|
FSN White Paper
“How can mid-market companies benefit from roles-based processing?”
7th May 2007 |
|
|
Summary
In today's highly challenging business environment, people are pivotal to keeping companies nimble and competitive. Whether in manufacturing or services industries, it is an organisation's employees who are essential to relationships with a wide range of different stakeholders. As such they are often a business' greatest asset and play a critical role in innovation, customer satisfaction, product quality and operational performance.
Furthermore, employees are frequently the largest single cost, so maximising their productivity and fulfilment should be a priority for any organisation. Yet, when it comes to supporting them with appropriate tools and technologies most businesses provide accounting and ERP systems that have not changed fundamentally in design for more than forty years and certainly long before the advent of email and other mainstream office systems.
As a result most employees have to balance their working day between two parallel processing ‘universes'. Firstly, a highly structured ERP environment that confines them to traditional departmental boundaries, and secondly, a Microsoft Office environment which they use to reach out to people within and beyond the organisation.
The lack of cohesion between these parallel environments is a serious impediment to productivity, with employees constantly struggling to find the information they require to do their work and make the connections they need to collaborate with other workers.
However, a new processing paradigm called “roles-based” processing is emerging, which bridges the gap between ERP and office systems. This liberates people from the constraints of modular ERP design by aligning users with the processes for which they are responsible. It also bridges the gap with office systems by providing a familiar user interface that more accurately reflects the way that they work. The result is that users are more fulfilled and productive and organisations are more nimble, responsive and competitive.
Introduction
Competitively speaking, mid-market businesses have never had it so good. Improved communications, mobile computing and the internet have combined to reduce the barriers to competition so that even companies of modest means and IT capability are able to compete with some of the largest organistions in their sector.
Furthermore, in an era of globalisation, many medium-sized companies have extended operations beyond their domestic borders. They are significantly more international as they access vast new markets overseas for the manufacture and supply of goods as well as fertile new opportunities for sales in developing economies in Eastern Europe , India , the Far East and China .
However, the rapidly developing “networked economy” in which different companies, customers, suppliers, employees and other stakeholder are progressively intertwined through technology presents challenges all of its own. For example, the internet has supported new channels to market but at the same time price transparency, have increased competition and reduced pricing power.
But one major structural change has gone relatively unnoticed. Increasing automation in both the manufacturing and services sector of the economy has underlined the critical value of people in driving success in the majority of businesses. It is people, relationships and ‘know-how' that are responsible for driving the success of companies much more than physical assets. This is even reflected in our changing terminology as we refer to ‘Human Capital' these days rather than ‘Human Resources,' reflecting the true worth of people to a business.
At the same time people are relatively inflexible. Although the labour force does not appear on the balance sheet it is often the biggest cost in the Profit and Loss account and with increasingly protective labour laws it represents an immovable fixed cost. As a result harnessing people, processes and technology to drive out the greatest productivity, is crucial to the success of mid-market companies.
Until recently, however, the majority of mid-market organisations have toiled with inefficient modular business software in which users are divorced from the underlying processes they are required to manage, disconnected from each other and unable to leverage everyday productivity tools.
In this white paper we examine a new paradigm for business software design, “roles-based processing”. In this radical new approach, people are aligned with the processes, technology and each other in a way that promotes exceptional productivity, reduces the cost of deployment, provides a more fulfilling ‘user experience' and lays the foundation for a more responsive and competitive organisation.
What is wrong with traditional application design?
The fundamental design of accounting and business software has remained relatively unchallenged since software packages were developed almost four decades ago. Constructed along modular lines, they were created initially to emulate the manual ledgers they replaced and support the operations of discrete functional departments such as Sales, Invoicing, and Credit Control. In many cases the packages were developed initially for large companies and did not envisage the agility required in a mid-market organisation. Even today, some ERP vendors offer cut-down versions of large scale packages for mid-sized organisations rather than offering solutions designed specifically with their needs in mind.
Successive rounds of technology improvement, most notably operating systems such as Microsoft Windows and more recently Vista have changed the ‘look and feel' of the user interface, but the navigation of the systems has remained rooted in the historic design of the typical organisation. For example, a sales ledger clerk would be confined to all of the invoice posting, allocation and matching routines appropriate to the role but unable to reach across into sales invoicing or stock control to follow up a customer query without logging-out and logging-in again to another application. Inconsistencies between modules accentuated the problem and created difficulties when seeking to transfer users from one functional area to another, for example, to cover for sickness or manage peaks and troughs in workloads in different areas.
But in recent years, the growing importance of E-commerce and the networked economy has changed fundamentally the way in which businesses interact with each other and with consumers. ERP systems generally have failed to keep pace with these developments as a greater part of each transaction cycle is committed to email exchanges and informal communications outside of the scope of their design.
So a yawning gap has developed between two parallel ‘universes'. On the one hand there are business systems with inaccessible and tightly prescribed functionality, and on the other hand a relatively ‘free-wheeling' and informal collection of processes that attempt to compensate for the shortcomings of traditional ERP design. The inability to exchange readily information between these two environments represents a serious and costly impediment to productivity.
In these circumstances information is scattered between users and uncoupled from the underlying process. Even though users may share a common business process such as ‘purchase to pay' or ‘order to cash' they are prevented from working in alignment by stove-piped functionality that restricts them to a departmental view of the process and detached office systems that prevent them readily sharing data. |
| Existing ERP systems lock users into a stove piped view of applications which prevents them collaborating across a business process |
 |
The net effect for mid-market companies is that productivity is compromised. Personnel face a steep learning curve when moving from one module to another and it is costly to redeploy staff where they are needed. Lack of process visibility means that staff have to resort to walking the corridors between departments, telephone calls and lengthy email exchanges to obtain the information they need. In turn, these factors have a knock-on effect on responsiveness, company reputation and ultimately competitiveness.
What is “roles-based” processing?
Our traditional view of what someone does in a company, i.e. the work that they perform is guided, at least initially, by their job title. A “sales ledger clerk” conjures up an image of someone that works in the Accounts Receivable Department, generates sales invoices and posts them to the sales ledger – probably using the sales ledger module of their ERP or accounting system.
This initial impression of what a sales ledger clerk actually does can be very misleading. In larger concerns the role will almost certainly be defined in a lengthy job description whereas in a smaller company the role is likely to be described informally. But the precise scope of the role could vary enormously depending on the skills and competencies of the individual, the size of the organisation, how it is organised over different processing sites and even the nature of the industry sector or trade. In an organisation with fewer than 50 staff, the sales ledger clerk probably deals with customer set up, credit checking, agreement of settlement terms and possibly sales order processing, whereas a larger business may insist on a segregation of duties between cash and invoice posting.
However, this perspective of a role is one dimensional - it views the role of an individual in the context of the organisation, the department and function rather than a business cycle or process. In practice, individuals work (sometimes unwittingly) in concert with other individuals across several functional areas as part of a continuous process. It is a multidimensional environment in which a sales ledger clerk could be collaborating simultaneously with the warehouse, the cashiers' department, the stock controller and the sales manger.
But roles also have an external dimension. For example, the sales ledger clerk will almost certainly have to correspond and communicate with customers' purchasing and accounts payable departments and possibly with other stakeholders such as HMRC for VAT queries and rulings on sales invoice transactions.
As suggested earlier in this paper, traditional software design has re-enforced the functional view of a role through modular software design, but it is only through understanding the nature and scope of the role in the context of a process that business can be made more productive and the user experience improved by the application of appropriate software and enabling technology.
In order to understand the ‘typical' processing roles and how they are related, Microsoft embarked on an ambitious research programme involving more than 280 site visits to companies where researchers completed greater than 1400 interviews and/or observations with individual people as they went about their daily work. They recorded their daily routines, interactions with fellow employees, software and the companies' processes.
Secondly, the researchers recorded their participants' organisational charts, departments, the individuals that make them up and their reporting structures. Finally, they recorded the specific internal processes a company uses across departments and also external processes with suppliers, customers and partners.
Armed with this comprehensive data of how companies operate, Microsoft researchers were able to construct a complete “customer model” which brought together this learning in one place and enabled them to identify around 60 typical roles and crucially how they were linked to each other and the underlying business processes. |
| Roles-based processing is underpinned by a process view of applications rather than a modular ERP approach. |
 |
It is this unique understanding of the multidimensionality of a role, i.e. how it relates to other roles and business processes which defines “roles-based” processing and has completely re-shaped the design of modern ERP software.
Crucially, concentrating on roles rather than departments to guide software design means that organisations can change the shape of their business (departments) without affecting their ability to support business processes. In other words a roles-based approach makes organisations more resilient to change.
The roles-based User Interface
At the heart of the roles-based approach is the design of the User Interface. It is this axis of human/computer and computer/human interaction that defines the user experience. This is an amalgam of ‘ease of use', having role specific information and tasks at hand as well as ready access to the relevant applications. It is this blend of characteristics which allows a user to competently carry out their role without leaving their desk.
Microsoft's research quickly identified that the interface needs to cater for three types of people in an organisation. There are those who spend most of their day working with an ERP system and really have no interest in leaving it. Then there are others who spend most of their working hours using Microsoft Office but need occasional access to ERP systems. Finally, there are those who need access to a limited view of information (business intelligence) to support a specific requirement.
The paradigm shift
Most systems treat these three distinct user needs as separate entities, confining users operationally to the applications (Microsoft Office, ERP or Business Intelligence) that they use most often. Traditionally these environments operate as separate ‘universes' with distinct boundaries and little opportunity to exchange information between them.
Even when a traditional ERP system is ‘integrated' with a Microsoft Office application it is on the basis of a ‘hub and spoke' model where the ERP system is the hub which connects radially to Excel and Microsoft Word, for example, as required.
On the other hand, the roles-based user interface is a paradigm shift because it inverts this model by using Microsoft Outlook as the interface (or hub) through which users reach out to the other applications, roles, tasks and information that they need.
Making Microsoft Outlook the centrepiece of the roles-based interface has the immediate benefit of providing all users, irrespective of background, with access to information leveraging a familiar environment with intuitive navigation. The way that information is laid out in the interface is informed by the role and, using the customer model mentioned earlier, Microsoft has been able to define around 60 roles or ‘personae' that are common to most businesses. However, in its latest incarnation the roles-based interfaces can be tweaked and refined according to users' needs to make them even more relevant and usable.
Can a roles-based paradigm really make a difference?
In the past, the term ‘roles-based' has been widely misunderstood by the software industry. Many ERP and accounting vendors claim to have roles-based software but in practice this is usually limited to user definable menu structures that merely guide the user to their preferred or most commonly used applications. As such it is rather like a ‘shortcut' on the desktop which helpfully de-clutters navigation but provides nothing extra in terms of process support, collaboration and immediate access to information.
Now software developers across the software industry are beginning to understand the benefits of the roles-based approach and integration with Microsoft Office. |
| The picture is an example of a roles-based interface, in this case configured for a clerk in Sales Order Processing. |
 |
A roles-based screen bears very little resemblance to the ERP systems of the past. In the above example access to everything needed to accomplish the role is defined through the Microsoft Outlook style of interface with its familiar navigation pane on the left. This crucially gives a process-oriented view of the ERP application (from order to invoice), rather than a modular accounts menu style of navigation typical of traditional ERP. Similarly, an “Activity” pane gives vital insights into process activity and backlogs in a logical process chronology or workflow.
Other panes, in the interface bring together business intelligence capability, such as charts and key performance indicators that are germane to the role. The remainder of the interface in this case is devoted to common Microsoft Office elements such as task lists, the calendar and email inbox.
The key to a roles-based interface is that it presents every aspect of a role in a single place, which emulates the way the user works rather than the way the ERP application happens to have been designed. But as well as connecting users to the process, the interface binds them to their colleagues (other roles) in the process allowing them to take advantage of common Microsoft Office applications as a natural extension of the ERP application rather than a cumbersome interface.
What is the applicability to smaller businesses?
Clearly, businesses come in all shapes and sizes, but all stand to benefit from roles-based processing. The ‘ease of use' of the interface reduces the learning curve and need for intensive training simply to navigate the system. This is particularly important in small businesses with few staff where roles are combined and staff mobility to cover for illness, absence and unexpected peaks and troughs in workload are critical.
The concept of a “process view” may seem grandiose in a small business setting but is essential to paving the way to growth. A competent process foundation embedded in the business at an early stage, supported by a scalable technology platform allows a small business to expand the scale of its operations without necessarily taking on extra staff.
Finally broader connectivity and integration allows a small organisation to make the most of its technology and to participate fully in the networked economy. It allows it to be responsive to customers, suppliers and employees as well as being more productive and efficient. Ultimately, this flows through to enhanced competitiveness and profitability. Therefore a roles-based approach is just as pertinent to a small business as to a large enterprise. |
| At a glance comparison of traditional ERP design versus a roles-based approach |
| Traditional ERP |
Roles-based ERP |
| Confines user to inefficient modular applications that bear no relationship to the underlying process or the way that people actually work. |
Interaction is wholly driven by a process perspective of the business rather than historic ERP design. |
| Separates the processing of transactions from informal processes in Microsoft Office applications. |
Encourages collaboration and information exchange by binding informal and unstructured information with transaction processing in a single environment. |
| Business insight is managed through separate business intelligence applications that are accessed through a totally separate environment. |
Unifies, process view of transactions and critical business insights in a single interface. |
| Confronts users with different interfaces depending on the applications needed at a particular moment in time. |
Single Microsoft Outlook interface combines all aspects of an individual's work. |
| Organisational change is difficult to implement with traditionally designed ERP systems that are aligned to departments or functions. |
Roles-based processing is indifferent to organisational structure. Complete oversight gifted in the interface means that a role can reside physically anywhere in the business. |
| Inefficient design acts as a brake on productivity and competitiveness. |
Process view enables a responsive and competitive organisation. |
|
What are the enabling technologies?
Users are not conscious of the technologies underpinning the roles-based interface since the simplicity of access and navigation via Outlook buffers them from the relevant enabling technologies. For most organisations this is exactly how it should be since few business users want or need to know how the technology is configured under the ‘bonnet'.
In fact, the roles-based solution draws on a formidable technology capability from right across the so called Microsoft “technology stack”. This comprises not only the ERP applications but underlying SQL databases, operating systems, Reporting Services, Web Services, SharePoint and BizTalk. It is the tight union of the technology stack and the business applications which means that the business user is shielded from any technical complexity. For example, generating production reports, ad-hoc queries and user definable business reports or publishing them to the web using Microsoft SharePoint is a straightforward process that promotes collaboration and allows information to be shared immediately across the web.
Conclusion
Traditional ERP packages have served mid-market businesses well for more than four decades but are no longer suitable in an environment of rapid change, internationalisation and heightened competitiveness. Now that businesses are more dependent on people for their success it is important that this is reflected in the way that businesses manage their processes and technology.
The move to a roles-based paradigm places people at the heart of the organisation by giving them complete process visibility, allowing them to collaborate more effectively with colleagues and putting critical business tools and insight at their fingertips. All of this is delivered through a familiar Microsoft Outlook interface that brings informal and structured ways of working together in one environment. The result is that users are more productive, the ‘user experience' is more fulfilling and the organisation is more adaptable to change. |
| About FSN Publishing Limited |
FSN Publishing Limited is an independent research, news and publishing organisation catering for the needs of the finance function. The report is written by Gary Simon, Group Publisher of FSN and Managing Editor of FSN Newswire. He is a graduate of London University , a Chartered Accountant and a Fellow of the British Computer Society with more than 23 years experience of implementing management and financial reporting systems. Formerly a partner in Deloitte for more than 16 years, he has led some of the most complex information management assignments for global enterprises in the private and public sector. His latest book, “Fast Close to the Max™” will be available in the Spring 2007.
Gary.simon@fsn.co.uk
www.fsn.co.uk
Whilst every attempt has been made to ensure that the information in this document is accurate and complete some typographical errors or technical inaccuracies may exist. This report is of a general nature and not intended to be specific to a particular set of circumstances. FSN Publishing Limited and the author do not accept responsibility for any kind of loss resulting from the use of information contained in this document.
© FSN Publishing Limited. All rights reserved 2007 |
 |
For a printer friendly version of this article click here |
|
|
