Quarterly Update – 1999 3 & 4

Todd Herman

All client service is about adding value. This is especially true for consulting services, where the output – an idea or concept – is intangible even if the outcome – for example, reduced cost – is tangible.

The question then becomes, "How can I add value to my client?" I believe the answer lies in concepts from information theory. Claude Shannon, a Bell Laboratories researcher, stated that "Information is a difference that makes a difference." If nothing changes, then there is no information. If something changes, but the change is not relevant, then the change is not information.

To illustrate how value is added, consider the following financial and textual examples:

Level Financial Textual
Wisdom Strategic Plan Interpretation
Knowledge Variance Explanation Executive Summary
Information General Ledger Report
Data Transactions Isolated Facts

Moving up each level involves more summarization, abstraction, or processing from a previous level – in general, changing and improving the context of the information.

The degree of value added is indicated by the difficulty in answering the question being asked. Questions involving "How" and "Why" are generally very hard to answer since they have subjective answers. "Who," "What," "When," and "Where" questions are typically not as hard.

Today's business systems usually work at the "Data" and "Information" levels. To move to the "Knowledge" level generally requires a skilled business person who can use tools – such as query, reporting, and multi-dimensional analysis tools – to access the databases of business systems, helping answer questions such as:

  • Why is this style not profitable, but a similar style is?
  • Why are system-generated transactions causing this account to be out of balance?
  • Why did we have a large inventory shrink?

Moving to the "Wisdom" level requires both knowledge and experience. It is generally acknowledged that about 10 years of experience is needed for a person to be considered an expert. Experts can help answer questions such as:

  • How can Finance move from transaction processing to business analysis?
  • How can we cut our product development cycle in half?
  • Why should we spend $500,000 for a new business system?

These questions are typical of the types of questions we help our clients answer. Given the nature and difficulty of these questions, I believe we can say with certainty that we help add value to our clients.

Best wishes for a successful 2000!

Todd L. Herman

Todd L. Herman


Client Project Update:

I am pleased to provide you with an update on our client projects. Projects we have completed over this period are...

Implemented Payroll and Human Resource Modules

Completed implementing the Lawson Payroll and Human Resources modules for a health insurer, assisting the client with interfaces, data conversion, process changes, and training.

Assisted in evaluating ERP Packages

Assisted a manufacturer and distributor of rubber products in evaluating ERP packages, providing an objective assessment of needs and vendor capabilities.

Reviewed and Analyzed Business Contingency Plans

Reviewed and analyzed business contingency plans for an apparel company, assisting management in assessing responses to possible external and internal failures.

Developed Reports Eliminating Manual Monthly Reports

Developed reports for the redesigned chart of accounts for a hosiery company, eliminating several manual monthly reports.

Reviewed Post-Implementation Status of Payroll and HR Modules

Reviewed the post-implementation status of the Lawson Payroll and Human Resources modules for a hospital, helping the client define and prioritize open tasks.

Developed and Tested a Value Statement System

Worked closely with the client's systems group during development and testing of a value statement system, allowing this sock manufacturer to automate this complex offshore reporting.

Developed a Microsoft Excel Template

Developed a Microsoft Excel template to calculate commercial invoice amounts from value statement information, permitting this hosiery manufacturer to eliminate manual calculation of these amounts.

Reviewed Physical and Perpetual Inventory Items

Reviewed physical and perpetual inventory items for the bookstores of a university, identifying discrepancies and suggesting steps to improve inventory accuracy.

Future projects we are planning include...

Standard Cost Accounting Implementation Procedures

Define procedures to implement standard cost accounting for an upholstered furniture manufacturer, helping this client better use the capabilities of its new J.D. Edwards system.

Analyze Vouchers Processed by Payables Department

Analyze the number and amount of vouchers processed by the Payables department of a county government, suggesting ways to reduce the workload of the department.

Product Line Profitability

Determine and assess the profitability of product lines over the past 3 years for a knit products company, identifying causes of gross margin changes.

Identify Potential Excess & Obsolete Inventory

Determine potential excess and obsolete inventory items for an apparel manufacturer, quantifying the effect of these items.

Product Cost Calculation Database

Develop a Microsoft Access database to calculate product costs, allowing a packaging products manufacturer to set prices based on realistic costs.

Product Development Process Streaming

Streamline the product development process for a sock company and implement the revised process in Lotus Notes, reducing the cycle time to develop new products.

Implementing PeopleSoft Payroll & Human Resources

Assist in implementing PeopleSoft Payroll and Human Resources for a university, helping with project management and process redesign.