Don’t Stovepipe Bad Processes By David Baker

Over the past ten or more years, “stovepiping” of applications has become a popular approach to enterprise software. The rationale is that, because every organization functions somewhat differently, a “best of breed” solution should integrate a variety of specialized software applications. In fact, a stovepiped approach to enterprise software does more to line the pockets of consultants than anything else.

Consulting methodology is the sum of available knowledge of (and expertise in) software solutions, as well as standardized processes and procedures. And in reality, standardized practices and procedures are the more significant factor in the equation.

Before rushing to purchase any enterprise software, an organization must first create processes and procedures to handle its operational requirements effectively and efficiently.


Process and Asset Management

For most organizations, creating processes for more effective operations is synonymous with better asset management.

There are a number of packaged solutions that apply to individual aspects of asset management: real property, plant, fleet and Information Technology assets, for example. What all of these aspects have in common is the need for proper lifecycle management to understand the costs related to planning, building, operating, servicing and retirement of these assets.

Successful lifecycle management is not merely about software. It is the combination of the most appropriate software and best practices or methodologies related to such management.

Curiously, most organizations lack the process and procedures required for properly managing assets. In most cases, “stovepiping” and internal political agendas prevent a dispassionate enterprise-wide view of an organization’s assets.

At the senior executive level of an organization, asset management means ensuring that your business volume and capacity is in line with your operational objectives. It typically has to do with understanding the costs of your total asset inventory, and applying appropriate controls to manage those assets across their entire effective life.

Understanding the financial net effect of sound processes and procedures for lifecycle management is the backbone for checks and balances that demonstrate good financial stewardship in an organization. That’s because something that looks questionable in your financial books eventually will be questioned – and left uncorrected may eventually lead to failing the audit.

For example, how do you keep track of the assets of your organization? Did the cost of a particular asset show up properly on financial statements? If not, how do you add or remove that asset from the inventory? How do you record the proceeds from disposal of the asset?

The Government Accountability Office has for several years routinely failed federal agencies when auditing their financial accounting practices. In the last audit of federal agencies, fully one-third had cited accounting deficiencies regarding real property. Problems with asset management in real property typically have to do with the lack of a credible centralized repository of asset information at the enterprise level – an artifact of organizations with decentralized decision-making using stovepiped software solutions.

If problems exist in an organization’s ability to account for real property – typically the second largest budget line item in a service organization, second only to human capital – it is not illogical to assume that similar deficiencies exist in other asset areas.


The Process-Software Connection

Stovepiping of software is a legacy of some previous poor management in an organization. Somewhere along the way, a decision was made that a particular division or group within an organization was so different or unique that their documentation, procedures and related information was best kept within that division, and software was purchased to support that philosophy – with the expectation that this software could be “connected” with other enterprise applications while maintaining exclusive control over the data.

The fallacy in this reasoning is that, while one area may never do the same thing exactly the same way as another, there could be common ways of sharing information to benefit the entire enterprise. Conversely, without such information sharing, an organization may not be adequately or efficiently managing its assets.

Consider, for example, what would happen if maintenance and management professionals did not interact with their counterparts charged with planning and disposal. Spare parts for maintenance that are not part of a common inventory system could lead to financial problems for an organization.

The point of using enterprise-wide software is to maximize the benefit of best practices across an organization. Lack of standardization means a lack of a repeatable process in which your organization is confident. Lack of repeatability, or lack of confidence in the repeatability of the process means that your software solution can do nothing other than simply emulate bad practices.

Stovepiping can cause numerous problems for an organization – all the way down to surviving an external audit. Workflow in software must support documented organization practices that are verified, validated and reportable. In most cases, stovepiped solutions are poorly documented (because they are focusing on only one aspect of an organization’s operations), and the systems do not support an enterprise view.


Using Consultants Wisely

Consultants focus on pieces of lifecycle management where businesses find pain. Different consultants specialize in different pieces of the lifecycle. Some focus on process flow – from planning to maintenance and breakdown prevention. Others focus on procurement and financial tracking.

Very few consultants, however, look at the entire lifecycle from planning to disposal. Without that holistic view, however, organizations are doomed to continuing to stovepipe processes and procedures – and then document those stovepiped processes and procedures with software.

Break the chain. Stop using software to chronicle bad processes and enrich very specialized software consultants. Instead, work with your consultants and your internal experts to create a procedure that uses software to streamline operations and improve fiscal responsibility.

David Baker is the National Director, Asset Management Solutions for VISTA. He can be reached by email at david.baker@vistatsi.com