The ideal management reporting solution enables management to see key metrics for any time period at any time. Without a common business language, the management reporting solution is slow and ineffective – management cannot base decisions on the information presented without long discussions to interpret the meaning of the information and more times than not manual intervention is required.
A common business language is a powerful tool within any enterprise. But how do you get there without a major investment? The primary steps include:
- Creating the Common Business Language – creating the basis for your common language with a list of terms and their definitions.
Companies use many approaches to creating the initial list, including facilitated work sessions with cross-functional resources assigned to the project, grass-roots wiki-like efforts, consensus-building efforts, and dictated terms from executives. To ensure adoption, collaboration is the optimal approach and best practice. Enthusiastic executive support and involvement, ability to drive cross-business activities and teams, and strong facilitation and negotiation skills are critical.
- Propagating and Supporting the Common Business Language – creating a standardized process for disseminating the common business language throughout the enterprise and supporting its ongoing usage and modification.
Although a collaborative tool would be very helpful in the initial establishment of the key metrics and their definitions, a tool is absolutely essential to propagating the common business language and thereafter supporting ongoing, audited modifications within an historical context. Without a tool, the hard work of establishing a common business language may need to be repeated in a surprisingly short time, greatly reducing the value of the initial alignment effort.
Many companies have quickly recognized these essential steps, but after estimating the effort required to develop new manual processes to create, implement and maintain a common business language, they cancel or postpone the initiative. Other companies have moved forward successfully only to find that after creating the initial list and gaining concurrence, they are stymied by how to continue to maintain concurrence and changes.
Building an agreed-upon list can be deceptively simple, often requiring more effort than anticipated; establishing a process to standardize a company’s business language can be deceptively complex, so much so as to stop companies in their tracks. Although potential resource and system costs can be substantial, there is a way to dramatically reduce those costs – a collaboration platform that will automate many of the steps involved.
Here is a checklist of minimum requirements for any platform that supports common business language creation, deployment, and sustainability:
- Ability to document terms and definitions in a non-proprietary format
- Ability to facilitate and demonstrate concurrence across silos
- Ability to publish agreed-upon terms to consumers in the enterprise
- Ability to facilitate a change management process for a term or definition
- Ability to retain history of discussion and decisions
- Ability to scale as the number of terms grows
- Ability to quickly search and retrieve terms, definitions and historical debates
A Benefits Case for AutomationTools automating the establishment and maintenance of a common business language provide a compelling benefits case.
A large, Fortune 500, global apparel company was embarking on an initiative to standardize terms and definitions. A number of manual steps were devised to support the process of moving to a common business language, including multiple approval checkpoints (functional, regional and executive management reviewers). Once the common business language was created, the problem became maintenance and change control. What process could ensure that the language remained current, accurate, and visible to the entire organization, or at least key players? Without a defined change control process, the analysts’ memory became the repository for the history of terms and relationships between terms, with some help from business user workshop notes. Over time, the organization found that conversations were being repeated, gaps in information frequently arose, and coordination of the input from all the global regions was extremely difficult and costly. Team members considered different tools to facilitate the process – a popular spreadsheet program, a more technical data modeling metadata repository, and transcriptions of notes in documents. Each option fell short in that it added additional work to the alignment team without fulfilling the basic requirements or were too burdensome for the business users.
An evaluation of one tool indicated that it would be a good solution to their problem and would meet all their technical, process and user requirements. Executives at the company requested a brief business case and a simple benefit analysis.
The team at the apparel company took this approach to their analysis:
- Step 1: Estimate the labor costs without the use of automation. Since the company had already completed the initial glossary, the team began with the estimation of internal labor costs for implementation and adoption of the common business language. Then they estimated the costs of maintaining the glossary, including the costs of monitoring the use of the terms in management reports, receiving request for changes, and securing approval for those changes. Finally, they estimated the costs of periodic (every three years), enterprise-wide validation of the glossary to ensure maintenance and change control was working and to provide opportunity for an overall review by management and key personnel. The labor costs were substantial.
In the first four years, the labor involved in implementing, maintaining, and reviewing the standardized language would cost the company $829,800.
The apparel company used a flat loaded rate of $100 per hour for administrators, analysts, managers, and executives to establish a budget.
The team at the apparel company estimated that 30 people would need to be involved in the implementation and adoption of the newly established standardization process for creating the common business language. The derived estimate was 1200 hours and the one-time derived cost $120,000.
The team estimated that 30 people would need to be involved in the maintenance and change control of the new common business language glossary. The derived estimate was 1764 hours annually, year after year, and the derived annual cost $176,400.
The team recommended that the company perform enterprise-wide reviews of the common business language every three years to ensure its continued accuracy and use. They estimated that 40 people would need to be involved in the reviews. The derived estimate was 924 hours and derived cost $92,400 every three years.
Not adopting the automation tool would cost the company a total of $208,200 in labor the first year and $176,400 every year thereafter, with an additional $92,400 in labor costs every third year. Thus in the first four years, the labor involved in implementing, maintaining, and reviewing the standardized language would cost the company $829,800.
In the first four years, the labor involved in implementing, maintaining, and reviewing the standardized language would cost the company $269,250.
The apparel company used a flat loaded rate of $100 per hour for administrators, analysts, managers, and executives to establish a budget.
The team estimated that 30 people would need to be involved in the implementation and adoption of the newly established standardization process for creating the common business language over the course of the first six months. The derived estimate was 645 hours and the one-time derived cost $64,500.
The team estimated that 30 people would need to be involved in the maintenance and change control of the new glossary. The derived estimate was 588 hours annually (probably less in future years, though the company did not assume a reduction) and the derived annual cost $58,500.
The team recommended that periodic reviews of the common business language glossary in the automation tool occur every five years (instead of every three years as in the earlier scenario without the tool). They estimated that 40 people would need to be involved the reviews. The derived estimate was 585 hours and derived cost $58,500 every five years.
Adopting the automation tool would cost the company a total of $93,750 in labor in the first year and $58,500 every year thereafter, with an additional $58,500 in labor costs every fifth year. Thus in the first four years, the labor involved in implementing, maintaining, and reviewing the standardized language would cost the company $269,250.
Benefit AnalysisWeighing the internal costs of the manual process against those same costs if the company adopted use of the automation tool yielded a strong business case just on labor costs, which were reduced by 67% over 4 years. The benefit to the bottom line of this company was a savings of more than $560,000 over 4 years.
It is important to remember, however, that this company had already completed the development of the initial glossary without the use of the automation tool. The company recognized that if they had implemented the tool from the beginning, the cost justification would have looked even stronger.
Since implementation of the automation tool, the company has reduced the cycle time to agree on business terms and extend the common business language. The collaboration and automation features in the tool enable clarifying discussion to reach agreement on common business language swiftly, provides historical information without analyst intervention to the user community, and provides clear links to the development process for management reporting. These cost savings and the implementation of a robust, repeatable tool and method to support a common business language will be paying dividends for years to come.
Reaping the Rewards of Common Business LanguageA common business language (terms, definitions, and metrics) is key to establishing and driving a performance-driven culture within any enterprise. Divisions and business units speaking the same language enables efficiencies in information system implementation costs and other business initiatives. Information can be lifted out of a unit and rolled up to the highest level of the corporation in a timely and efficient manner without the intervention of an army of analysts. Newly acquired divisions can quickly understand the management reporting metrics and move to align their metrics. Most importantly, enterprise strategy can be consistently deployed and measured throughout an organization. By implementing a common business language, companies can reduce misunderstandings and re-work, increase time spent on analysis instead of debating the assumptions, and foster meaningful conversations about company performance.
Although simple in concept, a common business language is difficult to create, implement, and maintain. Tools are available that automate much of the process and eliminate the technical difficulties that often distract from a focus on the many business problems solved.