addressing the challenges involved in managing distributed organisations - xledger whitepaper

| Tel +44 (0)117 3291050 | www.xledger.co.uk

Addressing the Challenges

Involved in Managing Distributed

Organisations

May 2015


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.


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.


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.


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.


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.


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.


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.


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.


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.


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


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.


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.


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.


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.


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.

http://www.xledger.co.uk/

addressing the challenges involved in managing distributed organisations - xledger whitepaper

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