Fatal Flaws in ERP Software Create Opportunity for Niche Software in CPG Companies

After companies purchase an enterprise resource planning (ERP) system they may discover that the ERP software fails to provide all of the functionality their business requires. These shortfalls have been characterized as "fatal flaws". If a company uncovers a fatal flaw in their ERP software they have three choices: keep their paper-based and labor intensive system, develop in-house software or, look for niche software to "bolt on" to their ERP software. Some consumer goods product (CPG) manufacturers find themselves looking for niche software when they look to improve the operation of their back office functions relating to pricing, trade promotion, and trade receivables after discovering that their ERP system does not provide the depth of functionality needed to completely manage their business issues.

*In Memoriam

An Example Business Problem

If we take a CPG example from the food industry, the pricing methods have evolved into a complex set of business processes that often go beyond the scope of normal ERP functionality. Generally, food manufacturers have a national invoice price for each SKU they produce. The net they ultimately receive for their product is reduced from the national invoice price three factors: "invoice deviations" which are list price concessions that appear on the invoice, "after invoice deviations" which are rebates set up as invoices from distributors, retailers, or foodservice end users for promotional programs tied to product sales; and "trade promotion payments" tied to direct marketing expenses like retail slotting allowances to get shelf space for a product or entrance fees to trade shows.

In the back office operation, all reductions in the net price have to be planned, approved, and tracked to determine their impact on sales. After invoice deviations and trade promotion commitments must also be accrued as liabilities to ensure that they are reflected in financial reporting. The issue of "deduction management" comes up because the back office process actually involves two payment streams—one from the customer to the manufacturer for product sales and the other from the manufacturer to the customer for promotional activities. Often, the customer deducts their claim for promotional activities directly from the manufacturers product sales invoice.

When the complexity of the pricing programs is combined with the complication of deductions the back office operations of food companies can become a quagmire.

For Harold Rosemann, the CFO at Salt Lake City, Utah (US) at Cookietree Bakeries, managing the process of tracking promotion planning to sales results is a critical area. Rosemann wants, "to know how our promotional spending is impacting our sales results, but we also need to keep ahead of our short paid invoices." For requirements like Rosemann's software vendors need to have both promotional planning and deduction management functionality. It is this combination of functional depth that is often difficult to find outside of niche vendors.

Software Vendor Solutions

Software vendors are attacking back office CPG issues in different fashions. As expected, niche software solutions are more focused on industry and segment specific issues.

General ERP vendors all provide pricing management functionality but may not address industry specific issues. Process industry ERP vendors have more experience with the specific industry issues and may include more detailed functionality by industry but may have specific strengths in particular market segments where they have existing clients. Traditional customer relationship management (CRM) vendors are expanding into trade promotion from their traditional account management or call center applications. Like the general ERP vendors, their solutions tend to be broad-based. The following chart illustrates the relationship between the depth of functionality and the breadth of offering of software vendors relating to food industry pricing and trade promotion management:

Niche vendors utilize industry-specific functionality to compete with global vendors. Alex Ring, president of the Synectics Group in Orefield Pennsylvania (US), which is a provider of trade promotion management (TPM) software observes that, "Generic software does not meet the unique needs of CPG. Food is different than hardware, and within food, retail and foodservice are different. As a result there are significant differences in the functional requirements for CPG/TPM software".

Companies that have identified a "fatal flaw" in their ERP usually have very specific requirements for the functionality they need. Dean Abrams, the Senior Vice President Sales and Marketing for Carrollton Texas (US) which is a sales information vendor information retrieval methods (IRM), which provides sales promotion software to the CPG and foodservice industries, finds that in a specialized software niche, "there is a fine line between a packaged solution and one-off custom development". "We understand the foodservice segment but not everyone in foodservice has identical functional requirements." Abrams' point is that niche vendors have to walk that fine line giving companies depth of functionality they need without moving into creating custom software.



SOURCE:
http://www.technologyevaluation.com/research/articles/fatal-flaws-in-erp-software-create-opportunity-for-niche-software-in-cpg-companies-17253/

Dealing with Global Trade Management Complexity

The moves of JP Morgan Chase and TradeBeam, and their respective acquisitions, as discussed in Market Leaders of Global Trade Management of this note, indicate that the global trade management (GTM) space is consolidating and that point solution providers are disappearing. Leaders like JP Morgan Chase and TradeBeam understand that to truly improve global trade, one must be able to manage both the physical and the financial supply chain across the entire trade transaction. The physical supply chain consists of export/import compliance, document management, shipment tracking, supply chain electronic management (SCEM), inventory management, global parts management, security management, and contract management. The financial supply chain refers to tasks such as purchase order processing, letter of credit (LC) management, open account management, pre- and post-shipment financing, reconciliation, invoice presentment, dispute management, foreign exchange, and insurance management (See figure 1).

As for the acquisition of Open Harbor by TradeBeam, product integration should be complete by the second half of 2005, and TradeBeam pledges to maintain uninterrupted service and support for a key group of Open Harbor clients during the immediate transition phase and post contract execution. TradeBeam has also been engaged in discussions with Open Harbor's customers to understand their specific circumstances, the scope of their projects, and to jointly agree on terms to work together to ensure alignment of business goals. GTM is a new and potentially very large enterprise applications space that has been compared by some to be the next corporate paradigm after enterprise resource planning (ERP). TradeBeam is considered a thought-leader because of its significant "first mover" advantage. It has had a few years head start compared to most competitors, and began with an "end-to-end" GTM portfolio, and did not retrofit its solution onto other "cousin" enterprise applications. So far, TradeBeam has an impressive functional scope, and it promises much more in the future.


Figure 1: Physical and financial solutions value chart (Source: TradeBeam)

Some enterprise applications, such as international trade logistics (ITL) and GTM simply seem to lend themselves well to a hosted model. Because of their widespread nature, they can not efficiently work the other way. Namely, global import/export "procure-to-pay" or "order-to-cash" processes entail a number of activities, such as source suppliers and customers; process purchase and sales order; insure goods; issue and receive LC; finance trade; arrange shipping; create trade documents; customs compliance export/import; send and receive goods; send and receive invoice; reconcile; and initiate and receive payment (see figure 2).

On a more granular level, these activities belong to the following sub-processes:

* order—includes plan demand needs, manage bills of materials (BOM), manage product catalogs, check inventory status, create purchase orders, check compliances, manage inventory, manage purchase orders, assess supply chain management (SCM) risk, acknowledge order, classify goods, calculate landed costs, manage contract, insure goods, and obtain credit insurance

* finance—apply and manage LC, manage documents collection, manage open account, request financing pre- and post-shipment, check compliance, assess SCM risk, and arrange foreign exchange

* ship—request booking, ship book, create ship notification, create shipping documents, manage shipping notification, manage shipping guarantee, track shipments, manage events, assess SCM risk, manage customs, clear customs, receive goods, and manage returns

* settle— create invoice, present invoice, reconcile documents, manage disputes, prepare documents, present documents, manage insurance claims, and receive remittance

In any case, many of these could only be efficiently fulfilled through a Web-based hosted solution, priced per transaction. To optimally complete the global trade cycle, a business must automate, track, and provide visibility to the entire GTM process to optimize its supply or distribution chains.

The average global trade cycle of order through settlement is 120 days, whereas a comprehensive hosted GTM solution like the one from TradeBeam can reduce this cycle by an average of 12 days, which can improve users' cash flow by 10 percent or so.


Figure 2. Global order-to-cash and procure-to-pay cycle

This is Part Five of a six-part note.

Part One defined GTM.

Part Two discussed the tradeoffs.

Part Three addressed managing global trade flows.

Part Four presented the GTM leaders.

Part Six will present challenges and make user recommendations.

Web-Based Tools

The number of users wanting solutions delivered over the Internet with monthly subscriptions or transaction-based fees has noticeably increased. Most new customers want a transaction-based model rather than a straight purchase with a big, upfront, payment (see Trends in Delivery and Pricing Models for Enterprise Applications). Moreover, an enterprise-wide, on-premise approach to global trade and logistics might not be the best approach because of high costs and implementation difficulties. In fact, products with the broadest appeal for global trade today appear to be hosted, web-based solutions that allow companies to go outside their firewall to deliver supply chain visibility, event management, multimode logistics execution, import and export management, and trade security to enterprise shippers.

Such a web-based tool is not just the choice for connecting to far-flung carriers, forwarders, and other service providers, but is often a better approach than ERP-oriented solutions for trade compliance and documentation. This is largely because ERP systems usually only have product marketing descriptions in their item master data, not technical descriptions needed for regulatory compliance. So, for example, if Apple Computer is importing PowerBooks, its name and associated marketing description would not be adequate for US Customs. Trade compliance applications should be able to take the marketing description off of the purchase order and associate it with a commercially acceptable description and the correct Harmonized Tariff Schedule (HTS) classification. For example, the system should list the PowerBook as a laptop computer with certain features and specifications, and the right HTS code number.

Further, complying with the 24 Hour Rule, and based on the importer's purchase order, and the information about the customers' products, the application should be able to create the shipping instructions for the forwarder and send it to the carriers for their manifest. Thus given all the information that needs to be complied, a web-based system, connected to trading partners around the world, should be faster, easier, and better than taking an enterprise-based system and trying to turn it into a global logistics system. Enterprise-based systems are notoriously difficult to integrate with a large network of users. Also, hardly any company would want its ERP master data going directly to vendors. It is far more secure to have a system that takes only the absolute necessary data from the ERP or back-office system to share with the supplier.

In the case of TradeBeam, the company has been striving to distinguish itself from peers and competitors by offering more than the mere ability to track orders and shipments, by aiming to improve all three groups of activities that make up a global trade—the order, the shipment, and the financial settlement. It has designed several so-called "solution blueprints" for solving specific global trade issues, ranging from providing import shipment visibility and trade compliance to eliminating financial discrepancies while managing LC. TradeBeam's Solution Blueprints begin with the key pain points of global trade and identify tools and strategies available to corporations seeking the advantages of the value of optimized GTM. They include an on-demand set of GTM applications that individually might contribute significant value to a corporation while solving specific event management problems. This supply chain monitoring system enables businesses to proactively monitor their supply chain performance by automatically alerting users to exceptions in the order fulfillment process. TradeBeam harnesses data to provide integrated decision support to give managers their best response to out-of-tolerance situations pertaining to order execution and fulfillment. TradeBeam provides near real-time monitoring, measuring and visibility of order and shipment tracking across the entire global supply chain.

Competitive Landscape

Although the TradeBeam's solution has been (and will be) indisputably competitive, especially in light of Vastera's logistics product gaps, the GTM market is characterized by early adopters and is rapidly evolving. Even a company of TradeBeam's current stature—one with several years of existence, less than $20 million (estimated) in annual revenues, an immaculate financial position, and a slew of marquee customers—might not be able to maintain its competitive position against current and potential competitors in the long term, especially against international brokers, freight forwarders, logistics companies, and other companies with greater financial resources, name recognition, and other resources. Competition might also come from in-house development efforts, consulting companies, other software companies, and third-party development efforts. The market is competitive, rapidly evolving, and highly fragmented, and one should only expect the intensity of competition to increase in the future.

Just as banks, such as JP Morgan Chase, are changing their roles, so will the roles of third-party logistics (3PL) providers, which are focused predominantly on the management of the shipment bookings through proof of delivery process and logistics costs management. As user companies continue to embrace the value of broader GTM solutions, logistics providers will be looked upon to provide leadership and to add more value to the entire order life cycle, including purchase order management, total landed cost modeling, insurance and claims, import/export compliance, security regulations, and more seamlessly integrate invoice reconciliation and trade financing systems.

Like other parties in global trade, 3PL providers must still mitigate their risks of providing correct and timely documentation relative to documents for transportation, customs, and settlement, such as LC. They will also be liable for trade compliance issues such as denied parties and anti-boycott and will need a corporate wide solution to protect them from liability. TradeBeam will likely prefer to partner with banks, 3PL providers, or even some logistics management vendors like G-Log or Xporta, given the currently complementary nature of their offerings. These entities, however, might likely decide to grab a bigger slice of the GTM pie through acquisitions such as that by JP Morgan Chase of Vastera or through in-house developments and competency building.


SOURCE:
http://www.technologyevaluation.com/research/articles/dealing-with-global-trade-management-complexity-18010/

Comparing On Demand Customer Relationship Management Service Alternatives

In a recent Forrester Research report, it was noted that while functions and features are important in selecting customer relationship management (CRM) software, they are not the "be-all and end-all" deciding factor.

It was also noted that when organizations looked back in terms of the criteria they used, or would use, to select CRM software, product capabilities were not nearly as important as most users initially thought they were.

Two of the top three criteria listed by companies focused on a CRM system's flexibility (i.e. configuration and customization) and the ease with which the application can be integrated with other systems.

Interestingly, a few features that some vendors have worked hard to incorporate into their products fell near the bottom of the evaluation-criteria lists. Vertical market specialization, for example, did not rank high among potential CRM buyers.

CRM Functions and Features

So, what exactly is core CRM functionality?

To come up with our answer, we researched hundreds of CRM products, and as a result of this process, we defined twelve functional areas that we believe cover the functionality that should be core components of any (and every) CRM solution.

The following is a list of these "core" CRM areas.
Area
1 CRM interface
2 Account management
3 Campaign, lead, and opportunity management
4 Customer service
5 Document management
6 Workflow automation
7 Desktop tools
8 Reporting, analytics, and dashboards
9 Administration and setup
10 Internationalization
11 Customization
12 Integration

Core CRM Area Definitions

1. CRM interface. This is the overall user interface, including home, pages, tabs, menus, dashboards, etc., as well as all the factors that affect the usability of the system.

2. Account management. The area of a CRM solution where all of the information about the companies (and the contacts or people at those companies) that the user enterprise has relationships with, is centrally maintained and managed. In addition, this area includes all calendar and activity management functionality.

3. Campaign, lead, and opportunity management. These areas of a CRM solution are where all of the selling opportunities are centrally maintained and managed.

4. Customer service. This area of a CRM solution is where customer service questions, requests, problems, and issues are input, tracked, and escalated (if need be), so that customers are able to get what they need handled in the most efficient and effective manner.

5. Document management. This functionality typically includes a document library where users can store files that other people can access via the web.

6. Workflow automation. This functionality can keep a business running smoothly by automatically assigning tasks (or sending e-mail alerts) based on a business's pre-defined processes. Workflow rules put workflow alerts and workflow tasks into action whenever the designated criterion is met.

7. Desktop tools. This functionality provides integration with desktop office tools like Microsoft Excel, Word, and Outlook, as well as wireless support and off-line access.

8. Reporting, analytics, and dashboard. This functionality monitors an enterprise's performance utilizing a variety of pre-defined (yet customizable) reports covering each of the services' main data areas. CRM solutions also allow users to use data filters, so they report on only the information needed, and to subtotal or chart the data to help analyze trends and get a concise picture of what's happening.

9. Administration and setup. This is the area of a CRM solution where an enterprise can import or export data and manage user roles (for information access) and security.

10. Internationalization. Internalization provides support for foreign language and real time currency conversion.

11. Customization. This is the ability to customize the CRM solution to meet industry- and company-specific requirements.

12. Integration. These are tools for integrating the CRM solution with other third party or legacy systems.

Other CRM Functionality

All of the other many functions and features that we found in our CRM product research (that were not part of our definition of core CRM) fell into one of the following categories:

* non-core CRM functionality,
* vertical industry specific features, and
* accounting-related CRM features.

Enterprises that are evaluating CRM solutions that include "non-core" CRM functionality need to be aware of the potential issues associated with these features.

From our experience, there's absolutely nothing wrong with a CRM solution that incorporates any, or all, of these types of functionalities. However, enterprises that are evaluating CRM solutions need to be aware of the potential issues associated with functions and features that are not part of core CRM functionality.

Non-core CRM Functionality

Some CRM vendors seem to be competing for business based on the number of functions and features that they offer. Their assumption is that the more functionality they offer, the better. The thing that distinguishes these features from core CRM functionality is that many enterprises don't need all of these things. Some examples of non-core features are

* Event management
* Project management
* Proposal generation
* Vendor management
* Product defect tracking
* Partner management

The issue is that if you don't need all of this non-core CRM functionality, you don't want any of it to negatively affect the usability (i.e., increase the complexity) of the system for your enterprise.

Of course there's nothing wrong with any of this functionality being incorporated into a CRM solution, particularly because there are enterprises that can benefit from one or more of these features. The issue is that if you don't need all of these things, you don't want any of them to negatively affect the usability by increasing the complexity of the system for your enterprise. So, when evaluating CRM solutions that include functionality that will not be needed by your company, it is imperative that you understand what will be required to remove (or hide) any unneeded functions and features from the user interface.
It is absolutely critical that you evaluate whether or not the process flows embedded into the functionality of each CRM solution being considered match your enterprise's needs.

Secondly, when evaluating CRM solutions, it is not nearly enough to determine whether or not the needed functionality is available in the CRM solutions that are under consideration; you must evaluate whether or not the process flows embedded into each solution match your enterprise's needs. For example, a CRM solution that inherently assumes that four or five people are involved in a particular process (e.g. developing and approving new entries into a customer support, frequently asked question-type knowledgebase) and segments the process into four or five steps will not be a good match for an enterprise that has only one or two people who will want to perform this process in one or two steps.

Vertical (Industry Specific) Features

We are often asked which approach is better: customizing a basic CRM solution to meet an enterprise's industry-specific requirements, or buying an industry-specific CRM solution.

Some customers recognize that there is still a price to pay for accepting easily customizable solutions and opt for vertical market solutions that reduce the need for even further customization. Vertical solutions have built in advantages such as business rules and a data logic that are industry specific. The customer does not have to build in the rules, specific numbering systems, or the common reports that their industry normally uses to track customers, services, and leads. In addition, industry specific workflows can be created, and back-end integration becomes easier as the database logic is likely to be close to the industry norm.
Some companies that tout industry-specific CRM solutions may have something to hide; namely that their software is not that easy to customize, so they've done a lot of it for you.

But, as noted previously in this report, vertical industry specialization did not rank high among many potential CRM buyers.

From our experience CRM best practices don't change all that much from one industry to the next. Sure there are unique data and workflow requirements, but this should be easy to implement. After all, doesn't every business in a given industry have different company-specific needs that they'll want to implement? True, but by all means, be careful out there! Some companies that tout industry-specific CRM solutions may have something to hide; namely that their software is not that easy to customize, so they've done a lot of it for you.

Since most industry-specific CRM solutions are generally more expensive then horizontal (non-industry-specific) CRM solutions, one of the most important evaluation activities is to compare the additional cost of the industry-specific solution to the cost of customizing the non-industry-specific solution, so it will meet your enterprise's needs.

Accounting-related CRM Features

Some CRM vendors incorporate functionality that will ultimately result in financial entries in an accounting system. When a vendor offers a fully integrated accounting solution (like NetSuite does) that your enterprise already has, or is planning to implement, then this functionality is not an issue—except that it will probably add to the complexity of the system's implementation.
The more accounting related functionality that a standalone CRM solution offers, the more difficult, time consuming, and expensive it may be to integrate it to a back-office accounting system.

Problems arise when accounting related features are offered in a standalone CRM solution. For example, when a standalone CRM solution includes functionality for processes, like managing return material authorizations (RMA), job and project management, time tracking, and commission tracking, each of these processes ultimately should result in entries (or access to additional information from an entry) to an accounting system. The more of this type of functionality that a standalone CRM solution offers, the more difficult, time consuming, and expensive it may be to integrate it to a back-office accounting system.

CRM Configuration and Customization

No two companies operate the same way, even if they are in the same industry. In addition, businesses are dynamic and to ensure their continuing success they must continue to adapt to their changing environment. Accordingly, the CRM processes and technology solutions that support those processes must be continuously re-engineered.
One of the most important areas that should be analyzed when evaluating a CRM solution is the ease with which it can be configured and customized.

We believe that one of the most important areas that should be analyzed when evaluating a CRM solution is the ease with which it can be configured and customized.

When new data must be captured using new or modified input/view forms, with re-worked automated processes and customized reporting and analytics, who in the organization will be able to implement these changes?

It's our experience that the best CRM solutions are those that are so easy to configure and customize. Ones where users with administrator privileges can implement most, if not all, of the needed changes on their own, without the need for assistance from technical information technology (IT) personnel.

Why? Because in many companies, ongoing technical resources (or budgets for third party assistance) are often not available to continuously reconfigure and customize the CRM solution.

Over the years, we have been approached by hundreds of enterprises that are looking to change from one CRM technology solution to another because they have become frustrated with the limitations of their current solution.

For many however, the truth of the matter is that this frustration has grown over time because of their inability to continuously configure and customize their CRM solution to meet their ever-changing needs.

When evaluating CRM solution alternatives, be aware that just about every CRM solution provider will claim that their offering is very easy to configure and customize. Have vendors demonstrate these tools to you so that you can gauge the ease of configuration and customization for yourself. And remember, your long-term satisfaction with your CRM solution may end up being directly related to having the ongoing needed resources to work with these tools. The more that non-technical people can do for themselves, the better.



SOURCE:
http://www.technologyevaluation.com/research/articles/comparing-on-demand-customer-relationship-management-service-alternatives-18295/

N-Tier Demand Management

The classic bull-whip effect means that the further a supplier is removed from the end-consumer, the worse are the fluctuations in demand that they see. This has led many to recommend an n-tier approach to demand management, where everyone gets visibility to the end-customer demand at the same time. In practice, very few companies have been able to actually realize this vision. There are some practical approaches that a supplier deep in the supply chain can do to mitigate the bull-whip effect.

Build-to-Consumption

Outsourcing and leaner supply chains are pushing companies to using networked models (real-time sharing of information across multiple tiers) for demand management. Most networks today are still working on building connectivity with their immediate trading partners, but the real promise comes from connecting n-tiers. Successfully managing an n-tier networked model involves sharing of real-time data such as POS data, orders, and changes in plan. This vision does not necessarily mean that companies need to create a detailed model of the n-tier supply chain and run optimization logic as they might within their own organization. Major practical challenges that have kept many companies from realizing the n-tier vision must be dealt with, specifically

* Understanding multi-channel demand
* Avoiding multi-counting

Managing N-Tier Demand through Multiple Channels


Figure 1—Multiple channels for single customer

In an n-tier supply chain, demand to the supplier from a single customer, such as an OEM, may travel through multiple channels (see figure 1). It is up to suppliers to aggregate expected demand for each major [] customer regardless of the channel that it flows through. This requires understanding the total market size, demand elasticity, and share for each customer (see section below "Forecasting Your Customer's Demand"). In addition, many suppliers fail to effectively aggregate demand by channel for each major customer, although it is critical to understanding overall demand. Effectively synthesizing demand across multiple channels requires close dialog with the OEM about demand at the finished-goods level, and systems that are able to explode a complex demand BOM against OEM finished goods demand (see sidebar). That is why it is important to monitor and forecast OEM sell-through rates[]. Once these are in place, the dialogs with OEM about demand can shift from discussion about supplier's parts to discussion about OEMs finished goods, for which the OEM has longer-term data and forecasts than they have in their MRP plans for individual parts.

[1] Aggregating by customer is only worth effort for your top customers (e.g. the top 20% of customers comprising 80% of demand). Demand from smaller customers can be aggregated by channel.

[2] Sell-through means knowing your channels' sales data, in this case the actual sales of the OEM, rather than consumption into their production lines.

Avoiding the Multi-Counting Trap

Suppliers that are several layers removed from the end-customer in multi-tier supply chains are prone to confusion about true end market demand. Multi-counting of the same demand is a common symptom. For example, a large telecommunications carrier replacing their line of cell phones sends out RFQs to multiple phone OEMs, who in turn send RFQs to several contract manufacturers. By the time the demand signal gets to the supplier, it can be grossly overstated.


Figure 2—Multi-counted demand signals

If the supplier is several steps removed from the end customer, they need to use their own intelligence to ferret out big end-customer deals, to get a more accurate picture of actual demand. As they pursue opportunities with OEMs, the account management team should capture information on potential end-customer deals (e.g., end-customer name, project name, size and type of deal, etc.). This data is factored into the forecasting scrubbing process to eliminate duplicate demand (see sidebar "Rationalizing Demand Across Channels"). Getting salespeople to consistently enter this kind of data is not easy. It must be made nearly effortless, and part of their compensation should be based on consistency and accuracy in tracking large end-customer deals. Forecasting Your Customer's Demand Beyond this, you should forecast demand for your customer's whole market and their share. For example, if you are a supplier to Ford, you would create your own forecast of demand for the whole light truck market and for Ford's share. Or a supplier to Juniper Network would forecast the whole enterprise switch market and Juniper Network's share. This way, if several major customers have aggressive forecasts, you can make your own informed opinions about whether the total market is really growing, or whether there is some double-counting going on. Formulating your own market assumptions provides the checks and balances needed to get to the best number you can for each account.

Taming the Bull Whip

Suppliers that are several layers deep in the supply chain can stop being at the mercy of late or incomplete demand information by

* Developing a demand BOM approach to understanding the actual demand as it flows through various channels

* Having a disciplined approach to keeping their "ear to the ground" on what is happening at each of the largest downstream channels and end-customers or large OEMs

* Maintaining their own perspective, getting a good handle on the total market size and using it to sanity check forecasts they receive from their customers

These steps can help upstream manufacturers avoid much of the misery and destructive force of the "bull-whip effect" that is normally the bane of their existence.


SOURCE:
http://www.technologyevaluation.com/research/articles/n-tier-demand-management-17705/

Best Practices for Transporters and 3PL Service Providers

The current state of the goods transport business is such that most transporters and third party logistics (3PL) service providers are forced to offer their services at lower rates while faced with the continual rise in costs for doing business (e.g., increasing fuel prices, employee salaries, and other operating expenses). This scenario calls for transporters and 3PL service providers to streamline business processes and provide value-added services to boost their top lines and improve their bottom lines.

Such results can be achieved by implementing software systems equipped with built-in best practices and with the ability to adapt for future growth, entry into new markets and market segments, and changes in business practices. It also makes sense for transporters to enter into new business lines (e.g., providing services to manage entire supply chains for clients, including managing inventory, warehousing, in-plant services, etc.).

Transportation is the crucial link among all partners in any supply chain. Goods move from suppliers to manufacturers, from manufacturers to distributors, and from distributors to retailers. In cases of rejections, repairs, and customer service, goods move in the reverse direction. Transportation of goods is the lifeblood of most businesses, and in an ever-increasing global market, its role is becoming increasingly vital.

In the agrarian societies of yore, transportation of goods was limited to taking farm produce to the central market of the village. Then came trading communities, which would ship and receive goods via sea routes. Slowly, after the dawn of industrial era, goods were being made on a mass scale, and they were shipped both nationally and internationally.

Now, in the era of global trade, some industries manufacture parts at different geographies, and these goods are then transported and assembled at locations close to end customers. In other industries, products are made at contract manufacturing sites that are located in faraway countries having low labor and materials costs, and are transported and consumed at other locations.

Transporters Have Distinct Needs

Because of the nature of global trade, goods are being transported to faraway places in larger quantities. Transporting goods over long distances both economically and with minimal transportation time requires special knowledge, resources, and expertise. Since the size of transport operations is becoming huge, transport organizations need reliable transportation management systems (TMSs) to communicate effectively with suppliers, distributors, retailers, and service providers. With the help of a capable TMS, transporters can plan and execute their shipments with more accuracy and with less effort. They can also lower their operations costs by means of optimized loading (to get better fill rates) and by reducing empty run miles and wasted time.

Best Practices for Transporters

The unique nature of the goods transport business calls for unique features in a TMS. Transporters deal with many organizations, so they need to have a system to which all of these organizations have access to perform everyday transactions.

Best practices related to goods transportation can be divided into six parts: 1) supply chain management (SCM), 2) billing management, 3) key performance areas measurement (KPAM) management, 4) key account management, 5) quotation management, and 6) fleet management.

1. Supply Chain Management

Transporters need to understand their clients’ requirements and to be an integral part of their clients’ supply chains. They should help their clients achieve the desired visibility level of inventory during transit, as well as reduce transit times, maintain service levels, and reduce transportation costs.

Transporters can devise innovative ways to achieve many of these goals. Technologies such as global positioning systems (GPSs) and general packet radio service (GPRS) can be used to track the location of a vehicle during transit. This will help in achieving better customer service and in making changes in planning at the receiving warehouse (such as appointment scheduling, unloading, put away, etc.) on the fly. Route and load optimization features will assist with route selection to reduce transit times and empty miles run, as well as optimize loading to lower transportation costs.

Providing 95 percent or more visibility during transit can help transporters’ clients reduce their overall inventory levels, and thus save in operations costs. Many times, a vehicle can be loaded at 100 percent volumetric capacity, but it could still be at less than 50 percent in terms of weight capacity. Similarly, sometimes a vehicle is 100 percent full in terms of weight capacity, but less than 50 percent full in terms of volumetric capacity. In these situations, the load planning features of a TMS can help achieve optimized capacity of use of the vehicle. Using load consolidation, which means using opportunities for loading vehicles during return trips, will help transporters’ clients reduce transportation costs.

2. Billing Management

Transporters need to ensure that there are no delays in the payment of their bills. Each bill for each activity they perform must be accurate, and they should ensure no opportunity is lost to bill every activity they carry out. They need to have checks and alerts so that bills are created and presented to clients on time, thereby minimizing payment delays. In addition, transporters need to have an activity-based accounting system so they can bill accurately for each and every activity. They can pass a percentage of the cost savings from reduced operation and transportation costs on to their clients, which will help to maintain a happy and loyal clientele.

3. KPAM Management

Each client of a 3PL service provider signs a service level agreement so that key performance areas can be defined and measured in order to rate the provider’s quality of the service. These agreements differ based on the needs of each client. A TMS with KPAM capabilities should be able to define and measure the agreed-upon key performance areas.

4. Key Account Management

Transporters and 3PL service providers have some major clients for whom they create dedicated customer service, marketing, operations, and accounting teams. In many cases, a team may be comprised of members from different divisions so that all the client’s needs are met through one channel, and the client does not have to deal with several people for a single area or issue.

Another aspect of key account management is that all the client’s needs related to logistics are met by one service provider. For this, the service provider may offer these services itself, or it may procure these services from other service providers to create a single window through which it provides all services to the client.

5. Quotation Management

By using seasonal or historic costs and by comparing rates, transporters can provide accurate quotations to clients. Quotations can take into account opportunities for consolidation, load optimization on equipment, and any other cost-saving measures so that the transporters can pass the cost savings on to their clients, potentially ensuring more business from these clients.

6. Fleet Management

By performing a complete and accurate cost analysis (equipment purchase cost and equipment operations cost) and revenue analysis (revenue realization from equipment being used for the fulfillment of certain orders over a certain period of time), transporters can find out which vehicle types are more profitable and which ones are not. It may be discovered once profit-loss calculations are done that some vehicle types are, in fact, incurring losses. This analysis can help transporters keep a mix of profitable vehicle types in their fleet in order to optimize their margins. Vehicles that create loss for the transporter can be modified to make them profitable (for example, one transporter modified its motorcycle-carrying trucks to accommodate 110 motorcycles instead of the truck’s original capacity of 81 motorcycles).

Recommendations for Transportation Service Providers

Today, most clients are concerned about visibility in the transportation of their goods, reduced transportation times, and fewer hassles in the transportation of their goods and in their SCM. They are also keen to outsource many business processes connected to transportation-, warehousing-, and logistics-related activities so they can focus more on their core business.

Transporters not only have to think about how to deal with their customers well, they also have to think about how to manage their own internal processes properly in order to keep their bottom lines in check. For a long time now, transporters and other 3PL service providers have been operating on thin margins; the time has now come for them to improve their operating environment. By providing better supply chain and transportation management capability, transporters can provide better visibility to their clients, as well as reduce transit times. By providing a single window for all logistics services, they can remove many obstacles from their client’s logistics operations. Such measures will also add much value to the services offered by these service providers.

By taking the actions above to ensure clients are satisfied, transporters have the opportunity to add value to their services by providing new service offerings, thereby increasing their business. Some business lines offer better margins and growth rates, such as express service, warehouse management, consulting services for creating new supply chains or for streamlining existing supply chains, and providing software as a service to clients. Transporters can also improve their bottom lines by bettering fleet management, billing management, and key account management capabilities. By managing and excelling at both customer-facing and internal processes, 3PL service providers have a greater chance of surviving the difficult reality of their business climate.

Recommendations for Transportation Software Vendors

Many of the needs of transporters and SCM service providers are unique. Software vendors would do well to understand these requirements and to develop software features that address these needs. For instance, at the shipment tendering process, players include the client, the broker or fourth party logistics (4PL) service provider, and the transporter. Which player should view what information is a crucial decision, as much of the information is confidential. A TMS should be able to take care of this aspect in addition to providing configuration options to change workflows in the process, depending on client needs.

Similarly, the service provider needs to bill clients for all transportation-related activities. Billing rates will be different for different activities and for each client. Likewise, billing for different equipment used to perform activities will vary. TMS software should provide billing functionality for all of these aspects.

TMS software should also be capable of integrating with any kind of third party software system, as service providers need to have information exchange capability with their clients and their partners. The system should also have interfaces for handheld devices, as employees of these service providers need to work in the field, and they need to constantly exchange information with the core system.


SOURCE:
http://www.technologyevaluation.com/research/articles/best-practices-for-transporters-and-3pl-service-providers-19235/

A Customer Relationship Management Solution Aims To Cover all the Bases

Surado aims to provide a complete CRM suite, rather than a modularized solution targeted towards departmental delivery. Its goal is to build full-featured, integrated, and multifaceted systems, as well as out-of-the-box solutions. The vendor is a Microsoft Certified Partner and Microsoft Business Solutions Certified Gold Partner, and uses the Microsoft Solutions Framework (MSF) as the foundation for its product development. It also touts the merits of the Six Sigma methodology and Design for Six Sigma (DFSS) as quality improvement philosophies.

Surado targets the small and medium business (SMB) market, namely organizations with annual revenues of $1 million (USD) to $1 billion (USD), and approximately 88 percent of its clients fall into this category. To reinforce its position in this market segment, Surado offers Surado Small Business CRM 5.0, designed for ten users or less. Surado Small Business combines the core Surado CRM suite (Contact & Account Management, Sales Automation, Marketing Automation, and Customer Service/Help Desk) with Integration for Exchange (for e-mail, contacts, and tasks), the Surado Integration Module (for connecting to third party databases or creating custom tables and screens), and Surado CRM Web (a web interface for remote user access to basic functionality.

Although Surado CRM is not vertical-centric, it enjoys a wide installed base in traditionally "vertical CRM"-dominated industries, such as technology, health care, education, banking and finance, and government. The vendor has customers in all fifty US states and in over sixty-four countries worldwide. A sampling of its top clients from those vertical industries includes Blackbox, County Regional Medical Center, California State University, Georgia Student Finance, and the City of Riverside Economic Development Agency.

We'll analyze Surado CRM 5.0 from the perspectives of core CRM functionality, look at some of its distinguishing factors, and discuss some of the challenges users may face when considering Surado CRM for small to midsized businesses.

Core Functionality of Surado CRM 5.0

Core CRM functionality covers five aspects:

* contact and account management
* sales management
* marketing management
* customer service and support
* integration

The figure below is a TEC-created table comparing Surado against other vendors and their offerings. Surado performs above other vendors in the areas of marketing automation, sales force automation, customer service and support, and partner management. In the areas of contract management and creation, and project management, Surado's performance is above average, but below the highest-rated competitor.

B2B (Business-to-Business) CRM Module Ratings


Source: http://www.vendor-showcase.com/software/281-16091-idealprofile/Customer-Relationship-Management-CRM/Surado-CRM-by-Surado-Solutions/ideal_customer.html

Contact and Account Management
This area of CRM typically displays and manages detailed account information, such as information related to the company, contacts within the company review of past activities and history, scheduling, and task management.

This module offers a unified interface for account and contact management functionality, where users can review past communications, upcoming activities, sales opportunities, quotes and purchases, support issues, links to relevant documents, and information from back-end systems. In addition, Surado CRM also captures all customer communications, whether through phone, e-mail, fax, the Internet, or personal contacts. A fully integrated workgroup scheduling and task management features the ability to track activities, participants, and resources, including pop-up reminders. A relationships tab also allows users to track the important relationships that may exist between two or more contacts in the system that otherwise might otherwise be overlooked or poorly managed.

Sales Management
This area of a CRM solution focuses on managing sales opportunities and processes. It provides the features and functionality to define, implement, manage, and execute one or more sales cycles, based on individual opportunity types. This allows users of Surado CRM to configure the system to better fit their unique needs rather than having to conform to a generic sales cycle supplied by the system.

The module includes the basics: contact information, correspondence, opportunity and forecasting data, literature and presentations, quotes, orders, and post-sale service history.

Surado CRM 5.0 allows for multi-source data import from lists, or captured leads from a web site through its eLeads module. It also allows inquiry tracking and intelligent leads routing. Automated process can be initiated to distribute literature, schedule follow-up activities, and set conditions to advance opportunities. Managers can use Surado CRM to monitor team activities across customized sales stages across multiple product pipelines. Sales positioning features and functionalities are also available through competitive intelligence analysis and customer analytics, to identify habits, trends, and potential.

Marketing Management
In this area of CRM, the key components to attracting and retaining a customer base are evaluation, design, implementation, and execution of marketing initiatives.

The application can track the results of advertisements, direct mail, and telemarketing, and help design, execute, and manage personalized, permission-based campaigns. Surado CRM 5.0 also allows for the planning, design, execution, and management of multichannel permission-based marketing campaigns. Users can assign tasks and responsibilities according to revenue projections, campaign periods, targeted audiences, and channels. Potential deployment issues can be identified, and resources re-allocated. E-mail and fax campaigns can be set up for automated execution and follow-up.

Surado CRM provides for campaign return on investment (ROI) analysis as a means to track the effectiveness of marketing campaigns, by comparing potential and actual responses and sales.

Customer Service and Support
This area of a CRM solution is where customer service inquiries and support issues are entered, tracked, and in specific cases, escalated to resolution.

Surado CRM 5.0 features a customer service, help desk, and support knowledge base, with keyword searches. It also provides an integrated system that coordinates and tracks customer interactions across multiple contact points to address customer inquires.

Surado CRM automates support and help procedures, by automatically converting incoming e-mail messages into support tickets (including attachments), responding to support tickets, and notifying customers of soon-to-expire service-level agreements (SLAs). It also handles routing, load balancing, escalation based on multiple criteria, automated response, and ticket updates and deletions.

In addition, Surado's Web Self-Service module provides a channel for clients to access an Internet knowledge base search as well as conduct self-service ticket submission and review.

Key metrics are displayed in graphical form, and can provide managers with the information necessary to make rapid decisions regarding re-deployment of resources to the most urgent support areas. Performance gauges (such as support metrics by urgency, touch point, area, type, and support groups) provide managers with the opportunity to act quickly to prevent potential bottlenecks in providing support. Finally, color-coded alerts for events that fall outside defined parameters provide managers the ability to take a proactive approach, preventing escalation of support issues.

Integration
While integration is not traditionally considered to be a functionality, it is nonetheless a critical component of any solution, and needs to be given the same level of consideration as core functionalities. Surado CRM 5.0 is very well designed to run on a Microsoft platform (including operating systems and applications, SQL databases, and Exchange servers), and integrates tightly with front-office programs (Microsoft Office, Outlook, and Project, as well as with mobile devices, scanners and business intelligence [BI] tools) and back-office applications (Great Plains Accounting). Surado CRM 5.0 has also enhanced its level of integration with Intuit QuickBooks. This is in alignment with Surado's focus on the SMB market, where such systems are widespread.

With the optional add-on Surado Integration module, back-office applications like financials, enterprise resource planning (ERP), supply chain management (SCM), logistics, manufacturing, shipping and delivery, human resources, e-business, and industry-specific applications can be integrated to give users a unified view of the disparate back-office application environment within a centralized CRM solution. This module also allows system administrators to create unlimited custom detail data tabs to display information from back-office applications directly from within the Surado CRM solution. Finally, administrators can also create stored procedures to automatically write Surado CRM data into other databases using automatic data exchange (ADX).


SOURCE:
http://www.technologyevaluation.com/research/articles/a-customer-relationship-management-solution-aims-to-cover-all-the-bases-18676/

Integrating All Information Assets Part Three: What Constitutes Integration?

So, whether the need for integration arises from the proliferation of business applications within your own enterprise, the results of mergers and acquisitions, or from the demands of e-business, integration emerges as a significant challenge in responding to the demands of business today. What then constitutes integration and how to you go about meeting these challenges?

Oddly enough, just as there are three predominant reasons why integration is an issue, there are three aspects of integration:

1. The most basic requirement of integration is at the data level.

2. The second aspect is perhaps the most complicated and problematic level since it is the one that is buried the most deeply into the application. This second aspect involves the actual application logic itself.

3. The third level is one of consistency and universality of access and visualization.

This is Part Three of four-part excerpt from the book ERP Optimization (Subtitle: Using Your Existing System to Support Profitable E-Business Initiatives) and is available through www.crcpress.com.

Parts One and Two presented the reasons integration is an issue.

Part Three covers what constitutes integration.

Part Four discusses what approach you should take.

Data Level

At the data level, there is master data, transactional data, and data that might be viewed as somewhere in between. This "in-between" data is that which is typically stored with the master data but becomes dynamic as the result of transactions—inventory and account balances, allocations, and reservations.

With the proliferation of applications comes proliferation of master data. Within a single company or division, having multiple copies of master data such as customer, supplier or inventory data, in itself, is not the problem. The fact that the information resident in these multiple copies may be different is the problem. In a rather simplistic example, an order entry application, whether it is a back-office application or a web-enabled electronic storefront, must have access to customer and credit information and inventory availability. Supporting master data can potentially reside in an order entry system, an inventory system and an accounts receivable system. Theoretically ERP took care of this problem with the introduction of a single integrated database.

Theoretically yes, but universally? No. The comprehensiveness of ERP implementations in general has been overestimated. Many companies that have purchased ERP systems, are still running a hybrid mix and as the push to web-enable legacy systems increases, this condition will grow. The need to share common data between applications will grow along with it.

In a multi-organizational environment, particularly one that has grown and developed either by acquisition, or with a planned level of autonomy, the goal is typically to gain access or a view of data across multiple sites and applications. In our simplistic example, the inventory availability may be from any number of warehouses or manufacturing facilities, across multiple operating units or companies.

Application Logic

But then there is further integration that goes beyond the data level and must involve application logic. For example, our centralized order entry function, which has access to multiple sources for inventory, may need to apply certain logic to determine the priority sequence of locations from which to pull inventory. Do you always ship from the closest warehouse? Do you always ship from a certain location unless there is no availability? If so, how do you select the alternate location? These examples require more than simple sharing of data. They require the logic that applies business rules, decisions, and policies.

Presentation or Visualization

And finally there is the level of integration that resides in the presentation or visualization layer? When integrating multiple disparate business applications, do you concern yourself with a common and consistent look and feel? And how is access achieved? When there is a combination of legacy system with new web-enabled applications, do you front-end the legacy systems with a browser-based front-end?

There are several products on the market today that provide you with the ability to bring legacy applications to the Web. This is generally the least disruptive approach in that the underlying application remains the same, along with the application logic and process flow. This may be an acceptable alternative if in fact the existing "green screen" application generally supports your business processes. But it does nothing to improve the underlying application, so if the overall objective is also to provide additional functionality, you may be better off supplementing your existing application with a new web-enabled application that extends the feature/functionality of your existing system. Just how far you go will be determined by what you are really trying to accomplish.


SOURCE:
http://www.technologyevaluation.com/research/articles/integrating-all-information-assets-part-three-what-constitutes-integration-17242/

Financial Reporting, Planning, and Budgeting As Necessary Pieces of EPM Part One: Executive Summary

While ERP/accounting back-office systems and analytics have been inseparable ever since the idea of business automation via IT formed way back in the 1960s, they have nonetheless had different user experiences, evolutionary paths, and so on. Namely, although ERP systems have positively transformed many enterprises' business processes, many users have still been left feeling they were oversold due to the overwhelming notion that these systems inhibit access to the vital information "jailed" in the system. Many have inevitably felt that mixing real time back-office transactions with astute reporting is like mixing oil and water.

Business intelligence (BI)/analytics provides an environment in which business users receive information that is reliable, consistent, understandable and easily manipulated (i.e., flexible). C-level executives and middle management have always had a need to understand their business's performance regardless of good or bad economic times—while the output from BI might change, the need is always there. Particularly the recent massive demise of dot-coms, depressed economic times, and the stringent Sarbanes-Oxley Act (SOA) reporting regulatory requirements following up the high-profile corporate fraud scandals (e.g., Enron, Tyco, and WorldCom) have additionally increased executives' focus on understanding and managing corporate performance.

New disclosure rules are prompting companies to share information faster (for example, accelerated filling of 10Q quarterly statements and 10K annual reports, report sales of stock by executives [insider trading] within days of the transaction, expanded list of "significant events" to include changes in debt ratings, inclusion of financial results of partnerships in earnings reports, etc.), and sophisticated data-collection and data-analysis applications come in handy in that regard. Given that the BI tools have neither been terribly complex nor expensive to deploy, but have still been helpful in facilitating the decision-making process, they have become considered necessary rather than only a luxury. Also, decisions are nowadays increasingly made at ever lower levels in organizations.

Increased Need for Financial Reporting

On the other hand, the financial statement reporting process been important ever since the establishment of capitalist business practices. In addition to the tight economy's revelations of many companies' inability to proactively manage their financial performance (thus, repeatedly missing earnings and, in a knee-jerk fashion resorting time and again to last-minute layoffs, restructuring and operational expenditure freezes), its importance has particularly been emphasized with the outbreak of attention now being paid to the above-depicted accurate and certifiable reporting to external markets and government agencies.

However, creation, maintenance, and dissemination/publishing of financial statements (e.g., profit and loss [P&L] statements, balance sheets, and cash flow reports) have traditionally been maintenance-intensive tasks, with users expending significant effort just to meet basic requirements. Not to mention that everyone amongst the top brass always wants something more and different, such as different views, complex comparative reports, and drill-down analyses, but still within the familiar form of the financial statements.

Unfortunately, the financial reporting programs delivered with the traditional back-office financial management and accounting applications have proven only their rudimentary or pesky nature. Consequently, financial savvy users, having a strong preference to see results in the traditional P&L statement or balance sheet form, have long sought for ways to improve the report creation and maintenance process. On the other hand, the formatting and calculation constraints of the above statements, which require user-defined sorting and grouping, have been nearly impossible for generalist BI providers to fully accomplish.

This is Part One of a two-part tutorial.

Part Two will discuss challenges and make user recommendations.

Turning to ERP Systems

Most ERP products have a rich database, but, translating the data stored within the database to information useful for making enterprise decisions has proven difficult. With the availability of software analytic solutions, dozens of ERP providers can supply their customers with a valuable tool for harvesting the business value from the database. For example, the list of current back-office solutions whose GLs have been integrated with FRx financial reporting analytic solutions is impressive, and the following are just some more prominent ones: Advanced Data Systems, Best Software, Epicor Software, Expandable Software, Flexi International, Geac Enterprise Solutions, IQMS, Made2Manage Systems, MAPICS, McKesson, Ross Systems, Softrax Corporation, and naturally MBS Great Plains and Solomon (the integration with Navision and Axapta is under way). Other financial reporting providers like F9 or Timeline have almost as impressive a list of ERP partners.

As an example, MBS for Analytics—FRx (formerly FRx Financial Reporter), with its spreadsheet-like interface, can consolidate financial data from disparate accounting systems even if they use different code structures, fiscal years, or server sites. By pulling information already set up in the GL, the product automatically understands the fiscal periods, chart of accounts, detail transactions, and various types of balances. Due to built-in accounting intelligence, it even recognizes concepts such as current and year-to-date amounts, debit versus credit balances, positive and negative variances, and posted and un-posted transactions. Furthermore, users can leverage the rows, columns and formulas that they may have created in Excel and import the information, with all data intact, directly into FRx.

The key tenets of FRx's flexibility have been the following three building blocks:

1. Row format, which lets users specify the data source and what they want to do with each row of a report. By using a link to the GL, users can select individual accounts, a range of accounts or a list of non-continuous accounts to be included in a report. Once created, a row format can be saved and used again as required.

2. Column layout, which lets users specify the data source and select the type of column they want from a list. Combined with row format, Column Layout lets users include period actuals, budget information, or other types of data in a report, either from the GL or from another data source like a spreadsheet. Math formulas across columns can be applied to identify variances, projections, or percentages. Like with row format, once created, a column layout can be saved and used again.

3. Reporting trees, which lets users create a hierarchical picture of their organization to understand or change their organizational and reporting structures. An auto-build function constructs reporting trees directly from the organization's chart of accounts, while an intuitive drag-and-drop functionality enables users to create alternative structures and multiple rollups of various accounts without having to make costly modifications to their GL or charts of accounts. Once created, a reporting tree can be saved and used again.

In addition to the on-the-fly reports creation option, application servers provide report scheduling and automatic e-mail report distribution. Using one of many customizable report templates, users can often get started creating relevant financial reports right away using the building-block approach and auto-build functionality, without much help from IT resources or other technically-minded personnel. Then, these reports can be posted to the Web or be sent via e-mail to be accessed immediately by on-site and off-site users alike, while a connection to the GL is not required.

GL Considerations

Despite many commonalities, every GL has its own fingerprint uniqueness. To illustrate, MBS Solomon's (which has long featured a built-in version of the FRx Desktop and FRx Forecaster) GL account and sub-account numbers can be up to thirty characters in length, whereby the main account number can be up to ten characters, and the remaining twenty characters can include up to eight user-defined segments. GL transactions can be entered using several types of transaction batches, including non-recurring, recurring, manual and one-sided adjustment, and the GL account determines whether the transaction will operate in multi- or single-company mode. Transactions can be entered for any prior fiscal period or year as well as for future periods, which allows for things such as installments and prepayments to be managed at a single time, rather than month after month.

On the other hand, MBS Navision's chart of accounts (where integration is slated for Navision 4.0, some time in 2004/2005) lets users define an unlimited number of "dimensions" and "dimension values" at any time. A dimension is data that users can add to an entry as a kind of marker so that the program can group entries with similar characteristics and retrieve these groups for analysis purposes. Dimensions are not limited to the GL accounts, since they can be set on all master records stored in the database such as customers, vendors, items, fixed assets, and so on. Dimension values are sub-units of dimensions. For example, a dimension called department can have sub-units such as sales, administration, and so forth. This is a powerful concept and tool, which allows nearly unlimited configurations to meet a company's needs and business processes, but it will certainly present some challenge to the integration to FRx.

Translating Strategy into Objectives through Forecasting

In fact, planning and budgeting have become a means of translating strategy into a coherent set of objectives, as well as a basis for assessment of achievement. As planning and budgeting should be a collaborative process (a forum on the future direction of the organization), there have been indications that even during unrelenting economic pressures, corporate managers are still seeing value in providing desktop portal views of key business process analytics to an increasing number of corporate workers. As a result, many financial executives have been marking active financial planning tools as a top investment. On the other hand, the majority of those annual plans are still completed in Excel spreadsheets, which wreaks havoc for business analysts and IT personnel as they try to figure out complicated links and how to import and export data to and from the spreadsheets.

Contrary to that, the collaborative capabilities offered by software analytic products should save time and help improve the quality of the final budget, making it more realistic and accurate. Users can collaborate using features such as automatic e-mail notification of upcoming deadlines and a centralized bulletin board where goals, objectives, business tactics and instructions are posted for enterprise-wide access. Through the use of memos, notes and attachments, managers can understand the rationale behind important numbers and assumptions made by other departmental managers, reducing or eliminating time spent in meetings. Furthermore, the software should let department managers interact with each other to insure their budgets complement each other's. For example, if a department budgets for a new program that impacts other departments, all budgets can reflect the impact of the new program. The software should also facilitate the reorganizing of the company's chart of accounts, since rollups are parent-child relationships that control how the posting data is summarized.

Forecasting software streamlines many of the tasks that comprise the budgeting process, including individual creation of budgets, changing the budget model, budget consolidations, and reporting and collaborating with interrelated departments to improve the chances of achieving set goals. This streamlining of tasks gives managers more time to construct a thoughtful budget that is based on valid data and assumptions (e.g., headcounts, project schedules, and costs. Can be changed and simulated to reflect different economic assumptions) and therefore be more predictive of the future. Accessing up-to-date and historical information from the general ledger and existing financial reports, users can budget and plan with greater precision.

Forecasting software should also consider (bearing in mind that this list is by no means complete):

* Expense budgeting, allows customers to define templates specific to cost centers, and thereby enables managers to focus on the important information.

* Human resources, which allows a company to better understand the effect of salary adjustments, bonuses, overtime, and benefits given that employees often account for the highest part of the expenses in a company's budget.

* Capital expenses, which lets the company standardize the accounting of capital expenditures by cost centers.

* Revenue planning, allows customized accounts and formulas to be used to calculate revenues and cost of sales, whereby formulas can be customized to meet organizational needs such as production, staffing, raw materials, and outside revenue planning.


SOURCE:
http://www.technologyevaluation.com/research/articles/financial-reporting-planning-and-budgeting-as-necessary-pieces-of-epm-part-one-executive-summary-17115/

Information Builders Did It iWay

Information Builders (IBI, privately held) has announced plans to spin off its middleware technology group (which develops and supports the EDA middleware product) into a new wholly owned subsidiary named iWay Software. The move is designed to allow Information Builders (IBI) to concentrate on the WebFocus and Focus business intelligence products, while allowing iWay to handle e-business integration using its suite of iWay software products (many based on EDA technology) and other former IBI offerings, including the SmartMart data warehousing suite.

According to Gerald Cohen, CEO of both Information Builders and iWay Software, "We carefully considered all our options for effectively supporting and growing our business intelligence and integration product lines before we entered into this milestone decision. Establishing a subsidiary will not only streamline Information Builders' ability to respond to the needs of its customers, but it will also give us an opportunity to brand our multiple product lines more effectively, thereby maximizing efficiency in the marketplace."

President John Senor, formerly vice president and general manager of the middleware product line and founder of the EDA division, will lead the new company, which is comprised of Information Builders' former Middleware Technology Group. The new company will focus on delivering rapid e-business integration solutions built on its newly announced suite of enterprise integration products. "As a part of Information Builders, we delivered rock-solid technologies that could integrate information from over 120 different sources and operating environments. This includes all legacy data, relational databases, ERP, and application products," said Senor. "That capability is critical for e-business, because e-business requires comprehensive access to all information assets in the enterprise."

Market Impact

iWay Software hits the ground running with more than 25 technology and services partners, including IBM, Oracle, NEON (New Era of Networks, not NEON Systems), i2 Technologies, Informix and others, who are participating in a variety of cross-licensing, co-marketing, and OEM agreements. Other vendors in this market space will have to make sure that they keep up with iWay, since the new spin-off starts out with an established customer base (from the EDA product, which has been on the market for ten years), name recognition in accounts (particularly due to the Focus products), existing agreements with partners, and an already-trained consulting staff.

As noted in many previous TEC articles, e-Business Integration is definitely the hot area at the moment. It is critical to firms attempting to integrate legacy data into web platforms, especially for access to historical data used in customer relationship management (CRM), and supply chain management (SCM) applications. EAI, or enterprise application integration, is the term commonly applied to this type of application, and it is clearly not a passing fad. Companies are rushing madly to "webify" their applications, and any software product that speeds implementation time and/or allows access to a "difficult" data source will have a leg up on the competition.


SOURCE:
http://www.technologyevaluation.com/research/articles/information-builders-did-it-iway-16322/

Glossary of Enterprise Applications Terminology Part One: Accounts Payable Through Internet

Enterprise resource planning (ERP) was an important step in an ongoing evolution of computer tools that began in the 1960s. Each evolutionary step is built on the fundamentals and principles developed within the previous one. As systems developed over time, a continuous stream of new terminology surfaced.

This is a glossary of those terms.

For terms not covered here see The Lexicon of CRM Part 1: From A to I , Part 2: From J to Q , and Part 3: From R to Z.

Accounts Payable through CRM

accounts payable (AP): The value of goods and services acquired for which payment has not yet been made.

accounts receivable (AR): The value of goods shipped or services rendered to a customer on which payment has not yet been received. Usually includes an allowance for bad debts.

advanced planning and scheduling (APS): Techniques that deal with analysis and planning of logistics and manufacturing over the short, intermediate, and long-term time periods. APS describes any computer program that uses advanced mathematical algorithms or logic to perform optimization or simulation on finite capacity scheduling, sourcing, capital planning, resource planning, forecasting, demand management, and others. These techniques simultaneously consider a range of constraints and business rules to provide real-time planning and scheduling, decision support, available-to-promise, and capable-to-promise capabilities. APS often generates and evaluates multiple scenarios. Management then selects one scenario to use as the "official plan." The five main components of APS systems are demand planning, production planning, production scheduling, distribution planning, and transportation planning.

APICS: A nonprofit educational organization consisting of over 70,000 members in the production and operations, materials, and integrated resource management areas.

application Software: A program that performs a task or process specific to a particular end-user's needs, or solves a particular problem. Enterprise applications are typically large-scale business systems that organizations use to manage their operations.

application programming interface (API): A set of routines, protocols, and tools for building software applications or for communicating with programs or other systems. A good API makes it easier to develop a program by providing all the building blocks that a programmer needs Although APIs are designed for programmers, they are ultimately good for users because they guarantee that all programs using a common API will have similar interfaces, which makes it easier for users to learn new programs. On the other hand, many enterprise applications vendors provide APIs for integrating other applications with their systems.

application service provider (ASP): A third-party entity that manages and distributes software-based leased services and solutions to customers across a wide area network from a central data center. In essence, ASPs are a way for companies to outsource some or almost all aspects of their information technology needs.

architecture: A structured set of protocols that implements a system's functions.

available-to-promise (ATP): The uncommitted portion of a company's inventory and planned production, maintained in the master schedule to support customer order promising.

back scheduling: A technique for calculating operation start dates and due dates. The schedule is computed starting with the due date for the order and working backward to determine the required start date and/or due dates for each operation.

bill of material (BOM): A listing of all the subassemblies, intermediates, parts, and raw materials that go into a parent assembly showing the quantity of each required to make an assembly.

browser: Software used on the Web to retrieve and display documents on-screen, connect to other sites using hypertext links, display images, and play audio files.

business intelligence (BI): Sets of tools that provide graphical analysis of business information in multidimensional views thus enabling people to make better decisions and improve their business processes.

business-to-business e-commerce (B2B) (A): Business being conducted over the Internet between businesses. The implication is that this connectivity will cause businesses to transform themselves via supply chain management to become virtual organizations, reducing costs, improving quality, reducing delivery lead time, and improving due-date performance.

business-to-consumer sales (B2C) (A): Business being conducted between businesses and final consumers largely over the Internet. It includes traditional brick and mortar businesses that also offer products online and businesses that trade exclusively electronically.

capable-to-promise (CTP): The process of committing orders against available capacity as well as inventory. This process may involve multiple manufacturing or distribution sites. Capable-to-promise is used to determine when a new or unscheduled customer order can be delivered. Capable-to-promise employs a finite-scheduling model of the manufacturing system to determine when an item can be delivered. It includes any constraints that might restrict the production, such as availability of resources, lead times for raw materials or purchased parts, and requirements for lower-level components or subassemblies. The resulting delivery date takes into consideration production capacity, the current manufacturing environment, and future order commitments. The objective is to reduce the time spent by production planners in expediting orders and adjusting plans because of inaccurate delivery-date promises.

capacity requirements planning (CRP): The function of establishing, measuring, and adjusting limits or levels of capacity. The term CRP in this context refers to the process of determining in detail the amount of labor and machine resources required to accomplish the tasks of production.

client/server system: A distributed computing system in which work is assigned to the computer best able to perform it from among a network of computers.

client: In information systems, a software program that is used to contact and obtain data from a server program on another computer. Each client program is designed to work with one or more specific kinds of server programs, and each server requires a specific kind of client. A Web browser is one type of client.

computer-assisted software engineering (CASE): The use of computerized tools to assist in the process of designing, developing, and maintaining software products and systems.

computerized maintenance management systems (CMMS): Automated software systems for handling maintenance work orders, as well as associated inventory, purchasing, accounting, and human resources functions. In some industries—particularly process production, in which manufacturers look to optimize use of capital-intensive equipment—maintenance management systems play a leading role as the enterprise system. Maintenance management systems have similar basic functionality, including:

1) use of work orders for preventive and predictive maintenance,

2) equipment recording and tracking,

3) inventory control,

4) scheduling labor and resources, and

5) purchasing.

corporate performance management (CPM): An overarching term that describes the methodologies, metrics, processes and systems used to monitor and manage the business performance of an enterprise. Applications that enable CPM translate strategically focused information to operational plans and send aggregated results.

cost of goods sold (COGS): An accounting classification useful for determining the amount of direct materials, direct labor, and allocated overhead associated with the products sold during a given period of time.

customer relationship management (CRM): Software systems that range from simple, off-the-shelf contact management solutions to high-end interactive selling suites that combine sales, marketing, and executive information tools. These include product configuration, quote and proposal management, and marketing encyclopedias. Some systems extend functions to include complex pricing, promotions, commission plans, team selling, and campaign management. Enterprise-level solutions installed at large companies with hundreds or even thousands of users have capabilities for call center and help desks; field service; forecasting; and analysis.

Database through Internet

database: A data processing file-management approach designed to establish the independence of computer programs from data files. Redundancy is minimized, and data elements can be added to, or deleted from, the file structure without necessitating changes to existing computer programs.

database management system (DBMS): The software designed for organizing data and providing the mechanism for storing, maintaining, and retrieving that data on a physical medium (i.e., a database). A DBMS separates data from the application programs and people who use the data and permits many different views of the data.

data warehouse: A repository of data that has been specially prepared to support decision-making applications.

discrete manufacturing: Production of distinct items such as automobiles, appliances, or computers.

e-Business: The generic name given to any type of business conducted using the Internet from online trading to self-service.

engineer-to-order (ETO): Products whose customer specifications require unique engineering design, significant customization, or new purchased materials. Each customer order results in a unique set of part numbers, bills of material, and routings.

enterprise application integration (EAI): The unrestricted sharing of data and business processes throughout the networked applications or data sources in an organization, since early software programs in areas such as inventory control, human resources, sales automation and database management were designed to run independently, with no interaction between the systems. There are four major categories of EAI:

1) database linking: databases share information and duplicate information as needed;

2) application linking: the enterprise shares business processes and data between two or more applications;

3) data warehousing: data is extracted from a variety of data sources and channeled into a specific database for analysis; and

4) common virtual system: the pinnacle of EAI; all aspects of enterprise computing are tied together so that they appear as a unified application.

enterprise asset management (EAM): A term used by maintenance management software vendors to connote the wide-ranging functionality that their systems include, for example inventory management and financials. A company's total assets might include labor, tools, equipment, materials, and information. The goal of asset management is to optimize asset use and manage all maintenance efforts involved in making assets as reliable, accurate, and efficient as possible. A further crucial element in enterprise wide asset management is integration with financial, human resources, and purchasing functions, as well as production, material requirements planning, and enterprise resources planning systems.


SOURCE:
http://www.technologyevaluation.com/research/articles/glossary-of-enterprise-applications-terminology-part-one-accounts-payable-through-internet-17685/

Attributes of Sarbanes-Oxley Tool Sets Part Two: Information and Communication, Monitoring, and Startup Tips

The Sarbanes-Oxley Act (SOX) placed new requirements on American companies to ensure the integrity, reliability, and accuracy of financial reporting and corporate disclosures. While you could do this on your own or manually, why reinvent the audit controls wheel? Automated tool sets and repositories to facilitate SOX compliance are available in ample numbers. But like any piece of software, you have to know what to look for to meet your organization's expectations and avoid disappointments. This research note examines critical attributes of SOX tool sets, discussing how you can utilize them effectively to maximize the return on your investment of time and money.

Part One examined the first three components of the COSO Integrated Framework relative to selecting a SOX tool set.

Part Two discusses the information and communication, and monitoring components from a similar perspective and provides some tips for kicking off the tool set selection process.

What is COSO?

COSO stands for Committee of Sponsoring Organizations of the Treadway Commission. It is a voluntary private-sector organization dedicated to improving the quality of financial reporting through business ethics, effective internal controls, and corporate governance. The Securities and Exchange Commission (SEC) ruled that management must base its evaluation on a suitable, recognized control framework established by a group that has followed due-process procedures, including the broad distribution of the framework for public comment. Furthermore, the SEC points out in its final rule that the COSO Internal Control—Integrated Framework, which is depicted in the three-dimensional diagram to the right, satisfies this requirement. Accordingly, the majority of organizations have adopted this framework as the basis for compliance with Section 404 of SOX, namely Management Assessment of Internal Controls.

When evaluating SOX tool sets, doesn't it make sense to determine how well the proposed software satisfies critical components of the COSO framework? Of course it does. The remainder of this note examines the five components of the COSO framework, outlining the key characteristics and attributes you should consider in selecting a SOX tool set. Specifically, these components include:

* Control environment

* Risk assessment

* Control activities

* Information and communication

* Monitoring

A brief description and introduction, as denoted in italics, is provided of how each component will assist in achieving internal control objectives as depicted in the second dimension (top level view) of the framework. These control objectives provide for the following:

* Obtaining the efficiency and effectiveness of operations in meeting business objectives to include performance and profitability goals

* Ensuring the accuracy and reliability of financial reporting

* Verifying compliance with applicable laws and regulations

The third dimension (front to back view) of the framework includes the units and activities of an organization to which internal controls pertain. Internal controls are relevant to an entire organization and to any of its units, activities, and processes. Accordingly, you must apply internal controls uniformly across an organization's units and activities. This characteristic is common to all components and is mentioned here to ensure that you can integrate the selected SOX tool set into all levels of an organization and equally apply it in a top-down approach. It would make little sense to have a tool set that could only operate at a corporate level without being able to deploy it at a division or apply it to a process. As with any software selection project, the decision makers must be comprised of a diverse cross section of an organization's users to achieve this characteristic.

Information and Communication

The information and communication component of the COSO framework consists of processes and systems that support the identification, capture, and exchange of information in a form and timeframe that enable an organization to perform their responsibilities. Simply put, this means providing the right information to the right people, at the correct level, on a timely basis. Similarly, communication processes must be in place to permit people to discharge their responsibilities.

First and foremost, the SOX tool set must be able to model the performance of the organization to include the specific processes used to generate or contribute to the financial reporting of the organization. In so doing the tool set can then support real time activity audits. Just as you would map your manufacturing processes when selecting an ERP package, you must identify these critical financial processes sufficiently to verify that a reliable electronic image of your business can be defined in the tool set.

It stands to reason that your accountants need to verify that the tool set is in compliance with GAAP. Failed audits need to be highlighted for immediate follow-up. Reconciliation procedures must reside in the tool set to provide immediate notification regarding audit failures. The ability must exist to lock down the approved tool set to prevent unauthorized alteration to the model.

Finally, the tool set should be able to support the audit function in the following ways:

* Be "resource-centric" and understand corporate resources and relationships.

* Audit the administrative systems underlying business operations.

* Audit manual transactional input of transactions and support operations reviews and individual transaction processing.

* Integrate with other systems (such as the inventory management system) and cross-check the system counts against individual transactional processing product accumulations.

* Support internal and external audits by providing detailed logs of each transaction and the results of the business-model audit. The system will check every transactions, every resource and will be able to provide statistical sampling when needed for operations and personnel reviews.

* Log each activity that takes place as a record of accounting events and transactions.

* Provide alerts or warnings for appropriate internal management of activities not meeting the business model or new regulations coupled with instantaneous reporting and documentation of these alerts/warnings.

Monitoring

Monitoring consists of the process that assesses the quality of internal control performance over time. A control system needs to be monitored to ensure that it continues to operate effectively and as intended. Without continual and effective monitoring, a control process may fall into a state of disrepair or not be executed altogether.

Consequently, a SOX tool set must run in real time on a 24x7 basis and unattended. You must be able to systematically monitor all activities and transactions corporate wide, with exception reporting used to identify control lapses and gaps. These transactions must be audited both operationally and financially against the business model. This implies a SOX tool set must have the flexibility to incorporate the rules of your business. To facilitate the recording and editing of these rules and to avoid hard coding or programming changes, you should consider a knowledge-based methodology, external to the tool set. As a result, approved rules can be entered without major effort from an organization's technical staff.

Business activity monitoring within a corporate information environment is evolving quickly. SOX, in many cases, requires that a tool set provide continuous activity monitoring, thereby allowing instant insight into corporate performance. As previously noted in the Information and Communication section, the sooner red flags are raised, the more time management has to evaluate and correct financial shortcomings.

Let's look at a simple example of operational/financial interaction when dealing with the purchase of an item to illustrate the monitoring component. The first rule is that the item purchase be from a known, legitimate, supply resource with which the corporation has a relationship. The same rule applies to the reason for the purchase. The internal resource to which the item will go may be product inventory, cost center inventory, or equipment or services. Depending on GAAP rules, the nature of the purchase and the business policies of how to allocate the cost of different purchases, the tool set must be able to compute auditable financial entries into the appropriate accounts. It must also update the supplier relationship with an accrued payable to verify the transaction when an invoice is received and posted into accounts payable.

The rules vary for different types of internal resources but all are available in resource-centric control files. On the other hand, when rules are changed by an authorized person, the resource-centric file will contain the new rules. It will also document who authorized the change, when, and the commencement date.

The same facility can be used for sales transactions with similar rules applied consistently from estimation, order entry, shipment and invoicing as to pricing, discounting, cost of sales and the reduction of product inventory, the computation of sales taxes to be collected and paid to the government and where applicable accrual of sales commissions. Manual adjustments and other infrequent transactions must undergo similar verification.

The resource-centric control files give everyone a cohesive picture of all the rules that apply to each type of resource. For example, product/inventory control files will contain the rules for sales, purchases, and all price, cost, and volume adjustments.

The timeliness of information distribution is critical and can take several forms such as alerts and warnings on "dashboards," e-mails, and text pages on a phone or PDA. E-mailing of control exceptions to the appropriate user and next-level supervisor must receive consideration, so problems can receive prompt attention and resolution. Additionally, a query language capability is a useful and necessary facility to satisfy ad hoc reporting requirements for analysis and on-demand information needs to allow those accountable and responsible to monitor, validate, and use the information collected.

Some words of caution regarding internal controls are warranted. The type of continuous monitoring process needed for SOX will put an additional strain on your control processes. You will need to have consistent, verifiable, and monitored internal processes regarding problem resolution when dealing with business activity defects. After error detection, the reconciliation process begins with understanding who's responsible and accountable for correcting the problem and when must it be corrected. Of course, someone, most likely in an audit function, will need to "mind the store" in this regard. The tool set must also provide the necessary support in this area.


SOURCE:
http://www.technologyevaluation.com/research/articles/attributes-of-sarbanes-oxley-tool-sets-part-two-information-and-communication-monitoring-and-startup-tips-17127/