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Monday, February 11, 2002


Process, Finance and Quality. I have a wealth of related resources to share in this entry:
  • Activity-Based Cost and Value-Added Assessment
  • eXtensible Business Reporting Language (XBRL)
  • Reference Software Quality Profiles
These resources are closely aligned with design patterns (and anti-patterns) that I covered in today's entry in Notes from the Field. Where patterns capture best practices, the topics I'm covering here are the basis for best practices.

Activity-Based Cost and Value-Added Assessment. I've used activity-based cost management (ABCM) since 1993, and have found it to be one of the most effective technques for determining total costs of ownership (TCO) for systems and applications. I've also used it to cost out shared resources and estimate outsourcing P&L from a vendor point of view. A Management Accounting Framework by Gary Cokins is a good starting point if you're not familiar with ABCM. Mr. Cokins is also the author of Activity-Based Cost Management Making It Work: A Manager's Guide to Implementing and Sustaining an Effective ABC System (see my 25 February 2001 review on Amazon).

Another facet of cost management is value assessments - the process of discovering non-value added activities in processes. There is a clear connection between ABCM and value assessment, and one of the best resources I've encountered is William E. Trischler's book titled Understanding and Applying Value-Added Assessment: Eliminating Business Process Waste. My 6 July 2001 review of this excellent book on Amazon summarizes why you should read this book. Another resource is a whitepaper by Thomas Miller titled Enterprise Architecture Framework: Providing a "Value Added" Analysis Capability.

Value analysis is not limited to measuring process steps, which is evidenced by Knowledge Value Added and Business Process Auditing. This brief paper is augmented by another paper that ties together knowledge value and ABCM by comparing the two. The paper, Knowledge Value Added and Activity Based Costing: A Comparison of Re-engineering Methodologies, is one of a series of similar papers that address different facets of the same topics.

We're now getting deep into business process improvement and reengineering territory. One valuable resource that covers this broader look at processes is the FAA's Business Process Improvement/Reengineering Handbook. Another resource is a PowerPoint presentation titled Tools for Managers: Measuring Performance and Success.

I'll wrap this topic up with two other recommended resources:

  1. A whitepaper in PDF format titled Principles of Benchmarking.
  2. Paul Strassmann's web page. If you're one of the half-dozen IT professionals who has not heard of Mr. Strassmann you're in for a treat as you read through his articles and papers. This guy is opinionated, egotistic, obnoxious - and is rarely wrong. His seminal book, The Business Value of Computers, established him as a straight-talking senior executive who was not afraid to debunk the voodoo methods used to justify computer purchases. Since this book's 1990 debut Mr. Strassmann's book writing has been prolific, and he has augmented his books with a series of digital publications.
eXtensible Business Reporting Language (XBRL). If you are working with or for a financial institution, or are supporting your company's finance department, then XBRL is an important topic.

A starting point is XBRL.ORG, which is developing XBRL for the preparation and exchange of business reports and data. The initial goal of XBRL is to provide an XML-based framework that the global business information supply chain will use to create, exchange, and analyze financial reporting information including, but not limited to, regulatory filings such as annual and quarterly financial statements, general ledger information, and audit schedules.

The XBRL Educational Resource Center maintained by Byrant College is a content-rich source of XBRL information too. If you want a good overview of XBRL download the XML-XRBL PowerPoint presentation. The Extensible Business Reporting Language (XBRL) 2.0 Specification dated 4 February 2002 (MS Word format) is the official spec and is essential reading if you are involved with XBRL solution development.

There are two books on the topic, neither of which I've read, that are currently available:

  1. Introducing XBRL: Making Decisions in a Digital Economy
  2. XBRL Essentials
Reference Software Quality Profiles. This topic is loosely related to XBRL and tightly related to SQA. An overview is provided in Definition of reference software quality profiles, which contains two MS Word documents that go into more detail:
  1. Software Product Quality Evaluation and Certification: the Qseal Consortium Methodology.
  2. The IBISCO initiative for the evaluation and certification of bank software product quality.
The latter document is the loose tie-in to XBRL, and is an essential document for anyone who works with or supports bank applications.

End Note: Do you have a fall-back strategy to go into manual mode if you lose a critical application? Here is an example of such a strategy for business process areas that depend heavily on word processing (law offices, transcription agencies, etc.), and a reminder to find a little fun in life.