Why temporary processes can be a bad idea in your business
Working with one of our customers recently, I was reminded why temporary processes can become such a headache for a business.
Our client uses a key report that shows the real profitability of their products by taking product sales and applying various additional costs and revenues to them to produce the true margin applicable to each product. It’s a vital report to the business. But, it’s created using a massively convoluted process, with a lot of manual intervention. Information is taken from over 30 different sources and manipulated to make it suit the reporting model. Very few people understand the process and it takes at least 6 months for someone new to learn how to do it. Also, it takes one person 20 days each month to produce the report, so it’s a full time job. Of course, with so much manual work, it’s also error prone and an area of high risk - what happens if the person who knows how to produce it is ill, for example. We’ve been helping them to understand and document the process, and making some recommendations for improvements, but changing it now is going to be hard for them.
Like many problematic processes I’ve seen in other companies, it started life as a feasibility study, answering questions such as ‘can this be done?’, ‘how can it be achieved?’ and ‘what would the results look like?’ That’s fine, and it’s a good approach to finding out what’s possible, but the trouble is that there’s a tendency for these things to turn into a real process once the underlying questions have been answered. Suddenly, what started out as a feasibility exercise has become a permanent fixture, which isn’t what the approach was designed for in the first place. Then people start to rely on the outcome of it, other processes are built on the back of it and, before you know it, you become trapped doing something in a less than ideal way.
My advice is to find any processes like this in your business and take stock of them. Consider if they are really necessary and whether, if you were to design it from scratch now, what would you really like it to do and how would you want it to work. Chances are, you’ll find that it’s not really giving what you want anyway, and there are much better ways to do the job you really need.
It’s worth spending some time and money to do this sort of thing properly with a real process that’s carefully thought out, using the proper tool for the job. In this case, a huge amount of information is being processed using 23 Excel spreadsheets, with macros and complex formulae, and a lot of elbow grease. The limits of what’s possible with this tool have really been reached, causing a lot of extra headaches.
Quite often, especially with reporting, and certainly in this example, the real problem that needs to be solved is at the point that the information arrives into the system. When people enter transactions onto systems, the requirements of key reporting processes need to be understood, so that the right information is being gathered at that point, to allow later analysis in the right way. In this example, if the revenue and cost transactions were already being posted at the best possible level, it would be so much easier to analyse the eventual effect on profitability, without all the manual effort to translate it.
So, next time you set someone off on a temporary approach to something, I’d recommend you think about where it might all lead. And once the feasibility study results are in, take the time to use what you’ve found out to design a proper process that provides a workable and sustainable solution to the problem.
If you would like some free advice about any processes in your business that are currently causing you concern, please just drop us a line by clicking here.
This entry was posted on Thursday, June 5th, 2008 at 9:52 am and is filed under Articles, Business Advice, Business Intelligence, Hints and Tips, IT Advice . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
June 13th, 2008 at 7:20 am
I agree. It is so easy to set up something ‘just for now’ only for it to still be in place years later when the company has totally outgrown it. I’ll try to size up any project now and estimate if it is likely to become a long term or important idea for our company and if so set up a proper system. Otherwise it takes up far more time in the long term.
June 16th, 2008 at 11:08 am
Thanks for your comment. I’m pleased that you agree.