addressing the challenges involved in managing distributed organisations - xledger whitepaper
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| Tel +44 (0)117 3291050 | www.xledger.co.uk
Addressing the Challenges
Involved in Managing Distributed
Organisations
May 2015
| Tel +44 (0)117 3291050 | www.xledger.co.uk
Executive Summary
There are many types of organisation which are, by
their very nature, spread across a lot of locations.
Any medium to large business-to-consumer
organisation which has to deal personally with
customers will have developed with such a structure
from the outset.
Other types of organisation, which don’t necessarily
need to be close to the customer, often grow by
acquisition. This frequently results in a business
which has many dispersed locations.
A key challenge in effectively managing this type of
organisation is minimising the overall cost of
administrative and support functions whilst still
ensuring efficient operation and management of
remote operations.
Set-up of Remote
Operations
Ongoing System
Management
Management
Information
Management of
Core Processes
When a business operates purely from a single site,
business systems, either computerised or manual, can
easily be put in place to manage core processes and
provide necessary management information.
Where computerised systems are put in place, these
can be deployed and managed fairly economically
and the necessary level of IT support is normally a
reasonable overhead.
Management of systems changes and upgrades,
although often disruptive, is relatively straightforward
as the inevitable problems can be quickly addressed
by face-to-face discussion.
Support of users is also fairly straightforward as
support staff can quickly respond to issues and
resolve the matter personally.
| Tel +44 (0)117 3291050 | www.xledger.co.uk
Unfortunately, things are nothing like as simple for
widely distributed organisations. This type of
organisation can face many challenges in effective
management which can easily lead to significant
inefficiencies and poor overall control of the business.
| Tel +44 (0)117 3291050 | www.xledger.co.uk
Set-up of Remote Operations & Ongoing System Management
Any new location will need to have some kind of
computerised system in place to manage core
processes and capture transactional information as
well as provide necessary management information,
both locally and to management locations.
There are several options for achieving this ranging
from the use of local spreadsheets to installation of a
local server and business management software or
linking to the overall company system, typically via a
VPN.
Each of these approaches has its challenges. The use
of spreadsheets for running local offices may seem
appealing due to speed and ease of implementation
but it can lead to serious issues with the flow and
possibly accuracy of management information.
It is also not likely to be helpful in managing core
business processes. Unfortunately, in the case of very
small remote offices, this is often the only affordable
way forward.
The other two approaches require significant levels of
IT resource and ongoing support. Linkage to a central
system via a VPN is common in large organisations
with large IT departments but is often fraught with
difficulty in smaller organisations.
Where independent systems are installed at remote
locations, these need extensive software
implementation effort, configuration of reports and
set up of data transfer mechanisms. The central
systems they feed into also need to have changes
made to reflect the existence of the new entity in
reports and enquiries.
1
Any new location will
need to have some kind
of computerised system
in place to manage core
processes.
| Tel +44 (0)117 3291050 | www.xledger.co.uk
The end result of all of this is that the opening of a
new location will either be delayed and rather costly
while proper systems infrastructure is put in place or
inadequate simple systems will be used which will
lead to management problems later.
Unfortunately, the challenge does not stop with initial
system set up. The reality is that systems regularly
need to be upgraded – either because of technology
changes or updates to the application software itself.
These upgrades normally require visits to remote
sites by IT staff, sometimes significant re-
implementation and then extensive testing by users.
All of this is time consuming and expensive.
| Tel +44 (0)117 3291050 | www.xledger.co.uk
Management Information
One of the biggest challenges in a widely distributed
organisation is ensuring that managers at all levels
have accurate, up to date information at all times.
For seemingly justifiable economic reasons,
compromises are frequently made in the overall
systems infrastructure and as a result data is
frequently only transmitted to the “centre” at the end
of each month.
This data then has to be consolidated, transferred
into reports which summarise the relevant
information and these are then distributed to
accountable managers.
Distributed organisations tend to have senior
management who spend a lot of time travelling
between locations.
This means that they are often out of touch with key
business performance information and become
reliant on period-end reporting.
It is extremely common for a business to be run based
on management reports produced part way through
the month following the one being analysed – i.e.
anything up to 6 weeks after the event. This is like
trying to steer a car with a huge delay between
turning the steering wheel and the car actually
changing direction!
Another issue is that business systems managed and
deployed from head office tend to have a strong bias
towards centralised control.
2
One of the biggest
challenges in a widely
distributed organisation
is ensuring that managers
at all levels have
accurate, up to date
information at all times.
| Tel +44 (0)117 3291050 | www.xledger.co.uk
This means that they do a good job at imposing
control over processes but they suck information
from operational locations to purely give the head
office management the information needed at the
centre. However, they are very frequently not good at
intuitively providing information to those responsible
for managing the remote locations. This worsens the
ability to see issues coming and proactively manage
the business.
| Tel +44 (0)117 3291050 | www.xledger.co.uk
Management of Core Processes
In a single site operation, core business processes
can be effectively managed relatively easily, as all
functions are based within the same building. Even
where communications do not go exactly according
to an agreed process, it is very easy to overcome
issues by people walking around to get things
sorted.
Purchasing is a good example which affects all
organisations. In a single site operation, each step
(ordering, goods receipt, invoice receipt, invoice
registration, invoice posting, invoice approval,
payment) all happen in the same place.
In a widely distributed organisation however, this
situation is far more complex and prone to
inefficiencies and mistakes.
This is a good example of the challenge mentioned in
the introduction, where a distributed organisations
needs to minimise the overall cost of “overhead”
functions.
The ultimate goal of a well-run distributed
organisation should be to give a strong sense of
empowerment to the local management, whilst
ensuring that control is exercised over appropriate
factors and cost of administration is minimised.
In the case of our purchasing example, this gives rise
to a conflict in ideal process. To maximise local
empowerment and flexibility, most of the process
would be handled locally.
3
In a widely distributed
organisation the situation
is far more complex and
prone to inefficiencies
and mistakes.
| Tel +44 (0)117 3291050 | www.xledger.co.uk
This however would require local management of
invoices, finance expertise and good process control
over authorisations and payment (some invoices may
require authorisation by head office personnel, so
that need to be accounted for).
On the other hand, to minimise overall administration
cost, everything would need to be done centrally. This
however restricts local empowerment and flexibility.
In both cases, because the responsibility for various
steps of the process is in different locations, there can
frequently be delays and mistakes leading to a lot of
wasted effort and poor relations with suppliers. It can
also lead to a lack of early visibility of what has
actually been purchased, making financial
management very difficult.
A similar story can be told for other processes. For
example, a lot of organisations manage projects as
part of their business and the effective financial
management of these involves a complex set of
processes.
In many project-based organisations the level of
distribution is even more extreme as project
managers and operational staff are frequently based
at customer sites or travelling. In turn, these staff
may well report to regional offices, which in turn
report to a head office.
This situation creates the ultimate challenge for
achieving the correct balance between local
empowerment and minimisation of overall
administration cost + control over core processes.
| Tel +44 (0)117 3291050 | www.xledger.co.uk
As with purchasing, the constraints imposed by
administrative staff location as well as systems
infrastructure frequently lead to inefficiencies,
mistakes and poor management.
In order to effectively manage a project to a healthy
financial conclusion, time usage, expenses and
external purchases need to be captured, approved
and paid efficiently, but critically the exact financial
picture of the project needs to be available to all
relevant parties at all times. Waiting 4 - 6 weeks for a
project financial summary report is totally useless,
but is staggeringly commonplace.
| Tel +44 (0)117 3291050 | www.xledger.co.uk
What if a widely distributed business could be as
easy to manage as a single site operation?
Thanks to exploitation of new technologies, the
challenges faced by widely distributed organisations
can be totally transformed. Local empowerment +
speed of response on one side and minimisation of
administrative overhead + control over core
processes no longer needs to be viewed as a conflict
requiring compromise.
Using the latest advances in business applications, a
widely distributed organisation can be made to
behave like a “virtual” single site operation.
Cloud technology has come of age and is now widely
adopted and this addresses a number of the
challenges detailed above. Put simply, a cloud
application is centrally managed by the supplier and is
accessed via the internet by users.
Using this type of application architecture,
geographical boundaries are broken down and
functions can be accessed from anywhere at any
time.
Many business systems suppliers have simply moved
their old application, or a revised form of it, into the
cloud, effectively making a hosted system. This
addresses some of the challenges of a distributed
organisation but not all.
Xledger has taken a very different approach to many
suppliers and was able to because it started with a
clean sheet of paper and no previous customers to
worry about migrating.
Set-up of Remote
Operations
Ongoing System
Management
Management
Information
Management of
Core Processes
| Tel +44 (0)117 3291050 | www.xledger.co.uk
However, it was started by a team of people who had
previously created one of the world’s most successful
business management applications and therefore had
a huge head-start in developing a new type of system.
When designing Xledger, the brief was not just to
build an application which sat in the cloud, but to
build one which fully exploited the fact that users and
data and were all connected.
This has led to the creation of a revolutionary system
which not just addresses the challenges detailed
above as faced by widely distributed organisations,
but one which also dramatically reduces the overall
cost of deploying and owning the system.
| Tel +44 (0)117 3291050 | www.xledger.co.uk
Set-up of Remote Operations & Ongoing System Management
Xledger uses a radically innovative approach to
system configuration, based on logical
multidimensional hierarchies that facilitate
“Inheritance” of data, which is only possible due to
the centralisation of data and connection of all users
to a single point.
The result of this clever use of technology is that the
work involved in setting up a new installation is
dramatically reduced in comparison to systems of
similar capability.
Furthermore, once a “head office” system had been
configured, fully functioning systems environments
for new remote locations can be created in a matter
of hours.
The days of painful and expensive system upgrades
are a thing of the past.
Xledger manages system upgrades centrally and adds
new functionality at regular intervals in a well-tested
and controlled regime.
No additional charge is made for this and no technical
resources or extensive testing is required by users.
1
Xledger uses a radically
innovative approach to
system configuration
which is only possible
due to the centralisation
of data and connection of
all users to a single point.
| Tel +44 (0)117 3291050 | www.xledger.co.uk
Management Information
Another radical innovation incorporated into
Xledger is the automatic creation of enquiries,
reports and executive information dashboards. This
means that when a system is configured, all of the
necessary management information facilities are set
up instantly.
When a new subsidiary location is set up, not only are
all of the reports and enquiries automatically created
for the managers of this location, but the reports,
enquiries and dashboards at all levels above it in the
hierarchy are also updated to take account of the
new operation.
This is once again only possible because of the
exploitation of the interconnectedness of all users
and all data.
All of the information facilities provided by Xledger
are accessible at any time and from any location on
any suitable internet-connected device.
This means that managers can always have a real-
time view of the business performance wherever they
are and can therefore react far more quickly to
problems or opportunities.
The days of waiting for the “board report pack”
become a thing of the past and Xledger creates a new
environment of genuinely empowered management.
2
Xledger automatic ally
creates enquiries, reports
and executive
information dashboards.
| Tel +44 (0)117 3291050 | www.xledger.co.uk
Management of Core Processes
Xledger’s innovative exploitation of new technology
has also been applied to core business processes.
The entire purchasing process can be managed
geographically in any way that is required but in
addition, clever use has been made once again of
centralisation of data. For example, when a purchase
invoice is received it can be electronically imported or
scanned and Xledger will check it against all previous
invoices (for all organisations using Xledger) and will
then propose posting details and supplier
information.
If no record can be found, Xledger will look externally
to company registration databases to check and
propose supplier information.
Once registered, approval is automatically requested
from the appropriate person and this can be done on
any internet enabled device anywhere in the world.
Payments are then processed in whichever location
the customer chooses.
A similar approach is taken with timesheets and
expenses management. This, coupled with the
excellent real-time information delivery, enables very
precise financial control of projects and visibility at all
levels in the organisation.
3
Precise financial control
of projects and visibility
at all levels in the
organisation.
| Tel +44 (0)117 3291050 | www.xledger.co.uk
Conclusion
A widely distributed business really can be as easy to
manage as a single site operation.
Xledger has proven that fully exploiting new
technology in a creative way completely takes away
the conflict and compromise between local
empowerment and central control. Not only does it
achieve this but it also significantly reduces the
overall cost of administration and enables very fast
response to new business initiatives.
Xledger UK
10 Victoria Street
Bristol
BS1 6BN
Tel +44 (0)117 3291050
www.xledger.co.uk
About Xledger
Founded in 2001, Xledger is a privately held software
company headquartered in Olso, Norway with
international operations in the UK, US & Sweden. We
provide revolutionary Cloud Finance & Project
Accounting systems to organisations that want to
focus on running their business – not their business
systems.
The company have helped over 6,000 distributed and
project-based organisations in 30 countries achieve
significant benefits in greater flexibility, improved
control and understanding of their businesses along
with significant savings in both cost (25% - 75%
savings) and management time.
Please visit www.xledger.co.uk for more information.
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