Chartered Accountants IT Newsletter November Edition 2008

Welcome to the November edition of the Chartered Accountants IT newsletter

Issue No 04 /2008 11 November 2008 1. Understanding software as a service 2. Productivity in the workplace 3. Business impacts of data quality 4. Further reading and references

Almost everyday we hear new acronyms being used, particularly within the IT industry, some of which become main stream before too long. As with any new terminology there often exists confusion regarding its meaning. In this article Simon Hubbard explains seeks to explain the term Software as a Service (SaaS) which has become very topical in the IT industry over the past year.

Background to SaaS

It is said that everything goes around in cycles, and SaaS is a case in point. SaaS is simply the capability to run hosted applications remotely via the internet, using a different payment model based on a subscription to your organisation.

Wikipedia describes SaaS as:
"a model of software deployment where an application is hosted as a service provided to customers across the Internet", and goes on to state
"moreover, costs to use the service become a continuous expense, rather than a single expense at time of purchase".

In the early days of computing, people would remotely log on to large mainframe computers and use these on a bureau basis with allocated timeslots. The personal computer (PC) changed the way companies used applications and processed data. Everything could be processed and stored 'within' the company. However, when the internet took off in the mid 90’s Application Service Providers (ASP) became the latest buzzword within the IT industry. Essentially this was the pre-runner to SaaS but never came to anything for a few reasons, but primarily because the technology was not ready to deliver as internet speeds were too slow.

Today you cannot read an IT related article without the terms on-demand, hosted, SaaS, or 'X'aaS (e.g. PaaS – Platform as a Service) being mentioned. Indeed even SaaS is now being referred to as 'cloud computing'; that is applications are accessed and data stored somewhere 'out there' in the internet cloud. Purists would argue that many of these terms are different. However, for most of us it is enough to simply understand what they mean at the high level, and whether they can deliver a benefit to the organisation.

What is SaaS?

Traditionally software is loaded onto your PC, or more typically a file server if the application is to be shared between multiple users. The application is then launched by the operating system (e.g. Windows) and any data you store is usually stored in the same place.

SaaS applications are hosted by a third party and you access them through your web browser. No software is installed on your PC or server.

The reasons SaaS applications are becoming popular is that the internet can now deliver near real-time speeds (most of us have access to broadband), and the broad range of internet enabled devices gives greater flexibility for deployment. Therefore, SaaS simplifies things considerably from the users perspective as all you need is a web browser (e.g. MS Internet Explorer) and the URL link to the application log on page. Any data you enter is stored on the software supplier's servers.

A benefit for smaller companies with no internal IT support is that they no longer need to worry about managing their servers, or paying third party IT companies to maintain their systems. Instead they now have another option which puts the onus of supporting the infrastructure and systems on to the supplier of the software application. Even very large companies with internal IT departments are starting to look at the benefits of this model particularly for systems best suited to this set up, such as Customer Relationship Management (CRM) solutions where sales teams are often remotely located.

Being web based means that your remote users can access the same version of the system as you access from the office (i.e. 'there is only one version of the truth') rather than needing to synchronise systems when they get back to the office. Synchronisation leads to complexity of data management as well as data not being up to date. Web based also means you can log on to any PC with web access (e.g. at home or in an internet café) and continue to work.

Three major concerns

There are a number of pros and cons as with anything, and these will vary depending on how you run your business. However, there are 3 main areas to investigate when considering if SaaS is suitable to your needs.

1. Integration

Due to the fact that the application is hosted externally, integration may be an issue if you want the application to 'talk' with another business application that you are running internally. Integration is still possible, but it may be more complicated to get it working in the way you would like.

The main point here is to consider the cost/benefit trade off for any integration work. For example, many people ask for their CRM to link with their accounting system, but in reality you must consider what benefits this will deliver to your organisation and is the cost to integrate the two systems worth while.

If you proceed to integrate always consider the simplest way to integrate the systems. For example, does the vendor already have some standard interfaces that could be used (e.g. a simple file export and file import between systems may suffice)?

2. Cost

SaaS is usually sold on a subscription basis, such as a per user per monthly fee. The main benefits of this model are that you can adjust the number of users to meet your changing business requirements rather than having to buy a fixed number up front; and often you can be running live with the application much sooner than if you had to go through a full software implementation thus giving you a faster ROI.

The very nature of it being web based means that it should be intuitive to use and require very little training. In addition, as everyone using the service is sharing the same software, it means smaller companies can get to use the same software as larger companies, whereas previously smaller companies could not afford expensive software and therefore missed out on features that would be useful to them.

It is argued, however, that when you compare the one off cost for buying software up front versus SaaS then over the longer term SaaS will be more expensive. To measure this you should take a reasonable time line, (2 years is often used as this tends to be the 'lifecycle' of a specific version of software), and then look at all costs associated with running this such as:

• software license fee
• server hardware (include operating system, backup software and virus protection software fees)
• services to implement
• annual maintenance fees
• any costs associated with an upgrade
• internal IT costs to manage the day to day running of the system.

3. Security of data

The final point revolves around data security ("I do not want my data stored outside of the company"). You should always check with the SaaS vendor what security measures they have in place, but in reality it is likely that they will have a much higher degree of security around your data than if you relied on your internal IT, especially if you are a small business.

Companies often think they have no risks if their data is stored internally. You must consider how secure your data actually is and who has access to it. Ensure that your internal procedures clearly document the security around your data and what to do when someone leaves your organisation. Also ensure that a clear back up policy is in place and that it is strictly enforced.

The point here is that there are companies that specialise in hosting applications and will have invested many thousands of dollars to ensure that the systems are as secure as you can possibly have them. It is their job to ensure your data is secure and the system is up and running almost 100% of the time. Most SaaS vendors will use these companies to run their applications and the costs involved will be contained within the subscription price. However, do always check that you can get backups of your data at any time.

Conclusion

The three points above are not the only points that need to be considered when comparing the pros and cons of SaaS versus traditional on-premise software, but they tend to be the main ones. The point of this article is to educate those people who may not be aware that there are other ways to purchase software and to try and highlight the main benefits.

If you think that you may wish to look into this further then you should discuss the pros and cons with your IT specialists, or seek guidance from knowledgeable sources.

Simon Hubbard is the Managing Director of Really Simple System. For more information regarding CRM as a SaaS application please visit www.reallysimplesystems.com.au. or email Simon at simon.hubbard@reallysimplesystems.com.au

A recent seminar conducted by Enabling highlighted the need for smarter work practices. "Productivity in the workplace" is an abstract of a white paper recently issued by Enabling about the same topic.

Improving productivity is seldom about the drastic overhaul of procedures and processes in a company where good, solid managerial processes already exist. It is more about management technique and iterative improvements in culture, procedure and process. Improving productivity in a well-established organisation is complex and needs to be well considered. There is no silver bullet – the experience of productivity improvements involves a fair bit of disturbance, patience and above all, perseverance.

What is productivity?

Productivity can be defined as measuring outputs against inputs, typically quantity and/or value of products and services (outputs) measured against the cost or time used to produce them. Inputs may include capital, materials, tools and employees. To measure productivity, we measure the quantity or value of outputs divided by the cost of inputs, in dollars or quantity.

Do you have you a baseline from which to measure your improvements? Without this it is difficult to assess your gains.

Before any increase in productivity can be achieved, a baseline and its components must be measured. Then a change can be made and the effect of that change measured to assess the gains.

There are two key ingredients to productivity:

• Doing the right things
• Doing things right.

Effectiveness – doing the right things

Everybody needs to be moving in the right direction to be effective, and everybody needs to move together. Similarly, your business needs to have a clear direction, and the entire business needs to be aligned to that direction.

Your corporate goals set that direction, which should then cascade down through strategy, tactics and operational functions to every task and process within the organisation, so that everything that happens in the business helps to push the organisation in the right direction.

Efficiency – doing it right

Efficiency is a relentless process of looking at people, processes and technology and asking how they could be improved. This is not a top-down process. It needs employees at all levels to be involved.

People

A key component – the right people in the right places, well motivated, fully engaged, and well led.

Appropriate staff:

Fully utilising their skills increases productivity and keeps them motivated and energised. Know what they are good at and match this with their roles, thus increasing satisfaction. Encourage staff who want to develop, and grow them to be the best they can be.

Boost morale:

This is achievable and simple and often overlooked. Listen and be approachable, recognise and reward good performance, express appreciation, encourage and motivate, give feedback.

Involve employees:

Be open, communicate your ideas and objectives to employees. Get their input, encourage their ideas on increasing productivity. It gives you a new perspective, with new and exciting ideas possible.

Lead by example:

Drivers of productivity rarely seep up from the bottom, they normally have to filter from above. Investing your own time in encouraging employees to work hard and improve productivity has little effect if you are not a role model, demonstrating how a productive staff member behaves.

Processes

These can be physical, mental or data, entailing the same approach to be more efficient. Low hanging fruit are often found at bottlenecks and decision points, eg. an approval process where the manager could add more value doing higher level things. As the changes are implemented, it becomes harder to find process improvements – but they are no less valuable for being harder to find.

Processes which work for you; know what techniques work for you. Where they are unsuitable you end up wasting time. Before starting your new plan, set out your objectives and measure the results. Maintain your focus and drive so you do not become overwhelmed and give up at the first hurdle. You need money, time and energy – but it will be worth it.

Technology

Hardware and computer software are the primary types of business technology. Technology must be used as a tool to assist with productivity: choosing the right technology components will ensure you achieve better results.

Building a better understanding

What leads to effectiveness and efficiency are tightly interwoven. Therefore understanding how people, processes and technology work in your business is essential to finding opportunities for productivity gains.

People

They have roles, both formal and informal, following rules which may be rigorous or modified for their tools and ability. They may be suited to their tasks or not.

Processes

Thoroughly, accurately understanding your business practices is essential – based on the real "shop floor" not just documented procedures.

Technology

Shop floor machinery, communications, information technology (hardware and software) – they may be integrated or a loose collection of gear.

Getting software to serve you

Businesses do not develop insights or make decisions, they do not close deals, invent new products or find new efficiencies - people do. But people need tools to help them be the best they can be.

Understand the user interface

Depending on an individual's role, there are three possible software interfaces:

• Business Application Interface
• Personal Productivity Interface
• Business Portal Interface.

Business Application Interface

This mainly accesses business applications. In the main pane of the screen are parts, consistent across different roles, with information changing for each person, depending on their roles and processes. The case here shows:

• Processes – associated with a particular role
• Activities – associated with processes, comprising related tasks
• Alerts – exceptions to standard workflow and processes needing immediate attention
• Productivity – access to email and calendar.

Personal Productivity Interface

In the main pane are interfaces giving easy access to multiple applications, with the information changing according to the user's role:

• Personal Productivity Applications – word processing, spreadsheets and email/calendar
• Collaboration Activities – associated to specific business activities, enabling mass communication across all roles and tasks
• Business Applications – this can include alerts or specific access to business application functionality.

Business Portal Interface

Dissemination of information. A portal may be a company intranet, accessing information on the company, products, policies and procedures. Another might have industry-specific information, such as bank rates or shipping schedules. Another may offer customers access to information they need to interact with your business, such as stock levels and locations.

Three distinct worlds of software to improve productivity

The first world

This involves business process automation software which automates processes in accounting, sales, production, etc. It is good at automating specific tasks but can be inflexible and hard to change.

The second world

This is personal productivity software, used daily, such as word processing, email, spreadsheets and the web.

The third world

This is platform software supporting automation and productivity software, out of sight, residing on servers. It comprises application and database server operating systems, email, database and collaborative software tools.

Integration of the three distinct worlds

The current goal of business software is to integrate the user friendliness and familiarity of personal productivity software with the user experience of business process automation applications – with the same look and feel. This fosters quicker adoption, with less training, and more familiarity.

Technology can bring together people, processes and technologies to help drive business success. Productivity and effectiveness can be increased by automating and streamlining financial, customer and supply chain processes, eg export shipping documents as a data file to import directly into the customer's system.

Role based applications

To identify how an application can best aid a particular role, you need to know its specific tasks and jobs. People and processes give huge insight into company-wide productivity and its improvement. Building this into an integration of the three worlds, the user's desktop can be very focused on their specific role and requirements, presenting them with the critical information and functions they require in their own home page – a huge productivity enhancement in itself.

Understanding how they interact and need to interact

The world is changing. The complexity of environment and processes are key influences on an individual's roles and the processes they participate in, their complexity and the process activities and tasks.

Summary

While focusing on software, the principles of productivity improvement are just as applicable in other areas of the business to achieve greater productivity. Productivity improvement is a relentless process of ensuring the business is effective and efficient – all meeting the same goals - and ensuring that to remain competitive, people, processes and technology are regularly examined, and improve. It needs careful planning, good management and a relentless dedication.

Enabling supply and implement business management software in Australia and New Zealand. This article is an abstract of a white paper, "Productivity in the Workplace" which also includes a self assessment guide. It is available from Enabling by phone 1800 Enabling or by visiting the web page www.enabling.net Copyright © 2008 Enabling. For further information contact Howard Cribb at hcribb@enabling.net

The quality of a company's data is an often overlooked facet of many business operations. Greg Pritchard introduces the concept of data quality, the impacts to your business, why you should care, and what you can do about it.

Defining data quality

Data quality is defined as having your business information correct, consistent, and complete. Data quality forms part of the broader information management process; which seeks to ensure data is trusted, reliable, and available for business initiatives.

Take the following simple, yet practical example of how low-level data quality can impact one's business. A client of ours recently faced the not uncommon challenge of integrating customer information stored in their Customer Relationship Management (CRM) system with their billing system. The goal was to ensure invoices sent to their clients were generated off current contact information. As with any business, invoicing clients correctly and in a timely fashion is the backbone of good cashflow management.

We found that before we could start the integration process our client had serious issues with the information stored in their CRM. Some of the key issues included:

1. Customer mailing and business address information not stored consistently in the correct fields or at all,
2. Email addresses, for electronic mailing of invoices, only recorded for less than 20% of the database, and
3. Significant duplication of client records.

If the integration were to occur without a cleanup the business would either not be able to reliably invoice their clients, or potentially invoice their clients multiple times. Neither of which were good for business.

Symptoms of poor data quality

As the above example highlights we need to be able to identify poor data quality before we can address any of the challenges faced. The following are typical data quality issues faced by all businesses:

• Information in the wrong fields. e.g. mailing addresses stored in physical address fields and vice-versa, email addresses in phone number fields
• Business process information in descriptive fields. e.g. using the comments field to keep track of where a particular file/customer/application is at in it's workflow
• Information simply not recorded. e.g. discounts or rebates provided to clients not recorded quantitatively during the initial transaction
• Inconsistencies of data entry. e.g. NSW vs New South Wales, 20 vs 0.20 (for percentages)
• Same or similar information stored in multiple locations. e.g. in a multitude of spreadsheets or databases
• Colloquial information. Sometimes, in the heat of the moment, we record subjective commentary which could later be seen by the wrong person.

Business implications of poor data quality

For almost all businesses poor data quality is not simply an IT problem. Instead, data quality issues have real business impacts that can extend throughout the organisation. The following are actual challenges faced by clients:

1. Staff downtime

Even though there are software tools available to cleanse data; time is required to investigate and amend incorrect, missing or ambiguous information. This time can have a direct cost to the business through lost employee productivity.

2. Strategic

While data is being cleansed; some business initiatives may need to go on hold.

3. Business workflow

Too often, we have seen business workflow information stored in the comments fields on a particular item or record. These include an item’s current status, who is handling it, what needs to happen next, etc. By storing this information descriptively it is practically impossible to get an overview of the business’ operations, and to provide auditability of processes.

4. Marketing

As any sales & marketing professional will attest to; the better targeted a campaign the more effective it will be. So, if customer contact information, as well as their purchasing or service activity with the firm, is not captured accurately; it becomes difficult to segment the customer database for targeted marketing efforts.

5. Compliance

Correctly recording the dates, amounts, and GST implications of each and every financial transaction.

6. Business intelligence

Regardless of the tools used companies looking to implement reporting for strategic analysis or for day-to-day business transparency are often hampered by not having their raw data available or reliable in the first place. No reporting tool, however sophisticated, can report on data which does not exist.

7. Technology

Vendors may have scripts and tools available but there may be cost implications for migrating or upgrading your software. This cost may be in purchasing licenses for tools or in consulting hours to configure them to run over your databases.

8. Exit strategy

Unfortunately, we have seen the value proposition of an client's exit strategy reduced because the core data of the business was impaired and could not be integrated into the purchaser's systems without significant cost.

9. Cashflow timing

Businesses who do not make the capture of clean data an integral part of ongoing business operations and the associated incremental on-costs, are in fact deferring the inevitable data cleanup to a lump-sum project cost.

10. Financial reporting

It may be difficult to report on the true profitability of product and service sales if discounts, rebates, and incentives are not captured consistently and accurately.

Sources of poor data quality

Data does not simply degrade by itself over time. Logically, your business information will be of reduced quality if the data was captured poorly in the first place. The state of a business' data quality can generally be attributed to one or more of the following causes:

• No clear, unambiguous definition of data quality for the department or organisation
• Lack of awareness by staff on the importance of good data practices
• Lack of management awareness and enforcement of data policies
• System limitations on entering quality data
• Lack of caring or engagement by staff, or outsource partners
• Low data quality from external parties
• Corruptions during system upgrades or migrations.

Strategies to address data quality

There are no silver bullets for solving data quality issues. However, implementing some or all of the following strategies will get your business moving in the right direction.

1. The first step in any data quality strategy is to define what good data looks like for your organisation. This includes, for any particular context, defining the minimum information to be captured, which fields or systems should be used for the data, and guidance on what should be entered where there is potential for variation (e.g. must enter percentages as a value between 0.0 and 1.0 – say 0.33 for 33%)
2. Secondly, it is important to understand how you are going to use the data as it will influence how resources are deployed to address any issues. When faced with setting policies or a data cleanup effort; the highest priority items, such as customer contact details or core product specifications, will need to be worked on first.

Based on the above; clear policies should be defined and communicated to relevant staff and suppliers.

Other important considerations include:

• Training may be required to ensure staff are well versed in data quality policies, and are aware of the business implications of non-compliance. If your systems are not able to provide input validation; your staff become the last line of defence, and so must be educated on how to help the business by recording data of a high quality.
• Most businesses do not have the luxury of starting with a clean slate, and will need to resolve existing data issues. Data generally needs to be corrected with a combination of technology tools and manual intervention. Tools can help identify bad records (e.g. this email address has no @ symbol), make rudimentary corrections (New South Wales = NSW), and fill in standard or easily assumed data (if State is one of NSW, QLD, VIC etc, then Country = "Australia"). Tools however, cannot create data which does not exist, and cannot extract real data from descriptive comments. For this, staff or external consultant time is needed to resolve.
• There are many trade-off's to be considered when deciding how to undertake a data cleanup. Depending on the situation, businesses may choose to undertake a "big bang" approach to data cleansing or a more incremental approach. Other trade-off's may include quarantining business processes while the data is being cleansed, taking steps to mitigate the risks of wholesale updates to financial data, and being able to report on both clean and unclean data concurrently. When working with large datasets or high risk data; it is wise to get some expert help with the process.
• Do not wait for the business to suffer significantly from poor data quality. Put data cleanup plans in place, and execute them. Business owners, or the firm's management, will need to hold all relevant stakeholders accountable for their commitments to meeting the milestones of the plans.
• Ensure data from external sources is clean before importing it into your systems. Where you can influence your suppliers, create data guidelines for information coming into your company. Alternatively, consider having your IT provider create or customise a script or tool that verifies the data meets minimum quality standards before importing.

Lastly, the best defence to user-entered data is changing your systems to validate data upon capture. The investment in changing your software to correctly validate data upon entry will significantly reduce the cost of future data cleanups. If its not possible to change your software screens consider utilising tools or scripts to query and verify your databases periodically.

Summary

Remember: the maxim "Garbage In, Garbage Out". In the technology age your business data should be treated as a first class asset of the business, and a business with good data will be better able to monitor and control their operations. Use that data for strategic initiatives and lower costs through ease of data migration and systems implementations.

Without a doubt the cost of fixing bad data will be higher than the cost of maintaining good data.

Greg Pritchard is the Managing Director of Dedication Group; a company offering Virtual CIO technology and business advisory packages to small-to-medium businesses. For more information contact Greg on greg.pritchard@dedicationgroup.com or visit the website www.dedicationgroup.com

In this issue we have identified a number of issues and trends for our contributors. Below is a miscellaneous selection of websites and references that has been compiled to help interested readers undertake further research on these topics.

SaaS

With the global economy in turmoil, SaaS vendors of all stripes (ERP, CRM, supply chain, BI etc) will be pushing their fast-to-implement and less expensive products even harder. But do you know how to look before you leap into the cloud? The article 5 Questions to Ask Before You Say Yes to SaaS or Cloud Computing may provide the answer.

Some technologies (think SaaS) may see increased use because of the downturn. But for many IT execs, scrimping on spending is now the order of the day. Economy puts IT into penny-pinching mode provides some food for thought.

The main attractions of the model are that services can be rolled out quickly with a sharp reduction in costs incurred on servers and administrative staff. With software-as-a-service now on menu of large companies is it the end of software as we know it. See www.techworld.com.au for more information.

Galen Gruman explores What is cloud computing?

The online delivery of software-sometimes been a long-standing dream for many in the IT industry. Abhijit Dubey writes about Delivering SaaS and what it may mean for vendors and organisations.

Data quality

Many organisations have deployed a SOA architecture to focus on service delivery to customers. In The importance of data quality in service-oriented architectures Sid Frank explores the importance of data quality and data governance practices as a prerequisite for delivering an SOA.

Most manufacturers would never think of eliminating the quality control function from their production processes. Yet many organisations do not have an equivalent focus on data quality. Andrew Greenyer describes why the quality of data should be an important focus for all businesses.

Clive Longbottom, Head of Research, Quocirca also has some interesting views on The importance of data quality

Daniel Tynan has written an article in the Information Age highlighting the issues with poor quality of data. The perils of dirty data describes some of the problems with today's corporate data.

Productivity

Measuring productivity in IT is fraught with dangers of measuring the wrong thing. In IT productivity: measuring the immeasurable . Edward H. Baker believes the goal for CIOs now is to figure out how to measure the real benefit of successful innovation, and of IT's impact on the innovation process, not just the benefit of IT by itself.

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