Henderson’s practice is involved with performance improvement and involves a whole range of business management activities, from supply chain, to finance and cost management, HR management, customer relationship management and, not surprisingly, management of the IT function itself. Clive Couldwell takes a look at a sample of the division’s projects.
“Having established the infrastructure to enable consistency in HR processes, we’re only one step away from the kinds of self-service regimes where individuals are responsible for maintaining data about themselves.”
CLIENT: Ministry of Defence
THE PROBLEM: The MoD turned to PricewaterhouseCoopers to help it effect the changes it needed to make in response to the Government White Paper “Better accounting for the taxpayers’ money” (July 1995), which sought to make the armed forces more accountable and efficient. The MoD wanted a system that measured what it took to achieve a front-line objective (an “output”) and that would cost the process accordingly so that ministers could make short- and long-term planning decisions.
THE TECHNOLOGY: Project CAPITAL
This fundamental restructuring of the Government’s accounting regimes is one of the largest change projects of its kind; it involves 550 consultants and spans the globe. Management consultants from PwC and Deloitte Consulting were called in to lead this as a business, rather than IT, project. The joint team was known as ASI (Accounting Systems Integrator).
PwC is the prime contractor and carries overall responsibility for the project, although it shares its management with Deloitte Consulting. Together these firms manage sub-contractors including Oracle, Systems Union, Logica, Robbins Gioia, Racal, Sequent and Dell. There have been 150 specific projects within the main project, 50 of which are still live. There are 2,500 users involved in the accounting project, and over 100 accounting systems.
Essentially, the Government has decided to change the method of accounting from the previous, old-fashioned cash accounting system (everything was spent “in year” and this lead to a mad dash in March to spend huge amounts of money so budgets wouldn’t be lost) into the more usual, commercial style of accounting (with special government rules) – Resource Accounting and Budgeting (RAB) – which creates a balance sheet (so managers recognise that what they are buying has a “life”, rather than a single year, of value).
This system enables calculation of the real cost of running services by establishing what they’re there for – their business value. Once in place, the change will allow military and civilian staff to make more informed decisions and to enable the MoD to justify the cost of the UK’s defence capability. For example, rather than adding up the cost of maintaining individual tanks and soldiers, the new method of cost measurement will show what it takes to achieve an objective (output) – this might be stabilising East Timor at short notice, or long-term peacekeeping in Bosnia.
Project CAPITAL has tackled five main areas:
- Systems: new accounting processes will run on commercial off-the-shelf packages (Oracle Financials, Sun Accounts and CLIME) rather than use bespoke software;
- Management structures (roles and responsibilities): a new finance function will be established, financial management at board level will be greatly enhanced and new financial management skills will be learned;
- Decision-making: in line with the MoD’s new management strategy, decision making will be delegated to the organisation’s lower levels and longer-term thinking will be required;
- Performance measurement: management activity will have a new focus: outputs will be agreed within and between budget holders and performance indicators set according to those outputs;
- Planning: long and short-term planning will become separate activities; a top-down, ten-year plan will be operated in conjunction with a four-year short-term plan.
Delivering this kind of change involved managing different cultures as well as accounting practices. “If you’re going to make such a massive change to an organisation and try and get the whole population to think differently, the best way to do it is to implement in the maximum number of places,” says Richard Jones, a financial and cost management specialist, and project CAPITAL’s coordinator.
“We’ve got 120 balance sheets in the MoD which consolidate up to the top,” he says. “So, the whole new language, new ways of thinking, has to be learned by a very large population. This tends to make our task more complex, but in our view, it has helped us to get through the change management aspects of things in an acceptable way. The military in particular, but also the MoD and its civil servants, don’t like change management for its own sake.
“The services had being going through many substantial changes, with great delegation of authority and the moving of responsibility out to the commanders-in-chief of the different services. Our view was that if you had then implemented a financial management system that drove in the opposite direction it would firstly be a very confusing signal, and second you might not get the benefits you were hoping for.”
CLIENT: British Telecom
THE PROBLEM: Technology is very much shaping the way people work. Arguably, it has allowed HR professionals to take on much more strategic roles in their organisations. They are clearly aware of the need to create a customer-focused culture, and technologies such as the Internet and intranet offer huge advantages in this area. At the same time, the Internet offers immense access to information, while the intranet delivers constant access to staff. An HR system should therefore directly reflect the way an organisation manages its people and, as this activity is going through tremendous change, the job of acquiring a new system is inevitably complex, entwined as it is with continual changes in employment policy and the changing roles of HR and line management.
The marketplace is swamped with HR systems, many of which have similar features. Many organisations start with the belief that choosing and implementing an HR system is straightforward. Most end the process believing that it was one of the most complex implementations their organisation has ever undertaken.
THE TECHNOLOGY: PeopleSoft HRMS
BT wanted to create a realistic view of what it regarded as its key resource – its people – and settled upon an easy-to-use and maintain, millennium-compliant information environment that would capture the HR data the company could use to manage its staff consistently, and that would also provide international functionality and a service infrastructure that would suit BT’s global expansion plans.
The project was huge, one of the largest PeopleSoft HRMS implementations in Europe, and it brought together HR professionals and a team of PwC consultants who specialise in implementing large-scale HR solutions. These people then set about gaining an understanding of the kind of HR processes that would be required by BT in the future, and which should therefore be implemented in the IT solution.
“This was not only an HR project, it required a highly sophisticated approach to HR to manage the whole thing,” says PwC’s Henderson. “Having established the infrastructure to enable consistency in HR processes, we’re only one step away from the kinds of self-service regimes that a number of businesses are starting up, where individuals become responsible for maintaining the data about themselves directly. Increasingly, this will be web or intranet-enabled.”
The actual HRMS has 1,000 online users. These include 400 staff at an HR shared-service centre who provide HR services to BT’s employees. The PeopleSoft HRMS’ functionality includes HR administration, compensation planning, benefits and compensation administration, employee contracts, management information reporting, and interfaces with BT’s payroll system. It has been rolled out to five of BT’s main, and 60 other, sites. BT is also planning to roll the HR system out over its intranet, giving all 130,000 employees access to it.
The Internet offers an ideal vehicle for helping manage overseas expansion and for harmonising different cultures and values. It is already used for online recruitment in areas such as computing and telecoms, and an increasing number of professionals from other disciplines are beginning to job hunt online.
Another key application is in training assessment. HR directors always need to know whether investment in training has made any difference to the bottom line. The system’s emphasis is less on delegates filling in online forms to say whether they liked courses, than on managers being canvassed as to whether there was any perceptible improvement in that person’s performance after a course. This research technique has major advantages in that managers who might be too busy to discuss such issues on the phone can often find time to respond via email, and that information and feedback comes directly from the employee. Such functionality will become more important as we see more mega mergers (for example, Time Warner AOL). “The number of people working for these businesses is growing all the time, and that accords with our strategy that we add most value to the biggest and most complex problems in the most substantial of clients,” says Henderson.
CLIENT: Octane Music
THE PROBLEM: UK-based company Octane Music owns an extensive library of jazz and classical music and wants to create a portal site that ultimately will blend e-commerce with streaming audio, downloads of MP3 files, personalisation and custom CD manufacturing. “Where there is a chip, there will be music,” is the mantra for Roger Press, a former music industry executive, and now CEO of Octane. “Our mission is to free the world from the constraints of physical music collections. We want to deliver your favourite music onto your desktop, into your car, or even to your cell-phone, in real time.”
THE technology: INTERSHOP enfinity
PricewaterhouseCoopers seized the opportunity to become an early adopter of INTERSHOP enfinity. “Octane’s undertaking provided the ideal testing ground for us to explore the potential of INTERSHOP enfinity. The site requires extensive integration work for personalisation and up-to-date retail features as well as cross-marketing and reporting,” said Mark Reed, at PricewaterhouseCoopers. His team could not develop a proprietary solution because the test-site had to go live after only six weeks, using a Windows NT platform. But with enfinity, the boundaries of e-commerce applications have been moved beyond the limits of traditional technology. Common functions such as sophisticated product catalogues, shopping baskets and electronic payments are handled by the standard product.
However INTERSHOP offers much more. In Octane’s case, enfinity’s pipeline architecture has helped marketing director Alex Kovach translate his business ideas into the structure of the solution without extensive use of techno-speak. “The graphical user interface and the drag-and-drop features of enfinity’s Visual Pipeline Manager made it very easy to create and edit business flows while the site was still in development,” he said. Most importantly, Kovach said, enfinity’s flexibility will allow him to change and modify business flows as market demands change and require adaptation of the site’s functionality. Octane’s secure download of MPEG music files through a suite of pipelets is an example of the use of enfinity’s business steps that are programmed in Java to perform specific functions. Octane accepts payments through the CyberCash payment cartridge that is integrated with Barclay’s ePDQ.
Octane’s rush to market and the successful deployment of the test site within a short time required a break with the traditions of project management and so it drew from an array of resources. PricewaterhouseCoopers in the UK and INTERSHOP R&D in Jena, Germany, assisted with customisation and on-the-job training. “We were very impressed by the ability of the PricewaterhouseCoopers and INTERSHOP team to take on a very demanding challenge and deliver a working Website within six weeks,” said Tim Lloyd, director of business development at Octane. “This would never have been possible without an advanced Internet retailing product such as enfinity, as it gave us a vital leg-up in the development race.”
This pilot project can gather valuable information about customer preferences, but boasts only a fraction of the features that will be available on the final site, scheduled to go live later this year. Kovach added: “Sophisticated personalisation will be critical for our success. We are confident that the product’s flexibility and openness for adding new functionality will go a long way towards keeping the site up-to-date and reflecting changes in consumer behaviour.”
Clive Couldwell is a freelance journalist.