“Outsourcing of manufacturing jobs has been going on for decades, but now white-collar, service-sector jobs seem to be at risk” (Dudley, et al, 2004) The frequency of Business Process Outsourcing (BPO) has been mounting for many years. Although previously offshoring has been popular with blue collar work to countries such as China, it has now become quite common for white collar work to be transferred to India. This has had a huge impact on many professions and industry sectors, none more so than accounting. It is important to examine this area further in order to ascertain the consequences and effects it may have on the accounting profession and the accountants themselves.
In terms of accounting functions, offshoring has had a great effect on all service lines, however it has emerged that tax departments have seen the biggest change. “As many as 360,000 US tax returns were prepared in India in 2006”
(http://www.pressbox.co.uk/detailed/Business/Offshoring_Tax_Returns_Preparation_to_India_90516.html ) These figures are relatively similar to what is happening in the UK today, and they are set to rise in the very near future. Tax has seen the biggest change mainly due to the fact that it would be incredibly difficult, if not impossible, for audits to be conducted from another country. Tax returns and computations however, can easily be transferred by means of the internet or file sharing. One main cause of this drastic change in service is the competitive pressures which accounting firms now face. The current market is more competitive than ever, and accounting firms are constantly looking for ways to make their operations more efficient. It can also be said that tax is a very ‘seasonal’ service. Tax departments in accounting firms will be busiest in the lead up to April, the end of the tax year, and so may need to transfer their operations offshore in order to meet client demand. On top of this there is currently a significant shortage of accountants in the UK, creating even more reason for the existing offshoring pattern. One particular reason which could make this pattern change course is the reserves of the accounting firms. There are various justified reasons why firms may be apprehensive about offshoring, in particular, data security.
Naturally, data security is of particularly high importance to firms to ensure client protection and maintain a good reputation. However the consequences of offshoring could prove to be disastrous if the chosen country has not got the adequate protection laws in place. Obviously the main priority of an accounting firm looking to offshore its services would be to “insist on security certification, or adherence to laws, standards and business practices prevalent in their respective countries.” (http://www.networkmagazineindia.com/200304/cover1.shtml) Fortunately there are security certifications that companies can acquire such as ISO 17799 which is an information security standard published by the International Organisation for Standardisation. This provides best practice guidelines on information security management for companies responsible for data. On top of this, there are various other protections which could be utilised by accounting firms in the UK, for instance, “Indian firms that deal with US companies are also asked to comply with US laws like the Graham-Leach-Bailey Privacy Act and the Patriot Act.” (http://www.networkmagazineindia.com/200304/cover1.shtml) UK firms should employ this tactic to ensure strict policies and regulations are adhered to regardless of the country they operate in. With these in place, offshoring will only become more common and easy to implement, causing huge impacts on employment patterns.
As would be expected, employment levels fall when offshoring is implemented by large companies, and it is estimated that this will cost the UK economy £5.7bn in “unemployment benefits and retraining costs” in the next six years. (http://management.silicon.com/itdirector/0,39024673,39118025,00.htm) However, were UK companies to persevere with using a home-grown workforce, this may also have a detrimental effect on the economy in terms of companies being less profitable and slowing GDP growth. While this debate is still on-going, one thing is certain; UK accountants may need to learn new skills in order to survive. In particular, tax accountants may need to establish new, fresh, flexible, and innovative skills to maintain there position within the sector and ensure they are carrying effective, and more importantly to organisations, efficient work. Without these skills, offshoring is likely to become the norm for tax accounting, and many skilled workers may find themselves jobless.
Offshoring has been developing and growing for many years, and currently it shows no sign of waning. For the accounting sector this could potentially result in whole tax departments being transferred overseas, and numerous specialised accountants out of work. For them to compete with this worrying trend, it may be necessary to learn exciting, novel skills to differentiate them from the foreign workforce. Although data security and other legislation may prove to be a stumbling block, it does not seem to be slowing down the migration of work to other countries.
References
Dudley, W, Hooper, P and Resler, D, (2004), “Ease the pain, but don’t stop Offshoring services”, FT.com.
Network Magazine, ‘Information Security: A New Approach’ [April 2003]
http://www.networkmagazineindia.com/200304/cover1.shtml
[accessed 9/11/07]
Pressbox, ‘Offshoring Tax Returns Preparation to India’ [Nov 2006]
http://www.pressbox.co.uk/detailed/Business/Offshoring_Tax_Returns_Preparation_to_India_90516.html
[accessed 9/11/07]
Silicon, ‘Offshoring will Cost UK £5.7bn and 250,000 jobs by 2010’ [Jan 2004]
http://management.silicon.com/itdirector/0,39024673,39118025,00.htm
[accessed 11/11/07]
Sunday 18 November 2007
Friday 16 November 2007
Assignment - Case Study - Geneva ERP Implementation
Introduction
Geneva Pharmaceuticals Inc., is a generic drugs manufacturer. There are many key points in the case study, the most important being the fact that the manufacturing industry is highly competitive meaning there is a constant pressure on Geneva and its competitors to reduce their cost of operations in order to increase the efficiencies within the company. To do this they decided to implement an Enterprise Resource Planning System (ERP). We will therefore look at the key decision-making processes behind the implementation and the main points that can be learned from this process.
Phase One - Supply Side Processes
The first stage of implementation concentrated on the 'Supply Side Processes'. During this phase there were a number of key decisions made which had a substantial effect on the progress of the implementation.
Firstly, Verne Evans, a "super user" of MacPac was selected as the project manager of this phase. This proved to be disastrous as he had no prior knowledge of R/3 systems and was unable to resolve problems or provide leadership. On top of this, Geneva decided to employ ten Information Systems personnel along with twenty users from across the business units who had no experience with R/3 systems, and hire Whitman-Hart to oversee the migration. Whitman-Hart employed six specialists to aid the implementation, however, with no knowledge of the business process on their part, there was a severe lack of communication and co-ordination during the project.
To combat this problem, Geneva hired Randy Weldon as the new CIO, who had prior experience using R/3 systems. This was a valuable decision as he put in place a new project management team consisting of one person from each stakeholder group (functional users, IS staff and consultants). In addition, Anna Bourgeois, who had over three years experience working with R/3 systems, was employed to lead the internal IS team.
Another key decision was selecting to follow the ASAP methodology, which meant that the implementation was as short as possible. This had a detrimental effect on the project as it turned out that this system was highly inflexible, however, Geneva decided to persevere with it until the end of phase one for the purpose of project expediency.
Phase Two - Demand Side Processes
During phase two, the main goal was to “improve sales and operations planning”, and there were a number of important decisions taken which made this possible.
One of the key decisions made was assigning an efficient management team. Whitman Hart was replaced with consulting firm Oliver White and Arthur Andersen Business Consulting. The roles of the two firms were clearly identified so that each could concentrate on their strengths. Both of these firms had extensive experience which was a virtue during this implementation.
Geneva set up three clear stages in this Phase, conceptual design, conference room pilot and change management. Having clear goals helped to give the team something to work towards and made sure that each stage was completed before moving on to the next.
Conceptual design involved gain sharing, where the most knowledgeable in the firm were identified, interviewed and had their input into any beneficial changes that could be made to the system. This was done through identifying the value adding processes against the unnecessary processes which finally led to the final R/3 system.
Stage two was the conference room pilot. Geneva spent a lot of time and capital using prototypes to fully test their system processes before it went live. This was a highly useful and invaluable decision, as leaving testing to the last minute could create a lot of problems and delays.
The final stage was change management. Geneva recognised that a new system implemented could bring a change in corporate culture within the firm. They therefore thought it was essential for extensive training of the staff before the system came into place. Each employee received in-depth, detailed training and was provided with support if they had any problems or questions.
Phase Three - Integrating Supply and Demand
During phase 3, the primary focus was to integrate the supply and demand processes.
In 1997 Geneva decided to implement a manual Sales and Operations Planning (SOP) process. Initially, this seemed to be worthwhile, however it emerged that the process created a huge time delay and mistakes were made when re-entering data manually. Worst of all, the process took a whole month to complete and so Geneva decided it was time for a change. They chose to implement Manufacturing and Resource Planning (MRP-II) and SOP processes to create 'just-in-time' production scheduling. Although a vast improvement on the manual process, Geneva felt this was still lacking in the advanced technology they required, and so took the decision to add Advance Purchase Optimiser (APO) software to aid data analysis.
This enabled Geneva to satisfy their primary business metric, 'available to promise' (ATP). This measures whether they are able to deliver to a customer by the promised time, which according to them is the key element of their business.
Conclusion
By considering all the key decisions made by Geneva, there are a number of things to learn from their experience.
Firstly, choosing an appropriate number of staff and the correct people for the job is a necessity for communication and co-ordination. Where this went wrong, Geneva rectified it quickly and efficiently. In addition, setting clear goals and strategies for the workforce is extremely important so they all have a common target to reach and can work in unison.
Also, choosing a methodology which requires implementation of the system so quickly was an error on Geneva's part. For successful implementation, the process should be completed over a long period so problems can be tackled effectively and not rushed.
Another lesson to be learned is the strategies employed by Geneva during the implementation. Such things as gain-sharing, using prototypes to test system processes, and extensive staff training are extremely important for effective implementation as they ensure that the process is running smoothly and efficiently.
Finally, for a completely successful implemented system, it is important to always look for improvements. Geneva went from manual to computerised and added further improved software systems over time. For companies to be an all round success, they must always strive to improve themselves, and Geneva are a perfect example of this theory.
This assignment was prepared in collaboration with Katherine Keane.
Geneva Pharmaceuticals Inc., is a generic drugs manufacturer. There are many key points in the case study, the most important being the fact that the manufacturing industry is highly competitive meaning there is a constant pressure on Geneva and its competitors to reduce their cost of operations in order to increase the efficiencies within the company. To do this they decided to implement an Enterprise Resource Planning System (ERP). We will therefore look at the key decision-making processes behind the implementation and the main points that can be learned from this process.
Phase One - Supply Side Processes
The first stage of implementation concentrated on the 'Supply Side Processes'. During this phase there were a number of key decisions made which had a substantial effect on the progress of the implementation.
Firstly, Verne Evans, a "super user" of MacPac was selected as the project manager of this phase. This proved to be disastrous as he had no prior knowledge of R/3 systems and was unable to resolve problems or provide leadership. On top of this, Geneva decided to employ ten Information Systems personnel along with twenty users from across the business units who had no experience with R/3 systems, and hire Whitman-Hart to oversee the migration. Whitman-Hart employed six specialists to aid the implementation, however, with no knowledge of the business process on their part, there was a severe lack of communication and co-ordination during the project.
To combat this problem, Geneva hired Randy Weldon as the new CIO, who had prior experience using R/3 systems. This was a valuable decision as he put in place a new project management team consisting of one person from each stakeholder group (functional users, IS staff and consultants). In addition, Anna Bourgeois, who had over three years experience working with R/3 systems, was employed to lead the internal IS team.
Another key decision was selecting to follow the ASAP methodology, which meant that the implementation was as short as possible. This had a detrimental effect on the project as it turned out that this system was highly inflexible, however, Geneva decided to persevere with it until the end of phase one for the purpose of project expediency.
Phase Two - Demand Side Processes
During phase two, the main goal was to “improve sales and operations planning”, and there were a number of important decisions taken which made this possible.
One of the key decisions made was assigning an efficient management team. Whitman Hart was replaced with consulting firm Oliver White and Arthur Andersen Business Consulting. The roles of the two firms were clearly identified so that each could concentrate on their strengths. Both of these firms had extensive experience which was a virtue during this implementation.
Geneva set up three clear stages in this Phase, conceptual design, conference room pilot and change management. Having clear goals helped to give the team something to work towards and made sure that each stage was completed before moving on to the next.
Conceptual design involved gain sharing, where the most knowledgeable in the firm were identified, interviewed and had their input into any beneficial changes that could be made to the system. This was done through identifying the value adding processes against the unnecessary processes which finally led to the final R/3 system.
Stage two was the conference room pilot. Geneva spent a lot of time and capital using prototypes to fully test their system processes before it went live. This was a highly useful and invaluable decision, as leaving testing to the last minute could create a lot of problems and delays.
The final stage was change management. Geneva recognised that a new system implemented could bring a change in corporate culture within the firm. They therefore thought it was essential for extensive training of the staff before the system came into place. Each employee received in-depth, detailed training and was provided with support if they had any problems or questions.
Phase Three - Integrating Supply and Demand
During phase 3, the primary focus was to integrate the supply and demand processes.
In 1997 Geneva decided to implement a manual Sales and Operations Planning (SOP) process. Initially, this seemed to be worthwhile, however it emerged that the process created a huge time delay and mistakes were made when re-entering data manually. Worst of all, the process took a whole month to complete and so Geneva decided it was time for a change. They chose to implement Manufacturing and Resource Planning (MRP-II) and SOP processes to create 'just-in-time' production scheduling. Although a vast improvement on the manual process, Geneva felt this was still lacking in the advanced technology they required, and so took the decision to add Advance Purchase Optimiser (APO) software to aid data analysis.
This enabled Geneva to satisfy their primary business metric, 'available to promise' (ATP). This measures whether they are able to deliver to a customer by the promised time, which according to them is the key element of their business.
Conclusion
By considering all the key decisions made by Geneva, there are a number of things to learn from their experience.
Firstly, choosing an appropriate number of staff and the correct people for the job is a necessity for communication and co-ordination. Where this went wrong, Geneva rectified it quickly and efficiently. In addition, setting clear goals and strategies for the workforce is extremely important so they all have a common target to reach and can work in unison.
Also, choosing a methodology which requires implementation of the system so quickly was an error on Geneva's part. For successful implementation, the process should be completed over a long period so problems can be tackled effectively and not rushed.
Another lesson to be learned is the strategies employed by Geneva during the implementation. Such things as gain-sharing, using prototypes to test system processes, and extensive staff training are extremely important for effective implementation as they ensure that the process is running smoothly and efficiently.
Finally, for a completely successful implemented system, it is important to always look for improvements. Geneva went from manual to computerised and added further improved software systems over time. For companies to be an all round success, they must always strive to improve themselves, and Geneva are a perfect example of this theory.
This assignment was prepared in collaboration with Katherine Keane.
Monday 5 November 2007
Why did TAURUS fail and CREST succeed?
The London Stock Exchange (LSE) has seen many changes in the past few decades, none more so than the transition into computerisation. Despite having gone through numerous Chief Executives, one fact has remained the same; the LSE are dependent on technology for growth and international competition. Pre-TAURUS, the LSE thought itself as the “foremost among the world’s bourses in international dealings, and first in Europe on any measure.” Laughably, TAURUS was intended to maintain this position however it had a very different outcome. CREST on the other hand was a highly successful project for a variety of reasons which will now be looked at in greater detail.
TAURUS was a large computerisation project introduced after the ‘big bang’ to tackle the problem of settlement. One main difference between TAURUS and CREST was that the former was compulsory for all member firms, whereas the latter was optional. This meant that the TAURUS team carried out significant consultation and negotiation with the majority of member firms over the design and business approach. Naturally, this meant that each firm wanted TAURUS to incorporate their unique approach to business, making it a complex and difficult program to design. The opposite happened with CREST. Being optional, their team used the Pareto effect and interviewed all interested parties which resulted in it delivering a blue print in only three months. Further to this, the TAURUS software catered for a possible 21 events which could occur during the course of business, resulting in the design team struggling to understand and cope with the complex system. This was obviously a downfall, and so CREST was designed with only 2 events making it simple and easy to implement and test. Probably the most obvious reason why CREST succeeded over TAURUS with regards to the design was that TAURUS was built with the intention of being “all things to all men” whereas CREST’s purpose was “to follow the recipe”. This highlights the main design problem in that TAURUS was aiming too high. Nothing can be ‘all things to all men’ and so in a way they had failed before they even began. CREST on the other hand took a simple approach which was able to cater for all members and was a relatively simple design.
Aside from the design aspect, TAURUS failed for a number of other reasons. Firstly they had a destructively bad relationship with the press. There was no real communication between the two parties and so the press would report on anything they could find, and it was rarely ever in a positive way. In fact when TAURUS was terminated, the press ran multiple reports claiming different reasons for the failure. This would not have happened if the TAURUS team had simply kept them informed. This is the area in which the CREST team were highly successful. They fully briefed the press on their progress throughout the project building a strong relationship and mutual respect between the two.
Another downfall of TAURUS was the huge number of people involved in its design and creation. This resulted in low morale amongst the workers as there were hundreds of people working on this project with no clear strategy or outline. On top of this, they kept missing deadlines while two senior directors and managers left in 1992 causing major unrest among the workforce. CREST combated this problem by initially only having ten men on the taskforce to design the system, followed by approximately 60 people for the programming and creation. This meant that the team all knew their specific tasks and had a clear target to meet, resulting in high team morale and growing confidence among them.
To an outsider, it seems as though TAURUS was destined to fail from the word go. From design problems to numerous legal constraints and heavy pressure from various Government bodies, there were few positive aspects of the project. CREST on the other hand, was a success from start to finish. The approach to the project and attitude of the workforce meant that CREST went live on time and within its budget with only a few hiccups along the way.
TAURUS was a large computerisation project introduced after the ‘big bang’ to tackle the problem of settlement. One main difference between TAURUS and CREST was that the former was compulsory for all member firms, whereas the latter was optional. This meant that the TAURUS team carried out significant consultation and negotiation with the majority of member firms over the design and business approach. Naturally, this meant that each firm wanted TAURUS to incorporate their unique approach to business, making it a complex and difficult program to design. The opposite happened with CREST. Being optional, their team used the Pareto effect and interviewed all interested parties which resulted in it delivering a blue print in only three months. Further to this, the TAURUS software catered for a possible 21 events which could occur during the course of business, resulting in the design team struggling to understand and cope with the complex system. This was obviously a downfall, and so CREST was designed with only 2 events making it simple and easy to implement and test. Probably the most obvious reason why CREST succeeded over TAURUS with regards to the design was that TAURUS was built with the intention of being “all things to all men” whereas CREST’s purpose was “to follow the recipe”. This highlights the main design problem in that TAURUS was aiming too high. Nothing can be ‘all things to all men’ and so in a way they had failed before they even began. CREST on the other hand took a simple approach which was able to cater for all members and was a relatively simple design.
Aside from the design aspect, TAURUS failed for a number of other reasons. Firstly they had a destructively bad relationship with the press. There was no real communication between the two parties and so the press would report on anything they could find, and it was rarely ever in a positive way. In fact when TAURUS was terminated, the press ran multiple reports claiming different reasons for the failure. This would not have happened if the TAURUS team had simply kept them informed. This is the area in which the CREST team were highly successful. They fully briefed the press on their progress throughout the project building a strong relationship and mutual respect between the two.
Another downfall of TAURUS was the huge number of people involved in its design and creation. This resulted in low morale amongst the workers as there were hundreds of people working on this project with no clear strategy or outline. On top of this, they kept missing deadlines while two senior directors and managers left in 1992 causing major unrest among the workforce. CREST combated this problem by initially only having ten men on the taskforce to design the system, followed by approximately 60 people for the programming and creation. This meant that the team all knew their specific tasks and had a clear target to meet, resulting in high team morale and growing confidence among them.
To an outsider, it seems as though TAURUS was destined to fail from the word go. From design problems to numerous legal constraints and heavy pressure from various Government bodies, there were few positive aspects of the project. CREST on the other hand, was a success from start to finish. The approach to the project and attitude of the workforce meant that CREST went live on time and within its budget with only a few hiccups along the way.
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