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Articles Finance Transformation

The chart of accounts: concept & SAP design (R/3 to S/4 HANA)

The chart of account (CoA) is one of the most important structures in business. It reflects all the activities a business is involved in and it provides a foundation for the majority of financial and management reporting. Correct use of the chart of accounts can both simplify operations and improve decision making capability.

Often on accounting projects, there is a gap between accounting expertise and systems expertise, this can result in a poor CoA design. This can easily be overcome by understanding the historical context and modern-day principles that surround the CoA. We can then better understand the implementation options in systems such as SAP ERP or S/4 HANA. This article will look at three topics:

  • Part I: Accounting: history & modern principles;
  • Part II: CoA settings in SAP ERP (from R/3 to S/4 HANA);
  • Part III: Common pain points and improvement initiatives.
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Articles Finance Transformation

A simple guide to cost reduction

Cost reduction and CSR

Whenever discussing cost reduction it’s important to consider corporate social responsibility as a starting point. Ideally, companies can find the right balance between reducing costs and thinking about employee and business partner (e.g. supplier) impacts. Employee layoffs can have a devastating effect on individuals. Business partner changes can put companies out of business. When planning and executing cost reduction these impacts should be considered. In real life, this might mean trying to offer employees other options (reduced hours / different contract terms / new profit-generating roles) or business partners a revised agreement.

A model for cost reduction

A good starting point for cost reduction is to consider the type of costs incurred within the business. Accounting provides a consistent way to look at this. Costs are either tied directly to production or not. For example; in a manufacturing environment there are factories with machines, operated by people to produce products. Cost accounting is used to calculate ‘cost of goods sold (COGS)’. This is the cost that can be directly tied to converting the input materials to the finished product. In this case by adding the raw material, labour and utility costs.

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Articles Project management

Improving project management by focussing on strategy and people

Many of the projects I’ve come into contact with over the years run into problems that stem from a lack of focus in two areas. A lack of ability to effectively deal with people. And a lack of depth of knowledge of strategy.

I’ve been around projects for almost 20 years. Working in roles such as systems analyst, business analyst, project manager, program manager, management consultant and change manager. During this time I’ve seen a wide variety of methods and tools applied, but regardless of those, there are consistent underlying problems.

The profile of the project manager is critical to a projects success. What experience do they have? what do they focus on? what tools do they use? how do they manage conflict? a good project manager needs a wide variety of skills.

If I were to estimate I would say around 1 in 5 projects that I come into contact with have good, multi-faceted project managers. The good news is we can all become better project managers and in this article I’d like to address one of the biggest opportunity areas for improvement.

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Articles Technology

SAP HANA and S/4HANA

Recent years have seen a resurgence in large organisations taking on major SAP upgrades with the relatively new SAP business suite 4 HANA (S/4HANA) collection of applications. But what exactly is HANA? and what is S/4HANA? How is implementing or upgrading to it different from the R/3 upgrades that were significant programs for many organizations over the last few decades?

As SAPs core products have advanced and their portfolio has broadened it’s become difficult to understand how it all fits together. In recent years I’ve met team members and stakeholders working on SAP programs who struggled to articulate the basics of HANA. SAP projects can be complex and challenging partly due to this lack of knowledge. SAP have been addressing this by improving their communications and training, but understanding HANA can still be quite a lot to navigate.

In this article, I’ll briefly explain the history of SAP and hence the context that led to HANA as well as clarifying the technical concepts behind HANA, why they are important, and how the business application has changed.

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Articles Technology

Blockchain: how it works

Blockchain has been one of the most hyped technologies of the last decade. In part thanks to the massive profits made from Bitcoin and other cryptocurrencies. Digging below the smoke and mirrors that surround blockchain, the evolution of the technology is fascinating.

This article is based on a presentation I gave to my international colleagues in Japan in 2019. I was motivated to create this to combat the misinformation surrounding blockchain solutions. This is key to answering the question of when they should and shouldn’t be used.

To answer this question a brief walkthrough of various concepts from mathematics and cryptography is required. These make blockchain possible. Bear with me as we work through some of the concepts, it will hopefully all make sense by the end of the article.

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Articles Technology

A No-Nonsense Guide to Digital and Technology Strategy in 2020

‘Digital’ – A Magnet for Nonsense!

‘Digital’ was and still is a popular term in the business world. In recent years a lot of papers, presentations and communities of interest have appeared on this topic. Unfortunately, the majority of them seem to create a lot of content, but little meaning. Put simply, a laymen could read a typical brochure on ‘AI’ or ‘Blockchain’ and still have no clue what the physical product or service is and how it differs from more traditional techology.

Back in 2000, I first started my career in information technology, not long after joining we were re-branded as ‘information & decision solutions’. I think the majority of people in information technology will be familiar with the constant re-branding of teams and functions.

This is the case with ‘digital’

Digital technology is a hodge podge of technologies which are new / popular / highly saleable. I tried to figure out what the common theme is with technologies that get accepted into the ‘digital’ podium, but there doesn’t appear to be one.

In this post, I’d like to have a plain english, no-nonsense discussion of digital (or more simply new & popular) technologies.

I’ll start by taking a look at what major companies are saying about digital, then I’ll look at structuring it into a simple taxonomy to promote a clearer understanding. I’ll then take a look at key areas of digital one by one. Finally I’d like to talk about the approach taken to develop a digital strategy.

Before getting into the detail I would like to give some advice to anyone thinking about investing in digital products or services:

  • Take a ‘doubtful’ stance, don’t get caught up in the hype;
  • If someone can’t explain a technology; how it works and why it’s useful, in a few sentances to a laymen, do not listen to them;
  • Be careful of conflicts of interests when dealing with suppliers and partners, I’ll talk a little more about this next.
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Articles Finance Transformation Process improvement

Improving the finance record to report process

“A complex, lengthy process, often not well understood”

Starting from business transactions such as the purchase of materials, payment of employees, execution of financial transactions and ending with reporting and decision making; including the submission of detailed annual reports, the record to report process (RtR) is a long, complex process that involves people from across the enterprise.

Despite the critical nature of the process it’s rare to find RtR clearly documented from end to end, few employees can describe the process in detail from start to finish. This could be in part due to the process extending from the core customer facing business through to technicalities of statutory and regulatory reporting. Some excellent papers and books exist, but many focus only on individual aspects of RtR.