A Heavy Price Tag on Doing Nothing

The business world is a bewildering, fast-moving place right now. But don’t fall into the trap of bunkering down and doing nothing, because this will cost you in the long run, says Kevin Phillips

The largest enemy of change and leadership isn’t a “no”, it’s a “not yet”. “Not yet” is the safest, easiest way to forestall change.’ –  Seth Godin

On a recent trip I took to New Zealand, the Auckland airport was closed down and its operations curtailed when the pipeline delivering jet fuel was dug up by accident. It seems impossible that there was such a massive single point of failure for the airport, which is a pretty significant regional hub. One stakeholder said in a radio interview that the cost of laying an additional pipeline wasn’t able to be justified as it would only be used infrequently, if ever.

Surely that is the very definition of back-up?

So instead, hundreds of planes were grounded and delayed, fuel needed to be trucked in, inefficiently and at great expense, and only ten days later was the pipeline repaired and put back into action. This management philosophy, based on the assumption that nothing can go wrong, may have been acceptable a few decades ago, but is way, way out of place in today’s world of rapidly changing requirements and expectations.

Three horsemen of the inertia apocalypse

Warren Buffett once said at his annual investors’ meeting: ‘Inactivity strikes us as intelligent behaviour.’ And it’s hard to argue with this if it’s conscious, mindful inactivity and a result of a careful evaluation of the situation and a decision that the status quo is the least risky course and the best use of available resources. However, mindless, knee-jerk inactivity, resistance to innovation and improvement, and even a lack of maintenance and monitoring are a different kettle of fish altogether.

‘I’ll think about it.’ In my experience, this response to innovation, a new process or product seldom delivers a decision in a positive way that can drive a business forward. Whether it’s to avoid change, a fear of failure when undertaking something new, the perceived (or real) risk of upsetting the boss, laziness, or the dreaded ‘If it ain’t broke, don’t fix it’ thinking, the usual outcome is no decision at all!

Most start-ups or other companies setting out to change and improve the way things have always been done for their clients will empathise. Your competition in closing a sale is often not another company offering a similar product or service, instead, it’s the ‘not yet’ or ‘we’re thinking about it’ response.

Or, what I like to think of as the three horsemen of the inertia apocalypse: resistance to getting moving, moving faster, or changing direction. And this unholy trinity coagulates to form a dangerous situation where cost of doing nothing jobs are neglected for another day.

Cost of doing nothing jobs

Cost of doing nothing jobs? A strange choice of words perhaps, but I like to think of these as the jobs that cost money but are not directly revenue generating, at least initially. These are the maintenance, optimisation and improvement tasks that will divert time and resources away from elsewhere, but because they are preventive or future-proofing your organisation, it is hard to quantify the cost of not doing them as this is largely opportunistic. Until the situation becomes critical, that is, and they end up costing you big time.

These are also the projects that can shift the paradigm for your organisation, building a foundation for future innovation, growth and success. Hence the danger of not doing them. An example is moving your operations onto the cloud. Neglect to spend the time and money today, and you may find yourself behind tomorrow when your competitors are offering cloud-enabled services and innovations that you simply can’t.

Take my hometown, Cape Town. Like other cities and regions around the world, we are currently at the start of what looks to be a long-term drought situation. All of a sudden, the leaking taps that could have been fixed months and years ago are critical – but people were busy, or would have had to adjust their household budget, or just didn’t know where to find a good plumber. Months and years ago the cost of doing nothing would have been hard to estimate. Today, as water levels drop and water costs rise in the city, the cost of doing nothing is all too apparent.

Step it up a level, and you’ll see the cost of doing nothing has also resulted in the status quo being preserved. While summers get hotter and the winter rainfall season gets shorter, ‘management’ (in other words city officialdom) has continued to rely on large dams in specific catchment areas for our water.

Now, with shifting weather patterns and a growing population, they’ve realised, all too late, that there is a need to change the approach to water management. What worked last year, won’t work next year. The crisis management that is upon us now will come at a price which with more innovative forward planning or attending to some of those cost of doing nothing jobs in a more timely fashion could have been managed more effectively and at a fraction of the future cost. The old adage ‘a stitch in time saves nine’ springs to mind.

Innovate to survive

In the business world, cost of doing nothing jobs are often also the small steps needed to innovate. Innovation is too often painted as a wide-ranging, paradigm-shifting, big bang event. But it includes the incremental improvements to products, services and processes and asks the question, what is next?

It’s not surprising that an unhealthy attachment to the status quo, and resistance to change, is part of the fabric of most organisations. Companies are often still built to Industrial Revolution specifications. When assembly lines were the heart of an operation, things needed to be repeatable, predictable and risk-free. Similarly, the Waterfall Method worked for hardware design but should never have been transplanted lock, stock and barrel into a software world. Now that the Industrial Revolution era is heading to a close, this type of thinking is becoming increasingly egregious.

The culture of risk-aversion and a steady as she goes approach is exacerbated by tough economic times, cost cutting and management protecting their pensions instead of rocking the boat and challenging the status quo. And this means that cost of doing nothing jobs fall by the wayside until it’s too late as they are the easy targets when looking for costs to cut.

Start-ups don’t have this inability to change, nor an attachment to the way things have always been done. This gives them a window of opportunity to innovate and delight your customers that you simply don’t have.

And while the inertia of its members might be baked into the business model of every gym contract, organisational inertia has reached its sell-by date and may leave you grounded, like it did the planes passing through Auckland.

As published in Accountancy SA Magazine - November 2017 https://www.accountancysa.org.za/regulars-a-heavy-price-tag-on-doing-nothing/ 

Give Inertia the Boot

Have you noticed that problems are solved and decisions are made differently today, especially by millennials? What’s the first thing that they do – and you probably do too, even if you are definitely pre-millennial? They Google it, of course.

Back in my day, pre-Google, we’d probably think about what we’d done before in similar circumstances, perhaps consult whichever was the prevailing canonical guide on the topic – updated at least once a year – and maybe phone a friend. Or, if we were really entering new territory, we’d call in the management consultants, who’d probably do much the same thing, just at a heftier price tag.

The upside of doing business today is that we have research, case studies, discussions, opinions, thought leadership and news related to our decision at our finger tips. The downside, however, is exactly the same. We have so much information, so many takes on a matter, and so many rabbit holes to explore that reaching a decision can be more difficult and time consuming than ever before.
Welcome to analysis paralysis. But supercharged for the digital age.

Today we can’t afford to be hamstrung by inertia. A wait-and-see, ‘nobody ever got fired for choosing IBM’ approach is no longer tenable. We’ll be sidelined by start-ups who have no interest in preserving the status quo, as well as our nimbler traditional competitors, who took the opportunity to act. Meanwhile we’ll still be commissioning one last piece of research and running one more cost-benefit analysis.

Right now, we should all be considering the opportunity cost of doing nothing when figuring out what to do next. Which, I know, is a tough sell in a business world driven by short-term ROI objectives. In the past, cost of doing nothing projects typically related to maintenance type tasks. The equivalent of ensuring you service your car every year, even though it’s running perfectly well today, to avoid costly repairs in a few years’ time when a tiny niggle becomes a catastrophic breakdown. Or, to save every month on fuel, because you’ve kept your car running efficiently.

Today, in business, these projects are more significant. Such as deciding to spend time and money on the automation of manual, repetitive (and probably boring) work, to free up your time to be more strategic. And even reviewing systems that currently work but that could be improved would not be wasted energy to keep you and your business ahead of the curve.

This month and next, I discuss these cost of doing nothing projects elsewhere in this magazine. Happy reading and let me know what you think.

Three ways to zap inertia

• Curtail your short-term ROI mindset. Next quarter’s figures are going to be irrelevant if your business isn’t around next year.
• Quantify the cost of doing nothing as a matter of course. It won’t be perfect, but it will be on the agenda.
• Decide! Choose a lighthouse project that gives you a toe in the water, then learn and improve.

As published Accountancy SA - 1st November 2017
http://www.accountancysa.org.za/viewpoint-give-inertia-the-boot/ 

Spreadsheets: a victim of their own success?

There is so much talk of digital disruption today, that it is easy to forget that one of the most significant disruptors of them all has been sitting quietly on our desktops for the past three decades. Yes, the humble spreadsheet software, most likely Microsoft Excel.

And even though my accounting days go back to the comptometer, I can barely remember a time when spreadsheets were literally that, sheets of paper spread across my desk!

And thank goodness too. I shudder to think what life would be like for accountants and companies without the multiple capabilities that spreadsheets give us. Especially in today’s data-centric world. From rapidly carrying out arithmetic involving multiple rows, columns and tabs of figures, to compiling information from various sources, to running scenarios using different figures, to analysing data thanks to pivot tables and macros, and even running small pieces of software. Spreadsheets really are our data workhorses.

So it’s not surprising that spreadsheets have escaped the finance department and are very often how finance and the rest of the company communicate with each other. It’s quite strange how everyone, whether in actual fact they do or not, is expected to have some level of Excel know-how. Designers don’t expect anyone else to be able to use Photoshop, for instance.

Yet any job title is expected to complete spreadsheet-based expense claim forms, or update a forecast with figures for next year, or apply a new budget, adjusted for a tough economy.

But sadly the spreadsheet has also become a victim of its own success. Several things typically happen when spreadsheets reach critical mass in terms of users, data or both. Spreadsheets get bigger and bigger, more and more complex, and increasingly prone to breaking, and certainly less likely to be trusted for accuracy. Only the initial author understands the logic of how it was set up, and if they leave the company, this insight goes with them.

Meanwhile as more non-financial people contribute to the spreadsheet, version control is abandoned, people do things that only make sense to them, including adding up their figures with a calculator and typing final amounts directly into the spreadsheet as plain text. (It happens!) Things happen manually, slowly and errors creep in: the domino effect of a single misplaced comma can be catastrophic, and like a needle in a haystack to track down.

Suddenly your spreadsheet is no longer saving you time or money, or giving you an accurate, up-to-date view on critical business information. But instead is a millstone that is weighing you down and putting you at risk.

A 2015 study gained unprecedented insight into the extent of this problem. Using more than 15,000 of Enron Corporation’s spreadsheets as the dataset, the study showed that:

●      24% of the spreadsheets with at least one formula contained an error, and of these, six out of ten had dependent cells;

●     76% of the spreadsheets used the same 15 functions -- barely scratching the surface of Excel’s capabilities.

●     One in ten emails sent either included or referred to spreadsheets, and often errors in and updates to the spreadsheets were the discussion point.

Don’t you think it’s time we stop overburdening the hard-working spreadsheet? And stop demanding, or expecting, non-financial managers to get up to speed with financial thinking: after all, spreadsheets digitise existing finance functions, they don’t necessarily de-mystify them for the rest of the organisation.

The answer isn’t in closing ranks, however. I have long argued that the best way to get the right information as well as buy-in from the company, especially at budget and forecast time, is to decentralise this function to the coalface. And the only way this can happen, is by giving non-financial managers tools that are intuitive and easy to use, and don’t require them to understand what is going on under the hood. It is far more important that they are able to set, and manage their own budgets, with the room to be nimble and responsive to changing market conditions, than it is for them to navigate and understand cumbersome spreadsheets.

The good news is that this frees up the accounts department too. So instead of hunting needles in haystacks, or reverse engineering bizarre ways people have used Excel, we can turn our minds to more strategic, impactful activities.

Perhaps it’s time to give the overworked spreadsheet a helping hand?

As published Accountingweb 25th October 2017 https://www.accountingweb.co.uk/community/blogs/kevin-philips/spreadsheets-victims-of-their-own-success

Expense management: Honing the double-edged sword

Ironically, growth and success can be a double-edged sword for small and medium-sized businesses. On the one hand, you're growing and hitting the milestones, which is a massive achievement, especially in today’s tough economy. On the other, quite quickly things that used to be simple and straightforward acquire added levels of complexity. All of a sudden, as the business owner or FD, you simply can’t be as hands-on and omniscient as you used to be.


It’s pretty daunting giving up some of this control, especially when it comes to something such as expenditure. Expense management, especially in the SME world, is really about procurement and “signing off” on expenditure before the money is spent. As your company grows, this becomes impractical. You as the business owner or manager need to focus on new business and growth strategies, rather than being tied to paperwork.


The only way to proceed is to start empowering the rest of the organisation to take ownership of some of these tasks. And to do this, you need to put the tools and processes in place — such as reporting, which, while reactive, will allow you to spot issues in a timely manner. And most importantly, you need to ensure everyone understands and buys into the big picture, and is able to align their goals with this overall strategy.


For instance, you need to make clear the difference between cutting expenses and managing expenses and tie this to overall company strategy.

A mid-level manager tasked with controlling spending might be wildly successful at that specific metric, when taken in isolation. And this might be wildly unsuccessful for your company as a whole when you consider things holistically.


For instance, collectively your mobile phone bill might be right down, which is great. But it’s not that great that customers are disgruntled because they are not being contacted in a timely manner, and so have taken their business elsewhere. On balance, that mobile phone bill saving suddenly doesn't look so rosy anymore, not when compared to the business you have lost.  And your middle manager? Well, they did what you asked them to do, especially if you didn’t provide them with any context.


I’ll admit, this is a pretty simplistic example — although unfortunately still a common enough occurrence. How often, as a customer, have you been inconvenienced to the point of defection through an obvious cost-cutting exercise? But now consider this in the context of the digital disruption the world is going through. Where doing more of the same is no longer going to cut it, and very soon you’ll find you are running to stand still.


It’s a world where, in order to save money and make money in the future, you need to spend money today. Moving to the cloud is the perennial example: without an investment in cloud infrastructure and capabilities today, you won't be able to offer the services and functionality demanded by your customers tomorrow.


In this scenario, being over budget is not necessarily a negative, provided you can explain it in terms of a bigger picture. So expenditure management is not always about minimising costs. Today, more than ever, it is critical to communicate your company strategy, tie it closely to individual goals and targets, and then give your people the tools to enable them to achieve their, and your collective, goals.


As published Accountingweb - 20 September 2017
https://www.accountingweb.co.uk/community/blogs/kevin-philips/expense-management-honing-the-double-edged-sword

What is the new normal?

There’s no doubt that the last 12 months have got most people muttering, ‘Well, truth is stranger than fiction, after all.’ It’s easy to get caught up in the mass, global Chicken Little, ‘the sky is falling in’ reaction to events such as the Trump election and the Brexit referendum.

We’re used to keeping an eye on the world to spot the trends, shifts, and Netflix series coming our way. But this can sometimes blind us to our unique experience living and doing business in Africa. Operating in change and uncertainty is our status quo. And, without wanting to glamourise the very real challenges Africa faces, the unintended consequence is that we’ve become extraordinarily resilient and adaptable – comfortable with not only riding out tectonic disruptions but also turning them into opportunities.

Here in South Africa we’ve been through a few pretty bumpy few years, to put it mildly. From musical chairs in our finance minister’s office, which wiped out around R500 billion in value from the economy and saw the rand go into free fall at the end of 2015; a yo-yoing petrol price; a 6,6% official inflation rate (many would argue the true inflation rate is double that!); and last but not least, a highly uncertain political landscape. Not to mention that, like the rest of the world, we are facing a massive period of digital disruption as we enter the fourth industrial economy. Change is quite literally our constant.

Today we need to tap into our inherent entrepreneurial savvy more than ever before. At all levels.

For instance, typically when you plan you set parameters and make some fairly significant assumptions: ‘Robots won’t be replacing my people in the next five years’; ‘The UK will still be part of the European Union’; ‘Smartphones aren’t going to become the biggest supplier of my product.’

Today, these assumptions are pointless! You can’t plan for the amount of disruption that is coming your way. And if you try, you risk baking a panicky, knee-jerk reaction into your numbers. At best, this would be inappropriate and regrettable when the dust settles. At worst, this approach becomes a self-fulfilling prophecy.

Instead, ensure your planning and business strategy is responsive to change by looping in the view from the grass roots of your organisation. Head office might be running around like Chicken Little, but the people on the ground can often see the opportunities, and know where to hustle. That is why you employed them, after all.

Look for the opportunities. We are resilient and uniquely adapted to make things happen, so we should be relishing the potential presented by the turbulence in the world today!

Navigating the new normal

• Realise you can’t begin to plan for the amount of disruption you are about to face.
• Embrace the hustle like you’ve never done before.
• Don’t codify a Chicken Little response – it may just come true.
• Look for opportunities and don’t only focus on the threats.
• Leverage our adaptability and resilience, the unintended consequence of ‘our normal’.

As published Accountancy SA - 1st September 2017

http://www.accountancysa.org.za/wordpress/viewpoint-what-is-the-new-normal/ 

When your normal is change then change is opportunity

It's easy to get disruption fatigue when literally every article you read reminds you that digital disruption is here, and that if you are not doing something about it, you’ve already missed the bus

Well, I hate to say it, but you’ve not only missed the bus, but you’re missing the taxi-on-demand-service and are imminently going to miss the self-driving vehicle. Take Uber — the poster child for the disruption of traditional business, shaking up the centuries-old taxi industry. But, while Uber sorts out its internal culture issues, and figures out its relationship with its drivers, it is already getting a taste of its own medicine. Dubai is about to disrupt the disruptor with the announcement that it is launching driverless drone taxis this year.


So I think we can all agree that change is coming, it is coming fast and it is exponential. I could say: “like nothing we have seen before” but we have, consistently over the last generation. It is just getting faster!


However, operating in this amount of change and uncertainty is par for the course in Africa. And the consequence of our exposure to unrelenting and erratic change is a deep-seated entrepreneurial optimism, which I think is going to stand us in good stead. I’m writing this in the week that my country, South Africa, saw its president survive an eighth vote of no confidence in parliament. This is a reasonable reflection of the lack of confidence the country as a whole is suffering from, compounded by musical chairs in our finance minister’s office; a yo-yo-ing petrol price; and an official 6.6% inflation rate (which many would argue is far from realistic) and constant revelations of mismanagement, corruption and graft. Change is quite literally our constant.


We’ve become extraordinarily resilient and adaptable. Comfortable with not only riding out tectonic shifts, but also turning them into opportunities. With the uncertainty created by Brexit and Trump, the western world is learning the hard way how to challenge existing thought processes and adapt to an environment of continual change and uncertainty. It is not all bad and the pot of gold at the end of the rainbow is a more versatile and adaptable management team, with a good dose of entrepreneurial spirit thrown in.


If your normal is change, then you should be well-prepared for making the most of digital disruption by looking for the gaps and the opportunities it presents. Because there are going to be opportunities. Take the arrival of the car at the start of the last century. For sure, businesses died as fewer horses were used: the grain industry faced ruin; and stables, farriers, trainers and other support services that had built up around horse-drawn vehicles saw a massive decline.


But other businesses emerged. Cars needed to be built and these cars needed tyres, fuel stations, etc. Proper roads had to be designed and built, as did road signs, pedestrian crossings and other infrastructure we take for granted.


How is this playing out in our finance world? Consider the automation of accountancy functions. Robots are simply better at doing tasks that are repetitive and rule-based. They are faster and more accurate than we are, and don't get bored or distracted. They are taking over some of the more repetitive functions in our firms, and at our clients, as accountancy software becomes more accessible.


So, as accountants, do we go the same way as the farriers and grain suppliers? Or are we agile enough to adapt to this new normal and look for the opportunities? For instance, with the flood of repetitive work taken care of, can we hone our critical thinking and problem-solving skills on behalf of our clients? Can we use our time analysing and assessing the real-time data we now have at our finger tips to give strategic input to our clients and support their planning and decision-making process? Can we develop our inter-personal skills now that we can leave the back office and interact with the rest of the firm as well as our clients? And can we review a few holy cows, for instance, what impact will blockchain technology have for us and our clients?


We have the opportunity to lead, not follow, the digital disruption. But we need to learn to be adaptive and hone those skills that were not perhaps at the top of the list: interpersonal skills, analysis, and a healthy and open minded view of what the future holds for us and our clients. We can lead or we can follow, but in tomorrow’s world there is little value to be added by being a follower.


As published Economia 17th August 2017
http://economia.icaew.com/en/tech-hub/when-your-normal-is-change-then-change-is-opportunity

Holy cow, the robots are coming!

Back in the day, when I set out on some of my first auditing jobs, I was accompanied by a formidable team of comptometrists. Their fingers were a blur as they entered lines of numbers into their comptometers — for the younger generation who have likely never seen one, this was a huge, key-driven calculator — and added up the trial balances. In those days, the human was the final word in accuracy.

But by the 1990s comptometrists were a thing of the past. We had started trusting computers enough to run the numbers, and what needed double-checking were the systems that governed the computers, not the calculations themselves. And the comptometrists? Well, their role was made obsolete, not in a generation but virtually overnight. They needed to find a new space to apply their existing skills, or, retrain and stay relevant in a changed world. 

Thinking about succession planning today, this story keeps playing through my mind. Except today the changes we are experiencing are far more profound and fundamental, not to mention coming at us at an almost exponential rate. Take automation. Repetitive tasks don’t bore robots, they are faster and more accurate, they don't make mistakes and they don't take breaks; put simply they are just better than we are… at the routine tasks. It also means our clients, including small and medium-sized companies, through the use of technology, have the ability to do a lot more self-service accountancy work. 

In the same way the internal combustion engine drove (pun intended) the horse and cart off the road, robots, in this case software robots, are going to replace humans in your organisation sooner rather than later — on the factory floor as well as in the office. According to a PwC report, 30% of jobs in the UK are at risk of being replaced by robots and artificial intelligence in the next 15 years.

What does this mean for how we think about succession in our organisations? In the past, this meant ensuring the leadership had understudies waiting in the wings for their time to take the reins.  

But today — and I do mean today — succession planning needs to consider what happens to our people when part of their function is taken over by robots. We need to be putting a plan in place for our existing employees, and also hiring people that have the skills to adapt: not only to working with robots, but also to thriving at the functions that robots can’t do. Recruitment policies need to focus on ensuring organisations attract and retain the correct people, not necessarily for the skills they have today but for the ability and potential they have to adapt to the skills they will need tomorrow. 

Take strategic client relations. In an ideal world, with the repetitive work items picked up by robots, accountants will have more time to analyse the data, problem solve creatively and engage with your clients to help them grow their businesses. Suddenly an ability to establish trusted inter-personal relationships becomes essential. So that hard-as-nails accountant, the “human calculator”, who previously did incredible work in from the back office, but never ventured out to client meetings, may well become a square peg in a round hole. 

This is succession planning today. It’s about considering the functions that software will do for you, and then figuring out how to redeploy staff whose functions have fundamentally changed and they no longer fit. And hiring for the skills and talent-sets that you will need humans for.  

It’s in appreciating that some of our holy cows, the things we are the “experts” at, the production of accounts or even, potentially, the double-entry bookkeeping system, might be slain, and choosing to act like Darwin’s finches, adapting to new circumstances and thriving, rather than putting our head in the sand and hoping.

As published in Accountingweb – 22 August 2017

https://www.accountingweb.co.uk/community/blogs/kevin-philips/holy-cow-the-robots-are-coming



Digital Darwinism: it’s still adapt or die

Charles Darwin was right about survival depending on our ability to adapt. And never has this been more true than in the face of the digital revolution we are living through in the twenty-first century. While Darwin might have been speaking about adapting from generation to generation, today it feels like you need to adapt from month to month and day to day.  

Look at the taxi industry and Uber. Retail and Amazon. Publishing and Facebook. Hotels and Airbnb. 

Frighteningly, even these examples are dating. Amazon has already gone full circle and is expanding its bricks and mortar presence, armed with everything it has learnt about consumer behaviour in the digital world. Uber and its drivers are still figuring out their working relationship, but Dubai has announced it is launching driverless drone taxis this year. 

So where does that leave us, the accountants? We’re typically the conservative bastions of caution and risk-aversion in any company. Wielding the double-entry bookkeeping system for the last several centuries, we have, for the most part, kept businesses honest and solvent. But now even the double-entry system is being questioned in the world of blockchain and other decentralised, shared digital ledger systems.

The same thing applies to us, I’m afraid. Adapt or die. But bear in mind that adapting doesn't mean throwing out the baby with the bathwater. Adapting means understanding what needs to change in order to continue delivering value to your clients and your organisation. Look at Darwin’s finches on the Galapagos Islands, which, within one generation evolved larger and stronger beaks to find food during a prolonged drought. The birds adapted fast to their current reality, by optimising a function rather than replacing it all together. 

Likewise accountants need to look down the line and start shifting their position today — we are already seeing the impact of some of the changes brought about by digitalisation. Just like with the introduction of the internal combustion engine at the start of the previous century, there will be winners and losers. The “horseless cart” put an ecosystem built up around horse-drawn vehicles out of business, but enabled the growth of entirely new industries to support the automobile.  

The same is happening today. 

My advice? Step away from the spreadsheets, literally and figuratively. Step out of the shadows and reconnect with your colleagues at the coal face — they are the ones who know where the changes are coming from, can see the impact of these changes, especially the opportunities.  Open up the accounting process and empower your colleagues to collaborate with you. By doing so you’ll ensure that they have access to the numbers that impact their view of reality and in turn provide real input and value to your analysis of the numbers. This gives you an accurate picture, and creates buy-in and mutual benefit whether in the planning process or understanding the variances, when looking at actuals. You’ll stay connected and relevant, and by decentralising some of the accounting functions, you’ll free up your own time to be more strategic and adaptable. 

With the world changing so fast, the old rules no longer work but the new rules haven’t yet been developed!  This makes finance’s custodial role more difficult but even more important than ever before. Stay adaptable and you’ll be able to guide your clients and organisation ethically and prosperously through these opaque days; don’t and you will be one of Darwin’s casualties.

As published in Accountingweb – 27th July 2017

https://www.accountingweb.co.uk/tech/accounting-software/digital-darwinism-its-still-adapt-or-die#flaglink

Lockdown Time Thieves

In my May article I suggested that one of the biggest challenges to innovation and business progress is simply finding the time to think, research, experiment and develop new ideas.

The notion of carving out 20% time, à la Google, is a pipe dream for most. So I thought it would be interesting to figure out what is keeping finance people so busy. 

To do this we held a snap survey of finance managers and administrators across a range of industries to find out what takes up their time, preventing them creating space for strategic review thinking.

The top three time thieves at budget/forecast time were investigations or enquiries from source, incomplete or incorrect data, and manual processes, while the top three time thieves at month-end reporting time were report compilation, manual processes, and investigations or enquiries from source. The top three time thieves at other times were ad hoc reporting requests, firefighting, and other ad hoc information requests. 

Interestingly, but perhaps unsurprisingly, there was no single time thief, which perhaps points to the complexity of the real world today, plus shows that there is not a silver bullet solution – companies need a fix that comprehensively tackles a web of challenges. 

Alarmingly, manual processes ranked in the top three for both budget/forecast time and during month-end reporting. Automation of these processes is the key not only to freeing up time in its own right, but it also results in timely, accurate data that you can confidently use for decision-making. In addition automation is the cornerstone for further innovation and new ways of working. 

What’s more, it looks like too much time is being spent on report compilation. This is a red flag because if you are spending your time compiling reports, you are not spending it analysing the information therein! 

Ad hoc reporting, information requests and firefighting also rank highly, though probably more understandably and, unfortunately, this is not an easy challenge to master. However, ad hoc reporting requests, in particular, are indicative of an un-empowered business that relies too heavily on finance to deliver and explain anything with a number in it. Consider how much time would be created by empowering the non-financial user through removing the frivolous queries, and freeing time for review and analysis.

The survey, though brief, did re-iterate that the key challenges we all face have not changed over the years. However, if we continue the status quo and fail to innovate, our relevance to the business will reduce and the spectre of robot replacement will become a reality. 

We are the principal architects of our own reality so it is time to start shaping our future! 

Unbusy your days

• There’s no silver bullet for a complex challenge.
• Automate, automate, automate – the tools to do so are out there.
• If reports are taking up too much time, how can the data be timely?
• Empowering the business will redefine our function from bean counting to strategic analyst.
• The pace of change is only going to speed up, so start today.
• We are the principal architects of our own reality, so it’s time to start shaping our future! 

As published ASA Magazine - July 2017
http://www.accountancysa.org.za/wordpress/viewpoint-lockdown-time-thieves/

The storm on the horizon for cloud computing

Like the wheel or the printing press, cloud computing is more exciting because of what it enables, rather than for its own sake. Much has already been written about what the cloud allows us to do: from launching new economy businesses such as Netflix and Airbnb, to saving money through processing elasticity, to gaining access to new services and capabilities.

And, despite security still being the number one concern when implementing cloud, we’ve recently been very starkly reminded how cloud-based infrastructure can be more secure than on-premise, thanks to the WannaCry ransomware attack and the unrelated catastrophic systems failure at British Airways. Both of these affected on-premise data.

For us, data security is just one of the many issues we deal with in running our varied businesses. A cloud provider’s business is data and its protection, so they should be better at it than you or me.

Too often we forget that, although the name sounds fluffy and intangible, cloud computing is based on some very real infrastructure, housed in complex, highly secure, and some might say, black box-esque, buildings very possibly located in a different country to you, your customers, and even your cloud provider.

This is where the red flag goes up. Not because sensitive private and personal data is being moved offshore though. Frankly, in terms of access, thanks to increasing bandwidth it is irrelevant whether your data is housed next door or on the opposite side of the planet.

Rather, a perfect storm is brewing as legislation attempts to catch up with technology and the globalisation of digital communications. In the balance is the protection of private and personal data, weighed up against a growing reliance on data, especially encrypted information, to predict and prevent acts of terror, and arrest those responsible.

The cloud spreads data around the globe, creating concerns around the protection of personal information, and as a result, a number of countries are legislating around this issue. In South African, for example, companies are required to comply with the newly legislated Protection of Personal Information (POPI) Act. This law brings us in line with global best practice when it comes to how private data is collected, processed, stored and shared by setting the conditions for how companies can legally handle information. The new law prohibits businesses from transferring personal information to a third party in a foreign country, unless they get consent at the time of gathering the information. So far, so good, if a bit of an administrative headache, especially in time of such rapid change.

However, in response to the recent atrocities and the use made of internet communications by terrorist organisations, there are moves afoot in the US to legislate that data stored by an American company — wherever it is stored in the world — is accessible, unencrypted, by US law enforcement. Or the discussion of reciprocal agreements that allow countries to gain access to information stored in each other’s geographies, or indeed, the newly passed “Snooper’s Charter” in the UK, which mandates onerous and illogical demands for hosting providers to leave backdoors in their encryption for government access. All of these step on or over the line of privacy of one’s data.

Hosting companies that aren’t US or UK organisations will simply move their operations to other countries where these agreements are not in place. But the reality is that the hosting giants are US companies, not to mention that the country contains much of the world’s internet infrastructure.

So where does this leave businesses around the world, wanting to realise the benefits of cloud computing, but also needing to comply with locally legislated laws such as the POPI Act? Are they and their customers simply excluded from the benefits, growth and innovation opportunities presented by the cloud? What is certain is that they will be looking very closely at the implications of their cloud decisions, and where and how their data is stored.

To be sure, the fight against terrorism is vital, but let's not also, in the process, destroy the cloud’s silver lining.

As published on Accountacyweb on the 14th June 2017 https://www.accountingweb.co.uk/community/blogs/kevin-philips/the-storm-on-the-horizon-for-cloud-computing

IDU in Gartner's Top 25 Corporate Planning Applications

Gartner, the world's leading research and advisory company recently published their Market Guide for Corporate Planning Applications.  IDU is very proud to have our award-winning Budgeting and Reporting Software idu-Concept recognized amongst the best in the world for providing innovative financial management solutions.

The Gartner Market Guide is independent and insightful, it highlights the rapid development of financial analytics technology, and the considerable opportunities that exists for finance professionals to take advantage of these developments.

IDU has over 300 clients in an ever-increasing global footprint with users across 33 different countries, we are constantly innovating and are rapidly becoming a globally recognised brand.  Our Corporate Performance management (CPM) solutions are also available via the cloud using Microsoft Azure as well as Amazon Web Services, the latter has opened the door for smaller and medium sized organisations across the world to access our cutting edge financial management solutions. 

IDU streamlines the budgeting and reporting process, frees up financial managers to be more strategic and business to be more agile and responsive, which is essential in a disrupting market.

About IDU

IDU makes budgeting, forecasting, performance management and reporting tools to simplify financial management. Our flagship product, idu-Concept, provides easy, effective budgeting and financial reporting for medium-sized to large businesses. It is the most widely deployed dedicated budgeting system in South Africa. idu-Concept integrates easily with ERP software, but unlike more cumbersome offerings, idu-Concept can be implemented quickly, requires little or no ongoing consulting fees and reduces budgeting cycles from months to weeks. idu-Concept addresses this establishing a platform of ownership and empowerment that inevitably leads to radical improvement in the effective management control of every business. 

Disclaimer:
Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

Gartner “Market Guide for Corporate Planning Applications” by Christopher Iervolino and John E. Van Decker. Published 24 May 2017.

Upsides and pitfalls of financial system migrations

The Apple iPad is only seven years old this year. Believe it or not, the first one was launched in April 2010, and if you dig a first generation iPad out of the storage cupboard you’ll find it’s probably more useful as a paperweight than anything else – it doesn’t even have a camera! Frighteningly it, and second and third generation iPads, are also unsupported by Apple.

Leaving aside Apple’s rabid upgrade tactics and the notoriously short lifespan of its devices, this is just one indication of how fast technology is changing. Therefore, it’s likely that the decision on whether or not to upgrade your financial system, for instance, is pretty much a done deal. Any argument for a “wait and see” approach has been crushed by the reality that the longer you stay with a legacy system, the further you fall behind your competitors, your customers and your employees.
In the event of a disaster your clapped out old iPad 1 equivalent is going to be harder and more expensive to fix, and the risk of data loss is greater. But you need to go into any systems migration with your eyes wide open. Here are some of the things to watch for.

End User Resistance

One of the main factors that can make the difference between a migration project sinking or swimming is the involvement of the end users. Consider the public outcry when a platform such as Facebook or Instagram makes even minor changes to their software.

End users are typically attached to familiar experiences of systems, and this colours their expectations of any upgrades. Plus, they expect systems to be as easy-to-use and intuitive as the consumer apps they use every day. A disconnect here can manifest as resistance to the new system and a loss of time and money for the business.

User Requirements
It is also vital to understand your users’ requirements and deliver on that. In other words, give them what they need to do their jobs well; don’t give them everything merely because it is there in the new ERP system.

Learn from the Google search home page: limit complexity to improve productivity. Do users really need to enter account codes? And for that matter, do they even need to see them? Remember that what a non-financial user of your new system requires can be quite different to that of a finance department user.

Chart of Accounts Opportunity
Now consider that a financial systems migration is a great opportunity to restructure your company’s chart of accounts (COA). Your business has almost definitely changed to such an extent that your current COA is no longer suitable to today’s reporting requirements.
However, when implementing an updated COA you need to get two things right. You need to create an environment whereby you can provide reasonable comparative information when the account codes are different. And, secondly, you need to figure out how to reproduce historical numbers when the accounts, as well as how they are aggregated, differ to the legacy system.
When mapping historical codes to new ones it is unlikely that there will be a one-to-one relationship from old to new. And when you have a one-to-many or many-to-one relationship, comparative reporting becomes a challenge.

Data Migration
And what about data migration? Decisions need to be made about which data is migrated and how many years to go back. The simple decision is normally to migrate immediate history and maintain a minimum license on the old system to be able to access historical information. But do you really think your old system is going to be a key priority for your previous service provider, especially after you have slashed your contract with them?

Major system migration is never easy and the pitfalls are many, despite what the salesman tells you! However, if you approach challenges with eyes wide open you are better prepared to identify the potential pitfalls and navigate around them.

Article published on Accountingweb May 2017
http://www.accountingweb.co.uk/community/blogs/kevin-philips/fs-system-migrations-beware-the-pitfalls-and-enjoy-the-upsides

How running to standstill won't get you ahead of the pack

Ask anyone how they are nowadays, and the answer is likely to be ‘crazy busy’ or something along those lines. Today’s world, designed around convenience and speed, seems to have had the exact opposite effect. We’re trying to cram more and more into the same 24 hours and wearing our ‘busy-ness’ like a badge of honour. Part self-imposed, part a reality of modern life, we’re a bit like the Red Queen in Lewis Carroll’s Through the Looking Glass — we’ve got to do all the running we can just to stay in one place.


This delivers businesses a massive catch-22. Although we are running as fast as we can, keeping up is no longer good enough. We need to be fundamentally and exponentially change the way we work in order to succeed in the digital economy. For instance: transitioning to cloud computing is critical to enable the services, features, and capabilities demanded by the market today and tomorrow. Things like collaboration, mobility, self-service, real-time data analytics, omni-channel retail and so on. Not to mention the long-term cost savings and efficiencies cloud economics can bring.
But, how are companies supposed to find the time to take a step back and re-engineer their infrastructure and processes to make the shift to the cloud?


The same applies to wider innovation: fundamentally changing how you do things, from small, incremental enhancements to new business models and existential shifts in your organisation. Innovation is a product of a few things: time, money, and being open to failing fast and often. Organisations don’t innovate though, people do, and to do so they need time to think, research, experiment and develop their ideas.


Google’s 20% time is probably the most well-known initiative where companies try to carve out time for employees to innovate away from their day-to-day tasks. The search giant gives staff around a day a week to work on side projects, and the outcomes have included commercial successes such as AdSense and Gmail.


This is not some harebrained internet start-up window dressing, though – like beanbags, hammocks and foosball tables. 3M, the inventor of Scotch Tape and Post-it notes, and the holder of almost 23 000 patents, has offered its employees 15% time to work on passion projects since 1948.
Indeed, the invention of Post-it notes is an illustration of just how long innovation can take: an employee invented the adhesive in 1968 but it was only in 1974 that another 3M employee joined the dots and realised it could be used to create a reusable sticky note. Ditto the development of Gmail. The Google engineer who invented this worked on it for two and a half years before convincing management that it should be launched.


All very well, as are innovation competitions, hackathons and other tactics companies use to foster new ideas. But reality bites. And the reality is that if we are running to standstill, we can’t currently carve 15–20% out of our business day, no matter how vital strategic innovation is.


It reminds me of that cartoon doing the rounds: two cavemen are energetically but not very effectively pushing and pulling a barrow with square wheels. Their friend offers them a set of round wheels. ‘No thanks,’ they say with a wave, ‘we are too busy’.


Something’s got to give. Somehow tired, ineffective and antiquated processes need to be sped up and automated, freeing people to be more strategic and perhaps to come up with the enhancements your company needs to survive.


Take the typical CPM (corporate performance management) processes, for example. In today’s real-time world, it can’t and shouldn’t take more than four weeks to complete a budget, or hours to complete month-end reviews. Bloated timeframes are compounded by manual processes resulting in errors and unnecessary admin. Plus, lack of transparency and collaboration between departments causes confusion and reduced accountability.


Fixing this single process can have a series of positive knock-ons. First, it can save you time. The vital time you need to spend innovating and thinking strategically about your business. But it will also improve the timeliness of your data – giving you and your senior management the real-time financial data to base decisions on. And if, as part of the fix, you have effectively included those at the coalface in the process, your data will be more accurate and relevant. Inclusive management also increases transparency and accountability, resulting in an aligned organisation that manages itself better.


So the flipside to the catch-22 mentioned above – that to keep up effectively, organisations need to slow down to change gear – is that once you have done this, the outcome is not only winning the time you need to innovate, but also gaining the data and other capabilities you need to succeed in a digital world.


Article published in Accountacy SA Magaine May 2017
http://www.accountancysa.org.za/wordpress/focus-technology/#running

CRAN highly recommends IDU

CRAN is the Communications Regulatory Authority of Namibia and regulates telecommunication services and networks, broadcasting services, postal services and the use and allocation of radio spectrum.

CRAN uses the Financial Budgeting, Financial Reporting and Analytics Modules of IDU. They purchased the system in April 2014, after looking for a cost effective, online financial management solution, that would allow them to easily administer the system with little ongoing IT support.

“IDU is a user-friendly system with amazing functionalities. The software has really made our work processes more efficient.” Says Maria Moses Manager: Management Accounting at CRAN.

CRAN has found idu-Concept Administrator simple to manage and use, there has been no need for IT or system development skills and very little need for ongoing support. Managing their own system has meant a huge cost saving to their business. 

“The IDU helpdesk is very efficient and any user queries are addressed as soon as possible”

CRAN have been particularly impressed with the Recodes and Accruals functionality within the IDU Reporting modules.

IDU's Recode functionality allows users to request the reallocation of journal entries posted to the general ledger directly from the Financial Reporting Module and the Accruals functionality allows the user to have the ability to create accrual entries at a cost centre level for items that they feel have not been accounted for.

“I would highly recommend IDU, the system offers functionalities that meet the needs of businesses, it is highly responsive and also very cost effective”