Let’s say you have a small manufacturing business.  Demand is good and you are working flat out to keep up.

You also want to grow.  But the cost of hiring an Apprentice who will take 3 years to train seems to be prohibitive.  What do you do?

Or, you run a logistics business.  You know that some types of contract make more money than others.  Which ones do you opt for?

Every one of the small and medium sized businesses across the UK will have similar questions.  What a difference it would make to productivity across the UK economy if they could all be answered.

Where’s an Accountant when you need one?

The person ideally placed to provide the answers is the Accountant.   They know their client’s business.  They are always looking for ways to help their clients to grow.  They are normally the first port of call for questions about income and cost.

However, some challenges stand in the way.

Accountants already have access to the numbers in the business, but they may not have access to the data needed for the answers required.

They already have a great deal of skill and experience, but need access to particular analysis methods and models.

They already work hard to be on hand for their clients whenever required, but clients are already becoming more self sufficient with financial information.

These challenges become all the greater when Accountants find it difficult to gain the access to their clients that they need.

Our goal is to equip accountants to overcome these challenges, first and foremost through highly focused and practical training.

We are part of the BPP professional development programme for Finance Professionals.  We are preparing courses for Accountants in Practice aimed at helping them to lift the productivity of their clients.

Scenarios such as those above suggest the need for stronger ‘commercial’ analytical practices.

But is this true?

Here is the question.

If you are an Accountant in Practice, and you want to equip your clients to make the greatest gains in productivity, what would the title of your ideal training programme be?

Please let us know by commenting on LinkedIn or Twitter.  The more we understand of the world of the Accountant in Practice, the better the training courses will be.

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Paul Clarke

Director

Develin Consulting

 

Much has been said about the arrival of automation and its impact upon Accountants.  The consistent theme is less time needed for routine tasks and more time available for ‘value adding’ analysis.

For Finance Professionals in larger organisations this will be an opportunity to get teeth stuck into the data within the business and provide a greater level of insight.

The small matter of the economy

But what of the Accountant in Practice?  It is vital to the economy that they can do the same.  This is because most of their clients are to be found amongst the UK’s 5.7M SMEs, which in turn comprise 99% of the UK’s businesses.

Just think of the benefit if each Accountant could help lift productivity within each of their clients by a few percent.

But they have challenges that their colleagues in larger organisations may not have to worry about. E.g.

  • The client may only have accounting data to hand.  If they have more, they must be able and willing to make it available.
  • The client will also need to make more time available, something they may be reluctant to do if it detracts from running the business.
  • The Accountant must then be equipped to provide the insights needed as quickly and efficiently as possible.

These can all be addressed through a mix of training and technology.

For example, imagine a care home looking after elderly residents, with different levels of care provided depending upon frailty and conditions such as dementia.

As demand for care increases the home needs more funding.  But to qualify, they must provide detailed information about the actual costs of care.

Equipped with the right templates their Accountant can show the staff how to collect the statistics and measures needed.  They can guide staff to relevant data within payroll and care administration systems.  And they can make efficient work of combining sets of data to produce a clear and granular set of service costs, along with cost projections into the future.

If care home staff are clear about the benefits to be gained from dedicating time to the task, they will be willing and able to perform the leg work required.

Bring on the trainer

It’s the training that matters most.

We are part of the BPP professional development programme for Finance Professionals.  We are preparing courses for Accountants in Practice to equip them to help businesses exactly like the care home above.

We believe the training needed is about becoming better at ‘commercial’ practices.  This is the art and science of gathering and using data for a sharper competitive edge, greater capacity, and a stronger bottom line.

But are we right?

Here is the question.

If you are an Accountant in Practice, and you want to equip your clients with the sort of information illustrated above, what would the title of your ideal training programme be?  And what would you like to be better able to do as a result?

If robotics will make time available for better things, that has to be good.  But only if Accountants are equipped accordingly.

So, please let us know using the comments on LinkedIn.  The more we understand of the world of the Accountant in Practice, the better the training courses will be.

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Paul Clarke

Director

Develin Consulting

This is the second in a series of blogs about the dynamic future that lies ahead for Accountants.  One that, in the face of technical change, involves becoming increasingly competitive as an Accountant and performing a role that is central to the plans for growth within the businesses that you serve.

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The backdrop

This is the rapid and unstoppable growth in Cloud based finance systems.  Although they help an Accountant to serve their respective businesses more efficiently and effectively, they are already leaving them with less work to do.

This will, of course, create free time with which to offer other services.  But this is a double edged sword if it leads to a large number of people having to compete hard for work within the few areas left unaffected.

However, if Accountants are willing to step beyond the confines of their more traditional services and diversify into new areas, a wealth of opportunity awaits.  The areas that matter relate to needs that, for a whole host of reasons, are simply not being fulfilled adequately at present.

They are to do with information, in particular that required to give businesses the competitive edge needed to grow.

In this blog we look at the first step for the Accountant who wants to diversify towards a new set of services, ones that will help them to take a seat dead centre within their business’ plans for growth.

Your perception comes first

It involves changing your perception of your role as an Accountant, and then engaging the business in a new conversation about the role that you can play as intelligence specialist, guide and mentor.

It’s helpful to first put your identity as an Accountant to one side for a moment, and then focus upon what you, as a person, really represent for your business or client.  You must use your own words, but expressions relating to ‘trust’,  ‘integrity’,  ‘advice’,  ‘understanding’,  ‘reassurance’,  and ‘security’ might not look out of place within the list.

The next task is to list the skills that you bring to bear.  They will be broad, encompassing both the technical and those required to build and maintain strong and enduring relationships founded upon trust, clarity, openness and integrity.

The final task within this first step, while still forgetting for a moment that you are an Accountant, is to work with the people within the businesses you serve to identify their ambitions for the business.  With each one cited, identify the most pressing issues standing in the way of progress – as well as the skills and attributes needed of the person capable of finding a way forward.

Then ask yourself, ‘what is stopping me from being that person?’.

I’m very good at what I do and there’s nothing stopping me

Many of the issues are likely to involve the need for information e.g. about the best way to make gains in price, quality of service, or customer retention.  Or the opportunities to make better use of resources.

There will be technical processes required for this sort of work.  However, they are easily mastered.

More importantly for you, and for the businesses that you serve, this exercise will demonstrate that the skills and attributes needed to find the way forward are the very same ones that you already exercise, as an Accountant, every single day.  In other words, you are already an ideal candidate for the job.  And there is nothing to stop you from doing a fabulous job.

Once you are convinced of this you are more than equipped for the next step.  This involves convincing people in the business that there is a vital role for you to play.  But the moment that you describe this as equipping the business with the right information for better decisions, little convincing will be needed.

The cloud is great, but feet need to be kept on the ground

So, those focusing solely upon mastering the cloud based Finance systems will do well.  They will deliver highly efficiency accounting services at a low cost.  What is there not to like?

However, to make a real difference to business prosperity, it helps to come down from the Cloud and work with a much a wider portfolio of information sources, most of which are to be found firmly on the ground.

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We have launched a service aimed at equipping Business Advisors with everything they need for this role.  It includes use of an expanding on-line knowledge base, access to easy to master business intelligence technology, and help and support in developing information. Please see below for more information.

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We are working in partnership with: Keen Shay Keen MK Chartered Accountants and Business Advisors in Milton Keynes in the UK who are piloting the service, as well as member organisations within The Biztech Technology Forum also based in Milton Keynes. And we have big amibitions. To change the face of accountancy so that you become the data smart, digitally savvy Business Advisors who can use data to help solve the problems standing in the way of your clients’ ambitions.

Within the next blog we will be looking at the the technical processes involved in developing Business Intelligence.  Yes there is some technology to master, but you will be surprised at how much you already know.

And to find out more about the service:
Contact us
Download pdf guide

 

Paul Clarke
Director
Develin

Why businesses big and small need their Accountants to become the  ‘Business Advisors of the future’.  This is the first of a regular series of blogs about the Accountant, who also serves as a Business Advisor to their clients.

It looks at why businesses, who have access to unprecedented amounts of data, need a Business Advisor who can use that data to solve problems and point to better ways of working.  And do so in a way that keeps things simple and makes sense to the client.

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There is a world of data within reach of businesses big and small that is not being used to its full potential.   The data can show you ways to take cost out of your business or make best use of your capacity, or show you how much money you are making on each customer and contract.   It can also show the strength of your customer relationships and where new lines of business might be found.

But, much of this data may be hard to reach and not be all in one place.  Some of the most important may also sit outside the business, held by suppliers and customers.

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For example, imagine you are an aspiring Amazon and you ship what you sell by courier.  You need your own data to tell you whether you are producing what you sell in the most efficient way.  But that might be located across order booking, work scheduling and financial systems plus some supporting spreadsheets.

You may need data from the courier to tell you how often your customers receive their orders on time – a critical measure of customer satisfaction with the service.  You might also want data from social media sites such as Facebook to tell you what other things your customers might be buying.

You then need to turn all of this data into a set of clear and simple pictures that show you what’s important for you to know.

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Businesses need Advisors who know how to use data to create those pictures – and explain what they mean in a language that everyone can understand.  It’s a challenging task.  Not least because the tools and methods needed often sit behind a wall of jargon and can appear to be impenetrable to all but the most experienced practitioner.

Nevertheless, we believe that, with access to the right training and support, their Accountant is ideally placed to perform this much needed role.

You know your clients’ business and what they have to do well in order to grow, you are already there as a trusted advisor, you do numbers, and, perhaps most important of all, you know how to explain things in ways that are simple and easy to understand.

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We have launched a service aimed at equipping Business Advisors with everything they need for this role.   It involves use of an expanding on-line knowledge base, access to technology designed to be easy to master, and help and support in accessing and using data.  Please see below for more information.

——

We are working in partnership with:   Keen Shay Keen MK Chartered Accountants and Business Advisors in Milton Keynes in the UK who are piloting the service, as well as member organisations within The Biztech Technology Forum also based in Milton Keynes.  And we have big amibitions.  To change the face of accountancy so that you become the data smart, digitally savvy Business Advisors who can use data to help solve the problems standing in the way of your clients’ ambitions.

Within the next blog we will be looking at the starting point – the need for a new conversation with your clients.  They may see you as principally their Accountant.  They know you for their financial reporting.  What does it take to convince them that you are so much more?

To find out more about the service:
Contact us
Download pdf guide

 

Sarah Clarke
Director
Develin

One of the key factors determining how quickly a business grows is the ability to make critical decisions e.g whether to invest, purchase another business, reduce staff numbers.

They rank amongst the hardest things that Business owners and management teams will do.

The consequences might be significant, there could be severe time pressure, and there may be a lot of people with an interest in the outcome who want to be consulted.

It’s tempting therefore to simply get it done, and as quickly as possible, so that everyone can move on.   But this risks making a decision based upon gut feel, intuition, and the opinion of those with the loudest voice.

Or, to put the decision off, citing perhaps that the time isn’t yet right.

Either path may introduce a significant risk to the business, and a lost opportunity to help it to grow.

To make the right decision it is important to step back and take a careful and analytical look at all the options.   Two things make the biggest difference to the quality of the outcome:

  • The clarity with which you know what you are trying to achieve;
  • The extent to which you can quantify the various options and use data to track how you are doing once the decision is made.

Knowing what you want to achieve

Be clear about what you want to achieve – and express it in measurable terms.

E.g. the decision may be whether or not to launch a new service or product.   But the outcome you want might be a bigger customer base and more revenue, or your existing customers trading with you for longer, or both.   These are the measurable outcomes.

Define what success is – and what you will measure to know you are on the right track.   E.g. more on-line traffic, greater customer footfall, increased sales.   And decide what a lack of success will look like e.g. an absence of growth by a certain time.

List out all the key actions needed to make success happen.   Be specific e.g. create a dedicated website, develop new promotions, introduce specific sales incentives.   And list as many as you can, whether or not you decide to act upon them.

Quantify the options and use data to track progress

Decide what measures you will use with which to track progress.   You will have already listed some of these.   They are part of your definition for success.

These measures will therefore be critical to the decision process.   If you decide to go ahead it is because you believe that you will deliver improvements in each of them.

It is essential therefore that you locate the data that will allow you to track progress, and at the right frequency.   Data that’s updated every quarter may not be sufficient.   You might want to know what is happening on a weekly basis.

Lay the decision out in the form of a spreadsheet model.   You may be clear about all of the above.   Nevertheless, a model enforces a vital discipline within the decision process that might otherwise be missing.   Each of the factors that will influence your decision, and each of the actions needed to ensure success, have to be quantified.

It may help to identify factors you haven’t yet considered.   It will also encourage you to think clearly about, and quantify, risk.

E.g. you might have assumed a similar conversion rate from enquiry to sale to that already experienced.   However, because this is a variable in a model, you have to select a value.   This will help critical assumptions to be challenged and should prompt a search for any data that will support your choice e.g. a look at other businesses with similar offers to see what they may be experiencing.

The model can also answer the ‘what if’ question.   E.g. I have assumed a 20% conversion rate, but what if it is only 10%?   And if it is, how much does our enquiry traffic have to fall before we would conclude that things are no longer viable?

The answer may not change your decision.   After all, you have an exciting idea and you are quite prepared to jump in and see what happens.   But this will give you a heads up about the critical risks.   And as long as you have data with which to monitor them you will be in a position to manage them from the start.

Use the information from the model to bring everyone on-board.   The outcome from the decision may not be popular with everyone, or it may require a concerted effort from some.

Those involved are much more likely to respond as you need them to if they can see and understand the evidence supporting the decision.   And they are much better able to keep things on track if they have timely, accurate and, above all, relevant data pointing the way.

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Paul Clarke
Director
Develin Consulting

Making business intelligence and financial modelling more accessible.

A major obstacle to businesses growing is a lack of relevant, timely, and forward looking management information & business intelligence.

For example, forecasts that trigger smart decisions about when to invest, which lines of business to focus upon, whether to change prices.

Also, information that moves everyone involved onto the same page.    It can be tough growing a business if there are differing views about what to do.    Clear, impartial and credible information is essential if there is to be agreement about the right decision to make.

There’s plenty of evidence that businesses with good management information and business intelligence are more likely to out-grow their competitors than those that don’t.    E.g. from the Economist Business Intelligence Unit – ‘putting information to work’.

But it takes time and money to find the right people, install systems, build the necessary skills, resources that many businesses find it hard to afford.

However, without that information the business might risk a cash flow crisis, a close brush with covenants, relationships with suppliers and customers that trigger losses.

New Analytics and Forecasting Shared Service

We at Develin are proud to announce the launch of our innovative Forecasting and Analytics Service.

It is aimed at management teams who want to quickly lift the quality and integrity of their management information and intelligence and have it delivered, as a service, in a highly visual format that everyone understands.

The service is completely bespoke with information designed to exactly meet their needs, for example:

  • Better plans, budgets and forecasts;
  • Clear investment options;
  • Insight about the most, and least, profitable customers and products;
  • Predictions about future customer behaviour;
  • Insight about the impact of a price change on profitability;
  • Confirmation that assets are being used efficiently and effectively.

The content is updated and refined as often as management teams wish.

The service is accessible as and when needed, through either a secure on-line portal or in-house.    But it’s paid for only when used.

And, it is delivered by specialists with over 25 years of developing management information and business intelligence for some of the best businesses in the country.

Our service is innovative because all you need to do is work with us to design the information that will get everyone onto the same page and ready for the decisions ahead.    And then leave us to do the heavy lift. E.g.

  • Collect the data that will bring the information to life.
  • Build the story within a secure portal accessible only by those you choose.
  • Change and refine the content as often as you need.
  • Provide you with all the relevant background and supporting information you need.
  • And, when it becomes possible to do so, train your people to do what we do.    So that, the moment the time is right, they can take over from us.

Please contact me, Paul Clarke, to find out how we can help your business to boost the quality of your management information and business intelligence.

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Paul Clarke
Director
Develin Consulting

Identifying cost reductions in an organisation is never easy. But happy days !! – an initiative to do just that has just concluded successfully, with all cost reduction targets agreed in full. Such a good feeling. And this was in a place that seeks consensus at every step within a management decision. No top down diktats here. Full agreement had to be reached.

BI, or ‘Business Intelligence’ made this possible.

It’s not about standard reports

Every business system worth its salt will be said to support BI. But the insights needed are rarely found in standard reports. They typically have to be handcrafted and involve originality, innovation, imagination and hard work. And the result needs to strike right at the heart of the issue. Nothing can be left to interpretation. It must answer the question – exactly.

This often means data that’s hard to find. For example, this business has a lot of people on the road visiting people in their homes. No-one doubted that costs could come down if visits were scheduled better. Benchmarks pointing the way were plentiful.

But it took the building of an ad hoc scheduling simulator that modelled a range of scheduling options to nail down exactly what could be achieved.

The result still had to be cross referenced to all those benchmarks and compared with related pieces of work from others. But the influence over the debate from this little piece of BI was profound. Reasons became clear. Particular defences could no longer be sustained.

It is about showing the way

Senior managers are perhaps much happier to embrace change than they are credited for. The problem is in how the argument is put to them. It’s often expressed in the language of failure, even blame. E.g.

‘That group over there operates at a lower cost than you. You need to get your costs down to their level.’

A valid point, sure. But if that’s the starting point then you know that you are in for the long haul. No-one is going to shake your hand and say ..  ‘Thanks for pointing that out.   What have I been thinking all these years!   I’ll get onto it right now’.

A more intelligent way to serve intelligent people is not to show them what’s wrong but to show them the way to somewhere better. That’s the role of BI. And the clue is in the letter ‘I’.

Here are some rules of thumb for putting the intelligence into BI.

  • Tap into the intelligence of those you are seeking to influence. BI is about building a simple model of the business, not on paper, but in peoples’ heads. What you build must resonate with how they see the business, what matters most to them, the metrics and imagery that will exert the greatest influence over their thoughts.
  • Look for the pool of people they will want to influence. BI may be focused towards a particular senior Executive. But they will need help to influence others, in particular within their own teams.
  • Stay small. BI is about simple models that contain just what’s needed and no more.
  • Be prepared to search for new data and keep an open mind about what you might need. The ad hoc scheduler drew upon public records for routes between locations, driving speeds, even walking distances – none of which had been used before.
    BI about abandoned properties drew upon a count of spiders webs on a front door. A quirky piece of data, but known by Field Agents to be a good indicator that no-one has been home for a while.
  • Welcome extensive trial and error. Conspicuous effort to get it right will help to sell the result.
  • Show options. It’s not only about showing there’s a better place to go to. It’s about showing the best way to get there.
  • Be obsessive about presentation. If it’s clear you took the time to get the font right, then you probably took the time to get it all right.

And finally, it doesn’t have to be perfect. Intelligence is about making connections between scattered pieces of information. You may not have many, and the component pieces may not be ideal, but if they come together to tell a compelling story then job done.
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Paul Clarke
Director
Develin Consulting

It’s alive!

This week, a strategic plan came alive. These are traditionally documents which describe a single path to success accompanied by some financial projections, a couple of alternative scenarios, and a set of risks, conditions, assumptions and caveats.

It’s not often that plans can be said to ‘jump into life’. But this did because this plan is not a document but an interactive dynamic model of the business. It jumped into life because those with a stake in the outcome could explore and play. This was strategic planning through Action Learning.

As a result the Executives, more confident now of the space within which they can manoeuvre the organisation, are selling the plan to others – potential funding partners in particular.

And their message is that we have an agile plan, one that can be flexed and changed in the face of events that might come out of left field without any warning.

Unshackle the managers

Trustees and potential funders like this approach to planning. They want the management team to be unfettered by constraints. If bad stuff should happen they don’t want expressions of angst about inability to stick to the original plan, but fast, flexible and imaginative responses with choices and options attached. This means knowing in advance how much key variables are likely to change if bad stuff happens and how far they have to travel before plans need to change.

And let them play

The business is one of providing care and support for elderly people. The front piece of the model is ability to ‘goal seek’ with 15 variables – including prices, trends, staff numbers, interest rates and efficiency cushions. The goals are determined by key financial ‘golden rules’ e.g. minimum levels of earnings, earnings growth, and debt cover.

‘Goal seek’ means testing each variable individually to see how much it would have to change for the golden rules to be breached. Tests can go the other way – for example to see what would have to change for new earnings targets to be reached.

There is nothing new in this type of test. But it is unusual to place this capability in the hands of senior executives, board members and funding partners to engage them in collaborative exploration and play.

But the shelves are bare

It would be good to think that an interactive and dynamic model of the business might fall off a nearby shelf. It will not, and any suggestion that it might would be misleading.

Building such a model requires design effort, data and time, all of which carry their own costs. It can seem like an insurmountable task. But, within a recent class on budgeting and forecasting, held for a mix of FDs and Financial Controllers, we conducted an exercise that overcame those concerns.

We picked upon one of the businesses represented within the room and proved that:

  • The key processes that need to be modelled are largely well understood;
  • Not every dynamic in the business needs to be modelled;
  • Key data may be fragmented but it is often available and easy to retrieve;
  • Missing from the mix were the necessary skills and time, but these can be found;
  • It’s a fun thing to do.

So, bring your planning to life and find ways for your Executives to play. That you can do this is a strategic advantage in its own right. That it will also help you figure out how to make your strategy come true is an added prize.

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Paul Clarke
Director
Develin Consulting

The issue of funding for old age needs no introduction. One of the Government’s much needed messages is that we are ill prepared for old age. We are living longer, much more so than we admit to ourselves, and we have saved too little. We can of course work longer and it’s well known that the ‘older person’ has much to offer in the work place.

But a less well known issue is that, although we are living longer, the length of time we are living without medical problems is not. Already people aged over 65 are the biggest consumers of spending within the NHS. Our increasing longevity will make the demands upon the NHS from this group ever more disproportionate.

Having gained deep experience in housing related analytics and planning we are now looking at the potential impact upon housing from the trends facing us over the next 20 years, and some startling findings are emerging.

Within a retirement village for whom we are providing strategic planning, the on site care and nursing facilities will have to double in size if we don’t rethink care provision. That means more staff and more buildings – not just to provide care, but to also house the staff. Approximately 50% of the caring service within the Village is provided by people from overseas. A doubling in size would only be possible with more immigrants, not a realistic proposition unless they have somewhere they can afford to live.

Here, and across the NHS, we have to find ways to provide care with less staff involvement. It means a greater capability for self-care, better use of technology, the ability for family and friends to provide support, and properties that are fit for purpose.

But this doesn’t seem to be on the radar within our social housing providers. Given that the life of a property is in the region of 60 years, those being built today need to be designed with future care needs in mind. Social housing providers house a significant proportion of the country’s older persons who in turn are likely to bear a disproportionate number of the complex health issues that will accompany increased old age. But properties being built today don’t appear to reflect this.

Can, for example, today’s properties permit good use to be made of ‘tele-health’ and ‘tele-care’ technology that has been shown to dramatically reduce admissions to hospitals?

How does the obsession about numbers of bedrooms in properties help family and friends to provide a level of support that could prevent long term health complications from escalating?

To what extent should the aids and adaptations that those with care needs can request be considered when a property is designed? The cost of inclusion at the design and build stage will be a fraction of the cost of subsequent adaptation.

Housing Associations are rightly wary about entering the market to provide care for their customers. Our analysis makes the risks and costs apparent. But if their stance is that long term provision of care is a problem just for Local Authorities and Social Services to solve then they are missing a big opportunity to make a big difference. The ability to provide person centred care to someone in their own home is going to really matter. But it will only be possible if the home is fit for purpose.

If anyone would like to see strategic analysis that makes the point loud and clear then please get in touch.

Paul Clarke
Director
Develin Consulting

The abbreviations in the title stand for Return On Investment (ROI) and Enterprise Resource Planning (ERP).

ERP systems are common the world over, and they are coming to housing (underway within three major Housing Associations at the time of writing. The Author is performing the ROI analysis within one of them).

ERP systems are computer applications through which major business processes operate. Their appeal is hard to resist. In principle, they bring to key business processes the benefits of automated work flows and tight process control. If, say, your purchasing process is slow and fraught with difficulty, an ERP system with its built in purchase to pay process should speed things up and make them more efficient. Other processes will benefit the same way.

Over the years the range of processes that ERP systems can accommodate has grown. There aren’t many businesses that couldn’t get an ERP system to fit what they do.

There is of course a ‘but’. The biggest relates to the price tag, and, crucially for housing, the challenges faced when attempting to realise the benefits promised.

Both are related to the quality of design of the future processes that will operate through the system. The better the design the easier it is to configure the system. The easier it is to configure the less it should cost.

But good design doesn’t come cheap. Each key process has to be thought through from scratch bearing in mind the opportunities presented for greater automation as well as potential new channels of communication with the customer.

One of the fundamental decisions that has to be made at the start of the Project is about the benefit to be realised. Is it to deliver cash savings based upon a lower headcount? Is it to deliver ‘cashable savings’ i.e. time freed to be either re-invested in doing something better or turned into cash? Do processes simply have to have greater capacity i.e. the ability to accommodate growth without incurring additional costs?

Once this is clear it is vital to then perform an ROI calculation.

This may not court popularity. It is much easier for all if the project is about delivering intangible benefits e.g. a redeployment of freed time towards better customer service, rather than the organisational change needed to yield real cash savings. It avoids the accountability that comes with quantified benefits targets.

But that accountability is exactly what ERP projects require. The issue is simple to describe but sometimes fiendishly tricky to resolve.

When ERP systems go live they are often fraught with difficulties. This is not the result of failure on anyone’s part. It is simply that much of what they are designed to do is ambitious, even aspirational, and they are doing things that haven’t been tried before within that organisation.

But businesses do not have the luxury of time to resolve these issues given that the operation of key processes is at stake. So local workarounds start to appear. They are supposed to be temporary, but because they allow the business to get back to normal, there is no longer the urgency to get the ERP system working properly. The technologists therefore drift away.

When businesses then grow, their ERP systems have the capacity to accommodate the growth without further cost being necessary. But the work-arounds that remain do not. It is not uncommon to find businesses that have invested in ERP systems but have a plethora of activities related to core processes that sit outside of it. This cost was never budgeted for, but with the technology under-performing, it is very hard to shift.

The point about the ROI calculation is that it promotes accountability for benefit delivery. At the start of an ERP development it may be a very approximate estimate as little is known about possible future process designs. But it improves as the project progresses and more information comes to light. The new information is provided by the owners of those processes who are both architects of the future ways of working and of the assumptions within the ROI models.

As ROI models grow in credibility and process owners become increasingly familiar with them they become effective vehicles for influencing business plans and setting budgets – budgets within which actual savings are realised or potential savings are identified and ring fenced to be available for ‘future-building’ activities.

And the point about those budgets is that they can only be delivered if the technology works properly. That, after all, is the premise upon which ROI models are built.

With an umbilical link to budgets in place, any shortfalls in ERP operation remain painfully visible because of the additional and unplanned costs incurred as a result. The technologists have to stay put because their work is obviously unfinished.

Why is this accountability so important in housing? It is because the money invested in an ERP system could pay for several hundred homes for people who are otherwise unable to put a roof over their heads.

This is the opportunity cost of an ERP system. The benefit needs to be such that those homes (plus some additional ones) can still be built, or activities of a similar value performed. If this benefit is not quantified financially, outcomes not measured in financial terms, and accountability for delivery fudged or completely missing, this is less likely to be the case. In which case the investment in the ERP system may have undermined rather than enhanced the social value that the Housing Association is there to deliver.

If ever there is any doubt about the delivery needed from a project such as an ERP development, imagine presenting the project to a room full of your customers. They will probably say that it is their money that is funding the enterprise. Imagine asking them whether or not the financial benefit should be established clearly in advance, whether the anticipated return should be measured along the way, and whether accountability for delivery should be put in place. I’m sure you can guess what they are likely to say.

Paul Clarke
Director
Develin Consulting