Archive for the 'Processes and Information Systems' forum

Why do we have such a problem relating knowledge to our business needs?

Enterprises have a well-known problem in relating knowledge to business needs.This is because enterprises do not organize and manage the business. Dead-end 20^th century management used today lays organization, business process, administration, and a variety of other structures over the business to manage the enterprise. Knowledge is not related to the business; knowledge is related to contrived structures laid over the business, such as an index of subjects and topics.

The business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Knowledge is capital consisting of specific solutions of worth utilized to improve the utilization of other solutions for cost and effectiveness of performance to produce value and quality in results. Knowledge is human capital that increases human personnel capital worth by improving their performance in utilizing various capital solutions effectively and producing higher value-quality results. Knowledge is used to develop specific human capability solutions that are utilized to produce specific difficult results to be of high value-quality,

Enterprises need a systematic way to identify specific business results that must be supported by knowledge, identify specific capital solutions that must be utilized properly to produce the result, define the precise knowledge needed, to relate knowledge to the capability of the user applying the knowledge, to link knowledge to where and by whom it is needed, to understand the value created by knowledge that gives worth to the knowledge, and to get feedback and improvement on the knowledge. This can only be done by managing the actual business.

There are many problems inherent in knowledge management today

Many enterprises make large investments in knowledge, but 20^th century methods that we use to manage knowledge limit the value created and the return of the investment:

• Knowledge is labeled as intellectual capital or intangible assets to relieve us of the responsibility to manage knowledge as an asset of worth
• Knowledge is organized by topics or subject matter, which depend on someone referencing the topic to their job or function to put knowledge to use
• Knowledge is human capital to improve human capability, but it is rarely managed as human capital
• Knowledge is delivered through learning, but learning material is often separate from knowledge
• Knowledge is information capital to contribute to the overall business information base, but is usually separated from other information
• Knowledge is not integrated with the business to be utilized as a capital solution to produce value for the enterprise
• Knowledge gains worth by creating value in business results, but results are not managed and only a few results are supported directly by knowledge

Conventional methods hamper the application of knowledge by using structures that are defined through various contrived entities like department, activity, and object, while organizing knowledge by topic, subject, etc. These fundamental problems prevent knowledge from being leveraged to be high-worth capital utilized in a managed business.

Knowledge is human capital that enables other human capital to utilize specific capital solutions to produce specific results

Knowledge is human capital that must be created and managed specifically to increase human capital worth through the value of results produced. Knowledge is also information capital that must be integrated with business data and delivered where needed to produce specific results and to support human capabilities utilized. [more...].

20^th century management lays reporting structures over the business

Since the business is not organized or managed today, the actual business cannot be reported. Management reporting is against the myriad of organization, management, administrative, and other structures laid over the business. Each structure employs its own terminology and information systems to produce reports on the structure. This produces a myriad of unrelated management reports for plans, business processing, resource planning and utilization, manufacturing, supply chains, customer relationships, accounting, quality control, financial management, human resource management, information technology management and on and on. The reporting possibilities create information complexity with no specific framework to relate all the reporting. Despite all the reports and complexity, there is no direct reporting on the actual business.

We try to bring together information from the diverse structures by adding special 20^th century reporting structures, such as:

• Performance management: Control panels, dashboards, scorecards and various other structures to capture and report information
• Strategic enterprise management: Structures to consolidate defined information from specific information systems
• Data reconciliation: Structures to gather and redefine inconsistent data from diverse systems
• Decision support and drill down: Structures to allow management to search and find information in diverse systems
• Categorization: Structures laid over information to reconcile and restructure information and to manage records, documents, reports, content, and other information sub-sets

These various reporting structures and supporting information systems constitute a large overhead and contribute to rather than solving information and business complexity problems. Management information produced is inconsistent, inaccurate, and incomplete in terms of what is actually happening in the business.

Business management reporting must be against the current and planned business

In order to report the business the actual business must be organized, planned, directed, and controlled as explained in previous articles. Actual business reporting is provided by reporting the three components of the business:

• Results: The economic outputs of value and quality produced across the business
• Capital: The investments in capital as specific solutions that must be acquired and developed to provide the capability to produce future results and that must be utilized in business performance to produce actual results
• Performance: The deployment and utilization of a specific capital solution to incur costs and provide effectiveness in producing a specific result in a performance domain

The business can be reported only by organizing the actual business as current results produced, invested capital available to the business, and performance in the utilization of a capital solution to produce a result. [more...].

Some enterprises take pride in their business complexity

When you talk to a company manager about employing a standard solution the response is often “Our business is too complex for a standard solution”. This is said with a measure of pride in being associated with a complex business. Is a complex business something to strive for or to be proud of? What is the alternative to a standard solution? Do non-standard solutions simplify the business? What is better, simplify the business to use standard solutions, or continue to develop non-standard solutions that compound existing complexity?

Business complexity is eliminated by organizing only the business essentials

Enterprises today introduce business complexity as soon a they implement an organization structure that is laid over the business. Since the business is not organized, they must lay more structures for strategy, accounts, business processes, performance management, etc over the business in order to manage the enterprise. Each additional structure introduces more entities with conflicting definitions to be managed and increases business and information complexity.

Business complexity is a misnomer. The business is not complex; enterprise management through rigid structures laid over the changing business is complex. The answer is to clear away contrived overlaid structures and organize the business for simplified 21^st century business management. All business organization, planning, direction, control, reporting, and governance employs the current and strategic business structures and only the essential business data entities.

Business complexity is accepted as normal in today’s enterprise

Business complexity is built in to 20^th century enterprise management methods, so business complexity is accepted as normal. We have no straightforward method to identify and root out business complexity and then to prevent future business complexity. [more...].

20^th century enterprise management problems are caused by rigid structures laid over the business

The generally accepted “business enterprise” definition is the activity of providing goods and services. The failure of 20^th century management to organize and manage the business enterprise in the activity of providing goods and services creates unsolvable management, business, and performance problems.

The fatal error of 20^th century management, employed by all companies, corporations, and other enterprises today, is laying a rigid enterprise organization structure over the business, rather than organizing the business. Since the business is not organized, the business cannot be managed. Therefore, rigid enterprise management structures for planning, processes, systems, financial and cost accounts, quality, administration, performance, reporting, etc must be contrived and laid over the business. Structures laid over the business conflict with the actual business, restrict business flexibility, move out of “alignment” as the business changes, prevent direct business data capture and management, and do not provide the direct management information needed to manage the business.

20^th century enterprise management improvements can never solve unsolvable problems

We continue to teach 20^th century enterprise management, contrive new 20^th century structures and “business solutions” to lay over the business, and write more 20^th century management books, but we have never solved the top ten problems of 20^th century enterprise management.

1. Reorganization: The business changes while the organization structure remains rigid, causing upheavals to lay a new rigid organization structure over the business and repeat the cycle
2. Accounting and Financial Management: Historic legacies focus on cash control and prevent professional records management and modern capital management of the actual business increasing financial risk and preventing accurate business management information
3. Investment Analysis and Development Project Management: Investments and projects are managed separate from the business, rather than itemizing, planning, and managing the costs, benefits, and return of capital development investments, as part of the business
4. Administration: Performing functions, while leaving tangible and intangible capital utilization and improvement unmanaged
5. Performance Management: “Performance” definitions mix actions executed with the result accomplished, so business processes, performance management, and KPIs mix results and performance and manage “performance quality”
6. Business Complexity: Each organization, plan, processes, system, administration, or other structure is defined separately with different definitions creating business and information complexity and preventing business collaboration and common solutions applicable to any business
7. Information Technology: Business systems, data, information solutions, networks, and architectures are designed to process overlaid structures and managed as technology, not capital, creating costly IT infrastructures and continuing capital management problems
8. Change Management: Change management addresses the conflicts between structures laid over the business and the actual business to change structures, while the business remains undefined and unmanaged
9. Corporate Governance: Problems are addressed from the governance side to restrict and control management, rather than organizing the business to be governed by management on the corporate side
10. Alignment: Rigid overlaid structures go out of alignment as the business changes requiring continual changes to the structures to align closer to the business

These and other unsolvable 20^th century enterprise management problems are discussed, in detail, here at the Business Change Forum.

Solutions to he top 10 management, business, and performance problems of 20^th century enterprise management are described in a referenced article.

The top 10 problems are eliminated by 21^st century business management

20^th century enterprise management problems are unsolvable, because they can never be solved by laying new or improved structures over the business. [more...].

Accounting is part of one of the top 10 problems of 20^th century enterprise management

A chart of accounts is laid over the business, rather than recording the actual business

20^th century management historically has separated cash from other capital to be managed in financial management and to be accrued and recorded through accounting. The need for the separation has decreased due to technology and advanced solutions. Technology has also led to high-worth information and intellectual capital that needs to be accounted for and managed. But the separate focus on cash tends to prevent other capital of worth from being managed professionally. Capital and cash transactions that are recorded are recorded against a contrived chart of accounts, rather than accurately recording the complete financial status of the actual business.

Establish facility records capital to professionally record the actual business

The business organizes all capital, including currently undefined capital and “intangible assets”. The business manages accounts and other records of the business as facility records capital and provides capital solutions from records as information capital. Facility records are the tangible information capital of the enterprise. Facility records go beyond the limitations of accounting to record:

• Financial records for the full business cycle, including fundamental business data on performance costs, result value, and capital worth
• Non-financial records for statistical, documentation, images, and other records

Business management broadens 20^th century accounting to professional records management to keep records on the actual business and to make records solutions available to produce high-value results.

The Accounting Problem

Accounting does not record the actual business

Due to 20^th century management problem number one, the business is not organized. [more...]

Performance Management is one of the top 10 problems of 20^th century management!

The definition of performance and performance management is a fundamental 20^th century enterprise management problem

Since the 15^th century, performance has been defined as both the capital utilized in action executed and the results accomplished. The definition prevents management of results separate from performance and restricts enterprise management to one confused performance dimension. Performance management is a big part of 20^th century management, with a variety of structures like processes, dashboards, and scorecards laid over the business. Key performance indicators (KPI) mix result volumes, capital utilized, and performance levels. Business process re-engineering focuses on business process management and performance quality to produce a process output. Many performance and productivity methods and consultants redefine costs out of the process and into other capital utilized in the business.

Separate results and capital from performance to enable 21^st century business management

The performance management problem is eliminated by separating results and capital solutions from performance to organize the enterprise business in results produced, capital solutioins utilized, and the performance of a solution to produce a result. The enterprise business changes each time management decides to produce a new result, close a finished result, or utilize a different capital solution. Capital management acquires, develops, improves, and supports capital solution investments that have the potential and are qualified to produce results. [more...]

Information Technology is one of the top 10 problems of 20^th century management!

Information Technology incorporates a wide variety of unsolvable problems

Information Technology (IT) employed today has many inherent problems that many expensive solutions have never been able to solve:

• Information technology is managed as technology, rather than as capital preventing integration with the business
• Information technology employs large monolithic information systems that are laid over the business, instead of information processing solutions that are utilized by the business
• Information Technology defines different architectures to define and align the business, systems, hardware and networks, and data and information, rather than integrating each with the business
• Different categories of information capital are mixed in many systems using different entity names and definitions producing information complexity and preventing proper information capital management
• Since the business is not organized, information systems manage information related to structures laid over the business and do not capture, process, or report actual business data or report actual business management information
• Information Technology is difficult to manage because it mixes business, facility, and management capital that require diverse management and operating capabilities
• It is difficult to manage return on IT investments since the investments are lumped together and do not produce direct measured business improvements
• Information Technology has grown into a large expensive empire that involves much unnecessary processing, extensive overheads, and unsolvable problems

These problems can never be solved with 20^th century management that tries to improve the enterprise by laying new or improved structures over the business.

Information Technology problems disappear when organizing the business for 21^st century business management

The only way to eliminate the Information Technology problems is by organizing the business with to enable 21^st century business management. Information technology must be integrated in the business as capital defined as specific solutions utilized to produce specific business results. Business management enables the following measures to eliminate the unsolvable Information Technology problem:

• The actual business is organized as specific capital solutions, including IT solutions, utilized in performance to produce specific business results
• Information system solutions are defined and integrated with the business process as modules to produce a specific result or a chain of results
• Information systems focus on managing actual business data in result value and quality, performance cost and effectiveness, capital worth, and return on capital investments that is not processed today
• Information Technology is defined and organized as capital, with other capital of the same category, for proper capital management by those with the professional capability
• Information capital is defined and managed as business data, human knowledge, facility records, and management intelligence to produce information solutions needed by the business
• Enterprise information is integrated by capital solution utilized, result produced, supplier, customer, time period, business transaction, etc in an enterprise Business Information Base for one set of complete and accurate business information
• Information systems and processing devoted to managing arbitrary structures laid over the business and special systems to address problems in data reconciliation, information integration and extraction, and management reporting are discontinued, if not directly needed by the business
• New information system implementation integrates business and information processing with other capital solutions to produce specific output results needed by the business
• The business is organized for a new generation of 21^st century business management systems and business-information process modules, to process the actual business result by result, and provide one set of consistently-defined management information

Managing information technology as capital utilized by the actual business eliminates the unsolvable IT problems in business alignment, information complexity, data reconciliation, unknown costs and value, unknown capital worth and returns, CIO and IT management capabilities, data integration and control, and on and on.

The Information Technology Problem

Enterprise information systems include a wide variety of systems that are laid over the business

Since the business is not organized, different management structures must by laid over the business to manage the enterprise. [more...]

20^th century enterprise management cannot define and organize real value chains

Much is written about the theory of value chains and various structures have been contrived to lay value chains over the business. But, value chains cannot be defined and organized today, because 20^th century enterprise management organizes and manages the enterprise, but does not define or organize the actual business. The actual business is defined as “investments in capital as solutions of worth utilized for cost and effectiveness of performance to produce value and quality in results”. A value chain consists of a chain of results of value produced in sequence to provide a final result of value to an enterprise customer. In order to build a value chain results, capital solutions that produce results, and the performance of each solution to produce each result must be defined and organized as a sets.

21^st century business management organizes the business to provide natural value chains

Result-performance Management (R-pM) provides the knowledge, concepts, and procedures for 21^st century business management. We cannot build natural value chains, until we organize and manage the business. Business management organizes results as the links in the chain, capital solutions to deploy and implement the capital solutions needed to produce each result, and performance in the utilization of one solution to produce one result. Each link in the chain consists of one result and the capital solutions utilized in performance to produce the result. Result relationships link results in sequence and manage the complete chain.< [more...]>

Change Management is one of the top 10 problems of 20^th century management!

Business change cannot be managed directly because the business is not managed

Business change is a mystery to the 20^th century enterprise because the business, the activity of providing goods and services, is not organized and managed. The enterprise is organized and managed through organization and management structures laid over the business. 20^th century “business change” is not change to the business, but is change to structures laid over the business. Most “business change” lays new organization, process, or system structures over the business with little positive change to the business itself. The rigid new and old structures are separately defined and conflict with each other and the actual changing business. Since the business is not managed, the value created by change cannot be planned or managed and the return on change investments cannot be measured.

The solution is to organize the business for direct management of business change

Business change is a change to either an output result produced by the business or a capital solution utilized in business performance. When the business is organized and managed, business change automatically reorganizes the business and can be managed as the routine. Business management organizes results and capital solutions to change the business as the daily routine. Business change projects involve capital development to increase the value of results or to enable new results, by implementing new or improved capital solutions. If the enterprise does not manage results and capital solutions utilized in performance, it is difficult to manage change to results, capital solutions, and performance.

The Change Management Problem

20^th century business change is change to overlaid organization and management structures

Even accepting 20^th century management change to overlaid organization, process, information system, account, performance management, and other structures, there are another set of problems. [more...]

Methods like Total Quality Management, Six Sigma, and ISO 9000 Standards do not provide the quality management needed

We have had structures like Total Quality Management (TQM) and the ISO quality system for ISO 9000 standards and certification, which were found lacking as a management method. We also reengineered our business process with BPR, specifically to help us manage performance quality. But, performance quality proved difficult to comprehend and manage. Six Sigma provides another structure for our final production quality. Now we have business process and performance management (BPM) to manage the quality of our processes and performance. Even with all this, we still have not found a way to manage quality as the business routine of everyone in the enterprise.

Customer-determined quality is managed result by result by managing the businss

Quality must be managed as part of the managed business defined as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. By definition, in the business, value and quality are attributes of results, the economic outputs produced across a managed business. Result-performance Management (R-pM) provides the knowledge and procedures to organize the business by organizing results produced across the business as one-off results or as result chains and by organizing the capital utilized as solutions in business performance to produce each result. With an organized business, the company can manage quality as an attribute of results, not performance, and can manage real quality for any result, not just final results from production. [more...].