Balmori Software Inc.

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To have clear, accurate, instantaneous, real-time information about one's business - most businesspeople might almost kill for this capability.

Military organizations have a term for this desirable state of affairs: situational awareness.

The US Coast Guard defines situational awareness thus:

Situational Awareness is the ability to identify, process, and comprehend the critical elements of information about what is happening to the team with regards to the mission. More simply, it's knowing what is going on around you.

What is the practical value of situational awareness? For a business, just as much as for a military organization, situational awareness promotes superior team performance. "Superior team performance" means, concretely, increased probability of accomplishing the mission, whether it's hunting and killing a terrorist chieftain or meeting a quarterly sales target.

Here's the US Coast Guard again:

Effective team situational awareness depends on team members developing accurate expectations for team performance by drawing on a common knowledge base.

In the business world, there is a creature that provides this "common knowledge base." It's called ERP software ("Enterprise Resource Planning").

ERP, aka enterprise solutions, promise business owners a tantalizing vision of clarity and precise control of their business. ERPs purport to encompass all of an enterprise's data within one massive database.

Such a software solution, its proponents claim, gives all the various parts of a company a single source of truth. Cuts ambiguity. Gives clarity. Provides situational awareness.

It becomes a company's central nervous system. It promises a business organization vigor and precision of action.

ERP is real and has been around for some forty years at the Fortune 500 level. And in the Philippines' Top 100 companies. Oracle and SAP are examples most familiar to business people.

An enterprise solution promises to synchronize all company data and make them mutually consistent.

For example, sales people talk about their sales for the month; the software already shows how much of these sales are already collected and how much still remain accounts receivable.

Accounting can count on a correct output VAT computation resulting from these sales.

The inventory control people can see at once how much inventory depletion resulted from these sales. The purchasing people know exactly how much to order from suppliers in order to replenish stocks.

Sales people, purchasing people, inventory management people, credit and collections people, cashiers and accountants - all are able to approach their work with confidence that they are basing their actions on up-to-date data.

Thus all parts of the business are able to work faster without any degradation in accuracy. Without frequent pauses to double-check facts or rework mistakes.

Thus the entire company becomes more responsive, more nimble.

This is in stark contrast to the old management model - a model still much in use in Philippine SMEs today. In that model, individual departments maintain independent troves of data. Each department maintains its own island of information.

In that old model, without ERP, the very independence of departmental databases also makes inconsistency of data likely.

For example, the sales department duly reports Invoice No. XX; but what if an accounting clerk fails to record the accounts receivable? The credit and collections department will then fail to collect a receivable it does not know about. This hurts cash flow - until someone notices and corrects the discrepancy.

Hiccups like these create a lot of small delays - delays that by themselves take a few minutes, but collectively slow down the entire organization... a lot.

That's because the different islands of information are not synchronized. They're often not consistent with one another. As a result, on some level, the different islands of information do not trust one another.

And that lack of trust shows up in the automatic double-checking of information coming from other departments. And that adds up to a slow-moving organization.

An enterprise solution promotes clarity, and thus confidence in the information. It removes uncertainty in day-to-day operations.

That's the theory; that's the ideal.

In recent years, ERP has trickled down to medium and small enterprises. But implementing it - and getting the full benefit of it - takes some sophistication on the part of the user organization.

ERP IN SMALLER ORGANIZATIONS. SMEs are more recent adopters of ERP software. And as late adopters, new users of ERP* software will at some point experience worrisome moments.

Moments when the software refuses to accept certain data inputs. Moments when a report tells a tale that you "know" to be "untrue".

At first, you suspect a flaw in the enterprise software. But it's not a bug; it's the software protecting you from making a mistake. It's called error-trapping, and it's your friend.

Step back a minute and reflect on the fundamental business process.

In everyday life, there are things you need to do in a certain sequence - unless you want to simulate insanity. You put on your socks before you put on your shoes, for example.

Same thing within ERP software.In day to day practice, you'll soon find that the ERP software won't let you input or post certain transactions until you first input and post a prerequisite transaction.

Or until you first satisfy a prerequisite condition.

The ERP disallows premature or out-of-sequence data- encoding. And it'll be right to do so. It does this in order to preserve your audit trail - and the integrity of your database.

The software checks that your socks are on before letting you put on your shoes, as it were.

Once you get attuned to the ERP software, you'll be thankful for this firm guiding hand.

In fact, it's a big part of why you buy ERP software to begin with. Computerization requires this discipline. The ERP software imposes this necessary discipline.

Without it, computerizing your back room will surely fail. Surely.

By way of example, the sidebar to this article lists a set of practical guidelines for users of Balmori Software's SURE! AR/ AP/ DMS, an ERP-for-small-business solution.

Users who input data into any ERP software should expect to face situations similar to those in this sidebar. This population includes inputting clerks, MIS analysts, and operating managers who consume report outputs.

The example shows the close coordination that all users of an ERP must practice.

In any company, one team member's inputs are usually a prerequisite before two or three others downstream can make their own inputs (ie, do their work). So teamwork is essential.

BE CAREFUL HOW YOU DEFINE "EFFICIENCY." All workers in your company, regardless of rank, must recognize one counterintuitive truth. It's this: one worker's personal efficiency does not always translate to total company efficiency.

It is no longer possible to do one's job in glorious isolation - the old management model. Not that that was ever a viable model - except maybe for hermits, writers, or philosophers.

Ms. XXX over at Purchasing may be confident that the most efficient use of her time would be to save all her inputting for Friday afternoon.

Mr. YYY in Sales may decide that he's best off doing his data-encoding every Tuesday morning.

But a little reflection shows that everybody who decides to be "efficient" this way is bound to damage company efficiency: data inputting downstream of the "efficient" inputter would clog up at various bottlenecks.

And sitting at each bottleneck is a worker who has decided to become "efficient" with no concern for downstream processes.

The net effect: frustrating delays in reporting, staleness of reports, loss of confidence in the data - and ultimately, derailment of the computerization project.

Here's a scenario. Say the person responsible for inputting sales transactions decides to input data only every Tuesday. ("...To be more efficient.") As the week wears on, more sales get done; and each transaction reduces physical inventory as you would expect.

But because Mr. Sales Encoder is waiting for next Tuesday before he inputs data, the ERP software - and all its other users - remain ignorant of all these sales transactions.

The result is a multiple whammy to the firm's maneuverability. Sales reports are understated. Inventory reports continue to reflect inventory that is no longer there.Accounts receivable fail to reflect these recent sales. Customer ledgers remain ignorant of these same sales.

Now into this soup of imperfect information comes the purchasing guy, poised to do his replenishment purchases for the week. He checks the inventory level, and sees that the inventory level is still ... quite good.

The inventory level is overstated, but Mr. Purchaser doesn't know it; the enterprise software is not updated. So Mr. Purchaser orders just enough to bring stocks up to the company's policy-minimum levels.

Or so he thinks; in fact he's acting on bad info (because Mr. Sales Encoder declines to input recent days' sales). So in fact, Mr. Purchaser has under-replenished his stocks even while trying to be conscientious.

Let's now observe further knock-on effects of Mr. Sales Encoder's non-action - this time at the retail floor.

One fine day, the company's retail stores run out of stock on Items X, Y, and Z. The business misses out on sales because the merchandise wasn't there.

The branches have just paid the price of Mr. Sales Encoder's solo decision to be "efficient."

The lesson is clear. All departments in a company are interdependent. Everybody has upstream processes that he depends on, and downstream processes that depend on him.

If each worker inputs data right away into the ERP, everyone can count on an almost-real-time management information system resource. And it's data that everyone in the company can believe in.

But what if individual users insist on scheduling their data-encoding at their personal convenience?

Then let's be blunt: forget it. Your ERP data will always be incomplete and out of date.

If you allow this situation to continue uncorrected, you'll soon start hearing disgruntled talk around the company. "This software is no good! All its data are wrong! You can't believe the reports!"

But all that indignation would be misplaced. In fact, in this case, it's not a software problem. It's a process discipline problem.

So, it's necessary for ERP users to input and post transactions as soon as possible after they occur. (We usually recommend to our ERP customers that all data encoders input and post all transactions within 30 minutes of their occurrence in the physical world.)

You can't afford to let individual encoders choose their own time for inputting their data. You have to consider their downstream colleagues. You need to make everyone consider their downstream colleagues.

Do team members sincerely want to contribute to total company efficiency?

Then individual encoders will have to accept being personally "inefficient" for the greater good.

YOU ARE AN ORCHESTRA AND YOU NEED A CONDUCTOR. Deploying an ERP in your company? It means that you finally accept that all functions in your organization are interacting every minute of the day - and are willing to do what it takes to streamline that interaction.

Accounting, Sales, Purchasing, Warehousing, and Credit & Collections - you name it. Almost every transaction each department does will affect the others.

But synchronizing all this data-encoding is easier said than done. Installing ERP software is just the start. A successful ERP implementation cries out for a strong coordinator, or "conductor."

His job is to ensure that individual data-encoders are not introducing bottlenecks into your ERP. This "conductor" would (a) prevent logjams and (b) untangle them when they do occur.

The conductor must be someone of unquestioned authority in the company. He has to impose discipline across different functional areas.

He or she will have to deal with the clingers to old methods, the slow to understand, the bearers of agendas, the saboteurs.

So we're talking COO or CFO here. We are not talking IT department head.

That's because, when the logjams do occur, it will be a grand finger-pointing fiesta, guaranteed.

For example, the collections people will complain about the inputs (or lack thereof) of the sales guys. Or the disbursements clerk will complain about the purchasing department's lapses.

Someone senior should be able to crack the whip across several departments.

Your internal audit team will be a valuable resource here. Its job is to ensure compliance to company policy. By doing its traditional job, internal audit can help the "conductor" enforce timely data-encoding company-wide.

In turn, a well-maintained enterprise software will give everyone in the team that precious situational awareness. -rsr


* Such as Balmori Sofware's SURE! AR/AP, SURE! AR/ AP/ DMS, SURE! AR/ AP/ LAMA, SURE! Insurance Brokerage System, or SURE! Mall Landlord B/C System



Title:   An enterprise solution gives your business a crucial "situational awareness"
But successful implementation requires a certain down-to-earth, common-sense discipline



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