Problem
Project Managers have to enter revenue forecast information
into one system, while actual invoiced values come from another. These values
are then reconciled monthly.
Issue
The issue is that this information is prone to inaccuracy
and or entered late.
Reasons for inaccuracy
- Projects are tracked in Australia in AUD while the Resource Forecast has to be mapped in USD.
- Each month a snap shot is taken of live projects for the past month to be compared against actual revenue for the current month.
- There are multiple points where information and knowledge is put in and taken out.
- Any mismatch between the revenue forecast and the actual invoicing is flagged as an exception.
- Schedule changes and variations to projects affect actuals but may not be reflected in the forecast.
Looking at the process flow above, you can see where I have
highlighted the points that are prone to error and the information and
knowledge flows, both in and out. The diagram indicates that there are issues
around currency conversion, the fact that known data or knowledge is entered
in at the TS point and invoicing stages but then through the addition of ERP information,
has to be re-analysed to again become knowledge.
Through analysing this process I have developed four
possible options listed below and shown graphically in figure 2.
- Change all local Australian systems to use USD. This has the risk of causing issues and confusion with invoicing and errors if values are mistakenly entered as AUD. The benefits are that currency conversion is removed.
- Do nothing and leave the systems as is. There are no benefits to this choice, however there are also no additional risks involved.
- Replace all systems with a single source of truth that can be used by all parties across the global organisation. This is easily the highest risk option as it would involve the introduction of a new system, training will be required and the costs could be high. This option also has the highest benefit as it will remove all inputs and outputs from disparate data sources and automated and contiguous workflows could be introduced.
- Cover the issues with a procedural solution. This would be low risk in that no new technologies are introduced and the benefits are relatively high if the procedures are governed appropriately.
Conclusion
Balancing the risk/benefit of the options, I have chosen to
take option four. This includes introducing procedures that need to be followed
at certain times of the month, as well as a governance model to police these
procedures. Additionally we can see that by transforming data into information
and then knowledge, we get a much clearer view of the necessary decisions.
Task 2 comment - Teresiah
Task 2 comment - Teresiah
Hi Russel,
ReplyDeleteThat is a good example of problem that is facing most multinational organizations. As per my understanding, the key problem here is currency differences due to conversions. I see in most organizations they set a reporting currency where all the payments and receipts are converted to say AUD. The choice of using a procedural solution may also have risks as it will only be followed at certain times of the month and this may not always be the case. How about using a software (automation) that every transaction made is converted to the reporting currency and the differences are reconciled in the profit and loss account. It may be expensive to install and train the users, and the benefits may take long to be realised/seen, but in the long run, the problem will be reduced. That's one of the characteristics of IT investments and its hard to quantify the benefits.
I believe that most decisions that are made in the operations run up to the managerial level, and if the problem is reduced in the operations, then it will be more manageable. Therefore how the data is organized or captured determines what kind of information is produced to aid in decision making.
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