Years ago, when I lived with my parents, my father would switch off the lights at home that were not needed, usually left on by the heedless amongst the family like myself. Now I do it in my house. I read somewhere that Queen Elizabeth does it in Buckingham Palace. It appears to be an abiding ritual hardwired into the oldest person in a household. Without doubt it was a money saving exercise on my father's part "money doesn't grow on trees" after all - and there is an element of that in my behaviour as well. But there is more.
Global warming and climate change are real threats to the stable future of our planet. I have kids and I want them to have a planet as good as I had, and I want their kids to have it too. This will only happen if we change our habits and making those changes should start now.
We have already reduced our ecological footprint a little as part of a house renovation a couple of years ago - rainwater tanks piped to the toilets, wide eaves, heat sink flooring for catching the winter sun, instant gas hot water rather than preheated storage. There's more we could do without a doubt but that is a start. I would love to go solar but the costs are prohibitive at the moment - the Australian government should be heavily underwriting domestic solar power rather than considering building massive infrastructure for more coal and nuclear power plants
In a world first the World Wildlife Fund is organising the Earth Hour in Sydney during March 2007 - an hour in which they are encouraging everybody, residential and corporate, to switch off all lights for 60 minutes from 7.30pm on 31 March. The aim is to reduce the city's greenhouse gas pollution. I like this idea, switch off those lights, make it a habit.
Friday, December 22, 2006
Monday, December 18, 2006
Why DSO is important in debt collection
Another of my interests and roles is the stewardship of our debt collection/credit control module, SunSystems Collect. I have been remiss in not including my thoughts on that area in this blog. Today I was drafting an article for another forum and thought it pertinent to add here.
Days Sales Outstanding (DSO)
DSO is probably one of the most critical performance metrics in the debt collection process. It tells you the average number of days sales still outstanding based on the period of activity assessed. It is worth noting that DSO measures the efficiency of your collections in terms of how quickly the invoices are converted to cash rather than the effectiveness of your collections in terms of what activities result in the best client behaviour.
The most common base calculation is:
[total receivables]
first divided by [credit sales value for the period]
and then multiplied by [number of days in sales period].
SunSystems Collect has a number of algorithms built in which are detailed extensively including work-through examples in the reference manual.
A low DSO is good and means clients pay their invoices in a timely manner, a high DSO means clients pay slowly and quite probably late. A high DSO means the company is using its own cash to fund the business rather than recovering cash owed to it by clients and using that to fund the business. When you go out to replenish product stock (or whatever) it is a far healthier position to be in paying with money from sales than money from your savings.
If the client DSO value is close to the client payment terms then they are behaving well, however if for example the terms are 30 days and the DSO is 60 days then you have some work to do. A low DSO can also be a health indicator for the client - happy clients pay their bills.
There are no exact good and bad values for DSO however there are forums for most industries where membership will include access to common benchmarks, best in class etc. As an example, for some industries if your payment terms are 30 days then a common and reasonably achievable goal is to keep DSO in the low 40's. Best in class would probably be consistently sub 40 days.
Collect also allows you to analyse the DSO over time by various dimensions. So you may want to see DSO trends broken out by account manager, and perhaps also by project or product. Measuring your collections staff by DSO can create a healthy competitive atmosphere where people strive to better eachother in keeping the DSO down for their allocated accounts. When a collector only has time for one more phone call in the afternoon they should perhaps target it at a client that most counts from a DSO perspective.
Some organisations use the value of a single days DSO as the target for sales/account managers to agitate their clients to settle outstanding dues. If each account manager succeeds in reducing your DSO by a day then you will have recovered a meaningful amount of cash back into the business at virtually no cost of sale. For some organisations they discover that reducing their DSO by 10 days is worth more to the business than increasing sales by 10%.
DSO is well worth focusing on for your collections activity.
Days Sales Outstanding (DSO)
DSO is probably one of the most critical performance metrics in the debt collection process. It tells you the average number of days sales still outstanding based on the period of activity assessed. It is worth noting that DSO measures the efficiency of your collections in terms of how quickly the invoices are converted to cash rather than the effectiveness of your collections in terms of what activities result in the best client behaviour.
The most common base calculation is:
[total receivables]
first divided by [credit sales value for the period]
and then multiplied by [number of days in sales period].
SunSystems Collect has a number of algorithms built in which are detailed extensively including work-through examples in the reference manual.
A low DSO is good and means clients pay their invoices in a timely manner, a high DSO means clients pay slowly and quite probably late. A high DSO means the company is using its own cash to fund the business rather than recovering cash owed to it by clients and using that to fund the business. When you go out to replenish product stock (or whatever) it is a far healthier position to be in paying with money from sales than money from your savings.
If the client DSO value is close to the client payment terms then they are behaving well, however if for example the terms are 30 days and the DSO is 60 days then you have some work to do. A low DSO can also be a health indicator for the client - happy clients pay their bills.
There are no exact good and bad values for DSO however there are forums for most industries where membership will include access to common benchmarks, best in class etc. As an example, for some industries if your payment terms are 30 days then a common and reasonably achievable goal is to keep DSO in the low 40's. Best in class would probably be consistently sub 40 days.
Collect also allows you to analyse the DSO over time by various dimensions. So you may want to see DSO trends broken out by account manager, and perhaps also by project or product. Measuring your collections staff by DSO can create a healthy competitive atmosphere where people strive to better eachother in keeping the DSO down for their allocated accounts. When a collector only has time for one more phone call in the afternoon they should perhaps target it at a client that most counts from a DSO perspective.
Some organisations use the value of a single days DSO as the target for sales/account managers to agitate their clients to settle outstanding dues. If each account manager succeeds in reducing your DSO by a day then you will have recovered a meaningful amount of cash back into the business at virtually no cost of sale. For some organisations they discover that reducing their DSO by 10 days is worth more to the business than increasing sales by 10%.
DSO is well worth focusing on for your collections activity.
Thursday, December 14, 2006
EBIT = Earnings Before IT
Thoroughly enjoyed the Christmas User Group and drinkies at one of our partners this week. They produce a fantastic process mapping and modelling suite that just goes from strength to strength - some very smart guys. This tool is becoming pivotal in how some of our clients approach their business improvement and I will elaborate a bit more another time.
One of the team was regaling us with stories from a previous job in the retail space - he had a client that referred to EBIT as Earnings before IT. Before IT they opened the shipping container, counted up what was in there, shipped to the stores, put a price tag on it and sold it - easy, cheap, very profitable.
Then they grew beyond the "mom and pop" size and started installing technology driven systems - and this is where they claimed their problems started. The system demanded that you receipted the container contents based on what was ordered and what was on the bill of lading. Unfortunately most of the suppliers were shipping from China where the main aim was to fill the container and get it off the dock rather than worry about little things like PO details.
In the old days, the retailer didn't really care what arrived as long as the container was full and on time (DFOT rather than DIFOT!), but "IT" didn't like this - if the order says "100 widgets" and the bill of lading says "100 widgets" then there better be "100 widgets" or we have an exception situation. Up went the costs, down went the profits - "bring back the Earnings Before IT".
We all shook our heads and had a good laugh - but it is a salient point to remember - don't try to lock down the business rules around what "should" be if the business doesn't really aspire to live to those rules in the first place.
One of the team was regaling us with stories from a previous job in the retail space - he had a client that referred to EBIT as Earnings before IT. Before IT they opened the shipping container, counted up what was in there, shipped to the stores, put a price tag on it and sold it - easy, cheap, very profitable.
Then they grew beyond the "mom and pop" size and started installing technology driven systems - and this is where they claimed their problems started. The system demanded that you receipted the container contents based on what was ordered and what was on the bill of lading. Unfortunately most of the suppliers were shipping from China where the main aim was to fill the container and get it off the dock rather than worry about little things like PO details.
In the old days, the retailer didn't really care what arrived as long as the container was full and on time (DFOT rather than DIFOT!), but "IT" didn't like this - if the order says "100 widgets" and the bill of lading says "100 widgets" then there better be "100 widgets" or we have an exception situation. Up went the costs, down went the profits - "bring back the Earnings Before IT".
We all shook our heads and had a good laugh - but it is a salient point to remember - don't try to lock down the business rules around what "should" be if the business doesn't really aspire to live to those rules in the first place.
Wednesday, December 13, 2006
SunPundits building SunSystems user community
I came across SunPundits a few months ago and posted a comment or two on SunSystems Collect which is our debt collection / credit control module for SunSystems. It was pretty embrionic at the time but I like the idea and the premise - sharing tips and tricks on operational issues around Infor SunSystems at a grass roots level.
I dropped back in on the group the other day and was pleased to see lots more activity and plenty of calls for assistance and advice responded to in an accurate and timely way. This bodes very well for building the community to a meaningful level. I did my bit with a few updates and will keep an eye on my patch from now on.
As a software author I love the idea of the user base building a self-service attitude to addressing some support issues - at a purely commercial level it has the opportunity to reduce the pressure on the support desk. But that is just a small benefit - the real gain is to hear how genuine end users put the products to use, how they implement their business processes within the constraints of the application, what they struggle to achieve, what they want to add, what they love and hate.
We can learn how we can do better directly from the people that really matter - the end users. Bring it on.
I dropped back in on the group the other day and was pleased to see lots more activity and plenty of calls for assistance and advice responded to in an accurate and timely way. This bodes very well for building the community to a meaningful level. I did my bit with a few updates and will keep an eye on my patch from now on.
As a software author I love the idea of the user base building a self-service attitude to addressing some support issues - at a purely commercial level it has the opportunity to reduce the pressure on the support desk. But that is just a small benefit - the real gain is to hear how genuine end users put the products to use, how they implement their business processes within the constraints of the application, what they struggle to achieve, what they want to add, what they love and hate.
We can learn how we can do better directly from the people that really matter - the end users. Bring it on.
Friday, December 08, 2006
Disaster Recovered
We had an interesting corporate experience the other week - our Melbourne office basement was flooded with 7 feet of water by a burst main on Sunday night. The building was closed down until it could be pumped out and re-certified for safe occupancy. Now this is not a 2-up-2-down humpy in the suburbs, this is a major sky scraper in the Melbourne CBD - a significant event. Press coverage here for more details. I am based in Sydney and was not directly affected but my colleague Tim Wragg was peering through the door at the chaos and brings some personal experience to the event.
What I thought would be worth sharing is the basic learnings for us from what could have been a lot more catastrophic than it was. There were probably three main areas of recovery - people, systems and real estate - to get our business back to normal - and it was of primary importance that our clients experienced as little disruption as possible.
The problem with the real estate was that in the affected building all the electricity and communications terminals were in the basement and therefore completely debilitated by the flooding. So regardless of any plans for dual carriers etc, everything was wiped out. Also because the building occupancy certification was cancelled by the council and would not be reissued until after the water was pumped out we were not allowed to have people at the desks anyway.
Many of our corporate systems are delivered from a central Sydney infrastructure so the main operational functions that needed to be switched over were the telephone help desks. That was done in short order without any problem and only seconds of interruption to service, probably unnoticed by anyone. We also flew a few of those team members to Sydney for the week to continue business as usual in that area. We already run a full VPN based framework to allow people to work from home, on site at clients, whilst travelling overseas etc so the physical location of the teams affected was not a concern. We didn't need to rush out and get temporary desk space - the combination of mobile phones and Internet access allowed most people to work as normal, just from a different physical place.
People - this was the trickiest area - how do you notify large volumes of people that the office is not open and they should stay at home or arrange to work from a client site (for those in consultancy roles). Well bulk SMS was the way we did it and it worked reasonably well - for the employees with company issued mobile phones that is. Within 2 hours of notification by the building management we had passed on the initial "stay at home, await further instructions" alert. Of course there are lots of people in the business that do not have a corporate mobile phone and the lesson learned was that we did not have accurate up-to-date mobile numbers for many of these people so there was a fair amount of time spent dialling land lines. Even still a few were missed and had to be repelled at the door.
Also, the SMS system that we used required data entry of the target phone numbers for the text message - when time is of the essence this is not ideal - so we have changed the bulk SMS system we use to one that allows us to keep an online list "ready to go". We will also be updating our corporate processes to ensure we capture and update these details for employees in future.
Some people responded that they had left their laptop pcs in the office over the weekend and we were lucky enough to be able to access the building under supervision to recover these and a few desktop pcs for key staff. If this hadn't been possible then some individuals would have been left in the lurch whilst we cobbled together spare machines for them.
As it was, although the building was out of commission for a full week we were remarkably well protected from the affects of a lock-out. The real question is what shape would we have been in if it had been the Sydney building that was uninhabitable and we are assessing that in light of the Melbourne event.
Walk out the front door of your office, lock it and shut off the lights and think about what you would do to get back up and running. Document it - that's the start of your disaster recovery/business continuity plan.
What I thought would be worth sharing is the basic learnings for us from what could have been a lot more catastrophic than it was. There were probably three main areas of recovery - people, systems and real estate - to get our business back to normal - and it was of primary importance that our clients experienced as little disruption as possible.
The problem with the real estate was that in the affected building all the electricity and communications terminals were in the basement and therefore completely debilitated by the flooding. So regardless of any plans for dual carriers etc, everything was wiped out. Also because the building occupancy certification was cancelled by the council and would not be reissued until after the water was pumped out we were not allowed to have people at the desks anyway.
Many of our corporate systems are delivered from a central Sydney infrastructure so the main operational functions that needed to be switched over were the telephone help desks. That was done in short order without any problem and only seconds of interruption to service, probably unnoticed by anyone. We also flew a few of those team members to Sydney for the week to continue business as usual in that area. We already run a full VPN based framework to allow people to work from home, on site at clients, whilst travelling overseas etc so the physical location of the teams affected was not a concern. We didn't need to rush out and get temporary desk space - the combination of mobile phones and Internet access allowed most people to work as normal, just from a different physical place.
People - this was the trickiest area - how do you notify large volumes of people that the office is not open and they should stay at home or arrange to work from a client site (for those in consultancy roles). Well bulk SMS was the way we did it and it worked reasonably well - for the employees with company issued mobile phones that is. Within 2 hours of notification by the building management we had passed on the initial "stay at home, await further instructions" alert. Of course there are lots of people in the business that do not have a corporate mobile phone and the lesson learned was that we did not have accurate up-to-date mobile numbers for many of these people so there was a fair amount of time spent dialling land lines. Even still a few were missed and had to be repelled at the door.
Also, the SMS system that we used required data entry of the target phone numbers for the text message - when time is of the essence this is not ideal - so we have changed the bulk SMS system we use to one that allows us to keep an online list "ready to go". We will also be updating our corporate processes to ensure we capture and update these details for employees in future.
Some people responded that they had left their laptop pcs in the office over the weekend and we were lucky enough to be able to access the building under supervision to recover these and a few desktop pcs for key staff. If this hadn't been possible then some individuals would have been left in the lurch whilst we cobbled together spare machines for them.
As it was, although the building was out of commission for a full week we were remarkably well protected from the affects of a lock-out. The real question is what shape would we have been in if it had been the Sydney building that was uninhabitable and we are assessing that in light of the Melbourne event.
Walk out the front door of your office, lock it and shut off the lights and think about what you would do to get back up and running. Document it - that's the start of your disaster recovery/business continuity plan.
Subscribe to:
Posts (Atom)