Category Archives: Automation

Top 5 Reasons NOT to Automate Your Business

Automation does not always make sense | Top five reasons for not automating your business

Just because it is possible to automate a business process does not always mean that you should.  As with any investment in your business, the decision to spend time and money should be driven based on  measurable returns and clear business objectives.

At Ei Dynamics, we encounter companies frequently looking to automate one process or another only to find time after time many of these requests simply do not make good business sense. While we always love to sell more software, we are not in the business of taking people’s money when it doesn’t make sense. Below are five reasons why I encourage businesses NOT to automate a business process.

1. Costs Outweigh Benefits

In many cases of business process automation, the cost to implement such strategies exceeds the benefits. The return on investing in an automation strategy doesn’t always exceed the initial spending costs. There are two methods of calculating return on investments (ROI) that can help business owners determine whether or not purchasing the technology to automate their business process is a worthy expense.

  • Tangible ROI is the more traditional form of return and deals with concrete information, such as how much money is to be spent and the amount that will be returned over a certain period of time. This type of ROI is tangible as it provides probable financial outcomes for specific amounts invested.
  • Intangible ROI is more difficult to predict as it deals less with actual dollar amounts and more on the success of the business and the happiness of employees, including free time away from company duties and a decrease in compliance risks such as missing deadlines and license renewals.

When it comes to predicting ROI in order to purchase the technology needed to automate your business, it’s important to understand there is more than one way ROI is measured and what might be beneficial for one company may provide serious setbacks to another.  (To learn more read How to Justify the Costs of Automation; Quantifying your ROI)

2. Too Complicated

In order to automate a process, we first must understand the process that we are seeking to automate.  It is amazing how often people ask us to automate something, and as soon as we start digging into the details and asking specific questions, they all of a sudden get a “deer in the headlight” type look. The line of questions can be long and circuitous: What happens if the invoice amount is over x dollars; What if the approver does not approve after x days;  After it is approved, who takes ownership from there … you get the picture.  Nonetheless,  it is critical that we are able to understand each and every step so that we can effectively implement  an automated solution. We must be able to document each step in plain English.  If a process cannot be documented in plain English, chances are it is too complicated and esoteric and attempting to automate it will ultimately end in failure or will be un-maintainable by future individuals.

3. Lack of Stakeholder Involvement

Ownership and management are crucial for company success, which is why supervisor roles are necessary for almost all businesses.  Likewise, it is also important to have someone who is individually responsible for automated workflow processes.  As the old adage goes, “Out of sight, out of mind.” This could not be more relevant than with automation. Often, when we automate something people forget about it and then a few months go by and the owner of the company starts asking why something slipped through the cracks nobody knows why. Even though the goal of automating processes is to reduce or eliminate human involvement, humans still need to be engaged. Someone needs to ensure that jobs are running and continually monitoring the health of these automated jobs. Believe it or not, computers do crash sometimes, Windows services get turned off or stop and IT sometimes does stuff not always knowing the full ramifications. When this happens, sometimes our automated processes stop working. Ultimately, someone needs to be watching the store and making sure all systems are running and functioning properly.

4. Establishes Barriers between Customers and Employees

One of the top reasons why automation isn’t beneficial for most businesses is that it impinges communication between employees, customers and suppliers. Automated systems are helpful when navigating through a general task or problem, but the fact of the matter is that automation generally treats every unit as the same despite how personalized a problem or project may be. In order for customers to feel their concerns are genuinely being heard, automated systems need to provide personalization or they will instantly create a communication wall between stakeholders. For example, have you ever called your cable provider to get help with your internet or cable service and the automated attendant picks up and you get 15 minutes into the call and you cough accidentally and the attendant says, “So you want to hang up and quit this call?” You then quickly say “No,” but you still have something caught in your throat and the attendant then says, “You have confirmed that you would like to end this call…good bye.”  You’re screaming at the stupid phone and yelling expletives because you said “No” but the “automated” system thought you said “Yes.”

Performed properly, automation should act and feel the same as if employees are doing the task manually, whether it’s in the form of how an automated email is crafted and presented or how people interact to each step of the workflow process.

5. Eliminates Personal Responsibility

Although automated services may be able to help connect companies with more customers than a physical representative can, it should not relieve employees of personal responsibility. In order to be effective, in terms of increasing business, automation should be designed to help employees become more productive while reducing human error and risk. Personal responsibility is essential in establishing trust with customers and building relationships. Therefore, automating a process that causes responsibility to be shifted from employees to a machine is counterproductive to the end goal of promoting a sense of security.

While there are certain companies that have effectively mastered the system of automating business processes, it’s important to realize that ultimately the benefits of automating a process must outweigh the costs and all potential downfalls to automation should be considered and taken into account prior to spending money on an automation project or software.

 

 

Why Running Reports Costs More Than the Value They Provide

A critical question all business executives should ask is, do the benefits of running company reports outweigh the cost associated with generating the reports? Reporting is a critical and necessary element in any size of business. Without meaningful data, businesses would be unable to make sound business decisions and react properly to events that occur within their organizations. But just how much does it cost to run, read and analyze the reports that provide this treasure chest of information and do the benefits outweigh the associated costs?

When running reports manually there are two main costs components: 1) The hard dollar costs of running reports that include the cost of paper, printer toner, physical printers and electricity; and  2) Ongoing human capital costs.  The first set of costs are fairly straightforward and easily calculated but the later is more elusive and can be staggering when broken down.   Every report that is created, Automating reports can save time and money. printed, read and acted on is a cost to the company in terms of human  time and energy. To illustrate, let’s take a look at some of the common steps that most people engage in when running a report:

  • Step one: Log in to the accounting or business system (which also means that another user license must be purchased which, quite often, is an expensive measure).
  • Step two: Navigate to the report you need to run, which takes more time and energy.
  • Step three: Print the report, which can take anywhere from several seconds to more than an hour depending on the length and complexity of the report.
  • Step four: Read the report and analyze the data for accuracy and anomalies, which requires more time and intellectual exertion to fully understand the information being delivered.
  • Step five: Throw the report in the recycling bin, which costs the company the expense of wasted paper and used toner in the printer.
  • Step six: Based on the significance and urgency of the information, repeat this process over and over several times a day, week, month or year until all issues are resolved or until the repetitive cycle starts all over again.

Now, multiply these steps across an entire company consisting of a few employees to thousands of employees, and you can quickly start to see how much time, energy and hard costs are actually spent simply running reports.
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- What if we could change the paradigm, and we only ran reports manually as the exception rather than the rule?

- What if, alternately, the majority of reports were automatically generated and delivered to the responsible individuals only when there was a reason for the individual to review the report?

- What if we could apply business rules that emulate the same thought process used when analyzing a report manually and then generate that report automatically when the business rules are broken?

- What if the report was emailed as a PDF attachment, eliminating the need to print the report out to paper and also making it easier to share and pass it along to others?

- What if we could also archive or save the report automatically for later retrieval and review or for audit purposes?

Increase Automation, Decrease Costs

Automating reports can save money, time and headaches.Through automation, there are ways companies can cut their reporting costs and still retain the important information these reports provide. If reports are emailed as PDFs, they are more easily archived for future reference and less paper is used in the process. If we automatically receive reports only when there is a need to review the information, we become more efficient and can reallocate that time on other activities. And, if automation automatically generates reports, we save human time from manually going through the steps of navigating, printing and waiting for the reports to materialize on paper.

Automating reports also reduces the number of software licenses a company must purchase and allows more employees the ability to access the material through public logins. Another benefit of automating reports is that business owners no longer have to rely on other employees to make sure the reports are printed and distributed on time. The larger the size of company, the greater chance that at any given time, an employee may be on vacation, out of the office due to illness or simply taking a day off for personal reasons. Automating reports increases mobility for employees as there is no need to be physically present in order to receive information as it becomes available.

As time, energy and finances are required to run a successful business, there are many ways your company can cut costs by implementing some type of report automation strategy.  In fact, there are several things that companies can do to further automate their reporting and, in some cases, even use standard tools freely available at no additional software cost.  For example, one easy and free approach would be to leverage the built-in report automation functionality of Microsoft’s SQL Reporting Services.  Alternately, there are other more robust and flexible commercial solutions such Ei Dynamics (http://www.eiDynamics.com) that leverage off of existing reporting technologies such as Microsoft SQL Reporting Services, Crystal Reports, Word and Excel and can provide full end-to-end report automation with all the bells and whistles.

Whichever method or direction you decide to take, it is important that you start developing and implementing a report automation strategy now.

 

 

 

Top “Clouded” Technology Words

Words may be the single most useful tool we have as humans to effectively communicate with one another. Words allow us to describe how we are feeling and what we are thinking.  Every word means something different, heck, we even have dictionaries to define the meaning of each and every word.  So why then are there certain words that nobody can quite pinpoint the correct definition?

The inspiration for this article came about recently while talking with a prospect. The prospect wanted to know if Ei Dynamics was a “Business Intelligence” product.  I had to pause and think for a minute and eventually retorted, “I guess that depends on what your definition of ‘Business Intelligence’ is. Why don’t you tell me what your definition and understanding of this term is, and then I’ll tell you if we fit into your definition.” We don’t classify our product as a “Business Intelligence” solution, but it certainly has functions and capabilities found in business intelligence solutions. The term “Business Intelligence” has morphed into such a generic term that I had to determine what the prospect’s definition of the word was before I could provide a reasonable answer.

Words On Fire = Distorted Meanings

Technology terms have become clouded in their meanings. Maybe it happens in all types of industries, but for some reason it seems like the IT industry is notorious for coming up with words and phrases to describe a process, a software class or a type of functionality. Then if it catches fire, the industry distorts the term to the point where nobody understands what it means any faster than you can blink. Sales and marketing people are wizards at doing this. As soon as a new word or phrase catches fire, they try to find any angle or possible opportunity to incorporate it into their product literature wherever possible. For example, when web based applications were all the rage several years ago, all of a sudden every application on the market incorporated the term “Web Enabled”.  Some companies would create a help file and display it in HTML through a web browser and claim their application was “Web Enabled”.  The problem is that when companies do this, it distorts the meaning of a word and makes it difficult for the end users to know what a term really means and how to differentiate one solution from another.

The following is my top list of technology words that I think have become “Clouded” (pun intended).

Business Intelligence — The term business intelligence (BI) was originally coined by a researcher at IBM in the 1950s. In the 1980s with the evolution of modern database systems, data warehouses and executive information systems, the term gained more steam. The Gartner Group brought the term into the mainstream in the 1990s, and the term soon covered a broad area range of functions focused around technologies such as data integration, data quality, data warehousing, master data management, text and content analytics.

I originally associated the term “Business Intelligence” with report writers like Crystal Reports and financial analysis tools like Lotus 123 and Microsoft Excel. But as soon as the term became mainstream, everyone wanted to claim that they did BI. I knew the term was doomed when low level business executives who barely knew how to turn on their computer were throwing the term around like cheap hors d’oeuvres at a cocktail party. Today almost every vendor in the market claims to have BI capabilities. Seriously, just randomly select 10 vendors of almost any business software and read their literature, and I guarantee you will find the term “Business Intelligence” intertwined into their product information at some level. I guess since almost every application on the market stores some type of data, provides output on that data and has some type of reporting capability, technically all applications do BI. But where does that leave those of us truly looking for a BI tool? How do we differentiate hyperbole from substance? Basically, when a term is used ubiquitously by everyone it becomes meaningless and, in my opinion, that is what has happened to the term Business Intelligence.

Cloud Computing — This term really took off in the mid 2000s after Amazon started offering virtual servers hosted on their “Cloud Computing” platform. Basically, you could lease a server just like the one sitting in the closet in your office … anytime, anywhere and for only a few minutes or indefinitely. They called it “the cloud” because you didn’t know where the physical server actually resided (nor did you care). It was as if the server was “up in the clouds”. You knew it was there, but you couldn’t see it or touch it. Amazon threw lots of marketing dollars around this service and the term “Cloud Computing”, and soon it was the new hot word. Eventually, everyone wanted to jump on the “Cloud Computing” bandwagon. SalesForce.com who originally marketed themselves as a SAAS (Software as a Service) solution, started referring  their web CRM service as a cloud based system. Citrix, whose core product offering hadn’t changed in almost 20 years, started to refer to their product as a “Cloud” based solution.  Today most people equate “The Cloud” with anything being on the internet or being accessible via an internet connection. This broad definition has significantly modified the essence of the original definition and has certainly “clouded” the meaning.

Today when people ask us if Ei Dynamics is cloud based, I have to ask what their definition of “Cloud Based” means.  There are so many different connotations of this term that it’s impossible to know what someone is referring to anymore without qualifying his/her definition of the term. Here are some common ways people think of the “Cloud” today…

  • Anything delivered through a web browser
  • Any access to data remotely via an internet connection
  • Ability to access a server via a RDP or Citrix connection
  • Any web based software such as Gmail, SalesFoce.com, Office 365

Workflow — Ei Dynamics is actually marketed and sold as a workflow solution, so this term is really personal in nature to me. I take it personally because when the term is misused or misrepresented, it directly affects our ability to articulate to prospective buyers what we do and how we differentiate from other solutions.

At Ei Dynamics we define workflow as the implementation of technology to systematically eliminate or reduce the manual and repetitive processing associated with a defined business process. We sometimes even refer to workflow as the robotization of business processes.

Unfortunately, in the software world –  because the allure of automation is so strong and because workflow software has traditionally been associated with providing a framework from which business processes can be automated –  many vendors and marketers include this term within their marketing and sales literature because it carries positive connotations. As a result of the overuse of the word to describe almost everything remotely associated with automation, the word has become significantly degraded. I even recently saw a promotional email from a major accounting software vendor who was promoting the fact that the ability to print a report from within their system was an aspect of how their software offered a workflow solution. Not sure if I’d go as far as claiming false advertising, but you make your own conclusion.

ERP has become synonymous with accounting software. ERP — Per Wikipedia, in 1990 Gartner Group first employed the acronym ERP as an extension of material requirements planning (MRP), later manufacturing resource planning and computer-integrated manufacturing. Without supplanting these terms, ERP came to represent a larger whole, reflecting the evolution of application integration beyond manufacturing. Not all ERP packages were developed from a manufacturing core. Vendors variously began with accounting, maintenance and human resources. By the mid–1990s ERP systems addressed all core functions of an enterprise. Beyond corporations, governments and non–profit organizations also began to use ERP systems.

Today the term ERP is essentially an acronym for any and all “accounting software”.  Once Quickbooks started marketing their software as an ERP system, the term ERP basically became generalized. I’ve included this word as one that has become “clouded” because in the past when someone said they had an ERP system it actually carried some weight and status and evoked thoughts such as big company, sophisticated, complicated operations. Now basically your $100 copy of Quickbooks is an ERP system.

Conclusion

Unfortunately, it appears where money and business are concerned, nothing is sacred when it comes to words and their meaning. People have time and time again proven they will twist, manipulate and distort words without impunity if it provides them some type of competitive advantage. The result is that words get distorted over time, they lose their meaning, consumers become confused and new words are created to restore meaning and clarity.

 

photo credit: kevin dooley via photopin cc

photo credit: SalFalko via photopin cc

How to Get your Technology Improvement Ideas Heard

Have you ever come up with a great idea that you think is creative and could maybe make things more efficient and even help your company make more money?  Do your great ideas get ignored?Only rather than embrace your idea, it’s dismissed as though your idea is crazy or that you’re out of line for even suggesting it. In the early part of my career, I felt I was constantly running into this.  I would see opportunities to improve things and/or save time and money only to be ignored, or worse, belittled.  Maybe this had to do with my age and youthfulness. Or maybe it came from a rooted business culture where the big ideas are supposed to come from the top and those at the bottom of the pyramid are supposed to do as they’re told and only speak up when asked.

As a consultant, things are a little different now. My clients actually expect and want me to offer my advice and suggestions for improvement—that’s what they are paying me to do. Likewise,  I feel it’s my obligation to do so when there is a need or an opportunity, and I thrive on the positive reactions of my clients when I actually help them improve their businesses.

Elevating Ideas

Since most of you are probably not paid consultants, you might be wondering how you can get some of your good ideas implemented or at least listened to when you’re not in a position of influence.  There is no straightforward answer, and, of course, every situation and company culture is different, but I’ll share a story about one of my first audits in Public Accounting where one of my automation ideas was not well received and how I handled it.

The audit manager on my job assigned me the task of doing some procedural testing on a sample of AP checks above $200. I’m dating myself a little here, but this was in the mid ’90s before computers were on every desk and computers in the field were an even rarer commodity. In any event, before I could even do my testing, I had to set up the workpapers, which consisted of large 14 column green-lined worksheets that we had to mark up with lines using a mechanical pencil and a ruler. We then had to manually write in the header information for each column. We repeated this over and over on multiple sheets of paper until we had enough sheets to complete all of our testing.

Automation turned an old-school accounting practice into an efficient procedure. I quickly did the math and determined that based on the number of checks we had to test I would need to prepare almost 15 individual worksheets. I knew it would take approximately 30 minutes to prepare each sheet. At this rate, it would take almost an entire workday just to set up the workpapers with no real output or work done. I sat there frozen for about 10 minutes trying to make sense of this insanity. At the time, I was pretty good at Lotus 123 and was one of the few professionals in our office who understood the program and had a grasp of its capabilities. Thus, a clever idea popped into my head—I determined that I could create a template using Lotus 123 with all our column headings with lines and a professional looking font to boot, and it would only take me about 15 minutes to create on the computer. I could then either print more sheets or go to the copy machine and create more copies as needed. Problem solved.

I presented my idea to the manager thinking I would surely get a huge pat on the back and gratitude for my creativity and time-saving idea. On the contrary, I was sternly told,  “This is not how we do workpapers here. Go back and do it the way you were shown.” I couldn’t believe it. Was this woman insane? I just offered her a way to not only be more efficient, but also perform a task in less than half the time that was budgeted. That’s pure profit to the bottom line on a fixed fee engagement like this and would make her look like a star to the partner in charge.

I didn’t want to give up—partly because I’m stubborn but mainly because I couldn’t mentally get my head around basically doing a craft project for an entire day. I felt that she just didn’t get it, and if I showed her what I was talking about, she would understand and see the light. I figured it would only take me 10-15 minutes to do what I wanted on the computer, and if I could show her my prototype, we would all be on the same page. Well, my strategy sort of worked and yet it didn’t. I showed her my prototype, and then I got chewed out for being insubordinate and wasting valuable time on the job and was reprimanded from taking my own initiative ever again.

However, a few minutes later, the senior auditor on the job came over and told me to use my new templates for my testing. He then asked me to teach him how to create similar templates in Lotus 123, so he could create them for other parts of the audit. Of course, he then reinforced that I should not try to think outside the box anymore on this engagement.

Risk and Reward

Ultimately, the manager did see the wisdom in my idea, but, unfortunately in this situation, I also suffered a little bit professionally as a result. What I did learn, however, is that most people aren’t necessarily against change and improvement. Rather, they fear the risks associated with taking on a new idea. What if it doesn’t do what they say it will? What if it fails and costs us more money? How will my job be impacted if this idea does not work out and I go along with it?People are more open to change if you reduce the fear.

Tony Robbins said in one of his books that, “People will do more to avoid pain then they will to seek pleasure.” I believe this is a very true statement and the fear of failure generally will supersede any pleasure gained by implementing the greatest new idea. One thing that I did learn from this experience is that if you can show people how something will work, you can usually get them past their fears and reluctance much faster. If they see it actually working, you’ve eliminated a big part of the risk and fear.

At Ei Dynamics, we run into this all the time whereby prospects think that what we’re saying is too good to be true or won’t actually work for their situation. To get around this, if we determine that the problem to be solved is definable and we are confident that we can deliver a solution, we will sometimes offer to make a sale contingent upon delivering a workable solution. We essentially eliminate all risk and doubt with this approach, because we are guaranteeing success. In fact, most of the risk actually transfers back onto our shoulders, because if we fail or do not deliver, we’re the ones who have to eat the clock.

If you run up against obstacles in your work environment when presenting new ideas and ways to improve your business operations, try reducing the fear/risk factor by presenting a prototype or working model if possible. Even if it means mocking up fake screen shots or some sample output in Microsoft Word or Excel, I think you will find that a lot more of your ideas will get noticed and pushed forward a lot quicker if the people in charge can actually see and experience first hand what you’re suggesting.

A Beginner’s Guide to Business Activity Monitoring (BAM) Software

Ever heard of the terms business activity moniBusiness activity monitoring software creates alerts to watch for errors and inconsistencies, saving you time and worry. toring, business alerts and email alerts? The phrases themselves are somewhat self-explanatory, but there is a lot more behind these words and the software that they were invented to describe. Through the course of selling and implementing our own business activity monitoring (BAM) software at Ei Dynamics, I’ve found that there is still much confusion and even complete ignorance on what BAM is and does.  Thus, I wanted to take the time to put together a comprehensive overview of what BAM is and how it can help companies become more efficient and profitable. My other motive is to enlighten those who have influence in this space so that they might educate themselves to better help their own customers.

Unlocking the Unknown

At Ei Dynamics we eat sleep and live automation, and sometimes when you are that close to something you forget that what might be common knowledge to you is not common to others.  It struck me recently that I might have lost touch with reality a little bit during a conversation with a prospective reseller.

I was explaining how our software can easily monitor almost any data and send triggered alerts to people when an exception was identified.  He said that it sounded neat but that he’s never had a customer ask for something like this so it’s probably not something they would be interested in. My gut reaction was that they probably aren’t asking, because they don’t know something like this even exists or is available to companies like them.

I realized from this conversation that maybe there needs to be more education on what exactly Business Activity Monitoring (BAM) is, so here it is:

A Beginner’s Guide to Business Activity Monitoring (BAM)

Definition

Wikipedia says business activity monitoring (BAM) is software that aids in the monitoring of business activities implemented in computer systems.

Here is my definition … The process of using computer software to electronically monitor business data based on user-defined business rules and the systematic electronic notification when those rules are triggered. When an exception to the rule is identified, notification events typically occur in the form of an email, text message, social networking post or desktop pop-up.

Depending on who you talk to there are also several other common terms for BAM that are also used interchangeably such as:

  • Business Alerts
  • Exception Alerts
  • Email Alerts
  • Electronic Monitoring Notifications
  • Triggered Messaging
  • Business Intelligence (Note: This term, however, is incredibly overused and has so many different meanings and connotations depending on who you talk to that it is almost unintelligible anymore…a bit like how the term “Cloud Computing” has recently become overused and diluted in meaning.)

Objectives and Benefits

The objective of BAM is to enable companies to make better informed decisions by giving them visibility across their organization in a real-time capacity.

The general paradigm followed by most organizations today—to determine if there is a problem or an actionable item—is to manually run reports, view on-screen dashboards or log in to their business systems and use some type of built-in inquiry to view actionable information. This is a largely manual exercise and leaves a tremendous amount of room for error, because a human being must remember to look in the right place and “pull” the correct information.

With BAM, rules are predefined and automatically executed by a computer, eliminating human error.  The computer simply runs its business rules at predefined intervals 24 hours a day, 7 days a week and then “pokes” or “alerts” the correct individual(s) when there is some type of actionable item.

BAM enables business users to focus on immediate important things and eliminates the need for the manual, repetitive exercise of having to remember to constantly log in to a system or run a report or check a file. The added benefit is that the more of these steps we can automate and transfer to the computer, the more time we have to focus on other things to improve the business.

Common Features

A BAM system is typically comprised of the following features.

  • Business Rules Engine — Allows users to set up business rules for the software to follow. The rules engine might be a combination of SQL, scripting language, functions and data filtering. (Note: Depending on the BAM system, some rules engines are more user friendly than others. Some are SQL query based, some are script/code based, while others are wizard driven via graphical user interface. There can be pros and cons to each.)

  • Notification Engine — Provides options to set up an email, text message or social networking post when an exception is identified.  Some products offer very basic text-based emailing, while others provide full HTML email capabilities including email personalization whereby the recipient and email content can be determined at run time. Having HTML capabilities is ideal, because it allows for more professional and aesthetically pleasing presentations of information to the end user. Types of notification options include:

    • Email
    • Text Message
    • Instant Messaging
    • Social Networking (Twitter, LinkedIn)
    • Desktop Pop-ups
  • Database connectivity — Different BAM systems will connect to data differently but in general most use an ODBC or OLEDB connection (a common database interface). More advanced systems will provide proprietary connectors to non-ODBC compliant systems or have the capability to allow you to talk to data via a web service or API. Types of connectors include:

    • ODBC
    • OLEDB
    • Text, CSV
    • XML
    • JSON
    • Web Service (SOAP or REST)
    • Proprietary
  • Logging — A BAM system should also provide some mechanism to track when an alert was sent or if any errors occurred during the processing. Without being able to track alerts, it’s difficult to gauge trends, larger issues, etc.

Practical Applications

There are many practical and useful applications for a BAM system. BAM systems allow us to automate things that we may otherwise be required to do manually.  A properly implemented BAM system can be like having a thousand set of eyes looking and watching for things on our behalf and always ready to let us know if there is an issue or reason to be notified.

Think of how much more productive and content you would be if you didn’t have to remember to do all the things you’re supposed to do or take care of. Wouldn’t it be great if you had a personal assistant that did all the remembering for you and simply reminded you when something needed to be done or taken care of? That’s the benefit of BAM!

There is virtually an unlimited number of applications for a BAM system. With that said, here are some examples of how a typical company might use BAM within each of their departments:

Accounting:BAM software can generate alerts for a variety of needs throughout your business.

  • Monitor account balances and send an alert if a balance meets or exceeds threshold.
  • Notify someone in the accounting department when and if a new GL account is added to the accounting system.
  • Notify customers when their accounts receivable balance becomes aged beyond a specified number of days.
  • Send an email to an AP vendor when their invoice has been identified as paid in the accounting system.

Operations:

  • Monitor budgets and notify project managers when a line item in the budget come within threshold or exceeds budget.
  • Monitor inventory levels and notify warehouse manager when an item comes within or below specified stocking limits.
  • Monitor vendor/customer/employee setup and notify appropriate individuals when information is not entered or is entered incorrectly.
  • Monitor compliance fields such as project due dates or insurance expiration dates and notify someone on or before said deadlines are passed.

Sales and Marketing:

  • Automatically notify customers when an order has been fulfilled or shipped from warehouse.
  • Match customer profiles with goods and services and notify customers when new goods or services are available that they might benefit from.
  • Automatically send customer statement or invoice upon completion of work.
  • Auto respond to customer inquiries via website feedback form.

Human Resources:

  • Monitor payroll and time and alert managers if an employee exceeds maximum hours allowed or falls below minimum requirements.
  • Monitor vacation and other employee benefits SHR  and notify employee when vacation or sick time benefits are about to expire or when thresholds are about to be met.
  • Automatically notify employees of key company events such as holidays or open enrollment periods.
  • Monitor employee setup and notify HR manager is information is missing or inconsistent with company policy and procedures

Availability/Commercial Solutions

narrowMany commercial software vendors are slowly incorporating more and more BAM functionality directly into their own products. However, these solutions are typically very narrow in focus and flexibility. For example, they might have a feature to notify you or a customer if an invoice becomes aged over a certain number of days, but if you wanted to change the email text or how many people get notified or modify the notification conditions to something custom you might not be able to do any of it. You get what the vendor built and how they perceived it should work.

A good analogy along these lines might be in the area of report writing whereby many software vendors over the years built their own report writers directly into their own products. However, because these vendors are not experts in report writing, their products typically are not as robust or feature rich as a commercial report writer like Crystal Reports or Microsoft SQL Reporting Services. Depending on your company’s needs and requirements this may or may not be a factor.

If you want a robust, highly customizable BAM specific solution there are commercially available solutions from vendors like Ei Dynamics all the way up to vendors like IBM. Unfortunately, there are not a lot of vendors in this space that focus on just BAM and many of the solutions tend to be geared toward the higher end of the market, incorporating more advanced functionality such as Work Flow, EDI and ETL. Therefore, the costs can swing wildly from just under $1,000 to well over $100,000.

If you are interested in BAM technology, I encourage you to explore the many benefits it has to offer. You can find more information on the Ei Dynamics website. Also, feel free to send me a note by posting a comment below, and I’ll either reach out privately or respond online.

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3 Rules For Determining If You Should Pursue a Technology Project

Sometimes utilizing technology is not the best option. Determining whether or not a technology initiative should be pursued is a dilemma that most companies constantly struggle with.  Just because we can apply technology to something doesn’t mean we should always do it even if we can afford it or it’s easy to implement.  Thus, we must establish some basis for determining which projects to pursue or not to pursue.

At Ei Dynamics, we get inquiries all of the time from companies looking to automate various types of processes.  The first thing my sales team and I do is to determine if what the prospect is trying to do makes sense and if we should even continue a dialogue or end the discussion sooner than later. This may sound a little unorthodox for a company that’s trying to sell a product, but our time is just as valuable as anyone’s. The last thing we want to do is spend our valuable, limited time chasing down opportunities that are not right for us, and, even more importantly, that won’t bring value to our customer.

For example, a company recently reached out looking for a solution that could monitor their inventory data and send email alerts to their purchasing manager when certain items dropped below a specified level.  So far so good … this type of functionality is directly in our wheelhouse and something we’ve done for dozens of companies. However, after a little discovery, we determined that they were a very small company with a limited budget and used QuickBooks. Even though we have a solution that could easily meet all of their criteria, it was not a good fit. QuickBooks was the first red flag, but the most important sign was that the alert they wanted to automate wasn’t going to really save them much time or money given the amount of effort they currently put into manually handling the process.

So, the magic question is, when should we and when should we not use technology to solve our problems?  Obviously, there is no definitive right or wrong answer here, but I have three simple rules that I generally follow to make a determination if we should pursue a technology project that I think you might benefit from as well.

As Easy as 1, 2, 3

Here are three simple rules I use to determine if we should apply technology to solve a problem:

1) Cost vs Benefit — Do the benefits of implementing a technical solution exceed the costs, or do we at least recoup our costs within a reasonable time frame? For example, let’s say it would take 40 hours of consulting at $150 per hour to automate a specific task that takes a person paid $50 per hour approximately 30 minutes once a month to complete.  Mathematically our consultant fees are three times as much as our employee costs, thus, our effective break-even point is 120 man hours.  At this rate, given the task is only performed once a month, it would take 40 years to break even on this project.

For me, personally, this would more than likely not be a project that I would spend my time, energy or money to fix. Additionally, if you were a client of mine I would probably discourage you as well from pursuing this project.

2) Is it better than what we do now? — There are thousands of software programs out there that allow us to automate and computerize a variety of different tasks, but is this enough of a reason to change or switch how we do things now? Should we drop our pen and paper foA wall phone is sometimes more convenient than the alternatives. r a word processor simply because we can?  After all, paper and pencil are readily available, easy to use, very instantaneous and, of course, a proven solution invented by the ancient Chinese in the 2nd century BC.  In fact, we’ve all experienced that moment when someone calls and we don’t have time to wait for Outlook or our contact management program to boot up and load just to jot down a few notes. So what do most of us still do? We reach over for that pen and scratch paper and write it down and then record in our computerized system later if it is necessary. Sometimes simple and “old” is not always bad.

Here’s another example where old sometimes works better than new. In our house, we still have an old phone with a chord that sticks into the wall. We mainly have it because if there is an emergency and the power goes off we can still make calls. Ironically, it’s also the only phone in the house that anyone can find and that consistently works. It’s always in the same place and never moves, because it is physically tethered to the phone cord. Alternately, all the other high-tech cordless phones are hidden under sofa cushions, left on obscure tables throughout the house and are seldom available or handy when we  need them. And if we do happen to find one, half the time it’s lost its charge and won’t work.

Technology is awesome and can make a lot of things easier and quicker to accomplish, but it is not always the best or right answer for every problem. Technological solutions should be implemented when they make sense and make things better.

3) Is it simple? — Simple is not always better, but on the other hand, if something is too complicated, the benefits may not outweigh the complexity of the system. Generally, I weigh in on the side of simple is better. My experience is that the more complicated something is, the more likely it is going to fail. Users will get frustrated if it’s not intuitive and easy to use, IT will not be able to support it if it is too complicated, and, ultimately, if it takes a rocket scientist to build, deploy and maintain, chances are it’s going to fail, because it will cost too much money (remember item #1 cost vs benefit) to support or it will simply not get used.

For instance, if you’ve worked with any major ERP system, you understand how complicated they can get.  They
have so many features and functions and modules built into them that if you are not a trained consultant and even if you are a trained consultant, the magnitude of these systems can make even the best of us dizzy.  However, companies implement ERP systems, because the benefits typically outweigh the costs (and complexity).  But do these systems really need to be that complicated at least from a user interface perspective?  For example, Quickbooks is actually a pretty complex and sophisticated system, but the user interface is so simple and intuitive that almost anyone can figure it out in a very short amount of time.  Simple is generally a good thing, don’t fall into the mindset that if something is simple it must not be sophisticated or powerful enough to solve our problem…simple is

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How to Justify the Costs of Automation; Quantifying your ROI

Automating business processes, reducing manual labor costs, doing more with less…it’s safe to say, these all sound like great worthwhile goals and endeavors for any business. However, the problem is that in order to automate our businesses and achieve these goals, it takes time, money and effort.  Thus, the benefits we reap from automation must be blatantly apparent. In other words, if the costs of automating our businesses do not equal or exceed the benefits received, then we probably shouldn’t do it even if we can.

Getting Y for X

Generally speaking, before most people take on a new technology project, purchase new software and commit resources toward consultants and IT professionals, the boss or manager generally wants to know: “What is our return on investment?”

Calculating ROI can be tricky.

I know, return on investment, otherwise referred to as ROI, is probably one of  the most overused terms that gets thrown around by vendors, buyers, consultants, marketers, sales people, owners, etc.  After all, isn’t ROI the standard justification for almost any business purchase?  We’ve all heard it: “Hey, Mr. Business Owner, if you invest money in our product, you will see a return on your money within x weeks/months/years.”  The problem for most companies, however, is that determining how to calculate ROI and measuring it against the risks of failure are not always so cut and dry.

Tangible vs. Intangible ROI

In principle, I agree that ROI is an important factor in making a purchasing decision. But I believe that an effective ROI calculation often goes beyond the simple formula of I paid x and I will receive y in return.  I like to break up ROI calculations into two categories: 1) Tangible ROI; and 2) Intangible ROI.

Tangible ROI typically takes on the traditional form of calculating ROI.  For example, I will spend x dollars, and in a specified amount of time I will receive y dollars in return.  If y is greater than x and the amount of time to recover y is reasonable, then our investment would be deemed wise.

Intangible ROI comprises benefits that may or may not directly translate back to pure dollar and cents calculations.  For example, if I automate this process, I can then go home at 5:30 PM and see my children at night instead of staying late at the office two days a week. But how does one measure the value of being with your children? The good news is that I actually believe there is a way to measure Intangible ROI, and I will share it with you in just a little bit. The overarching point is that not all value and benefits can be translated into pure monetary computations.

Calculating Tangible ROI

Calculating tangible ROI is linked to hard dollars. It seems easy enough: we determine what our costs are going to be to move forward with a project, and then we figure out what will be our hard dollar return and how long it will take to recover our investment. In some cases, this is an easy calculation. For example, Ei Dynamics has helped several companies automate the distribution of their payroll direct deposit notices. In one of our client’s instances, we actually found that printing their direct deposit notices, stuffing them into envelopes and either mailing them or hand delivering them to employees in the field cost, on average, about $3.50 per employee. With 500 employees and with twice-monthly payroll, the math is pretty straightforward:

  • $3.50 x 500 x 2 = $3,500 per month in hard dollars to process direct deposit notices manually
  • Total annual cost = $42,000

Another way I like to calculate hard dollars for a ROI calculation is by quantifying the cost of each employee’s hourly rate. Many companies, however, fall into the trap of assuming that employees are overhead (sunk costs that can’t be recovered).  As a consultant with an hourly rate, all of my clients see me as a quantifiable cost worth x dollars per hour. Not ironically, this is how I see all employees.

Let’s say an employee makes $60,000 a year plus benefits of 10% salary. The employee works a standard 40 hour week, or 2,000 hours per year. We can quickly do the math and come up with an effective hourly rate of $33 per hour. Once I can calculate an employee’s effective hourly rate, I can then use it to quantify the costs associated with that employee to do almost any task. For example, if our $33/hour employee is spending six hours a month on administrative tasks such as stuffing envelopes and licking stamps, I quantify the cost of this task at $198 a month. Based on the hard dollars, I can then assess whether or not it’s the best use of the employee’s time to do administrative tasks (or whatever task I’m scrutinizing), automate the task or find a less expensive person to do it instead.

Along this same line of thinking, I once consulted for a CFO who was a pretty technical person. He was very capable of doing things like writing a Crystal Report from scratch or creating complicated spreadsheets with macros. As such, his tendency was to do everything himself. In his mind, he was saving the company money, because since he was doing the work, he was not having to pay a consultant one hundred-plus dollars an hour to do the same work.

One day, I asked him if he knew how much his hourly rate was. He couldn’t tell me. So, using the same logic I outlined above, I helped him come up with his effective rate, which ended up being close to my hourly consulting rate. I explained that whether he paid me to do the work or he did the work himself, he was essentially paying the same amount of money if not more. In all honesty, he was actually spending more money, because he did the work slower and generally made more mistakes than I would have. If I did the work for him, it would get done quicker and would be done correctly from the beginning. My position was that his time was much more valuable focused on doing other things for the business and concentrating on activities that could not be outsourced or done as well as he could do himself.

Calculating Intangible ROI

Calculating the Intangible ROI related to automation is definitely a more subjective exercise.  Intangible ROI has to do with benefits that are not always quantifiable or clear cut. Here are some examples of Intangible ROI:

Intangible ROI benefits can include having more time to spend with your family.

  • Peace of mind knowing you don’t have to worry about something getting done or getting done incorrectly.
  • More free time to focus on other areas of your business.
  • Ability to go home at a regular hour, because you can now actually get your work done in a normal eight-hour workday.
  • Less compliance risk: reducing the probability that if you forget important deadlines, like renewal of an insurance certificate or business license, you don’t get sued or lose out on a void insurance policy should an event occur that would require you to exercise that policy.

How do you put a dollar value on being able to go home at a regular hour to spend more time with your friends and family? Do happier employees translate into more productive employees? Do healthier employees miss work less often?  The point being is that Intangible ROI benefits can be equally compelling, important reasons to invest in automation and technology as much as hard dollar savings. What if the cost of automating something actually resulted in a hard dollar loss, but the agitation and stress of doing the task was so high that the benefit of automating it and getting it off of your plate would provide you joy and inner peace? Tough call, right? I think mental health and happiness is equally as important as hard dollar benefits when calculating a ROI.

Just Justification

The bottom line is that ROI is and will continue to be an important element in making purchasing decisions, but calculating ROI is not always pure science or measured in straightforward dollars and cents. As you might imagine, I’m all for automation and investment in technology, but let’s recap a few things when it comes to calculating ROI and making an investment decision:

  1. There is more than one way to calculate the cost of an activity.  There are hard costs, indirect costs—such as fixed labor—and hidden costs, such as compliance risk.
  2. ROI is as much about finding ways to justify an expenditure as it is about discouraging an expenditure. For instance, if a manual task costs us $100 per month in labor costs, and you want to purchase some software to automate that task which costs $10,000, it would require a 10-year payback period, which might not be the wisest investment.
  3. Don’t forget Intangible ROI benefits of automation. They can be very powerful justifications. For example, increased accuracy, more free time, less stress, and reduced risk resulting in loss of revenue can be more beneficial than hard dollars.

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Holding Back on Automation Projects to Save a Few Pennies Only to Lose Big Dollars

Rather than wish you would have done something differently, just do it differently. We have all been there—wishing we would have, should have or could have done something differently, realizing only after the fact that our missteps never needed to occur. As the founder of Ei Dynamics, I often find myself on the other side of the equation.  I frequently identify red flags and impending catastrophes for customers and potential clients even before they see the issues. I label these folks as the “Latent Need” people (which I covered in a recent blog post, “No Manual or Repetitive Processes Allowed … Most of the Time”).

Last year, when I encountered a Latent Need potential client who could have clearly benefited from Ei Dynamic’s products, I jumped at the chance to help him improve his construction business. Unfortunately, my “jumping” went over the potential client’s head. My explanation of the virtues of one aspect of our software that could monitor his company’s data and send automatic notifications to employees when an “exception” to certain business rules occurred left the potential client feeling like the product was interesting but not relevant to his company.

I know … epic fail on my part in terms of sales approach. I should have focused less on pitching our software and more on the potential client’s specific areas of needs. But, I couldn’t help myself. While I will leave my sales slips for another blog post, despite my poor approach, the construction owner truly could have benefited from additional automation for his construction company. And he soon found out why.

Cause for Alarm … and Automation

Six months later, I received a call from the company’s chief financial officer (CFO). The construction company had a problem: An employee transposed an extra zero on one of the project budgets in their construction management software. As a result, the project, which looked to be under budget, turned out to be over budget by nearly $150,000. The construction company’s assumed profit vanished before their eyes.

Automation can act like tiny alarm clocks, alerting us when an anomaly occurs. As I spoke to the CFO, I couldn’t help but gently remind him that I had recommended an automation tool six months ago that could have prevented this issue. By implementing a simple business rule that looked for anomalies, like an extra zero in a budget, someone would have been alerted long before it became a problem. Resisting the urge to act like a five-year-old and shout, “Na, nana, na, na, I told you so,” I listened to his needs and created a game plan to move forward.

What I helped the construction company, and countless others, realize is that automation is not always about eliminating keystrokes or reducing manual data entry.  Sometimes it’s about creating virtual eyes and ears—tiny alarm clocks all over the place that keep track of all the little things. The alarm clocks allow us to go about our daily business, alerting us of anomalies so that orange flags don’t turn into red ones and create business-crippling issues.

Risk vs. Reward

Most ironic about this case is that the construction company opted to pinch pennies and not incorporate Ei Dynamics’ automation tools into their business from the get-go. Automation is as much about risk avoidance as it is about saving hard dollars and reducing labor efforts. By pinching pennies, the construction Pinching pennies for short-term savings could lead to long-term losses.company lost nearly $150,000 due to an error that could have easily been flagged and then remedied with an investment in software costing less than $5,000.

Do you have time bombs in your organization waiting to go off?  Now might be the ideal time to re-evaluate areas of risk. I encourage you to start thinking about ways to reduce or eliminate risk by implementing a real-time alerting software or leveraging your current technology to provide extra monitoring.

When it comes to your business, pinching pennies in the short term might mean losing big money in the long term. Don’t wish you would have, should have, could have.

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No Manual or Repetitive Processes Allowed … Most of the Time

There are generally three types of peple. I’m always fascinated by the conversations that I have with people when I attend trade shows. In fact, I would say most people fall into one of three categories:

1. Identified Immediate Needs: People who have identified pain in their organization.They know a solution exists, and they are actively looking to solve their problem.  They are eager to spark a conversation and engage.

2. Identified Needs but Unaware of a Solution: People who know they have a problem and may have even searched for a solution in the past but have not identified or found anything that appears to solve the problem.  These are difficult conversations to start. You really have to listen and try to get people to open up about what’s going on in their world. When you do, then you can determine if you might be able to identify their problems and, subsequently, if you can help them find solutions to their problems.  If you can solve their problems, these people are then usually open to further dialogue.

3. Latent Need: People who have a problem, but they don’t even realize they have a problem. Since they don’t know they have a problem, they are not even looking for a solution.  These are the toughest conversations— it’s almost like fishing or throwing mud up against the wall and hoping something sticks.

Oddly, I sometimes enjoy the conversations with people that fall into the third category, Latent Need, most.  Maybe it’s because I like the challenge, or I find the responses from people fascinating when I speak to them.

Realizing Repetition Is Right Before Your Eyes

At a recent trade show, I had the fortune of running into a Latent Need person.  A lady wandered up to our booth and asked me, “What do you guys do?”

I responded with our standard spiel: ”I work with CFOs, controllers and business owners to identify areas within your business where there are manual and repetitive processes. I then help determine if we can leverage our software to automate those processes, putting the cost savings from our automation either directly into your pocket or back into the company.”

Running reports collectively take up more time than companies realize.

She paused for a second and then retorted, “We don’t do anything manual or repetitive in our business.”

I responded,”Wow that’s great! So you already own software or have put systems in place that automate most of your processes?”

She looked at me almost cross-eyed and said, “No, we just simply do not do anything manual and repetitive. Everything we do is different.”

So I replied, “Do you run reports?”

“Yes,” she said

“Do you ever run the same report twice?”

”Of course. All the time,” she said.

To which I responded, “Hmmm…isn’t that a manual and repetitive exercise?”

A bit perplexed, she replied, ”Oh, I guess if you put it that way it sort of is.”

The moral of the story is that we all do manual and repetitive things whether we realize it or not. Am I saying that anything manual and repetitive is bad? No. In fact, there are some trivial manual things that we do that the cost and time to automate them would not be worthwhile.

Rethink Reports

With that said, when it comes to running reports, something that most all of us do, this is one area that actually takes up a lot more time collectively in most companies than many would think. Thus, if people are spending time and energy printing or previewing reports for no other purpose than to review them for anomalies or changes in key indicators, I would challenge them to rethink why they are doing this.  I would further argue that it makes more sense to write a business rule that mimics what is trying to be done visually when we review the report (i.e. highlight issues). Then, with a simple business rule, the report can be automatically generated and sent to the reviewer when there is an exception.  Since the report is only sent when there is an issue, the end user only spends time reviewing reports that demand further attention and action, saving time, energy and countless hours to boot.

Stop the Insanity

Automation is great, but in order to automate your businesses, you must first be able to identify what processes need automating.  If you have your head in the sand—you’re either ignorant about how people are working or you’re simply in denial—then you’re going never going to be able to move the ball forward and improve your business processes.

A continual goal for me and my em
ployees is for us to work faster, smarter and more efficiently. It should be your goal as well.  Albert Einstein said it best when he referred to insanity as “doing the same thing over and over and expecting different results.”  I say, “Stop the insanity!” Don’t keep doing things the same way month after month simply because it’s the only way you know how or because it’s the way you’ve always done it.

My challenge for you until my next post is to start identifying things that could be improved.  We’re not ready or looking to fix or solve anything yet. I’m merely asking you to take baby steps. Start by looking to gain some awareness of areas that might benefit from a little more automation.

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Two Hours to Automate: What is Your Company’s Threshold

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