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Expense/Cost Allocations – Simplified Approach using Oracle EPM

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Introduction 

Evidently every organization, whether small or large, performs various financial and non-financial activities throughout its existence. These activities range from focusing on daily business activities, recording financial transactions, maintaining an efficient supply chain, managing human and other resources, to generating revenue to cover various expenses.  

As the organization expands, complexities in all the business areas increase hand in hand. As a result, to let people focus on dedicated areas, responsibilities are delegated to various responsibility centers such as cost centers, revenue centers, profit centers, etc. 

Responsibility Centers and the Expense / Cost Allocation 

 

Both Revenue Centers and Profit Centers have their sources of income to meet their expenses. On the other hand, Cost Centers incur expenses related to their operation but do not directly generate income. Hence there should be some income source for the Cost Centers to meet their expenses and run their operations. In addition to that, there are various other indirect expenses as well as overheads at the organizational level that also need an income source to pay for. Here’s when the Expense / Cost Allocation comes into the picture. 

 

The impact of expenses incurred by the Cost Centers (Finance Department, HR Department, IT Department, Admin Department, etc.) needs to be distributed across different departments of the organization. The objective is that all the departments are aware of and responsible for their share of costs, can efficiently use their resources and accurately perform financial planning. 

 

Challenges in Allocating Expenses / Costs 

As good as it may sound, more than 30% of organizations across the world face difficulty in allocating expenses to Revenue / Profit Centers because they perform this operation manually / traditionally. The difficulty in allocating the expenses manually / traditionally can vary based on several factors: 

  1. Lack of Transparency and Visibility: In the allocation process, more than 50% organizations struggle in terms of transparency, which eventually leads to confusion and reduced efficiencies in tracking the way expenses are distributed across the cost centers. 
  2. Allocation Bias and Subjectivity: There exists unfairness and inconsistencies in expense distribution because of non-standardized procedures as approximately 35% of organizations experience bias in their allocation process. 
  3. Lack of Communication and Collaboration: For accuracy in cost allocation, effective communication and collaboration between Cost Centers and Finance Teams is crucial. Around 25% of organizations face difficulties in terms of effective communication and collaboration. 
  4. Size and Complexity of Business: The larger the size of a business, the more will be its departments and products, resulting in a more complex cost structure. It makes manual allocation error prone and more time consuming. On average, 40% of the large-scale organizations have very complex cost structure and methods that they struggle with the manual allocation process.
  5. Allocation Methods and Allocation Keys / Basis: There exist multiple allocation methods and accordingly exist multiple allocation basis. Around 30% of organizations find it challenging to establish appropriate allocation methods as each method (Direct Method, Step / Sequential Method, and Reciprocal Method) has their own advantages and disadvantages. The simpler methods may be less challenging to manage, however, for more intricate ones, manual spreadsheet-based / traditional processes can become cumbersome.
  6. Data Unavailability: In manual spreadsheet-based / traditional processes, gathering accurate data from various sources with no data loss can become tedious and requires very much back and forth process. More than 30% of the Organizations face significant challenges with respect to limited data access or poor data quality. 

 

Sources: 

  1. Common Challenges And Solutions In Cost Center Expense Allocation 
  1. Common Challenges In Expense Allocation And How To Overcome Them 

 

For Example:  

In the Healthcare Industry, revenue streams are typically identified based on inpatient and outpatient days, categorized by the services provided by hospitals and clinics. The more services a hospital or clinic offers, the more complex and detailed the allocation process becomes. 

Similarly, expenses in hospitals and clinics can be classified as direct, indirect, or overhead, depending on the cost centers and services provided to patients. For example, expenses like doctor fees, radiology test charges, or laboratory test charges can be directly allocated to the patient. However, allocating costs such as the salaries of ward attendants or supervisors to inpatients or outpatients requires a specific allocation method. Many other expenses cannot be directly assigned and require the use of drivers or activities to timely perform transparent and unbiased cost allocations with sufficient data being available. 

 

Oracle EPM: Overcoming Manual / Traditional Challenges in Cost / Expense Allocation 

Every organization has actual expenses that need to be allocated between the departments. It also has budgeted expenses that require allocation between the departments to perform efficient financial planning and forecasting. 

To eliminate all the manual allocation challenges mentioned in the above section, you must have a robust software solution that automates the accurate data integration process as well as expense / cost allocation process using various allocation methods and allocation basis, for as big an organization as you have. Oracle Enterprise Performance Management (EPM) is the best fit for these requirements. 

The modules of Oracle EPM help you perform the end-to-end process of allocating actual as well as budgeted expenses / costs in quick succession, in one click, and using simplest to most complex allocation methods and basis. Let me walk you through two of the best modules of Oracle EPM, i.e., Oracle EPBCS and Oracle EPCMCS, that best suits your needs. 

 Oracle EPBCS (Enterprise Planning and Budgeting Cloud Service) 

  • If an organization needs robust financial planning with options for direct or single-step allocation methods, both for actual and planned data, Oracle EPBCS is an ideal solution. 
  • In a SaaS deployment, Oracle EPBCS offers all the advanced budgeting, forecasting, data management, and analysis features of Oracle Hyperion Planning. 
  • It provides immediate value and boosts productivity for business planners, analysts, modelers, and decision-makers across every part of an enterprise. 
  • Oracle EPBCS supports organizations in various planning processes, including financial, workforce, capital, and project planning, along with what-if scenario analysis and modeling. 
  • These processes come with built-in best practices, including predefined content like forms, calculations, dashboards, drivers, and KPIs. 

How can we eliminate challenges & meet the allocation requirements through Oracle EPBCS? 

Oracle EPBCS can address the challenges of manual cost allocation in several ways: 

For Example: If a service industry or any other industry wants to allocate overhead costs like office rent or administration charges across their revenue centers, Oracle EPBCS can handle this efficiently. With actual and budgeted data already stored in the system, business rules, groovy scripts, and allocation driver logic can automatically distribute these costs across all revenue centers in a single step. If the budgeting or finance team wants to adjust the allocation pattern, they can easily select or create drivers based on their preferences, such as percentage allocation, gross margin percentage, revenue figures, or employee headcount. 

  

Oracle EPCMCS (Enterprise Profitability and Cost Management Cloud Service) 

  • If an organization needs to perform direct, multi-step, or reciprocal allocation methods for both actual and planned data, Oracle EPCMCS is the perfect software choice. 
  • Businesses must be able to accurately measure, allocate, and manage costs and revenue to maximize profitability. 
  • Oracle EPCMCS helps manage the cost and revenue allocations needed to determine profitability across various business segments like products, customers, regions, and branches. 
  • It also allows you to use cost decomposition, consumption-based costing, and scenario analysis to measure profitability, providing valuable support for planning and decision-making. 

How can we eliminate challenges & meet the allocation requirements through Oracle EPCMCS? 

 Oracle EPCMCS tackles manual cost allocation challenges in several ways: 

 

For example: If a Healthcare Industry wants to allocate its Direct Costs, Indirect Costs, as well as Overheads to its Revenue Centers, it must go through multiple allocation logics, drivers, and layers for the same. The more cost centers, expenses, and overheads involved, the more complex the allocation becomes. Suppose, the cost of surgical supplies might be directly allocated to the surgery department, while the maintenance department’s costs could be distributed first to other departments like radiology and surgery. Then, radiology’s costs might be further allocated to surgery and other departments. If the radiology department provides services to the laboratory, and the laboratory also serves radiology, a reciprocal method would allocate costs to reflect this mutual relationship. No matter how complex the allocation mechanism, Oracle EPCMCS is fully equipped to handle it using various drivers, logics, methods, and bases. 

 

 

Conclusion 

 

Overall, Oracle EPBCS as well as Oracle EPCMCS transforms cost allocation from a belief-driven manual process to one grounded in solid data and automation, helping you to take more informed decisions, improved cost control, etc. However, choosing one of the two or selecting both of them, is dependent on the business requirements. 

 

  • If the need is to perform robust Financial Planning as well as to perform Direct or Single Step Allocation, Oracle EPBCS can be chosen as it contains actual data through Data Integration, and the planned data is generated through the system itself. 
  • If the need is to focus on accurately measuring, allocating, and managing costs and revenue to maximize profitability, using Multi-Step Allocation or Reciprocal Allocation along with Direct Allocation, Oracle EPCMCS can be chosen as it contains actual data through Data Integration, and the Budgeted Data needs to be integrated from other planning systems like Oracle EPBCS. 

Employee Compensation Pre and Post COVID19

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The Compensation and Benefits Package an employee receives is considered the main motivator for them (outside of a personal sense of purpose). As such, it plays a crucial role in determining successful recruiting, engagement, and retention strategies. Failing to offer the right mix of benefits and compensation will translate into additional costs for the organization. According to a survey by Pew Research Center, low pay, lack of opportunities and feeling disrespected at work are the top reasons why Americans changed their jobs. Findings related to the COVID-19 impact showed that employees’ lifestyle has changed, and flexible working hours are the top benefit, followed by more paid time-off options.

The COVID-19 pandemic has had a significant impact on the compensation of employees across various sectors and industries. According to a survey by WorldatWork, in the USA an average salary structure has seen upward adjustments of 1.9% in 2020, representing a significant slowdown from 2.2% in 2019, affected by a much larger number of organizations reporting no salary structure increase. According to a report by Willis Towers Watson average actual salary increases hit 5.4% in 2023 as compared to 5.0% in 2022 among organizations in the top 15 economies around the world. It is estimated that the increase would be around 5.0% in 2024.

Compensation trends that have emerged or intensified during the COVID-19 pandemic:

  • Variable pay: Many employers have shifted from fixed pay to variable pay to align their compensation costs with their business performance and to incentivize their employees based on their results. Variable pay can include bonuses, commissions, profit sharing, stock options, or other forms of contingent rewards. According to a survey by Aon, 42% of companies in India plan to increase their variable pay budgets in 2021, up from 33% in 2020. This is to reduce the fixed costs and can modify costs based on company performance and market outlook.
  • Total rewards: The pandemic has also prompted many employers to adopt an integrated approach to compensation, which considers not only monetary rewards but also non-monetary benefits that employees receive. According to a study by timesjobs.com bureau, 70% of companies in India plan to enhance their total rewards strategy in 2021, up from 56% in 2020. This results in a change in employee perspective, giving them the impression that the organization is looking at the overall well-being of the employee.
  • Proximity Bias: The recent shift to remote or hybrid work has created a “visibility” concern for many employees. Proximity bias describes how people in positions of power tend to treat workers who are physically closer to them more favorably. This stems from the antiquated assumption that those who work remotely are less productive than those who work from office. Additionally, this is an example of the out of sight out of mind” effect.

A survey by the SHRM (2018) showed important correlations between compensation and benefits and job satisfaction, where 92% implied compensation and benefits were critical to their job satisfaction; while 32% stated that the reason why they loved working in the company was exactly the benefits and compensation they received.

Factors that have affected the compensation pre and post COVID-19:

  • The type of industry and occupation: Some sectors, such as health care, technology, e-commerce, and logistics, have experienced increased demand and growth during the pandemic, while others, such as hospitality, tourism, entertainment, and retail, have suffered severe losses and closures. This has resulted in different compensation trends and strategies for different industries and occupations. For example, some employers in high-demand sectors have offered bonuses, incentives, or retention payments to attract and retain talent, while others in low-demand sectors have implemented pay cuts, furloughs, or layoffs to reduce costs and survive.
  • The mode of work: The pandemic has also accelerated the shift to remote work for many employees who can perform their tasks online. This has created new opportunities and challenges for compensation management. On one hand, remote work can offer flexibility, cost savings, and productivity benefits for both employers and employees. On the other hand, remote work can also pose issues such as communication difficulties, isolation, security risks, and performance evaluation. Therefore, some employers have adjusted their compensation policies to reflect the changing nature of work and to reward employees based on their outcomes rather than their inputs.
  • The employee expectations and preferences: The pandemic has also changed the expectations and preferences of employees regarding their compensation and benefits. Many employees have prioritized their health, safety, and well-being over their financial rewards during this crisis. Therefore, some employers have enhanced their non-monetary benefits such as health insurance, wellness programs, paid leave, flexible work arrangements, and employee assistance programs to support their employees’ physical and mental health.

Insights:

Some of the changes that companies need to do to their compensation policies post covid are:

  • Change performance evaluation: Review the performance evaluation and incentive systems to align them with the new goals and challenges of the post-covid era. Instead of leaving it up to chance, create clear guidelines for each role. Define responsibilities, expectations, and next steps for career growth. Having a defined path for growth makes it easier to evaluate both in-office and remote employees. And your team will appreciate knowing what they need to do to be rewarded for their hard work. Our recommendation is to schedule regular check-ins with the employees to develop a more inclusive workplace for remote workers.
  • Change pay structure: Employers may also need to redesign their bonus, commission, stock option, and other incentive plans to motivate and reward employees for achieving the desired outcomes. This will help in reducing the fixed costs and keep the employee motivated at the same time.
  • Enhance benefits: Evolve the benefits and rewards that support employee well-being and work-life balance. Companies need to offer benefits and rewards that address these needs, such as health insurance, wellness programs, mental health support, paid leave, childcare assistance, learning and development opportunities, etc.
  • Communicate: Employees are happy if they feel they are being paid fairly for their work, but they are more engaged if companies have a transparent compensation policy. Employees trust companies more if they understand the company’s decision-making process for employment packages, and employers need to be able to explain this clearly to the rest of the organization. Even if an employee disagrees with the company’s process, it opens a path for them to communicate their opinions and concerns, leading to a healthy discussion for companies to improve their compensation and benefits packages.
  • Conduct Employee surveys: Surveying employees from all rankings on their needs and what they look for in a company gives perspective on what the company can do to improve how they take care of the workforce. Employees from one company can have diverse needs and wants compared to other employees from another company, so it is important for employers to understand their workforce and not solely rely on and copy other companies’ compensation and benefits packages. Employee surveys and feedback also reveal what employees think of the company and can help clarify any misunderstandings or catch any grievances employees could develop towards the company in the future.

The Importance of Design in Digital Transformation: A Designer’s Perspective

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The world is so ever-changing that we had to invent terms like VUCA, BANI, TUNA and the ilk. The world of Digital transformation evolves even more rapidly. Design plays a bigger role than ever in shaping user experiences and driving business success. It’s no wonder why design-driven companies have outperformed the S&P Index by 219% over 10 years (https://business.adobe.com/blog/the-latest/15-mind-blowing-stats-about-design-led-businesses). As we see a deluge of AI generated content and design, we need to lean in and become more human for us to have any true differentiation. From creating intuitive interfaces to developing cohesive user journeys – we need to ensure that technology not only meets functional needs but also resonates with users on a deeper level. One area where the impact of design is particularly profound is in the realm of Enterprise Resource Planning (ERP) systems.

Digital transformation is more than just dropping new technologies into existing business processes. It is a holistic approach that reshapes how organizations operate and deliver value. This transformation encompasses a range of innovations, from cloud computing and artificial intelligence to data science. It also encompasses process redesigns and mindset overhauls. At its core, digital transformation aims to improve efficiency, enhance customer and employee experiences, and drive innovation.

In a world of perfect competition with over 80 “popular” ERP vendors and hundreds of smaller products, features and abilities start to blend in and become similar across the spectrum. A major differentiation for products then is in their User Experience and Design. Similarly, with hundreds of ERP System Implementors, the major differentiation can come from Design Thinking and Service Delivery Design.

The Role of Design in Digital Transformation

Design is the bridge between technology and the user. It translates complex functionalities into accessible and engaging experiences. In the context of digital transformation, design ensures that new technologies are not only functional but also intuitive and user-friendly. As my Design Office colleague Niyam might put it – in the world of ERP, “Adoption beats Perfection”. If you don’t have the user at the centre, you may get a “perfect” system, but you will never realize the value you hoped to reap from it. Here are several ways design contributes to successful digital transformation:

  1. User-Centered Approach: Design thinking, a methodology centered on empathy and understanding user needs, is crucial in digital transformation. By focusing on the end-user, designers can create solutions that are tailored to specific pain points and requirements. This approach ensures higher user adoption and delight. By imbibing this, we make sure we never veer from the purpose for which the ERP was selected as a tool.
  2. Simplification: Digital transformation often involves complex systems and processes. Design helps to simplify these complexities through clear and concise interfaces, making it easier for users to navigate and perform tasks efficiently.
  3. Consistency and Cohesion: A well-designed digital transformation strategy ensures consistency across all touchpoints. This cohesive approach not only strengthens the brand but also provides a seamless experience for users, whether they are interacting with a mobile app, a website, or an ERP system. Design consistency when designing solutions can reduce the learning curve of the new system.
  4. Innovation: Design Thinking lets us quickly empathize, experiment and evolve our service delivery, our solutions, and our products to fit the unique context of each of our customers. Some of our most innovative ideas like our AI Assistant Orbri and our Video Game & AR based onboarding process come from our Design Thinking sessions.
  5. Analysis: Decision Dashboard Design is another major aspect of the work I do with Orbrick. It is important to highlight the right information in the right context and the right time so that ERPs can be used to take the right decisions.

Conclusion

As digital transformation continues to reshape industries, the role of a Design Office becomes increasingly important. Designers bring a unique perspective that ensures technology is not only functional but also engaging and user-friendly. In the context of ERP consulting (which is a traditionally non-design-led industry), design can significantly enhance user experience, drive adoption, and ultimately contribute to the success of digital transformation initiatives.

APEX vs VBCS: How to make the right choice?

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Low code tool is new buzzword here from sometime now. Platforms which enabled developer community to produce applications, with fraction of efforts and very few line of codes. These platforms empower developers to create software solutions with minimal manual coding, leveraging visual interfaces, pre-built components, and drag-and-drop functionality.

Absolutely, Oracle has recognized the importance of low-code development and has positioned itself as a key player in this space. Instead of one, Oracle has 2 solutions in Low-Code tool space: APEX (Application Express) and VBCS (Visual Builder Cloud Service). But Why 2 low-code tools? What is oracle doing? & Which tool to choose as developer or end customer?

Here are how oracle places both tools on its site:

APEX:

VBCS:

The main difference is clear in title itself – APEX: “Data Driven Application” & VBCS: “Build Extensions for cloud applications”.

Apex is here from around 20 Years, and it is one of the oracle’s prime development tools. They have invested a lot into it and improved it constantly. Although it builds very robust modern looking webapps but at the core it uses simple SQL and PLSQL. Old school developers find this very friendly. It can be run on cloud or on premise. This tool is for both citizen and professional developers. Citizen developers are those who knows only very basics of coding and intend to create lighter applications. It allows developers to leverage their SQL and PL/SQL skills to build data-centric applications rapidly.

On the other hand, VBCS is a newer addition to Oracle’s low-code offerings. The reason was to have a tool which truly cloud, web-based platform using JavaScript. VBCS is based on Oracle JET, which stands for JavaScript Extension Toolkit. JavaScript is de facto standard for web application development. It gives web application developer an advanced experience of what they generally do. It supports git management, docker and CI/CD which makes it more robust from DevOps perspective. For simpler apps it is near no-code. The main use case of VBCS is for expanding and add extensions to any oracle cloud service like oracle fusion. VBCS integrates seamlessly with other Oracle Cloud services, making it a compelling choice for organizations already invested in Oracle’s cloud ecosystem. The data source is generally a rest end points, making it truly neutral to database. One of the main advantages is its ability to create truly native mobile application.

APEX VBCS
Positioning 20x Faster w 100X less code Extensions to oracle cloud apps
Cost Free with oracle database. $ per OCPU. It counts message packs in relation to active users and OIC integration calls it makes
Data Source: Developer Mindset Oracle Database: You can think of as a relational data model structure underneath  Rest End points: Plan/Design Rest endpoints carefully. It can be any rest enabled database schema also
DevOPS APEX Team Development: APEX Maintains application inside database hence do not compatible with DevOps Tools Visual Builder Studio: Better than APEX DevOps as it supports git, CI/CD, Docker etc. Visual Builder has better product life cycle management
WebAPP Y Y
Mobile Application development Y
Oracle SaaS extensions Y
Product Maturity and bigger community Y
Deployment It sits on top of Oracle Database hence it is tightly coupled with it. APEX can be deployed at both on-premise or on cloud It is neutral to oracle database and truly webapp/mobileApp development platform. Deployed on-cloud.
Developer Skill as Prerequisites SQL & PLSQL Javascript, Rest, Oracle Jet, Database

So now let’s try to answer the questions we raised initially:

Why two low-code tools instead of one?

The decision likely stems from Oracle’s recognition that different developers have different preferences, skill sets, and project requirements. By offering both APEX and VBCS, Oracle can cater to a wider audience and provide solutions tailored to various use cases. Additionally, having multiple low-code platforms allows Oracle to address different aspects of application development, from data-centric applications with APEX to more modern, user interface-focused applications with VBCS. This strategy enables Oracle to stay competitive in the rapidly evolving low-code development market and better serve the diverse needs of its customers.

Which to Choose?

Go for VBCS if require oracle fusion extension app. Go for VBCS if want mobile application. Go for VBCS if want truly platform neutral webapp.

Go for APEX if current skillset if SQL/PLSQL. Go for APEX if want to keep maintenance cost low.

By considering these factors, organizations or developers can make informed decisions about which Oracle low-code platform best suits their specific requirements and goals. Whether prioritizing skill compatibility, cost-effectiveness, or specialized functionalities, Oracle offers options to meet diverse needs in application development.

Conclusion:

It is indeed a tale of 2 siblings. Both are children of powerful father named Oracle. Both, APEX and VBCS, benefit from Oracle’s vast resources, developer community, user group and commitment to provide an ease to learn & continuous product improvement.

Elder One, APEX, is traditional old-school (SQL/PLSQL), robust, proven, well established in life and conservative with money (free with DB).

The younger child, VBCS, is modern (JavaScript, mobile & true webapp), innovative, looking to solve many futuristic problems, expensive but promising.

The Oracle Redwood Saga: Upcoming Updates in Responsive Self Service Procurement UI

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Oracle Redwood has been gaining attention due to its recent updates and announcements. The Redwood theme is designed to provide a high-quality user experience to its users. As per Oracle, “The idea is to transform the whole company’s communication and its vast portfolio of technologies and applications to share a common vision and user experience.”

Many of you might ask: “What’s the need? We’re accustomed to the classic UI/UX, and it does the job very well. So, why go through such a significant change?”

A simple explanation would be that when you compare the UI/UX and animations of modern web pages, Oracle Fusion Cloud might come off as a bit outdated. Even when compared to its newer competitors, the design may seem less attractive at first. The user interface becomes more challenging to navigate. And last but not least, the current pages aren’t responsive on devices like mobile phones or tablets. In today’s world, where we’re used to doing everything at our fingertips, this might seem like a turn-off.

But don’t worry; Redwood has you covered. It has an eye-catching modern design. It also has a responsive UI and module-specific apps. Mobile devices run them without a hitch.

Now, many of you might be thinking, “So, is it all about user experience and theme?” The simple answer is ‘NO.’ It goes beyond that and certainly brings a lot more features as well. Oracle has definitely seized the opportunity to enhance features wherever possible. In this blog, we’re listing down some of the key features, with a focus on ‘self-service procurement.’

  1. Secure the catalog by delivering it to locations.’
  2. Procure goods from preferred sources during catalog shopping (applicable for supplier-sourced as well as internal transfer requisitions).
  3. Bill-only requisitions and other requisitions requiring special handling.
  4. A dedicated field is for extra supplier contact emails. It ensures that further communication to the supplier will also go to the extra contact.
  5. It provides a powerful, smart new search experience. For example, you can search for items by the manufacturer or supplier part number mentioned in the item master.
  6. Enhanced Requisitions Status, which goes beyond ‘approved’ status. Many new statuses, such as Action Required (for invoice hold), Ordered, Shipped, In Receiving, Billed, Order on Hold, etc., are being introduced.
  7. View the current requisition approver and the refined approval tree view of all the approvers.

The above features offer just a brief overview of what Oracle has recently announced. Many more features have already been announced or are expected to be announced in the coming months.

Important Announcement:

If you haven’t heard, the classic requisition UI is being retired starting from update 25A and will be replaced by the Redwood-themed Responsive Requisition UI. An approximate timeline for the retirement of the classic UI would be 7-8 months from today. Now is the perfect time to start planning the transition to the RSSP.

Beyond Buzzwords : Elevating A Digital transformation Exercise

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In today’s fast-moving digital world, no company can afford to miss the bus of digital transformation. With rapidly moving market, existence of businesses comes into question if they fail to digitally transform themselves to compete and capture new markets. But as the world is rapidly moving towards digital transformation, with the constraints of resources are they getting the expected outcome/ROI? Are they able to make the required impact on all the stakeholders?

The above study by McKinsey’s digital practice clearly states that although 89% of the business are or have undergone business transformation and as an end result only 30% of them got the expected revenue increase, 25% of them could got the expected cost reduction, strange, right? Surely there is something in this approach that is clearly missing. What is the magic ingredient that ensures that the organization gets the anticipated outcome of the digital transformation? Well, there is no single ingredient but a collective contribution of “all” stakeholders of the organization and when we say all it is literally all; any one missing either by intent, design or capabilities can cause less than expected outcomes from the transformation. Below are few of the findings that can help organizations to ensure they are in the journey with all the right intent, plan, technology and team.

Purpose

One of the major reasons for failure is that the “Purpose” of the digital transformation is not clear, consistent or carefully governed. Top guns of the organization play a vital role as the “Why” comes from them. When we connect technology to a profound sense of purpose, we unlock its true potential and embark on a journey of meaningful progress, not just technological advancement. A well-crafted purpose shall help the organizations visualize, define and document who will they be post the transformation and align all levels of the organization. Purpose simplifies and binds the organization as often transformations tend to go directionless.

Change management

Changing and running at the same time always needs balance and thus change management cannot be avoided. A well-defined purpose clears way for top-down communication and reduces the risks of change management. The holistic approach to address the end-to-end business alignment and not the immediately impacted areas shall ensure business readiness and faster adoption. Resistance to change can be avoided if during the transformation, the front liners are involved, as they have insights into customers’ pain points and the solutions that can be levered. Going beyond traditional skills training and nurturing a culture of continuous learning is the key. Upskilling and reskilling the existing workforce shall ensure early and easy adoption. The most effective way to embrace change is by involving the top management in business process change, tech awareness etc. Before, during and after the transformation.

Approach

To optimize performance and impact, organizations must engage in rigorous self-assessment, scrutinizing their team composition, technological assets, financial constraints, and timeframes. Post-goal analysis enables informed prioritization between “Big Bang” transformations and siloed improvements, fostering learning and adaptation. The focus? Internal or frontline systems? Global or regional implementation? The answer lies in a nuanced blend driven by a holistic understanding of micro and macro factors. Ultimately, success hinges on striking a balance that maximizes value creation, elevates customer experience, and ensures business feasibility, scalability, and technological readiness. This comprehensive approach empowers organizations to navigate uncertainty and achieve impactful, sustainable progress.

Technology and talent

The digital revolution has irrevocably altered the landscape of every industry, and at the heart of this seismic shift lies technology. Far from being merely tools, cutting-edge technologies like AI, ML, IOT & Big Data are the very engines driving digital transformation, propelling organizations towards unprecedented levels of efficiency, adaptability, and customer engagement. This isn’t just about replacing analog processes with digital equivalents. It’s about reimagining workflows, disrupting outdated models, and fostering a culture of continuous innovation. Technology provides the foundation upon which organizations can build new value propositions, enhance existing products and services, and forge deeper connections with their customers. Technological innovations are individual pieces in a complex Digital Transformation puzzle, powerful but incomplete. It’s the human talent – the architects, analysts, builders, and navigators – who understand how these pieces fit together, who bridge the gap between potential and reality. Their expertise in data analysis, cloud architecture, user experience design, and agile methodologies are the brushstrokes that paint the canvas of a successful transformation. Think of tech as the enabler, talent as the artist: think of the digital platform as a blank canvas. It offers possibilities, but without the artist’s vision and brushstrokes, it remains just an expanse of white. Talent, with its skillsets and creativity, transforms that canvas into an immersive digital experience, talent breathes life into technology, making it sing. The organizations need to either upskill or reskill, attract and retain new talent or partner to ensure they have the right talent.

Most common mistake made by the organization is the assumption that digital transformations are short lived, digital transformation is not a destination; it’s a permanent state of evolution. The point isn’t to become digital; it is to generate value for the business. And that can only happen if top management act as digital guardians of their companies’ transformations and are clear on how they can best affect the change that will embed digital DNA into their organizations.

Bell the Cat: A different paradigm to look at Employee Ratings

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Cut the Bell

One little toy I’ve always found fascinating is the Galton Board. You may not have heard of it, but if you ever mindlessly scroll YouTube or Instagram like me sometimes – I am sure you’ve come across this small glass box with small metal balls poured on from the top. These randomly fall and hit spaces within the Galton board and yet they invariably fall to arrange themselves into a ‘bell’ shaped pattern. This mound of balls falls into what we commonly known as Gaussian or “Normal” distribution. Most random things arrange themselves (at least somewhat) into this formation. This is following the Central Limit Theorem in Math. In fact, most human experiences follow this pattern. Plot human height on a bar chart, what do you get? A bell. People’s reaction times? Bell. Plot shoe sizes, what do you get? A bell. Plot the circumference of bells on a plot, and what do you get? I have never tried plotting it – but I assume you get a bell curve!

For many years, it has also been how we visualize employee performance. In the context of talent management this feels, for the lack of a better word, fair. It makes intuitive sense that most people are average or near-average performers with both the best and the worst performers tapering off at the two ends of a bell-shaped curve. It represents people are being clustered around the mean. This idea is so ubiquitous that we see organizations with a performance calibration process where a “curve-fitting” exercise is undertaken. This is essentially to force-distribute people by rating on the bell curve. Now, a lot of the customers I’ve worked with swear by this practice and I’ve had many a healthy debate on this. Sure, this makes perfect sense in some cases too. If you have a performance linked compensation and don’t want to spread your resources too thin, you must be mindful of how people are rated. Also, I’ve seen way too many talent management processes to claim that there’s just one way of doing things. However, by assuming that normal distribution is representational of reality, we may end up under-rewarding our best people while being extremely harsh to those who need only a little help to do better.

The fact that GE, which popularized this concept in the first place, got rid of the bell curve fitting says something about the truthiness of the bell curve. Human performance isn’t a random and finite occurrence. It is deliberate, and, it doesn’t have finite variance. It is possible to have vast differences in performance. When approached with a growth mindset – this creates an upwards climb for all involved. If we curve fit, we may be essentially denying the truth its right to assert itself in our data. We’ve forced a narrow view unto the complex intricacies of reality. If we simply collect the data and don’t fit it (and ensure the data is actually representative), we are more likely to see what’s called a Power Law or Pareto Curve.

As opposed to the bell curve, this curve typically shows that there are a small number of very high performers, with a long tail of variably average performers and a low number of under-performers. It is named after the Pareto Principle which, and I am generalizing, states that 80% of the outcomes come from 20% of the inputs. Basically, a smaller number of people give organizations outsized returns. It implies that there are some super-talents in a team, and most people are below the mean. This doesn’t mean they are low performers though. But this truth only surfaces when we stop trying to force-fit people in the bell curve, and let the data speak without bias or forced comparison between nuanced and complex work outputs. Depending on your industry and culture (and all talent management is a culture setting or culture preserving exercise), this may make a lot more sense than using a bell representation.

This helps deliver a mindset shift in how we see our people. Any performance measurement system will only be successful if continuous improvement and feedback are built into it, moving everyone constantly towards a north star. Otherwise, the performance review becomes the dreaded, boring, mundane and perfunctory process we all know and hate. In terms of rewards too, it is important to shift from a forced bell curve mindset to reward people fairly and retain top talent with a disproportionate impact on your organization. That’s what happened at Microsoft. They found that their best people were leaving because of forced curve fitting. They ditched the bell.

While I understand the Bell Curve has served many organizations well for years, or at least it feels that way – I do urge organizations to reconsider their strategy for Talent Management to make it a true lever in their success. Talent can give you outsized returns if done right.

Acceptance of the Pareto Curve is just one of the many, many mind-set changes required to make Talent Management processes truly useful in building high performance teams and delivering hard-hitting results, but those are for future blog posts! For this new year, all I ask is that you relook at some of the oldest truths about talent management and consider some changes that would help your organization soar to new heights in 2024 and beyond!

We at Orbrick believe that value follows the pareto-principle too. Small investments can yield outsized returns. We love working with customers to unlock those paretos in their own organizations. Speak with me directly to discuss how we can help make Talent Management (or HCM in general) deliver more for you.

Real Time Visibility in Supply Chain

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Supply Chain Management involves overseeing the movement of goods from suppliers to customers, whether they are consumers or businesses. This process starts with managing suppliers at the beginning of the chain and extends all the way to the end-user.

The way organisations distribute products and procure raw materials is changing a lot right now. Modern ways of making products and ever-changing customer demand patterns are requiring organizations to be innovative and strategic in terms of how the sourcing to manufacturing to fulfilment is orchestrated. In the middle of all these developments, Supply Chain Management needs to adapt without changing everything it does.

Supply Chain Resilience

The challenges that originated from the extensive industrial closures during the global Covid-19 pandemic are still lingering in 2023. These challenges are further complicated by emerging and persistent issues, such as the Russia-Ukraine conflict, inflation, economic slowdowns, geopolitical tensions like Brexit, conflicts between China and the West, Cybercrime, global actions, and climate-related concerns, notably the increasingly frequent extreme weather occurrences. These factors will continue to impact the movement of goods and raw materials throughout the supply chains, worldwide.

Three key disruptors for Supply chain driven organizations are:

  1. Logistics Disruption
  2. Delays in Production
  3. Labour Shortages

Supply chain leaders must face this challenge, and now! According to Gartner, a technology research and consulting firm, decisions have become 65% more complex since 2020. In fact, executives spend almost 40% of their time making decisions—and it is fair to say that most of that time is poorly used.

To have a resilient supply chain, it has become essential for organizations to have real time visibility with a smart and responsive supply chain.

Real Time Visibility

Understanding of all operations across the entire supply chain, covering every stage and operational process is the need of the hour. This insight empowers companies to effectively control the movement of products and components at each step of the supply chain.

By maintaining supply chain visibility, companies can ensure that their suppliers comply with essential regulations, mitigating risks and minimizing disruptions in the supply chain. Additionally, it plays a crucial role in enhancing customer satisfaction, boosting productivity, and ultimately contributing to increased profits. Some measurable improvements can be achieved on:

1. Reduced Disruptions

Having real-time visibility into the supply chain enables the early detection of potential issues. Immediate access to information facilitates quicker response times and informed decision-making, aiding in the proactive management of risks throughout the supply chain. For instance, IoT detecting a machine failure can signal a potential delay, or identifying transportation issues in real-time can help prevent delays in processing sales orders.

2. Improved Customer Satisfaction

The ability to see real-time updates empowers businesses to offer accurate and current information to customers about their orders. This transparency fosters trust and improves overall customer satisfaction.

3. ESG & Regulatory Compliance

Having real-time visibility in the supply chain ensures adherence to regulatory standards at every stage, including EXIM regulations, environmental norms, and worker safety requirements. Being aware of the precise timing and details of processes enables proactive resolution of potential compliance issues before they lead to disruptions, recalls, or legal consequences. Additionally, this capability allows for timely adjustments to the supply chain in response to changes in regulatory requirements.

Start the Journey

Although enhancing real-time visibility in the supply chain may seem challenging, the advantages it offers justify the initial investment. Here are some approaches to boost real-time visibility within your supply chain.

  1. Identify areas of improvement and define targeted KPI’s.
  2. Leverage Industry best practices in designing processes.
  3. Implement ERP/SCM Solutions with End-to-End Connected Process flows.
  4. Technology Investments into Blockchain, IoT and AI.
  5. Measure the benefits achieved with the right Analytics.

Oracle Solutions to accelerate the reach to Real Time Visibility:

Oracle Intelligent Track and Trace

Gain multi-tier visibility into supply chain networks, track and trace things of value, and detect and resolve issues with Oracle Fusion Cloud Intelligent Track and Trace.

Oracle Intelligent IoT Applications

Oracle’s Fusion Cloud Internet of Things IoT Intelligent Applications can provide us with more visibility, insights and efficiencies by capturing sensor data from connected devices using smart manufacturing, connected assets, connected logistics, workplace safety, and connected customer experience.

Oracle Supply Chain Management

With Oracle Supply Chain Management (SCM) & Manufacturing, organizations can respond quickly to changing demand & supply, and market conditions. One can seamlessly connect their supply chain to create a resilient network and process built to outpace change.

What is the next step?

Sticking to the usual way of doing business is not an option anymore.

The primary constraint for supply chains is no longer the limits of technology but the creativity of the individuals who utilise them. With businesses worldwide encountering a convergence of transformative changes, today’s leaders in supply chain management must revolutionize business models, organizational structures, and operations to succeed both now and in the future.

Orbrick acknowledges that business leaders require more than just solutions—they need reliable advisors. Our professionals possess extensive industry knowledge and expertise across diverse sectors, aiming to enhance your journey of transforming the supply chain.

Digital Transformation: Out with the Old, In with the YOU!

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Digital transformation is a pivotal change reshaping how businesses operate, utilizing digital tools to revolutionize strategies, processes, and customer experiences. It goes beyond technology adoption, fundamentally altering traditional approaches to drive innovation, efficiency, and competitiveness.

Digital Transformation activity sometimes might feel exhausting because tt involves too many people, takes far too long and by the time the project is over, users are too exhausted to celebrate the benefits.

While all this is not untrue, seldom do organizations remember why they chose to undertake this massive activity in the first place. Digital Transformations are organization’s door to the future, and users get to decide on the architectural style of it.

We tell our clients that this activity requires a mindset shift and this is why we say so –

Sweeping Away the Cobwebs of Obsolete Systems: In the world of business, some processes feel as ancient as dial-up internet. Digital transformation is the ultimate broom, sweeping away those cobweb-covered relics and introducing a fresh, streamlined approach.

Letting Go of Technological Antiques: Remember the days of floppy disks and fax machines? It’s time for them to retire to the museum of nostalgia. Embracing digital transformation means bidding adieu to these relics and welcoming cutting-edge technologies.

Revamping Business Processes: The Marie Kondo Way: Just as Marie Kondo revolutionized decluttering, digital transformation revamps business processes. It’s about discarding what doesn’t spark joy in operations and embracing tools and systems that do.

Smooth Collaboration & Heightened Efficiency: Digital tools eliminate the chaos of sticky notes and endless email threads, fostering seamless teamwork. And, with automation taking the reins, tasks are completed faster than a birthday cake vanishes at an office party.

Thriving, Not Just Surviving: Digital transformation isn’t a mere upgrade; it’s a leap toward flourishing. It’s about seizing opportunities, innovating, and staying ahead in a landscape that changes as swiftly as fashion trends.

So, let’s toast to a tech savvy, personalized future. Here’s to shedding the old skin, refining the outdated, and diving headfirst into a world of possibilities. The digital transformation journey promises a buffet of opportunities as vast as an endless brunch menu. Cheers to a fresh start in the digital realm!

Orbrick wishes you a very happy new year!

Digital Transformation through Gandhi’s Words

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As Gandhi Jayanti comes to a close, we reflect upon the teachings of the Mahatma.

Mahatma Gandhi has taught the world a lot. His Experiments with Truth resulted in many learnings which he shared with the world and led by example. His life and his legacy are a rich source of lessons. Gandhi asked us to be slow in forming our convictions, but once formed defend them against all odds. Here are 3 of his quotes that reinforce our convictions about doing better Digital Transformations.

“Be the change you are trying to create.”

Probably the most famous Gandhi quote. It’s been plastered on graffitied walls, countless internet articles and motivational posters – but repetition doesn’t make anything untrue.

Many projects start with the leadership wanting to change things in their organizations. They sponsor the projects, hire a vendor, select a product, get the teams together, and then somehow leave the implementation and operation of their new tool to the teams that are key users but may or may not share their overall vision. True transformation needs both – the view that keeps the North Star or the purpose of the project in sight, and the view that keeps practical realities and details in sight. A project without active sponsorship will not usually result in the kind of change that the project sponsors hope for unless that are hands-on and participate in steering committee meetings, decision making and keep a finger on the overall pulse of the project. They have to not only be involved during the development, but perhaps even more importantly during deployment and adoption. They have to “be” the change and be the first brand ambassadors of the new tool. They should be seen using it, and involved in the process of rolling it out. They should be talking about it to their people right from the get go. This causes a lot of people to see it as a more organic change and not something sudden and unwelcome.

“There is more to life than increasing its speed.”

Speed is typically one of the main things we want from any digital transformation, right besides cost savings. This, while understandable, sometimes becomes a hindrance to getting something better. We must decide on other, and better metrics besides just speed of execution. Afterall, we are what we measure.

If we take bad business processes and digitize them to make them a whole lot faster – we have created ways to be terrible, faster. We have to descend into the details of each project, understand how we can re-engineer our processes to make them better processes, and then make the execution of those processes faster!

“My aim is not to be consistent with my previous statements on a given question, but to be consistent with truth as it may present itself to me at a given moment. The result has been that I have grown from truth to truth.”

He believed that truth is self-evident. He said truth emerges when we remove the cobwebs of Ignorance. His famous Satyagraha is simply the insistence of truth. His autobiography isn’t called “The Truth” or “My Truth”, but rather consistently with his overall believe – is called “My Experiments with Truth”.

All ERP/EPM implementations are done, at their very core, to collect data that can be reported on. The entire point of large, cross-functional systems like Oracle Fusion is that a single environment helps with cross-functional reporting. But all too often we using reporting as just that – a report to be read. What’s worse – sometimes we use it to feed our Confirmation bias. The aim of these transformations is often to support great reporting. But that reporting will only turn into value when we design for truth-prompted and data-guided actions. We at Orbrick build solutions that represent the truth of the organization we work with. Analysis, KPIs and KRAs that accurately show the reality of businesses and organizations, and not just an aggregation of data left to be interpret. We don’t lie with statistics. And we make our analytics actionable. We want our partners and customers to be able to spring into action when the truth changes from what it was a while ago.

We want to grow with them, from truth to truth!