Archive for the 'Business Capital' topic

What is the business and capital as part of the business?

The 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”. Every business in the world invests in capital needed, in order to utilize capital in performance, in order to produce output results. The capital must have a worth that justifies the investment costs for acquisition or development and implementation as capital solutions.

Capital is the investments in the business to have the capability to produce results

The only reason to invest in capital is to provide the capability to produce business results. Capital is all the tangible and intangible assets available to be utilized by the business. Capital includes the business organization, processes and systems, humans and their capabilities, facility equipment and supplies, management plans and tactics, and information capital. Capital has a worth in the capability to create result value attributable to the capital over the remaining capital life.

20^th century management fails to organize and manage capital as part of the business

Today, people think of capital as items in an asset register or on the payroll, rather than as items to be managed and utilized as part of the business. Businesses invest in enormous sums of money capital and then fail to identify the specific capital solutions developed, the costs of developing the capital, the worth of the capital as developed, the utilization of the capital to create value, the cost of capital utilization or consumption as capital worth deteriorates, and the value created to return the original investment. [more...].

Business change is not change to the business, but to structures laid over the business

We all have heard of business change problems and the need for change management to solve these problems. We assume that business change changes the actual business, and that business change management manages change to the business. We think of projects like reorganizations, systems implementation, business process re-engineering, etc as changes to the business. We think that the business never changes until there is a periodic business change project.

One problem with 20^th century management is that no one knows what the business is that is supposedly being organized, managed, and changed, because there has never been a precise identification and definition of the “business”. The fact is that 20^th century “business change” is not change to the business. The actual business is in a continual state of change that we are not aware of because the business has never been defined and organized. The most common 20^th century definition of the enterprise business is the “activity of providing goods and services”. The business changes with each change in business activity, which is the utilization of capital as performance solutions, and each change to goods and services, which are economic output results. 20^th century management has never precisely defined and organized the “activity of providing goods and services”, so actual business change has never been managed as business change.< [more...].

You may be asking; what is business capital? You hear of business organization, business processes, and business data; but do think of it as business capital? You likely do not, because 20^th century management does not organize and manage business capital as the capital that is directly utilized to produce an economic output result. 20^th century management administers known tangible capital, rather than managing capital. Capital is lumped together as an asset, much never been documented and managed as capital, and much is labeled as “intangible assets”.

Logically all capital must be defined as performance solutions to be deployed and utilized to produce a specific result. The post on August 6, 2007, The Logic of Capital Management, provides the background.

Capital utilized by the business is organized into four categories

Capital utilized by the business requires different professional capabilities to be professionally managed, which organizes four categories of capital:

• Business organization, process, and data capital to manage capital that directly produces a result and cannot, generally, produce another result. Business capital requires business knowledge and analytical capability
• Human personnel, capability, and knowledge capital to support and develop the worth of human capital. Human capital requires human handling, development, and coaching capabilities
• Facility equipment, supply, and record capital to manage reusable and consumable tangible assets and records. [more...]

Capital Management is the management of enterprise capital in performance solutions to produce results of value needed by the enterprise. Capital management is an important part of 21^st Century Management.

Capital is not managed in 20^th century management

20^th century management does not manage capital. 20^th century management provides administration functions like finance, accounting, human resource administration, purchasing, information technology, and corporate planning to administer selected tangible capital. Most capital is not identified or managed by the enterprise. Much capital is created and used in the enterprise, but is known only in the department that keeps it. Much enterprise capital is assigned to a responsibility center and managed no further. The capital in administrative units is administered rather than managed to provide solutions, control costs, create value, and increase in worth.

Capital investments are not managed to develop specific capital to produce value in results

Enterprises invest significant sums in the capital used, but these investments are not managed to provide the specific returns. The tangible capital is normally developed as a lump sum for an asset or a project. [more...]

Business or Systems analysts work with structures laid over the business

Historically, the business or systems analyst has never had a good business framework for disciplined analysis. The analyst usually works with an isolated problem or set of user requirements and creates a business process or system solution. The solution does not actually manage the business, but is laid over the business. The business tends to change while the solution remains rigid, requiring continuing solution maintenance to align the solution with the changed business.

Most corporations do not understand the role of the business analyst and do not properly organize their business capital. Often the systems analyst is placed in IT, which removes him from the business and provides a computer processing focus, rather than a business requirements focus.

R-pM organizes the Business Structure to provide a framework for analysis

R-pM provides a new environment for the business or systems analyst. R-pM organizes and manages the business, “the activity of providing goods and services”. R-pM organizes the activity as business performance and the goods and services as business results in a simple, easy-to-manage Business Structure defined by only two entities:

• Results: Specific economic outputs that must be produced by business performance
• Performance Solutions: Specific capital that must be utilized in performance to produce specific results

Results are the inputs to and the outputs from performance. A result is a specific accomplishment, like customer order recorded, that can be counted and measured. [more...].

Business Solutions are specific capital items that are utilized to produce specific business results.

Business solutions are the specific items of capital that are supported and are utilized to produce specific results. Business solutions are broken down to provide the specific management support capabilities needed, and to integrate with other solutions utilized to produce a specific result. The set of solutions is organized in the business solution structure. This means that the business solutions must be structured into two dimensions.

• The capital management and support dimension so that solutions can be supported by the proper human capability solutions
• The result management and utilization dimension to group like solutions that must be integrated to work together to produce a result

In the capital management support dimension, solutions should be categorized by the kind of human capability capital needed to develop, support, and provide cost-effective business solutions. In the result management and utilization dimension solutions should be classified by the way capital is organized to actually produce results.

Today, some capital is administered by functions, but most is undefined and unmanaged

In today’s enterprise, most capital is administered in different categories. Human capital is separated as human resource administration. Tangible facilities like financial and fixed assets and accounting records fall under finance and accounting or an administration department. [more...]s

Information technology is changing faster than the management of information technology

The organization, processing, and data that produces a specific result used to be integrated business capital processed by human capital and tangible asset facilities. Then computers came along with expensive technology that had to be separated from the business and operated by specialists. We set up data processing, which evolved into information technology or IT. Today we manage information capital and information solutions as technology, rather than information capital to be utilized to produce results.

The solution is provided by Result-performance Management, which integrates application system processing with the business process, integrates hardware, software, and networks with other facility equipment, and manages data, knowledge, records, and intelligence through the capabilities needed for high-worth information solutions. Review the R-pM article “Solve the CIO Problem by Proper Capital Organization and Management” and the R-pM community download “Organizing and Managing Performance” to see how to manage information as capital to be utilized, rather than technology to be administered.

The power of Information Technology can be put back with users

We now have conventional methods of managing Information Technology. But now information technology is changing, so that the power of IT can be put back into the hands of the user. In effect, we can now re-consolidate data processing back with our business capital. [more...].

In an article on 29 January we discussed the Rapid change in technology and slow change in IT. We are finally starting to wake up to the long-standing problems in the way we manage and deliver IT services.

IT has been operating as an exception since its introduction because the technology was so specialized. But now the technology is becoming more common. We have identified the CIO problem where one person does not have the natural aptitude to manage strategy, systems development, and technology operation. We need to split up IT to be managed effectively as capital, within the whole of enterprise capital.

R-pM separates information technology as capital to be supported and utilized

There are two important aspects to managing capital:

1. Managing capital creation, development, and support
2. Managing capital integration and utilization to produce results

Result-performance Management organizes information technology as capital to be developed and utilized. Learn more by clicking the banner to go to result-performance-management.com.

Information Technology is categorized to be developed and supported as capital

IT strategy must be blended in with the enterprise management strategy, not a separate solution, so strategic information system planning is management capital. Systems development must be integrated with the business development and systems processing must be integrated with business processing. Data describes the business, so system development, information processing, and data are business capital. Technology operation is part of our equipment and network solutions the same as our telephone network. So the enterprise service architecture, network, and equipment and operations are facility capital. [more...]

Conventional corporations are not built from strong building blocks

Is there a building block that we can use to construct any enterprise? What are the building blocks we use today: organization units, functions, positions, teams, locations, etc? Do any of these building blocks build a solid foundation for our enterprises?

Conventional corporations build on a variety of organization theories and methods

The conventional foundations of our enterprises are weak. The foundation is based on organization theories and methods that are distorted by managers maneuvering for power. The organization foundation is fixed and inflexible. The business changes but the organization stays fixed, generating pressure for reorganization and another cycle of the same.

Corporations must build up from the fundamental element of the business

We need a building block that can be used to build a fundamentally strong organization for any enterprise, but also provide the flexibility to add and remove blocks for quick change. This requires that we organize the business, so that the organization is a natural organization that changes as part of business change. There will be no more re-organizations, consultant studies, politics and disputes, change management, or the other by-products of the conventional weak organization foundation.< [more...]>

Business data is usually administered as information technology

Data management is normally an IT function. Is this what data management should be? Is data capital? What is proper definition of data in a business context? What is the difference between data and information?

In most enterprises data management is thought of as a technical IT function. Perhaps the technical aspects of large enterprise database back-up, reorganization, and recovery are; but even this is changing as databases become more user-friendly.

Stop administering data as information technology and utilize data as business capital

Data is important information capital with value that should be managed as capital. Data is business information that is needed to operate the business. Therefore, data is also business capital. [more...].