referred to as different types of business process management. They reflect different views of the same core business processes improvement and talk about product, process, customer satisfaction, quality, and practical techniques to plan, organize, and control this process. They all consider business processes improvement as a global strategic goal and, as a result, companies achieve better financial numbers.

Certainly they are not the same things. While there are plenty of books, articles, and Web sites available to help readers understand the concepts, at the same time the non-dedicated reader who isn’t a professional in these concepts can easily become confused in this ocean of information.

Generally speaking, total quality management, lean, and six sigma as methodologies are much wider and deeper in substance than business performance management—which is a very useful and helpful way to estimate the current business and financial situation of an organization, as well as providing food for thought for managers at all levels to assist them in optimal decision making.

5. Reporting and Analytics
An in-depth explanation of the difference between BI versus reporting and analytics exceeds the scope of this post. So we’ll make this part short but sweet: analytics is complex reporting, while BI is a sophisticated reporting and analytics tool.

Most accounting, enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM), product lifecycle management (PLM), solutions offer reports, and most of them even allow you to do analysis on sales, purchases, productivity, and more. As our jobs are becoming very information-intensive, reporting, analytics, and BI are essential to today’s workforce.

Reporting and analytics tools do not always provide data in a format that can be used by a BPM product. Oftentimes, information comes from a variety of sources and—just to make things worse—different tools are used to extract it. A BPM tool should be able to gather all the required data from all available sources and convert it into a format that can be used in the decision process.

The Dawn of the GRC Era for XBRL

The current economic environment cries out for sustainable technology standards to be established at the core of information governance. The profound losses in the financial markets were the result of weak governance, failing risk management, and little regard for the consequences. The time has come to define and implement the methods needed to identify and manage risks, ensure oversight, and enforce corporate policies and procedures to exploit extensible business reporting language (XBRL). This extremely challenging economic climate is stimulating the demand to leverage the expanding taxonomy for financial reporting purposes to meet the challenges of operational risk and compliance management as part of the natural evolution of XBRL.

The inevitable combination of people skills, business practices, and information technology (IT) necessary to improve governance, risk, and compliance (GRC) management are not ends in themselves, but serve the organizational necessity of improving and sustaining performance. The next phase of enterprise performance management integrates the mandated requirements (regulatory, legal, and contractual) for an organization’s operations with the voluntary commitments (business practices, customer expectations, service levels) that help focus the organization on internally and externally directed improvements.

The complete portfolio of processes directly related to GRC include organizational and IT governance, business strategy, all levels of risk management, quality management, financial and IT auditing, legal obligations, security, compliance monitoring and reporting, social responsibility, and ethical culture. Synchronized planning and communication between multiple business departments, decision makers, business partners, suppliers, and customers is the key to successfully leveraging GRC across an extended enterprise of any size or shape.

To this end, diverse organizations with broad international experience and constituents are building the basic definitions and structure that will comprise a comprehensive taxonomy for GRC XBRL. Critical work on aspects of the emerging taxonomy and messaging standards for GRC have been undertaken by organizations as diverse as the Fujitsu Research Institute; the XBRL Risk Taxonomy Forum of the IBM Data Governance Council; AIIM’s StratML Work Group; and the International Standards of Accounting and Reporting (ISAR) group of the United Nations’ Council on Trade and Development (UNCTAD).

The major contributors to an XBRL taxonomy for GRC can contribute to the development of five defining domains, as follows:

* common financial and operational risk controls
* corporate social responsibility and transparency metrics
* issue and incident management taxonomy
* performance management reporting
* corporate policy and organizational strategy taxonomy

The construction of XBRL standards in each domain will address information standards based on authorities with respect to

* policies and processes modeling regulatory authority guidelines for laws, rules, and regulations;
* references and translation procedures based on authority documents;
* object definitions, elements, and specifications derived from authority documents;
* and metrics that define standardized process performance and risk indicators.

As painful as the economic environment has been for most businesses and markets, the opportunity for a deeper commitment to developing GRC components for XBRL has emerged. Over the next few years, as business performance improves and economic value ultimately rises, long-term efficiencies will be supported by a more coordinated set of information standards that inherently integrate risk and compliance processes. Advancing compliance and risk management capability across markets and industries is a deeply important and global role that is now a domain of XBRL.

To SaaS or Not, Is That a Question? – SaaSy Discussions

described the opportunities for software as a service (SaaS) or on-demand applications, especially in the current difficult economic milieu. Part IIa then analyzed the top five SaaS assumptions (misconceptions) recently outlined by Gartner.

Before any vendor can embark onto delivering a SaaS offering, it must thoroughly consider a number of harrowing SaaS technology choices and their implications. Thus, Part IIa also analyzed the decision’s impact on the functional footprint (scope) of the future SaaS product, after which the aspiring SaaS vendor must identify gaps within its in-house skill sets and define how to fill them.

This part continues with the other major remaining technical considerations before any vendor can embark on delivery of a SaaS offering.

The Tenancy Decision

While the true multi-tenant design approach for SaaS is the best in terms of highest scalability and lowest operational overhead (and it allows moderate to extensive software modifications), it also requires the highest initial investment. Thus, in some cases, the traditional single-tenant hosted/application service provider (ASP) model or partial/hybrid (something in between) solution may be appropriate. Namely, the application virtualization approach enables single-tenant solutions via tenant management (virtualization) tools from Wrapped Apps Corporation, Parallels, or Citrix Systems.

The major considerations here for independent software vendors (ISVs) (not necessarily end users per se, although everyone should be informed at least) are the following: whether there is legacy code that could be somehow leveraged (or that would be difficult to rewrite), how many new SaaS implementations per year are forecast, and whether the SaaS model has been proven in the target market. In any case, it is critically important to get the product’s architecture right up front, since making any corrections and rectifications along the way will be complex and expensive.

In addition to the tenancy considerations, one must address the questions of scalability (in terms of load balancing and routing), availability, performance, and configuration-driven customization (both to accommodate personalized look-and-feel and special functionality). Other architectural factors are system integration, information security (including identity management), usability, communications (e.g., via e-mail, short message service [SMS], instant messaging [IM]), global (multinational) capabilities, audit and compliance, and system backup and recovery.

The above overwhelming combination of factors influences not only the SaaS applications architecture but also the underlying infrastructure (platform) architecture. I would also add the cost of full time employees (FTEs) charged with handling all these issues.

While there are costs with multi-tenancy, over time the costs to handle each of these architectures can and probably will exceed multi-tenant design costs. Current macro-economic conditions are making one or the other approach seem cheaper right now, but as the economy rebounds, the question will come up about long-term strategy.

Finally, the costs for compliance are very high (and can be so high that it is out of reach for new entrants) to get enterprise-class services and certifications and audits, such as ISO/IEC 27001, SAS 70 Level II, Systrust, etc. Each part of the system must be audited and these audits can cast to the amount of US$100.000 and higher. Thus, multiple components in any architecture will lead to higher compliance costs, but that’s another blog topic.

Forget Not About the “SaaS Plumbing” Thingies, Either!

But even solving these multiple pieces of the architectural puzzle is only the beginning, since one also must include many SaaS-specific “must have” pieces of functionality, such as a pricing engine, a billing engine and payment processing, tenant and subscription management, service provisioning, system usage and performance (uptime) monitoring, and subscriber management and self-service. Creating all these “SaaS plumbing” components requires significant effort (in addition to the necessary “know-how”), and the company must thoroughly plan for it.

During the Webcast mentioned in Part IIa, Scio Consulting International claimed that this functionality takes from 20 to 50 percent of the research and development (R&D) effort for an entire SaaS application. The conventional wisdom is to leverage commercial SaaS components and services for time-to-market (TTM) reasons.

For example, commercial SaaS billing applications options would be OpSource Billing CLM (Customer Lifecycle Management), Zuora, or Vindicia, whereas SaaS customer management applications would be OpSource Billing CLM and Aria Systems. While PayPal has become the standard for online payment processing, uptime service level agreement (SLA) monitoring can be done via TrustSaaS, Absolute Performance, and the SaaSMonitor.com offering from MVP Systems. Last but not least, SaaS enterprise applications integration (EAI, including links to on-premise applications as well) is offered by Boomi’s AtomSphere suite, and Cast Iron Systems. Sonoa Systems provides analytics, management, and IT governance solutions for cloud services and application programming interfaces (APIs).

PaaS The Hosting, Please!

This brings us to the discussion about choosing the technology stack (with the following technical layers: application, deployment platform, and infrastructure) in a do-it-yourself (DIY) or other fashion. Namely, as ZDNet’s blogger and SaaS connoisseur Phil Wainewright explains well in his recent blog post, there is a plethora of platform choices for vendors, including commercially available platform as a service (PaaS) options.

Some examples of available PaaS offerings would be the following: SaaSGrid from Apprenda, Force.com from Salesforce.com, Google App Engine, Bungee Connect, Facebook’s Platform, Apple’s iPhone Platform, pieces of Microsoft’s still upcoming Azure Cloud Platform, and so on. In the case of Salesforce.com, there are three main ways that ISVs can partner with the vendor as a platform: build, market, or sell.

Force.com is designed for those that want to build applications (without bothering with porting, integration, security, hosting, infrastructure, etc.), while the AppExchange directory is for ISVs that already have an application of their own and are focused on marketing it. The upcoming Checkout service (currently in the pilot phase) will be for those who want to fulfill sales using Salesforce.com’s infrastructure.

Force.com is also flexible, so that developers can use Salesforce.com’s Visualforce presentation-layer development environment or other toolkits such as Eclipse (Salesforce.com has an Eclipse plug-in), or other third party development environments to create custom applications that do not look like the traditional Salesforce.com user interface (UI). In addition, Force.com has its own programming language, Apex, which can be used to create highly customized applications via the Java-like language.

Indeed, selecting the right PaaS may simplify the technical decision process, accelerate time-to-market, and reduce development and operating costs. A PaaS takes care of software components (services) creation (via managing metadata and portals), deployment (i.e., ordering, provisioning, and metering), and execution (via SLA management, billing, and subscription management).

In fact, the abovementioned necessary SaaS add-on plumbing applications (monitoring, billing, provisioning, etc.) also come bundled within a PaaS, and can save time and money while adding value to the vendor’s operations. Finally, a PaaS also provides the necessary components for reporting, alerts, and dashboards.

Two Force.com Endorsements by ERP Veterans

Salesforce.com’s Dreamforce 2008 user conference, which coincided with the historic US Elections, was marked by exuberance, confidence, and an overall upbeat feeling, in sharp contrast to the ongoing market sentiments. Ray Wang and Vinnie Mirchandani have described the event in their respective blog posts.

What really caught my eye there was seeing the two longstanding enterprise resource planning (ERP) players, CODA (now part of Unit 4 Agresso) and Fujitsu Glovia, opting to write brand-new products on Force.com. Salesforce.com’s blustery chief executive officer (CEO) Marc Benioff even (half-jokingly or not) taunted SAP (during his intellectual debate with SAP’s co-founder Hasso Plattner in early 2008) to rewrite the SAP Business ByDesign on-demand product on Force.com, rather than to “further torture and embarrass itself” (and the rest of the traditionally stodgy on-premise vendor community).

Even though this challenge might sound ridiculous for too-proud SAP to acknowledge and succumb to, that suggestion begins to make sense to me, in light of the giant’s initial faltering with SAP Business ByDesign. Well, maybe SAP could acquire Salesforce.com and solve its SaaS conundrum once for all, but that might be a bit difficult to pull off (at least during these days of limited spending)?

I concur with Dennis Howlett, who in his recent blog post on CODA wondered why a company with a 30-year history of writing world-class finance applications and with 2,600 renowned customers would entrust its on-demand future (i.e., the CODA 2go SaaS product) to a new, relatively untested platform. According to Jeremy Roche, CODA’s CEO, the attraction came in the following four distinct forms:

1. Access to a pre-built infrastructure that includes a security model, workflow, reporting, and multi-tenancy.
2. The ability to gain immediate access to Salesforce.com’s customer and partner ecosystem.
3. The ability to have the Coda 2go product run from Salesforce.com’s datacenters, reducing the need for infrastructure and gaining access to massive painless scaling.
4. The inheritance of Salesforce.com’s credibility in maintaining a world-class service since Coda 2go runs on the same servers and infrastructure as Salesforce.com’s.

For its part, Glovia had initially ported a cut-down on-demand version of its established glovia.com ERP product. The vendor named its erstwhile SaaS product GSinnovate, but has apparently not sold a single license since 2006. In our recent discussions, Glovia conceded the need for the SaaS channel (and more), and thus the decision to go for Salesforce.com’s AppExchange and Force.com. Glovia plans to deliver on-demand products that will address one business process at a time, starting with the generally available glovia.com Order Management product.

There Is No Such a Thing as a Free Lunch PaaS

At the end of the day, a PaaS platform is not a charity that is free of charge, but rather a significant cost item that will cut into the SaaS vendor’s bottom line ever after (as well as will all the other necessary individual SaaS plumbing components). Thus, many SaaS aspirants might still opt for the grueling DIY approach by using some free and open source software (FOSS) LAMP (Linux, Apache, MySQL, Perl/PHP) bundle or Ruby on Rails (RoR).

On the commercial software side, there is always Microsoft’s stack, which consists of Windows, Internet Information Services (IIS), ASP.NET, and SQL Server. Progress OpenEgde, Oracle SaaS Platform, various SaaS programs from IBM, and so on are other SaaS platform (but not necessarily all-inclusive PaaS) alternatives.

In any case, the DIY vs. PaaS dilemma should take into the account whether there is a match between the technology requirements with the SaaS vendor’s available in-house expertise. When leaning towards PaaS, the SaaS vendor should ascertain whether its target market is part of a particular PaaS marketplace (ecosystem), as well as the time-to-market and R&D cost savings vs. the costs of using the PaaS. Certainly, there is a trade-off between the abovementioned benefits of a PaaS and the dependence on the PaaS provider (i.e., what happens if the PaaS provider goes out of business?).