Posted by Rakesh Shukla on Thu, Jun 04, 2009 @ 01:59 PM
It's been about a year since one of my very first blog posts titled, A Cell Phone for an 11 year old?
A year ago, my son tried to make the case that he needed a cell phone but had no idea of the costs.
It turns out that he actually didn't use his phone that much to talk. Instead, TEXTING became all the rage. I became aware of this when our monthly bill doubled! You see, I didn't have him on a texting plan, and he sent and received 750 texts!
"Do you realize that sending text messages cost money?" I asked.
"Uhhh, no"
"Do you realize you texted 750 times last month?"
"Sometimes I get 50 in a day!" he responded proudly.
"What are you texting about?"
"Stuff" he replied like it was none of my business.
At that point, I got concerned and asked him to hand the phone over so I could see what was going on.
Here was a typical text conversation with one of his buddies:
SON - hi
BUDDY - hello
SON - im bored
BUDDY - me too
SON - bye
BUDDY - bye
750 texts like this! I put him on a plan and told him not to go over 500 texts in a month.
Anyways, the same lack of knowledge about costs continues to persist about technology investments.
Check out this chart:
What is striking (at least to me) is that almost 20% or respondents have NO IDEA of the return on their technology investments!
That's excusable for a 12 year old but not a finance manager ... especially an AP manager. Other surveys (such as IOMA's) show that most AP departments have no idea of current costs even after the economic turmoil we have been through.
Here is the point I made last year which I feel is still valid now:
Survey after survey shows that the #1 priority for most finance departments and especially AP is cost reduction. Well, how can you make the case to save money with proposed/desired initiatives if you don't know your current costs???
The other benefits of a formal cost analysis are a better understanding of your current AP processes and inefficiencies, as well as establishing the groundwork for future benchmarking to measure how you are improving as an organization and how you compare to other organizations.
IOMA also states that when it comes to technology investments, "traditionally, AP has not been a priority, which is why so many organizations rely on completely manual processes. ... The problem is that most AP Managers do NOT build a good enough case."
How can you build a case for any type of investment if you don't have a handle on current costs? Understanding costs would be a NECESSARY first step to building a case for technology investments.
-Rakesh Shukla
Posted by Rakesh Shukla on Fri, Sep 12, 2008 @ 01:37 PM
221 Days, 16 Hours, 23 minutes ... that's how long it has been since the Patriots lost the Super Bowl and I am still crying over that loss. Did they really lose the championship game after going 18-0?
I am still in denial.
Unfortunately, denial is only stage 1 of the "5 Stages of Grief." The "5 Stages of Grief" is process by which people deal with tragedy and grief and was introduced by Elisabeth Kubler-Ross in her 1969 book "On Death and Dying."
The stages are:
- Denial: "It can't be happening."
- Anger: "Why me? It's not fair."
- Bargaining: "Just let me live to see my children graduate."
- Depression: "I'm so sad, why bother with anything?"
- Acceptance: "It's going to be OK."
These stages can be applied to any form of catastrophic personal loss ... a loved one, job, freedom, a Super Bowl loss ... Tom Brady getting injured for the season ... and even Accounts Payable!
With some help by some great illustrations by Steve Greenberg (http://www.greenberg-art.com/), here is a tongue-in-cheek look at "The 5 Stages of AP Grief":
The 5 Stages of AP Grief
Stage 1: Denial
"There is just no way that there could be anything wrong with the way we process invoices around here. Whatever frustrations business managers, suppliers, auditors and my AP staff say they are experiencing must be bizarre delusions caused by impaired reasoning."
Stage 2: Anger
"I am SOOOO furious! WHO'S TO BLAME? I'm not gonna stand for this!
Why can't those lazy business managers send their invoice approvals in on time!
Why can't those incompetent suppliers send invoices that actually match the POs we send them!
Those @#%*! auditors found another control deficiency! Those pointy-headed, bean-counting suits are just too picky!
Those procurement boneheads are no help in resolving holds"
Why can't my AP work more efficiently with less errors?!"
Stage 3: Bargaining
"If we can just survive this quarterly close, I promise to do away with the manual, paper-intensive processes that are causing such long work hours. If this all goes away, I will simplify and automate our processes ... I PROMISE."
Stage 4: Depression
"This job is so hard and nobody appreciates all the hoops we have to jump through to get a stinkin' bill paid."
Stage 5: Acceptance
"It wasn't supposed to be this way... but I guess this is life. It is what it is. And, hey, if paying a bill was as easy as it sounds, I wouldn't have a job."
Again, thanks to Steve Greenberg for the great illustrations!
Illustrations by Steve Greenberg, Ventura County Star, Calif.
Posted here with artist's permission.
http://www.greenberg-art.com/
-Rakesh Shukla
Posted by Steve Wilcox on Mon, Aug 18, 2008 @ 03:02 PM
"There are three kinds of lies: lies, damn lies, and government statistics."
Variously attributed to Mark Twain,
Benjamin Disraeli,
Alfred Marshall
and several other dead people.
Anyone who has worked with numbers knows the end results can be manipulated if one tortures the numbers long enough. Washington's smoke-and-mirrors number crunchers are infamous for this type of hocus pocus. As the cost of everyday items like gas, food, medical expenses, education, etc continues to rise rapidly, do the Government's sanitized statistics for CPI, GDP and unemployment really make sense? Of course not!!! Very few people understand that the government formulas used to calculate economic statistics are constantly changing! Yup, every year the government changes the formulas ... usually in a way to make themselves look good. I won't get into the details of hedonics and other statistical trickery but if you were to use the government formulas from 20 or 30 years ago to calculate CPI, GDP and unemployment, you would get very different and very disturbing numbers. John Williams (http://www.shadowstats.com/) contends there is rampant data distortion - the real unemployment rate is 4-7% higher than what Washington claims, inflation is 5-9% higher and the GDP is actually 5-6% lower (which would put us in a recession).
But it is not just the public sector which distorts the numbers; it is also quite common in the private sector -- specifically, corporate finance. The pressure to make the numbers and threats from bosses can result in exotic number massaging and some very creative accounting. Even with SOX, this nonsense continues. CFO.com recently published an article titled An Anatomy of a CFO's Agony which is a case study of one CFO's relentless, exhausting pressure to hit the numbers and the accounting cartwheels required to make ends meet.
Within Finance, potential skullduggery does not stop with accounting but also includes metrics -- the act of collecting data about systems and processes - and then reporting them in dashboards. Metrics allow you to track progress toward top goals, alleviate key pressures, and solve key challenges ... BUT figuring out which metrics to gather and how to gather them accurately is crucial despite Dogbert's consulting advice:
DILBERT: © Scott Adams/Dist. by United Feature Syndicate, Inc
Even worse than pointy-headed bean counters gathering metrics just for the sake of gathering metrics is gathering stupid metrics that can drive unintended behavior. Let me give you a great example in Accounts Payable - a true story of a really dumb AP productivity metric that led to unintended consequences.
I was at a company a few years ago where they actually measured productivity using a ruler. The dreaded ruler was used to measure the size of paper stacks on employees' desktops. The thinking was that if the stack was small, the employee was being very efficient. What was the unintended consequence of this metric? AP Clerks learned that if you store invoices in your desk drawer ... you become a lot more efficient. The "ruler" productivity metric was just a stupid lie and led to all sorts of visibility issues where invoices kept getting "lost" in desks, payments were late, discounts were lost, procurement and suppliers were unhappy, etc.
So what are the AP metrics that should be measured to promote the right behavior? And how and when should these metrics be gathered?
-Rakesh Shukla
@rakesh170
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Posted by Steve Wilcox on Mon, May 19, 2008 @ 04:34 PM
My son recently turned 11 years old. For months leading up to his birthday, he was bugging his mom and me for a cell phone. But he just didn't want just an ordinary phone, he wanted a phone that browses the internet, downloads video clips, plays music and does his daily chores. He had a very sleek model all picked out.
But I know he wanted the phone for one reason and only one reason - to be cool.
But when I asked him why he needs a phone, I got a much more thoughtful answer than I expected.
"Dad, there are so many good reasons I should have a cell phone - in case of emergencies, in case you need to locate me, and so I can let you know where I am."
Impressive answer for a yet-to-be 11 year old! He must have had help from his mother but I have to admit that those reasons played right into my protective instincts as a parent.
"Do you really need a phone that browses the internet and lets you watch video clips?"
"Yea, dad -- it will keep me busy instead of fighting with my sister on car rides. I can even use it to help with my homework! I'll just become a lot more productive."
"Hmmm, sounds like you have been thinking about this for a while. How much more productive will you be?" I responded.
"A lot more dad. A lot more. " he answered very seriously.
"So how much does it cost?"
"Cost?"
"Yes, how much does the phone cost and what is the monthly charge including the extra costs for those internet and video features?
Silence.
My son didn't have a clue about costs (a trait he must have picked up from his mom). So what does all this have to do with AP? Check out this chart:
Can You Guess the Survey Question?
This is a fascinating chart from the recent IOMA report titled, "Paperless Accounts Payable: The AP Department's Complete Guide to Electronic Invoicing."
Can you guess the survey question which elicited these responses?
... It's NOT "Do you plan to use e-invoicing?"
... It's NOT "Do you plan to use outsourcing?"
... It's NOT "Do you like the folks in Procurement?"
... It's NOT "Are approvals done in a timely fashion?"
In fact, the survey question has nothing to do with technology, globalization trends, processes or future plans.
OK then, what is the survey question? Well, the question is "Do you know the average cost to process an invoice?" Looking at the results ... a stunning 71% of respondents have no idea of costs! These people are as clueless about costs as my son! That's excusable for an 11 year old but not a finance manager ... especially an AP manager.
What makes this a real head scratcher though is that survey after survey after survey shows that the #1 priority for most AP departments is cost reduction. Well, how can you make the case to save money with proposed/desired initiatives if you don't know your current costs???
The other benefits of a formal cost analysis are a better understanding of your current AP processes and inefficiencies, as well as establishing the groundwork for future benchmarking to measure how you are improving as an organization and how you compare to other organizations.
IOMA also states that when it comes to technology investments, "traditionally, AP has not been a priority, which is why so many organizations rely on completely manual processes. ... The problem is that most AP Managers do NOT build a good enough case."
How can you build a case for any type of investment if you don't have a handle on current costs? Understanding costs would be a NECESSARY first step to building a case for technology investments or cell phone investments for kids.
-Rakesh Shukla
@rakesh170
P.S. For those of you wondering, yes, I did cave in and get my son the phone. After understanding the costs and heavily discounting his "less fighting with his sister" claims, we purchased a basic phone with no internet browsing that shares minutes with our family plan. Honestly, he hardly uses it (because very few of his friends have phones yet) but he is very happy making a fashion statement with a high "coolness" factor and I have peace of mind that we can reach each other if he is in trouble.
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