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Here’s part three of 6 Keys to IT Success, covering keys five and six. Earlier posts cover keys one and two and keys three and four. Key 5: People Are Everything Companies will spend months, if not years, selecting software. They’ll pay thousands of dollars in maintenance and hardware fees. And yet, they won’t give people raises. They won’t pay $10K more for a great programmer because HR doesn’t want to break the wage scale. They get cheap on training. Having been in software for more than 20 years, I can say I’ve never seen product make a major difference. If you’re in the right class (i.e. a Fortune 500 shouldn’t run QuickBooks and a small company shouldn’t run Oracle), most modern software is pretty competitive and similar. After all, there are only so many ways to place an order. So what does make a difference? People with the right business knowledge. People who’re...

The sad fact is that much business intelligence software is really shelfware. Stuff that someone bought once upon a time, but it was never used and instead sits on the (virtual) shelf. Even worse, sometimes people did something with the software, but it gradually fell out of use. While there can be many reasons for this, the most common is because people purchased the software with only a vague notion of wanting to use data better. There was no specific need to fill. In their “field of dreams,” they heard James Earl Jones: “If we build it, they will come.” But nothing happened. This came to mind recently when a partner asked us to quote on implementing BusinessObjects for their client. BusinessObjects has lots and lots of pieces. So, the first question we asked was why? What is their client looking for? What are they trying to achieve? Why do they need...

Most of my projects involve getting executives the data they need from their existing systems. In the course of that work, I end up working with a wide range of IT groups. Some companies have almost no one in house, some companies have great IT groups that just need our particular expertise, and some companies – well, the relationship between the business and IT isn’t the best. Usually, my team is able to find ways to work around strained relationships. Occasionally, in the course of helping companies get the data they need, I’m also able to help them improve the overall functioning of their IT organization. This is more satisfying than working around problems. After all, I don’t want my customers to come down with Consultant Dependency Syndrome. How do I help them do it? While there are many practical steps involved – coaching people, restructuring the organization, defining better processes –...

Continuing on from our earlier post on the six keys to IT success, here are keys three and four: Key 3: You’re Not Really Special This is a hard one. I know enough not to tell a woman her dress makes her look fat. And I know not to tell a new father his baby looks… interesting. But when it comes to software, I tell the truth, even when it hurts. You’re just not that special. Sad but true. Your unique needs are not so unique. You don’t need a customized solution. For most of your software needs, somebody else has already been there/done that. Yes, every company has its own little nuances that require a bit of tweaking. But generally, these tweaks should make up no more than 10% of your system. Indeed, as you go down the “technology stack” you become less and less special. There’s no advantage to having custom...

Most of my projects involve getting executives the data they need from their existing systems. In the course of that work, I end up working with a wide range of IT groups. Some companies have almost no one in house, some companies have great IT groups that just need our particular expertise, and some companies – well, the relationship between the business and IT isn’t the best. Usually, my team is able to find ways to work around strained relationships. Occasionally, in the course of helping companies get the data they need, I’m also able to help them improve the overall functioning of their IT organization. This is more satisfying than working around problems. After all, I don’t want my customers to come down with Consultant Dependency Syndrome. How do I help them do it? While there are many practical steps involved – coaching people, restructuring the organization, defining better processes –...

Consolidation is a basic accounting concept that's simple in theory, but complex in the real world. In this post, we'll cover the basics of consolidation, some of the challenges that emerge and possible solutions. Understanding Consolidation In the context of financial accounting, consolidation is the aggregation of the financial statements of two or more companies under the same ownership into a consolidated financial statement. To really grasp consolidation, you need to understand that in the outside world, no one cares about money that’s traded back and forth between different companies under the same ownership. In the outside world, the only revenue that counts is revenue coming from a real customer. That’s what consolidation is all about – putting together financial statements that eliminate all the internal back and forth and focus only on “real” customer revenue. Let’s explain how this works with an example of a growing company. ACME makes and sells widgets to...

In our previous posts on consolidation, we’ve reviewed consolidation basics and complexities. In this post, we’ll cover system solutions to consolidation challenges. If you’ve been following our blog for awhile, you probably know we believe in implementing the simplest solution possible to get the job done. We apply this approach to consolidation as well. We’ve identified four different ways to solve consolidation challenges. 1. Outside Accountants For mid-sized companies with two or three entities, the most common approach is to let outside accountants deal with it. When a company has to answer to its bank and a few owners, a consolidated statement is generally not all that important – it’s something they have to produce once a year at most. And while auditors who follow strict rules of independence shouldn’t be doing your consolidation for you, smaller accounting firms generally handle such things in the normal course of business. 2. Excel When all else fails,...

In our previous post, we outlined the basic concept of consolidation. At the end of the day, consolidation is really about addition – adding in balancing entries. But things can get complicated quickly. Here are some of the complexities we see regularly: 1. Scaling Up to Multiple Systems On purpose, we’ve used a simplified example. In reality, it’s rare to have such a simple situation. As companies grow, structures get complex, and multiple levels of consolidation must occur. While some people stick with an Excel solution as long as possible, it just isn’t trustworthy. Often, when people “upgrade” from Excel to a real system, they discover that what they thought was working, wasn’t. 2. Setting Up Intercompany Costs In our example, widgets were sold at the same price to outside wholesalers and the company-owned retailer. But life is rarely so simple. There are all kinds of reasons management may want different intercompany prices. Some...

Continuing our series on complex system accounting challenges, in this post we discuss the tricky world of consolidation. In the context of financial accounting, consolidation is the aggregation of the financial statements of two or more companies under the same ownership into a consolidated financial statement. To really grasp consolidation, you need to understand that in the outside world, no one cares about money that’s traded back and forth between different companies under the same ownership. In the outside world, the only revenue that counts is revenue coming from a real customer. That’s what consolidation is all about – putting together financial statements that eliminate all the internal back and forth and focus only on “real” customer revenue. Let’s explain how this works with an example of a growing company. ACME makes and sells widgets to wholesalers around the country. Focusing on the income statement, let’s say (for absolute simplicity) that ACME sells...

We’re putting together a series of posts and/or white papers on some of the complex system accounting challenges we run into. We’ll explain the basic accounting concepts involved and then discuss how challenges can be met with system solutions. We’re planning to cover such topics as consolidation, currency accounting, VAT and other issues. Some of you may ask why we’re including basic accounting concepts as part of our discussions. We’re not a CPA firm, and, please, we remind our clients to consult with their internal and external advisors when determining final processes and procedures. Still, we’ve decided to include basic accounting concepts for a couple reasons: 1) Training for finance folks Often our clients are in growth mode. They may have very good accountants on staff, but these people may not have direct experience with the new challenges growth brings. We’ve searched the Web for succinct descriptions of these challenges, and we haven’t...