Elemica Solution Architect’s Insight Into The New Year
I want to make it clear, I fully realize the top things a CIO will be considering for 2014 are similar to 2013. It will be Cloud, Software-as-a-Service (SaaS), and data security. However, if CIOs haven’t already been thinking about these things, and developing strategies related to them; then to be blunt, they are not so much behind the curve as still being back at home working out which shoe is left and which is right.
Data accuracy and the dirty data ‘time-bomb’ are in relation to ERP systems. I went through a large migration from in-house systems to SAP in 2004. A phalanx of people were charged with clearing up data. All the classics were found, the spaces between letters (B A S F), the dots which aren’t needed (B.A.S.F.), the old names because of buy-outs and mergers (Engelhard), and so on (my apologies to BASF for picking on you in my blog again). These were all worked on, cleared out, and a pristine new system was created. Then the rot starts to creep in.
It is not just pure dirty data, there is also data accuracy timing issues. With ERP systems there is always a complicit ‘fudge’ that goes on. One of the key elements of an ERP system is the ability to get financial data quickly. I spent some time in the Accountancy and Controllership area of my previous company. The start of the month was all about “the previous month close” there was a strict timeline around Workday 1, Workday 2, and so on. When we moved to an ERP system, this was dramatically reduced. But as much as the timing improved, the ‘fudging’ starts to creep in.
I have two examples.
The Purchase Order that has gone out to the supplier for 25,000 kg of product - Anyone in production knows that between tolerances and logistics equipment, the number could be anywhere between 24,000 and 26,000 kg. As you can imagine, this means the system is working on false data. The data will only be accurate when the supplier gives the accurate delivery volumes via a ship notice. For a product on a two week lead time, you may be doing calculations on product that is +/- 5% off.
When the order is sent, the system starts accruing the cash to pay for the product – For most companies you are accruing on a best guess amount. If your accounts payable is not up to scratch, this accrual can end up between 5 and 30 days longer than expected (net 35 to 60 payment cycles). In some respect, this helps the cash-to-cash cycle. However, a responsible company does not want to be accruing cash in anything less than the tightest possible ways.
I am not naive enough to say that this would be a case of “for the lack of the nail, the battle was lost”. I am a Chemical Engineer at heart and I am trained on Hazard & Operability Analysis (HAZOP). I know that accruals being off base or mild uncertainty on product weight is not going to cause a production line to stop, or cause a company to have financial issues. The result? These problems have not been high on the list of either a CIO or a CFO.
However, I believe 2014 will be the year CIOs and CFOs start to realize they do need to care for the following reasons:
The ERP implementations they have are generally 5 to 15 years old. There will have been good company people, in middle positions, who will have been trying to keep this data as accurate as possible. But you would struggle to find KPI’s or appraisal performance ratings which will reward keeping data at high levels of accuracy.
With the pull towards data security, it means that people will start looking at data. Once data is looked at then data impurities will be found. It is the ERP equivalent of Schrödinger’s Cat, until it is viewed you know the data is either good or bad, but you will not be certain.
With the move towards SaaS and Cloud computing, you will be starting to put data into the ether. However secure it is, there is a matter of house-proudness, you will want to make sure that the data is ship-shape and Bristol Fashion.
Then frankly, you just should care about good quality. I said earlier that it isn’t the case of “for the lack of the nail…” but it could be. You don’t want to put the wrong information on the truck. ERP systems are beautiful bits of engineering, the intelligence, time, and passion that goes into making them and implementing them is phenomenal. Why have the equivalent of an E-type Jaguar, but not keep it clean? I am not sure that Debrett’s has a sector on ERP data cleansing, but the petition for it starts here and now.
So, consider this blog as advanced warning! When we talk to you in 2014, we will be highlighting that you should:
Get more data. If you do not get the Ship Notice or Order Confirmation electronically then you are missing imperative data.
Get more data quicker. Don’t let partners get away with giving it to you at the last minute. As with any supply chain (and there is a supply chain IN data) the sooner you get it, the better it is managed.
Get more data, quicker, and cleansed. I do not believe we will change data, unless expressly permitted, but we can definitely flag it up.
This last point – Get more data, quicker, and cleansed - is key to my thoughts for 2014 and onwards. Clients work partner-to-partner, we talk about an ERP-to-ERP connection. However, Elemica deals with multiple companies across the process industry. We have thousands of ship-to’s, bill-to’s, sold-to’s, etc. coursing through the network. Who is better placed to review data for accuracy? We are not there yet, but we aspire to be a company that highlights data quality to our partners. For example, if we see a bill-to used, which we believe is inaccurate master data, we would flag it up.
Why not? Every data quality improvement is a horseshoe that will not fall off, so the battle will go according to plan.