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Part 1: Introduction, Problem Statement, Definitions and Examples

An overview of the history of the approach and statement of the problem in terms of major deficiencies in high quality management information together with definitions and examples

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Introduction, caution, and Definition

The James A Robertson and Associates

Taxonomy Handbook

How to unlock exceptional value

From your ERP, IBIS, Data Warehouse or Business Intelligence


Supporting exceptional decisions that enable your organization to THRIVE

A new, different and FAR BETTER approach to information system configuration




Dr James A Robertson PrEng

 The ERP Doctor


Introduction and copyright

The JAR&A Taxonomy Handbook is a compilation of short articles which provide an introduction to the Strategic Engineered Precision Taxonomy (SEPT) approach to Enterprise Resource Planning (ERP), Data Warehouse (DW) and Business Intelligence (BI) solutions for business.  These technologies collectively form something that I term the Integrated Business Information System or IBIS).

We sincerely believe that this approach is the missing link and next frontier in business information systems.

This document is very much a work in progress and DRAFT

It is a combination of marketing and technical articles, some recent, some of some vintage that have been put together to provide a more comprehensive view of the picture that I see

Thus sections are not necessarily in the best sequence, some items may be redundant, wording may not be clear or may not be as diplomatic as it should be

You have received a copy because I felt it would be relevant to you at this time but I ask that you will take account of the above points and feel free to let me have feedback both negative and positive


James Robertson

09 November 2011

Tel: 0027-(0)11-251-6644

Email: James@JamesARobertson.com



This manual is the intellectual property of James A Robertson and Associates and may not be reproduced or distributed without the express permission of Dr James Robertson

A word of caution

The techniques presented in this manual have been developed over decades.

It is only recently that I have come to fully understand just how different this approach is to the traditional methods.

During the last two decades I have consistently seen that people readily grasp the concepts but fail to get the detail right.

It is vital to recognize that exceptionally well designed taxonomies and configuration will serve the organization well for decades if well maintained and the commercial strategic value of these hierarchies to the organization will be huge.

In terms of overall life time cost of ownership it costs MUCH more to develop and operate sub-standard taxonomies and configuration and, unless you really understand the fine details of what is contained in this manual you will never know that what you have is sub-standard.

I strongly recommend that you engage with me, at the very least in terms of the high level solution architecture, training and periodic review in order to obtain the true value of this approach in your organization.

I look forward to working with you.


James Robertson

Definition of precision content engineering

The definition of information content in a way that is structurally (taxonomically) fundamentally meaningful to human beings who understand the business and the translation of this content into structured codes which faithfully and accurately reflect human understanding of the REAL WORLD in a way that the computer can manipulate with minimal human intervention so that the computer system appears to be intelligent

Table of contents


Introduction and copyright                                                                            3

A word of caution                                                                                           5

Definition of precision content engineering                                               7

Table of contents                                                                                           9

Section 1: Problem statement, why read this, history                            15

1.1   Why you should read this                                                                       17

1.2   Typical needs                                                                                         19

1.3   Problem description                                                                                20

1.4   What is a Strategic Engineered Precision Taxonomy (SEPT) to JAR&A Standards?                                                                                                 23

1.5   History of the JAR&A Strategic Engineered Precision Taxonomy (SEPT) approach?                                                                                                  26

1.6   What is NOT a Strategic Engineered Precision Taxonomy?                  29

1.7   Taxonomy principles                                                                               41

1.8   The desired end-state                                                                            42

1.9   Why Taxonomy coding is important                                                        45

1.10 Differentiators                                                                                         48

1.11 What is different about the JAR&A ERP Implementation approach        49

1.12 Why use the JAR&A approach?                                                              51

1.13 Key Benefits of the JAR&A SEPT approach to system and data warehouse configuration                                                                            53

1.14 The REAL cost of SEPT Versus the REAL cost of conventional solutions And the REAL value of SEPT                                                                                                                                                                                              55

Section 2: Definitions and examples                                                         57

2.1 What is the JAR&A Strategic Engineered Precision Taxonomy (SEPT) approach?                                                                                                       59

2.2 Definitions of Strategy                                                                               63

2.3 What is a strategic taxonomy?                                                                  65

2.4 What is an engineered taxonomy?                                                            69

2.5 What is a precision taxonomy?                                                                 75

2.6 The case for Strategic Customization                                                       80

2.7 Defining the taxonomy approach                                                              83

2.8 Comparison between a full-house ERP SEPT re-implementation and a Data Warehouse SEPT implementation                                                                                                                                                                                      85

2.9 SEPT Examples                                                                                       88

Section 3: Why JAR&A, Who is James Robertson, required Knowledge and Experience                                                                                                                                                                                                                          91

3.1 Why not do it yourself without JAR&A?                                                    93

3.2 Introducing Dr James Robertson, PrEng -- The ERP Doctor                   95

3.3 James Robertson's knowledge and experience as applied to taxonomy development                                                                                                  101

3.4 Knowledge and experience required for a senior SEPT taxonomist       108

3.5 The Factors Causing Integrated Business Information System (IBIS) Investment Failure                                                                                         110

3.6 The Critical Factors For Integrated Business Information System (IBIS) Investment Success                                                                                      112

3.7 There ARE visible differences in quality of taxonomies                          114

Section 4: Important principles                                                                119

4.1 How to give executives REAL information                                              112

4.2 The Power of an Executive with a Blank Sheet of Paper                       122

4.3 Why ERP can make the blood boil                                                         129

4.4 The CEO MUST be the custodian of ERP                                             133

4.5 Understanding strategy and how ERP fits in                                          138

4.6 Risks and common mistakes when developing taxonomies and configuring systems                                                                                                         143

4.7 Risks and common mistakes when developing Group-Wide Charts of Accounts                                                                                                       145

4.8 What is an IT Pulse Measurement?                                                        147

4.9 Defining an ERP Implementation Engineering Laboratory                      149

Section 5: The cubic business model and group chart of accounts   154

5.1 The JAR&A SEPT Cubic Business Model and Group-Wide Chart of Accounts                                                                                                      155

5.2 Benefits of developing group wide Precision strategic master taxonomies and data attributes to JAR&A standards                                                      163

5.3 Key Components of JAR&A SEPT Cubic Business Model and Group-Wide Chart of Accounts                                                                                        169

5.4 Suggested basis of attribution of overheads and production costs in a cubic business model environment                                                                       172

Section 6: Why taxonomy software?                                                      177

6.1 Why Taxonomy and Configuration Management software is necessary179

6.2 What is the JAR&A taxonomy software?                                                 181

6.3 Why use the JAR&A taxonomy software?                                               184

6.4 Further information on the use of software to develop and manage Taxonomies and Precision Configuration                                                      187

6.5 Benefits of taxonomy software                                                                 189

Section 7: How to do it                                                                                191

7.1 The challenge                                                                                          193

7.2 The opportunity                                                                                        194

7.3 The essence of the solution                                                                     195

7.4 Complexity                                                                                                196

7.5 Preparatory steps for a SEPT project                                                      197

7.6 Strategic Engineered Precision Taxonomies and Configuration Getting from where you are to where you want to be                                                         199

7.7 Design and development stages                                                              202

7.8 Categories of lists                                                                                     204

7.9 Important questions about any data                                                         209

7.10 Steps in developing a hierarchy                                                             210

7.11 Steps in coding a hierarchy                                                                    216

7.12 Coding steps                                                                                          218

7.13 Critical implementation considerations                                                   219

7.14 Conventions and standards                                                                   221

Section 8: Case studies and white papers                                              223

8.1 V3 ERP Implementation case study

 -- headlines                                                                                         225

 -- paper                                                                                               226

8.2 CRM Risk Control case study

-- headlines                                                                                          232

-- paper                                                                                                233

8.3 Rennies Group General Ledger case study

-- headlines                                                                                          246

-- paper                                                                                                247

8.4 African Sales Company case study

-- headlines                                                                                          254

-- paper                                                                                                255

Section 9: Other references                                                                      261

9.1 Why your IT project may be riskier than you think Harvard Business Review

-- headlines                                                                                          263

-- paper                                                                                                264

9.2 19 out of 20 ERP implementations do NOT deliver what was promised -- Financial Mail

-- headlines                                                                                         267

-- paper                                                                                               268

9.3 Most organizations are NOT making better decisions than they did five years ago – Gartner

-- headlines                                                                                         273

-- paper                                                                                               274

Section 10: Conclusion                                                                             277

Section 1 -- Problem statement, why read this, history

Section 1.1

Why you should read this


You may well be asking yourself why you would want to read a document on Taxonomies in ERP (Enterprise Resource Planning) Systems or Business Intelligence (BI) / Data Warehouse (DW) investments.

Following are some reasons you might want to consider:

1.  You are frustrated that you cannot get the information you need from your ERP / BI / DW investment

     2.  You know that the Financial Mail has reported that "19 out of 20 ERP Implementations do NOT deliver what was promised" and want to prevent that happening to you or have it and want to get out of that situation

     3.  Gartner has reported that despite massive investments "most organizations are NOT making better decisions than five years ago" and you do not want that or have it and want to get out of it 

     4.  You are seriously considering trashing your present systems out of frustration and are wondering what to do

     5.  You can identify with the CEO who rated his executive information systems at 1 out of 10 where 0 = "non-existent"

6.  You have spent millions but cannot get answers to questions relating to data you KNOW is in your database

7.  You have heard horror stories of corporations damaged by defective system implementations and want to make sure it does not happen to you – see the Harvard Business Review article "Why Your IT Project May Be Riskier Than You Think" at the end of this volume.

All of these situations are directly and dramatically POSITIVELY impacted by the material contained in this document, I encourage you to read further...

Section 1.2

Typical needs


The typical needs that would drive a decision to invest in Strategic Engineered Precision Taxonomies and Precision Configuration are:

1.  Improved decision support

2.  Greatly improved reporting

3.  Answers to questions you have not previously thought to ask

4.  Automated roll-up of information

5.  Ease of electronic drill down

6.  Reliable, high quality data and information

7.  High levels of information ownership and accountability

Improved operating efficiency and effectiveness


Section 1.3

Problem description

At a very practical level what are the problems your organization might be experiencing that would point to the JAR&A Strategic Engineered Precision Taxonomy approach being relevant?

Following are some problems I frequently encounter:

1.  Spent millions – no answers

A frequent complaint I hear from executives is "we have spent millions but I cannot get answers to simple questions even though the transactions are being processed".

SEPT configuration is the answer to this problem.


2.  No accurate production unit costs

Executives frequently complain they cannot get accurate production unit costs – one CEO whose company was developing a new mine said to me "James, I have spent 27 million on … (big brand ERP), I have ONE tunnel, they cannot tell me how much it is costing per meter to drive that tunnel, in one years' time I will have eighty tunnels, what am I to do?"

I subsequently learned that that same organization employed a highly competent lady with a Bachelor of Commerce degree and five years of post-graduate experience who had not managed to produce a viable income statement in six months and that the senior bookkeeper had spent six months whittling down the Chart of Accounts to 16 pages of accounts from 25 pages based on what she considered relevant.  It finally turned out that the Chief Financial Officer was managing the finances in Excel and merely pretending to use the ERP!

They had the second worst Chart of Accounts I have ever seen – a Chart of Accounts which did not comply with any of the principles advocated here.  Yet a Chart of Accounts with regard to which the big brand ERP software vendor declared "… is so powerful it can handle that" – totally ignoring the fact that the Chart of Accounts made no logical sense whatsoever, a characteristic of many Charts of Accounts which results in implementers making a fortune with ongoing support while executives mistakenly believe they do not understand IT when they should instead be taking a stand for quality taxonomies.

A badly designed Chart of Accounts recently contributed to a Chief Executive of a large listed company being fired after a badly configured big brand ERP was reporting increased profits while, in fact, the profit was a loss because some expensive consultant had accidentally reversed the posting accounts for the debit and credit side of certain transactions in the configuration.

A series of SEPT taxonomies would have solved both of these problems.


3.  No accurate end- to-end product costs

Another CEO of a manufacturing group in which several business units added value to basic materials to create high value products complained that he could not get sight of the end to end chain of value addition and cost addition for his finished products.  Once again badly classified and badly configured data was the cause.

A SEPT Item Master taxonomy coupled to precision configuration would have solved his problem.


4.  Nobody trusts the system

I constantly encounter businesses where most of the business is run in Excel and add-on software packages because people do not trust the data in the system.

SEPT configuration properly implemented and operated is the answer to this.


5.  Reports do not agree / do not make sense

It is an everyday occurrence in most corporations that they have numerous simple reports that do not agree or do not make sense, each person has their own variant which they trust but the overall totals do not agree.  Frequently this relates to badly designed and badly configured validation lists and Master Data.

SEPT configuration is the answer to this.


6.  Still getting huge bills from implementers

It is a regular occurrence that organizations continue to pay huge monthly fees for support of their systems or to employ expensive personnel to maintain reports and general configuration because the configuration is so clumsy and imprecise that the consultant or staff member is frequently the only person who can make some sort of sense of the data.

SEPT configuration is the answer to this.


7.  Our data does not make sense

Executives frequently tell me that they do not understand IT – on closer examination this translates to the data being so badly configured that it makes no sense at all and does not in any meaningful way model the real world -- so executives, when they cannot make sense of the data, assume there is something magical that IT people know that they do not in order to make things work, frequently ignoring the harsh reality that it is the same people who are responsible for the mess in the first place.

Ultimately the CEO MUST be the custodian of any integrated system such as an ERP, Data Warehouse or Business Intelligence installation and the configuration MUST make sense to the CEO.  This requires a SEPT configuration designed and implemented from the executive suite.


8.  Lack of an effective group consolidation model

Most corporations lack anything approaching a comprehensive Group Financial Consolidation model that is anything more than a set of summarized financial statements.  The JAR&A SEPT Financial Taxonomy solution (Cubic Business Model and Group Wide Master Chart of Accounts) provides a solution that enables comprehensive Group Wide financial analysis and modelling.

It also provides a mechanism for rapidly mapping and analysing the financial performance of potential acquisitions during due diligence and of rapidly integrating acquisitions when they come on board.


9.  Etc

There are numerous other problems that you may be experiencing that are giving rise to frustration, doubting the software you have bought, etc.  In the vast majority of these cases a comprehensive SEPT configuration coupled with Strategic Customization well designed and well implemented to JAR&A standards and well operated is the answer.

Strategic Engineered Precision Taxonomies really can make a huge difference to your Integrated Business Information System (IBIS), ERP, DW or BI investment and enable you to massively leverage your existing investments.


Section 1.4

What is a Strategic Engineered Precision Taxonomy (SEPT)

to JAR&A Standards?


The following is an overview of what constitutes a Strategic Engineered Precision Taxonomy to the standards that I have developed over the years:

1.  Semantic structure

Fundamentally a taxonomy is a logical word or semantic structure – it depicts the real world in a carefully structured hierarchical list.

The following figure depicts a very simple taxonomy of Credit Note Reason Codes:


2.  Precision vocabulary or preferred terms

In defining a taxonomy the choice of words is important – a limited and specific vocabulary should be used such that the same concept or element is always described with the same word or phrase.  There is a difference between "Factory" and "Manufacturing".


3.  Conveys  understanding

A taxonomy succinctly conveys understanding between human beings with related knowledge and experience.

A strategic taxonomy conveys an executive view of the strategic priorities of the business all the way down to the most junior clerk who posts against that taxonomy.


4.  Hierarchical strategically structured list

A Strategic Engineered Precision Taxonomy is a hierarchical (nested) structured list relating to any specific attribute stored in a computer system ranging from the most simple to the most complex.


5.  Precision code scheme

In the context of this document not only is a taxonomy a precision semantic (English language) structure but this is, in turn, linked to a precision code scheme which conforms to the standards that I have developed over the years with regard to number of elements at any level in the hierarchy, gap coding, capitalization of headings, trailing periods against headings, use of numeric, alphanumeric or alpha coding, mnemonic coding including conventions for mnemonic coding relating to correlation to vowels and consonants, etc.

The following diagram gives an indication of how critical precision is in delivering value 


6.  An Art and a Science

The development of a strategically valuable sustainable taxonomy is both an Art and a Science and requires significant levels of knowledge and experience to originate.

There are rules but a lot of what is required to craft a taxonomy that really works is intuition based on comprehensive understanding of business, information technology, language, logic, etc.


7.  Precision communication tool

A precision taxonomy is a precision communication tool that requires adherence to a range of standards and conventions in order to achieve its full potential and communicate a consistent picture across all users.


8.  Add's value to users from the CEO to the most junior supervisor (Team Leader)

A precision taxonomy adds value to all users of the information in the system, from the CEO who is able to get answers to all possible questions, including those not thought of previously and drill down to detail at the touch of a button to the clerk who needs to post fast and accurately and harness the power of software system intelligence linked to workflows, business rules, etc.


9.  Time consuming and tedious to develop – once right it seems obvious

Strategic Engineered Precision Taxonomies to JAR&A standards are time consuming and tedious to develop and observers may question why it is taking "so long" but, IF well designed to cater for all business eventualities a precision taxonomy seems "obvious" at the end.

The more complex the taxonomy the more time consuming to develop it.


10.Software tools can enhance development

The use of software tools can enhance the development of precision taxonomies both in terms of speed and precision.

The above list contains the main elements that define a Strategic Engineered Precision Taxonomy.



Section 1.5

History of the JAR&A

Strategic Engineered Precision Taxonomy (SEPT) approach?

This document outlines how the James Robertson and Associates Strategic Engineered Precision Taxonomy (SEPT) approach has developed over a period of nearly forty years.

1.  Early days – late 1960's – practical application of existing taxonomies – insects first and then butterflies

2.  Early 70's – Computer Science for Engineers – finite element analysis and other techniques – precision in data definition and complex repetitive calculations, statistical and presentation techniques

3.  1977 – detailed study of catalogue design principles – design of a very complex taxonomy for my PhD research – ultimately used to make sense of over 7,000 pages of laboratory data in a prize winning PhD thesis

4.  1982 – first high value decision support solution designed and built – client organization doubled turnover in twelve months by supplying the right information to the right people at the right time in order to make the right decisions – high value investment decisions which gave rise to dramatic earnings

5.  1981 to 1984 – grounding in economics – how business and economies work

6.  1980's – the NATO filing system – a very complex document storage and retrieval catalogue system

7.  1987 to 1990 – first ERP implementations – some good and some bad – hard lessons about the psychology of change

8.  1990 – one thousand hours of unremunerated research and development – the Cubic Business Model General Ledger Chart of Accounts taxonomy solution – first use of software tools – developed standards that remain in use today – tried and tested

9.  1993 – dramatic ERP win – V3 Consulting Engineers – "fantastic -- more management information than we know what to do with" plus dramatically reduced audit time and cost and headcount reduction – refer white paper

10. 1993 – Price Forbes – CRM Risk Control – insurance loss control system for SA Post Office – "fantastic -- more management information than we know what to do with" plus saving of eight clerks and dramatic increase of information captured – simple software with quality taxonomies delivers massive benefit – refer white paper

11. 1994 – Rennies Group – Strategic Master Chart of Accounts taxonomy across over 100 companies with dramatic results – refer white paper

12. 1994 to 1995 – clever technology does NOT compensate for the lack of taxonomies – major software development that failed because of lack of taxonomies – hard lesson that I did not yet know my own techniques and strengths well

13.1996 to 2002 – diverse projects, taxonomies low profile, strategic analysis methods, software sustainability, etc

14. 2003 – Financial Mail reports that "19 out of 20 ERP implementations do not deliver what was promised" – executive level view of non-performance – reinforces my findings of a 70% outright failure rate

15. 2003 – fourth generation of StratSnap software, JAR&A catalogue of the factors causing IT and ERP investment failure and the Critical Factors for Information Technology Investment Success with particular emphasis on ERP – start presenting courses

16. 2003 – wrote the book "The Critical Factors for Information Technology Investment Success".  Published in 2004.  Expanded portfolio of courses

17. 2005 – Gartner reports that despite huge investments in Business Intelligence technology "most organizations are NOT making better decisions than they did five years ago" – reinforces my conviction of the importance of taxonomies but still not seeing the full importance

18. 2005 to 2007 – diverse projects – some taxonomies, many other aspects of system implementation and StratSnap Critical Issues Strategic Analysis Approach

19. 2007 to 2008 – African Sales Company – taxonomy driven ERP implementation – software to manage a critical taxonomy in Syspro (the Product Class) and build associated sophistication (which I was told "could not be done") – final result a "strategic resource" – refer white paper

20. 2009 – opposition and "James you are the only person in ERP in South Africa who understands taxonomies" and discover to my surprise that big brand implementers do NOT know how to implement their software to full potential

21. 2010 – major Group Consolidation Chart of Accounts for Foodcorp in association with EOH Impact Africa and Group Chart of Accounts for MoreGolf Group – developed GL Builder software – some lessons with regard to implementation, post implementation support and need for software tools to accelerate processes, increase speed, reliability and sustainability

22. 2010 – finally got that taxonomies were THE MOST CRITICAL ELEMENT of ERP and business system implementation AND that seemingly no one else knew what I did – started to "evangelize" taxonomies and give much more detail in my courses – developed high level specification for a comprehensive suite of taxonomy software – Project Butterfly – alliance with Nicolaas Hugo

23. 2011 – current clients in Steel and Mining sectors looking at major green field data warehouse projects using Strategic Engineered Precision Taxonomies to JAR&A standards – the method is finally coming of age – discovered that the real cost of re-implementing an ERP is more than just about any organization can justify – new data warehouse with Strategic Engineered Precision Taxonomies and THEN trickle taxonomies down into the ERP

The above gives a headline level history of how the approach has evolved over the years in tandem with other milestone events in my career which have informed, confirmed and supplemented my overall outlook and approach to business information systems.

It has been a long and challenging journey but the benefits of the approach are huge, I have every confidence that this approach will have a MAJOR impact on business information systems and will redefine standards with regard to ERP implementation worldwide.

Strategic Engineered Precision Taxonomies RAISE THE BAR for ERP and Business Intelligence Worldwide!

Section 1.6

What is NOT a Strategic Engineered Precision Taxonomy?

In seeking to explain what a Taxonomy is it is useful first of all to consider what a Taxonomy is NOT.

In particular, what is NOT a Strategic Engineered Precision Taxonomy.

Following are a few examples of lists from ERP implementations which are NOT taxonomies:

1.  Credit note reason code example

The following example of Credit Note Reason codes is NOT a Taxonomy:



At first glance this might look reasonable, however, the list is coded sequentially and there is no information about the nature of incident that gave rise to the Credit Note.


Any management query relating to the nature of damage or the nature of incorrect supply will necessitate a fairly senior person to go to the database and analyse the transactions.

Typically this will require exporting the transactions into Excel and then creating some form of manual analysis which can then be supplied to management in order to answer the question "what was the nature of …".  In the event that this report triggers further questions it will be necessary for the same reasonably senior person to return to their spreadsheet and look for answers to those further questions.

If, as frequently happens they only brought the information they needed into their spreadsheet they may need to do another query and do further analysis which, because it is all manual, may not exactly return the same results of the first query resulting in frustration and distrust of the system.

Contrast this with the following SEPT list produced in consultation with the management of the particular client organization concerned:



It will be apparent that there is considerably more information available for analysis in the base data before further analysis is required.  If, in addition to this well-structured list there are other well-structured lists throughout the ERP Database then considerable further information can be extracted without the need to pull data into Excel and analyse manually.

Note also that as far as possible the codes are mnemonic and therefore it is quicker and easier to remember codes and post and also the code structure permits summarizing analysis.


2.  Chart of Accounts in big brand ERP

Following is an extract from the Chart of Accounts in a multi-million Rand big brand ERP implementation that had to be trashed.

At the start of the Pulse Measurement Investigation the Chief Executive of the client corporation said to me "James, I have spent … million on this ERP installation, I have one production unit at present and they cannot tell me the cost per operational unit of that one unit, this time next year I will have eighty such units, what do I do?"  In this case the client was seriously considering trashing their big brand ERP and buying another big brand ERP.

During the investigation I found that the client had employed a highly capable lady with a Bachelor of Commerce degree and five years' work experience who after six months of intense effort was unable to produce an Income Statement that was reliable!

Here is an extract from the Chart of Accounts:

Notice that "Sand and Stone" is about as consumable an item as one can find, two accounts away from "Services" which was likely to be a fairly large expense, one account removed from "Skips and Cages" which are large capital assets and one removed from "Smelting and Refining" which was a capital asset amounting to hundreds of millions of Rands, but notice also that "Smelting and Refining" might also be related to operating expenses and NOT assets.

Notice that "Steel Other" occurs BEFORE other items relating to Steel whereas "Other" should be the posting of last resort.

Notice that "Scraper Rope" occurs after "Scrapers" where the rope is a component of the scraper.

Notice also that there is no pattern or logic in the coding either.

One of the business personnel responsible for this Chart of Accounts proudly told me that he had consulted a number of other businesses and pulled in everything that they had in their Charts of Accounts as well.

The senior Bookkeeper subsequently informed me that when she started with the company the Chart of Accounts ran to twenty five pages and she had spent six months narrowing it down to a list of sixteen pages in order to make it useable.

During a system walkthrough attended by the Client, the Implementers and representatives of the big brand software company when I pointed out the weaknesses of the Chart of Accounts one of the software company representatives started to argue with me that his software was "so powerful it can cope with that" – an absolutely foolish statement insofar as the issue I was raising related to a complete lack of logic or structure in the data.

At a subsequent meeting with the same representative he persisted in insisting that the Chart of Accounts was not that bad and referred me to the "Best Practice" Chart of Accounts off his company's website.

When I obtained that Chart of Accounts, this is what I found:

Again virtually no logic, no structure, no pattern in the coding, in fact seemingly completely arbitrary numbering.

He was right, the highly defective Chart of Accounts in the implementation of his client was NOT much worse than the so-called "best practice" Chart of Accounts.

At that point I understood for the first time that the large global organizations that sell and implement big brand ERP systems did NOT understand principles that I regarded as fundamental and essential to effective ERP implementation.  I also understood more clearly why such implementations so frequently run over time and over budget.

Subsequently I have encountered similar deficiencies in sample data for various other big brand ERP products.

There is a HUGE opportunity to enhance your current ERP and BI investments using SEPT.


3.  An example of a well-designed (SEPT) Chart of Accounts

So, what DOES a well-designed Chart of Accounts to JAR&A SEPT standards look like?

Following are some extracts from a Group Consolidation Chart of Accounts that JAR&A developed for a large manufacturing group recently:

As you will see from the spreadsheet row numbers in the left hand column many rows have been hidden in the spreadsheet in order to make the hierarchy more readily visible.

Only the section relating to "Wages" has been left open at the lowest level of the seven level hierarchy to give some idea of the posting level detail.

The colours in the columns are simply to make the hierarchy easier to follow during development.

Notice the use of the delimiter "-" in the code scheme in order to break it into segments that make it easier to read and remember.

Notice also that headings in the hierarchy are in Capital Letters and that the hierarchy is indented to make it easier to scan and read.

Notice the trailing periods "." in the codes that correspond to the levels of headings in the hierarchy, these periods make the code easier to read, the hierarchy easier to follow and permit the incorporation of intelligent interpretation of the hierarchy in software, query and reports that work with the hierarchy.

Notice also that codes are spaced out over the full available range in order to provide space to add in extra items in the correct location if ever required.

Following is another view of the same Chart of Accounts:

Here the accounts have been collapsed at the first level of the hierarchy with the exception of Expenses which is opened up at the second level and Cost of Sales which is opened up at the third level of the hierarchy.

What you will notice here is that a straight forward listing of the Chart of Accounts I.e. a Trial Balance gives a detailed Income Statement and detailed Balance Sheet and that only minimal further work is required to produce formal detailed Income Statement and Balance sheet.

This is in dramatic contrast to the previous examples where even the simplest Income Statement will takes days or weeks of work by an expensive resource to produce reports which may not even be very accurate.

At about the same time that I had the debate with the representative of the software company with regard to the "power" of their ERP I encountered another situation with another big brand ERP implemented at about the same time.

In this case the Chief Executive had just been forced to resign when, following implementation of his new big brand ERP by big brand implementers he had consistently reported to shareholders over a six month period that profits were improving significantly.  At the end of the six months, when there was no money left in the bank he had to report that as a consequence of a configuration error in his big brand ERP the profit that he had been reporting was, in fact, a loss!

Someone had accidentally swapped the debit and credit accounts around somewhere in the configuration with the result that the financial statements were in error.

If you contrast the SEPT Chart of Accounts above with the examples earlier I am sure you can see how easy it is with the former Charts of Accounts to make such a mistake.  Software vendors may well argue that their way of doing things is normal practice, that may be so but it does NOT make it acceptable practice, let along good practice and certainly NOT best practice as the man from the big brand ERP vendor had asserted to me.

Yes, there ARE grouping codes and other devices in these big systems to try and add logic to these illogical lists but, I hope by now you will agree with me that it is MUCH EASIER to build the logic in the foundational list from the start.

Notice that with the highly structured SEPT Chart of Accounts above a five line financial report summarizing the entire Chart of Accounts in account number order will give the balancing totals for the Income Statement and Balance Sheet and immediately show whether the accounts are in balance or whether there has been a posting error or configuration error somewhere.

When this is combined with the JAR&A Cubic Business Model superimposed on the General Ledger, every Location–Function element of the business has its own Income Statement and, where applicable, Balance Sheet and all performance management takes place directly off the GL with a dramatic improvement in Governance AND reduction in audit time and cost.

Couple this model to the configuration of all other modules and it becomes immediately possible to drill down on a value in the General Ledger into the source systems in order to obtain additional detail (assuming of course that you have SEPT configuration in all the other systems as well).

Note that you can achieve a significant proportion of this benefit by implementing SEPT configuration in your Data Warehouse and just tuning the poor lists in your ERP, which in most cases will be working after a fashion for operational purposes.

These problems occur in every area of every ERP I have ever looked at.

Another element of the Chart of Accounts above is that the expenses are sequenced from the most strategically fundamental to the most routine so that every person who accesses the Chart of Accounts has the Executive Strategic view of the financial priorities of the organization.  This alone carries with it significant organization optimization benefits.

Following are a few other examples of poor quality data in major ERP implementations.

4.  Item Master in a big brand ERP


5.  Item Group in another big brand ERP

Again, no logic, no structure, nothing that corresponds with the concept of a logical way of grouping items.


6.  Material Group in another big brand ERP

Duplication, no logic, no structure and nothing that gives any indication of a logical basis for "grouping" materials.

7.  Etc

I could go on and on giving you examples but I hope that the above will have sensitised you enough to provide the incentive for you to go and have a look at the tables in your own ERP.

While they may not be as bad as the examples here, my experience tells me there is a fairly good chance they WILL be comparably defective or that, at best, they may be some limited way towards the recommended SEPT practice examples above.

I hope that this will provide you with the incentive to read further!

Section 1.7

Taxonomy principles


This document summarizes some important taxonomy principles relating to Strategic Engineered Precision Taxonomies as applied by JAR&A.

1.  High value business decisions

Value is unlocked through effective delivery of information that is intuitively fundamentally meaningful packaged in a way that the computer system APPEARS to be intelligent and presented through reports, graphs, dashboards, advanced statistical techniques, advanced economic analysis and other advanced techniques of information presentation, analysis and interpretation.

This supports MUCH BETTER strategic, tactical and operational decisions that manifest in improved organizational profitability, growth, impact, etc.


2.  High value intelligent information

High value business decisions require that executives can get answers to any question for which they can reasonably expect there to be answers in the databases that they know their organization has -- easily and quickly and without major effort on the part of any staff member or contractor -- the RIGHT information at the RIGHT place at the RIGHT time in order to make the RIGHT decision.


3.  Value is created by business action

Value is created by business actions that deliver on the essence of why the organization exists and how it thrives.  Value manifests through increased profitability, growth, acquisitions, job satisfaction and fulfilment of the strategic vision.

Value is the consequence of intuitive, intelligent, informed leadership business decisions – thrive decisions.  Such decisions are facilitated, accelerated and enhanced through access to more intelligent, meaningful and relevant information.

Value is created by obtaining answers to the questions I have not yet thought to ask.

Such “intelligent information” is assembled as a consequence of high level strategic and executive level input into the design of the data CONTENT – taxonomies designed to catalogue every conceivably relevant classification ahead of time.

All taxonomies should be designed with the above principles in mind.

Section 1.8

The desired end-state


What is the average executive or manager looking for from their ERP, IBIS, DW or BI investment (or the whole package)?

Following are some objectives I frequently encounter: 

1.  Easy to use and makes sense

People want their systems to be "user friendly" -- user friendly actually translates to "well designed, intuitive to use, logical, makes sense, works the way I work, etc" – reality is that  you can have the most technologically advanced software in the world but if the data content makes no sense that technology is valueless – Strategic Engineered Precision Taxonomies (SEPT) and configuration are the answer.


2.  Accurate, consistent, reliable

Systems should be accurate, consistent, reliable, dependable – routine reports should all agree with one another; questions should be able to be answered easily.

A SEPT configuration makes this a reality.


3.  System is trusted

It is vital that "the system" is trusted by all staff so that private records, private spreadsheets, private software are abandoned because the main resources of the organization are easy to understand and use.

Sounds like a technology issue?

Doesn't it?

Well, yes, thirty or forty years ago but NOT today.

Today the problem is NOT the technology it is the data and SEPT and precision configuration are the answers.


4.  Costs immediately accessible

Every executive who authorizes expenditure of millions on an ERP or BI tool has a reasonable expectation that they will be able to easily and immediately get answers to all reasonable questions regarding costs.

Frequently this expectation is unmet.

The answer is precision configuration using the SEPT principles outlined in this document.


5.  Rich diversity of reports and analysis

Executives reasonably expect to have a rich diversity of reports and analyses with which to manage their organization.  Frequently this expectation is drowned out by the massive struggle to get even simple reports that are reliable and dependable.  A precision, SEPT based, configuration is the way to achieving this requirement.


6.  Hardly see the implementers

In the real world, once we have built an office block or a factory we do not expect to see the designers or constructors at all after the warranty period has expired, yet with ERP and BI we find expensive personnel on-site almost in perpetuity because of the constant maintenance burden of badly configured installations.  SEPT is the answer – well configured systems are easy to operate and maintain.


7.  Better decisions faster

When authorizing major expenditure on ERP or BI executives have a reasonable expectation that they will get the information they need to take better decisions faster.  As reported by Gartner this expectation is seldom met.

Properly configured systems using the SEPT approach are the answer.


8.  More profitable

In motivating massive ERP and BI investments organizations are promised increased profitability, yet this seldom materializes and, if it does, it occurs at the operational level and NOT the strategic level.  Strategically aligned taxonomies are essential to supporting better decision making that result in a more profitable organization.


9.  Headcount reduction

Many ERP investments are motivated on the basis of headcount reduction but in many cases headcount increases.

A well designed, well implemented and well managed SEPT configuration will give rise to efficiencies and MAY, through natural attrition, give rise to headcount reduction.  Headcount reduction should NEVER be the motivation for an ERP investment, the investment should be made for strategic gain with headcount reduction as a spin-off if the job is done right.

Why not instead aim to GROW in order to utilize the added capacity that is unlocked by operational efficiencies?


10. Delighted with our systems

Very few executives can truly say they are delighted with their IT, ERP, DW or BI investments.  SEPT provides a concept, thought process, implementation attitude and way of working that has the potential, if executed with the right executive level advisors, to achieve exceptional outcomes that you will truly be prepared to boast about J


Section 1.9

Why Taxonomy coding is important


The following are the major reasons why it is important to code taxonomies:

1.  Coded taxonomies are essential

Coded taxonomies are central to and essential to the effective operation of business information systems.


2.  Every validation list

Every validation list, drop down list, category list, group list, class list, classification list, etc – any list that contains logic that reflects the reality of the business or affects the way the software operates should be carefully coded in accordance with all the conventions of the SEPT approach.

This includes the Chart of Accounts and all complex logistical code tables such as the Materials Group in SAP, the Item Class, the Product Class, etc.


3.  Computers only understand binary (0's and 1's)

In understanding why computer systems need codes it is vital to understand that computers only manipulate binary data (0's and 1's) and binary data is presented logically as ASCII data with 256 possible text values.

All apparent intelligence in a computer system working with data relies on what the computer does with the patterns of characters in its data.

SEPT involves the careful design of English or other language semantic (language) structures and then the careful alignment of these logical language structures with hierarchical codes using various coding conventions including trailing periods for headings, mnemonic codes, alpha codes, numeric codes, alpha numeric codes, etc chosen as required for a particular taxonomy.

For reporting, roll-up, drill-down and other electronic functionality to work effectively there must be carefully thought out logic in the code schemes which allows the fancy technology that has been available for the last fifteen years to work to its full potential.

Problems with reporting, etc are fundamentally NOT technology problems, they are problems associated with the lack of logic in lists and the lack of logic in code schemes.


4.  Codes allow the computer to emulate human intelligence

These highly structured and carefully thought out codes, designed by an informed and knowledgeable human designer enable the computer system to manipulate the data electronically with ease.

If the codes are badly designed then massive increases in human effort are required to produce even the simplest reports and this is why most organizations continue to spend large sums of money on expensive consultants to maintain what should be elementary reports that should be produced at the touch of a button.

The relationship between value and precision is dramatic:


5.  Intelligent data

The above elements of semantic logic and carefully matched code schemes create what I call "intelligent data" – data that contains high levels of human intelligence and which therefore allows query, reporting, dash boarding, etc tools to produce elegant and easy to interpret reports.

In the absence of intelligent data huge amounts of manual effort are required to maintain reports and multiple reports will return different results.


6.  JAR&A coding and presentation conventions

JAR&A have developed a range of coding and presentation conventions such as the use of indents, trailing periods, capitalization, gap coding, seven plus or minus two elements per hierarchy level, etc in order to facilitate the creation of intelligent data.

Software tools are being developed that will facilitate the application of these standards and help to enforce consistency and rigour.


7.  False to suggest codes no longer required

There is a widespread view that "because it is Windows" there is no need for codes and that only the long English or other language text descriptions are required.

The most elementary examination of this thesis will reveal it to be untrue – how do you easily write reports which summarize, roll-up and drill-down based on long language text strings, the hassle factor and room for error is huge.

Text strings do not in any manner that is amenable to electronic processing facilitate hierarchical nesting of information in a manner that a computer can easily process.

Hierarchically structured codes allow reporting on ranges, allow the ranges to be extended easily and consistently, etc.

It is just NOT possible to achieve the levels of precision envisaged here without precision structured codes associated with the precision semantic English structured taxonomy descriptions.

The above list contains the main reasons why Strategic Engineered Precision Taxonomies are coded.

Section 1.10



Why is the JAR&A SEPT approach different and better?

1.  Birthed out of a focus on high value decision support

2.  Founded on insistence of understanding the strategy – essence of the business and how it thrives – the fundamentals of the business

3.  A level of taxonomy precision and discipline not seen anywhere else

4.  Conventions and standards designed for ease of human engagement in terms of posting and inquiry – cognitive span and other visual and logical techniques

5.  Conventions and standards designed for ease of electronic manipulation of coded data

6.  A holistic, integrated concept and solution

7.  Sustainable, reliable, dependable, low operating cost, high value delivery outcomes IF correctly designed, implemented and utilized

8.  Opens the door for opportunities that cannot be achieved in any other way

9.  The FUTURE of business information system configuration and operation


Section 1.11

What is different about the JAR&A ERP Implementation approach

Following is an analysis of what is different about the JAR&A approach to ERP implementation.

The goal of this approach is a MUCH higher quality outcome for the same or less total cost to exceptionally high standards.  Long term operating benefits are exponentially greater than traditional techniques and system operating costs are considerably lower.

1.  Engineered solution

Critical factors engineering approach (model the real world) – Architect–Consulting Engineer model from building construction industry – high level of thought leadership and accountability – design for success by engineering against failure – engineers design bridges NOT to fall down.


2.  Top down strategic executive approach

Executive level strategic view – essence of the business and how it thrives – driven top-down – high level of business engagement, education, involvement, organization wide, management of change, focus on decision support.


3.  Precision configuration

Precision engineered strategic configuration to unique standards developed by JAR&A built on precision taxonomies – far superior to anything I have seen elsewhere.


4.  Configuration management software

Use of rule based software to help with configuration and maintenance of taxonomies and configuration and to assist with on-going management of the operation of the ERP and Data Warehouse as precision machines.


5.  Maximize use of permanent staff

Use of high quality temporary staff to free up permanent staff to do everything possible on the project.  Limit use of contractors, use high value consultants only.


6.  Laboratory

Rigorous laboratory approach – representative data samples, extreme value cases, break it till it will not break anymore, test alternative configuration scenarios, document, CBT, train, develop reports, establish data warehouse BEFORE going live.


7.  Cubic business model

Scalable cubic business model to model the entire enterprise flexibly with the ability to report flexibly for Governance and management purposes – flows through into a governance and reporting philosophy with high levels of ownership and delegation.  Scalable for acquisitions.


8.  Decision support, analytics and modelling

Emphasis on facilitating high value decision making rippling through to all aspects of the configuration and implementation and including comprehensive reporting and analytics BEFORE go-live, including data warehouse and business intelligence – REAL BI.


9.  High operating standards and training

Comprehensive training, computer based training, education of staff, standards, disciplines, typing, etc BEFORE allowed to use the system.

All the above taken together represent something that I have not seen done elsewhere, I have heard people use language that at some level sounds like this but it is not in practice.

Having said this, I have never had the opportunity to tackle a full scale project end to end in accordance with the above principles and so there is still learning involved but I am confident that the overall outcome will more than warrant the risk.


Section 1.12

Why use the JAR&A approach

The following points summarize why I think you should consider using the JAR&A approach:

1.  Thought leadership

Innovation, thought leadership, accountability, work ethic – 22 years seeking to understand how to apply "the disciplines of engineering to the ERP implementation industry" – finally think I am close to having a reasonably comprehensive suite of answers that I can teach to others.


2.  Wide ranging ERP exposure

Through Pulse Measurements I have been exposed to almost the entire spectrum of ERP products and have never seen an implementation by another party that conforms to these standards.


3.  Never been contradicted

I have spoken at about 90 public conferences, presented about 50 public courses and published numerous articles, columns and newsletters most of which have reported negative performance statistics such as "19 out of 20 ERP implementations do NOT deliver what was promised" (Financial Mail) and "most organizations are NOT making better decisions than they were 5 years ago" (Gartner) and I have NEVER been challenged.


4.  Precision is intuitively sound

The concept of precision configuration is intuitively sound – we live in a world characterized by precision and casual inspection of sloppy configurations confirms the validity of the concept.


5.  First principles approach

The JAR&A approach has been built from the ground up using a fundamental first principles approach calibrated by understanding how failure occurs and how to prevent failure.  I have never encountered anyone else who has applied this philosophy.


6.  Taxonomies are inherent in life

The use of taxonomies is intrinsically inherent in the way other disciplines (biology, information management, library science, inventory management, etc) organize and classify information and is therefore intuitively fundamental to the organization of information in an ERP or Data Warehouse – I have taken these principles to an even greater level of precision in order to support decision making most effectively.  I have yet to find another person who espouses comparable standards.


7.  Taxonomies since 1977

I have been involved in the detailed design and application of taxonomies since 1977 and in the design, configuration and implementation of ERP's since 1987 with the express goal of achieving engineering levels of reliability with ERP implementations.


8.  Critical issues thinking

My approach to strategy diagnosis and interpretation is critical to my approach and has developed progressively over more than twenty five years.  Coupled to my critical issues thinking approach this is vital to the success of projects I undertake giving an ability to rapidly sift through huge amounts of information to distil the essence of what is important.


9.  Building construction approach

The building construction orientated approach to design and project management is unique to JAR&A and is profoundly relevant to ERP implementation and business information system projects generally which are fundamentally engineering projects.

All these elements taken together distinguish the JAR&A approach to ERP implementation and offers a much higher probability of a successful outcome to much higher standards and lower overall life-time costs.

Section 1.13

Key Benefits of the

JAR&A SEPT approach to system and data warehouse configuration


Why would you read this document or, for that matter, why would you consider Strategic Engineered Precision Taxonomies (SEPT) and Configuration to the standards developed and advocated by James A Robertson and Associates (JAR&A) for your organization?

Following are a few key benefits:

1.  Systems easier to configure and configuration is much higher quality

An ERP or Data Warehouse (and Business Intelligence) system configured based on Strategic Engineered Precision Taxonomies to JAR&A standards is easier to configure, will be configured faster and more precisely and to much higher quality standards than conventional configurations.

This applies both to ERP's and other operational software systems AND to Data Warehouse (DW) and Business Intelligence (BI) implementations.

This leads to lower overall operating costs AND to increased "bang for the buck".


2.  Faster and more accurate posting

Because the code schemes are so logical and so easy to read operators rapidly learn their way around the hierarchies and learn the codes (which are designed to be easy to remember), and therefore post faster and more accurately.  This leads to reduced costs (headcount) for the same transaction throughput or more transactions for the same headcount.

It also greatly reduces downstream time and cost resulting from inaccurate data.


3.  Easier, cheaper and more accurate and more sustainable reports

The writing of reports is quicker, easier and therefore cheaper and the quality of reports is orders of magnitude higher, they are also far easier to maintain and therefore much more sustainable.

This leads to reduced operating costs, reduced time wasted, gets away from dozens of reports doing roughly the same job, gets away from multiple reports given different answers for supposedly the same query, etc.

Long term cost savings and knock on operational benefits are huge IF the SEPT taxonomies are correctly designed, implemented AND maintained.


4.  Greatly reduced maintenance costs of systems and reports

As noted above, the cost of producing and maintaining reports is drastically reduced.

Major opportunities are created for MUCH more sophisticated and much higher value reports – the reports you originally expected when you signed the order!


5.  Much better quality and sustainability of management information leads to faster and better decisions

The quality, reliability and sustainability of management information referred to above leads to faster and better management decisions at all levels of the organization.

Better decisions made fast reduce operating costs and allow the operation to grow with the same headcount or allows natural attrition to reduce headcount for the same outputs.


6.  High levels of ownership of data improves governance and leads to improved organizational efficiency and effectiveness

The fact that the data accurately models the physical world and therefore accurately models the business removes issues of uncertainty over who owns data and therefore who owns the business outcomes.  This leads to greatly improved governance and this in turn leads to greatly improved operational efficiency and effectiveness – do more for less cost.


7.  Increased profitability through reduced costs and improved value adding decisions

These improvements in effectiveness and efficiency give rise to increased profitability.

Capping this with improved high value (strategic / thrive / essence of the business) decisions results in strategic effectiveness (better decisions) and efficiency (better decisions made and executed faster).

Once we have a situation where executive management and all other managers and supervisors are consistently aligned with the right things done well the overall profitability, viability and growth of the organization will far surpass those for organizations without SEPT.

The currency value of MUCH BETTER decisions is impossible to compute.

One bad decision can cost millions or even put an organization out of business.

One excellent decision at the right time can cause an organization to grow dramatically.

What value do YOU ascribe to being employed by the market leader as opposed to being part of an organization that has been taken over and is to be "right sized"?

Currency does not describe the true value of this benefit...

Section 1.14

The REAL cost of SEPT

Versus the REAL cost of conventional solutions

And the REAL value of SEPT


1.  The REAL cost of SEPT – senior personnel

The REAL cost of Strategic Engineered Precision Taxonomies and Configuration is the time required from Executives and senior managers to design, implement, adopt and apply strategic taxonomies.

This is a very visible cost although the real cost of the alternative is, over time, much higher.


2.  External advisor

SEPT will generally require a more senior, more experienced and more expensive advisor and facilitator than the alternative approaches, again this extra cost is, over time, outweighed by the serious inefficiencies of the conventional approach.


3.  Software

Precision taxonomies and, particularly the Cubic Model, are almost impossible to maintain without software that guides operators and maintains standards.

This is a very visible cost although the inefficiencies that result from the alternative approach rapidly consume far more than the software cost.


4.  REAL cost of traditional solutions – lost management efficiency and bad decisions

The REAL cost of traditional solutions – badly structured or unstructured lists is first and foremost through lack of high quality management information delivered in a timely manner that supports better decision making.  The biggest cost is the lost opportunity cost and business risk that results from bad decisions or delayed decisions and wasted management and executive time.


5.  Direct costs of traditional solutions

Traditional solutions carry substantial hidden direct costs such as additional staff costs, higher than necessary audit costs and other operational inefficiency costs.


6.  REAL value of SEPT – gained management efficiency and better decisions

The REAL value of SEPT lies in faster access to information, much more information available, immediate answers to every question, answers to questions not previously thought of, etc -- all resulting in improved management efficiency which allows the organization to grow without additional management and administrative complement.

There is also a potentially massive, but hard to quantify, benefit relating to decision making efficiency – less time to reach decisions and decision making quality – better decisions.  One really good decision can be worth millions or even tens or hundreds of millions as can one bad decision avoided.


7.  Direct savings associated with SEPT

The effective implementation of Strategic Engineered Precision Taxonomies and Configuration also leads to considerable operational and direct savings in terms of reduced consultant / contractor costs, reduced headcount (through natural attrition) or increased throughput for existing headcount, reduced wastage, increased efficiency at all levels, reduced audit costs, etc.

The real costs and real value must be understood in order to make a sound business investment decision when embarking on a SEPT project.

Section 2 -- Definitions and examples

Section 2.1

What is the JAR&A

Strategic Engineered Precision Taxonomy (SEPT) approach?


 What is the James Robertson and Associates Strategic Engineered Precision Taxonomy (SEPT) approach?

1.  Humans need information to make high value decisions

Human beings work with information – the more exactly that information models the real world in a logical, easy to understand and utilize manner the more powerful the computer system becomes.

There is much talk of converting data into information – the concept is sound but attempts to use technology are fundamentally flawed – it is ONLY through highly structured, fundamentally logical taxonomies that intelligence can be incorporated into data.

The JAR&A Strategic Engineered Precision Taxonomy approach has been developed over more than 23 years with the sole objective of supporting high value decision making which has the spin-off benefit of greatly improved operational decision making, greatly improved governance, greatly improved data quality, reduced audit time and cost and reduced headcount – all resulting from a fundamental focus on highly structured, highly logical data focussed on the strategic drivers of the business – the essence of the business and how it thrives.


2.  Computers work with data

Computers fundamentally work with numbers, in fact, they work with bits (0's and 1's) only which are assembled into 256 eight bit ASCII characters which define the representation of text and everything else that we see displayed on a computer screen.

Computers are fundamentally very fast adding machines.

Once one realizes that a computer is only a binary adding machine then one can be practical about what can be done with computers.  It is only by incorporating highly structured logic into code string patterns that equate to hierarchical, text based taxonomies that make sense to humans that one can really introduce intelligence into data.

The JAR&A Strategic Engineered Precision Taxonomy approach is geared to producing highly logical hierarchies coupled to highly structured code schemes.

Thus, we have the highly strategically logical textual taxonomy exactly modelled in the highly structured alphanumeric code string using JAR&A coding conventions so that the computer system APPEARS to be intelligent.  The more strategic intelligence in the hierarchy and the more accurately this is mirrored in the code scheme the more intelligent the software will appear to be and the easier the software will be to use -- standard ERP and BI software becomes MUCH EASIER TO USE with high quality taxonomies.


3.  Support high value decision making

The essence of business operations relates first and foremost to decisions.  Good processes do NOT compensate for bad decisions, good processes just make the execution of bad decisions easier and faster.

The entire JAR&A Strategic Engineered Precision Taxonomy approach was conceptualized from the perspective of supporting high value decision making over twenty one years ago and has continued to focus on executive level decision support ever since.

Experience has shown that this approach also gives rise to better operational and tactical decision making, improved governance, improved data quality, reduced audit time and cost, more precise workflow (process) configuration and headcount reduction amongst other benefits.

Comments like "we have so much management information it is fantastic" characterise the use of Strategic Engineered Precision Taxonomies well implemented.


4.  Hierarchical taxonomies facilitate decision support

Decision support is facilitated by hierarchical taxonomies designed to JAR&A standards of precision with particular emphasis on strategic priorities taking account of the cognitive span of human beings which is seven plus or minus two and is central to understanding the psychology of decision making.


5.  Fundamental first principles classifications are central

Classification of all information according to a fundamental first principles analysis leading to the addition of all possible practical attributes to Master Data is also a fundamental component of the SEPT approach.


6.  Fine granularity that models the real world

Fineness of granularity of the posting level data at the lowest level of the hierarchy is another element of the SEPT approach – the logical metaphor is the arrangement and display of screws in a hardware store in unique packets for every attribute versus dumping all different screws in a large bin and scratching through manually to find the required screws.

This metaphor accurately parallels the desirable granularity of transaction level data versus the large logical bins that are typically encountered in operational business information system databases.

This fine granularity of the posting level entries is another vital element of the JAR&A SEPT approach.


7.  Practical modelling of the real world

Practical modelling of the real world is another characteristic of the JAR&A Strategic Engineered Precision Taxonomy approach.

Complex logical models such as the Cubic Business Model which accurately depicts the Location – Function – Account logic of financial data as it occurs in every enterprise is a vital component of the total SEPT solution.

Likewise the analysis and depiction of complex list taxonomies alongside Master Data tables such as the SAP Materials Master, Lawson M3 Item Master, Infor LN Item Master, Syspro Product Class, etc are essential elements of a comprehensive solution that will deliver the real benefits that have been projected for computerized commercial systems for decades but seldom delivered.


8.  Supported by software tools

The complexity and precision required to accurately model the real world is such that the use of software tools to support the Strategic Engineered Precision Taxonomy approach has become increasingly critical.

The GL Builder module has been used on a number of projects and is currently nearing completion in the second generation.  Other modules are on the drawing boards following on development of custom prototypes for specific clients in the past.

The use of software tools to facilitate the design, construction, deployment and maintenance of precision taxonomies is vital to achieving the full potential of the SEPT approach.


9.  Sophisticated reporting, query and analysis

The development of sophisticated practical queries, reports and models and the application of advanced analytical techniques and tools for analysing the resulting data constitute a major element of where the real value is unlocked.

The SEPT approach extends through to supporting the client with the development of a range of high value queries, reports, dashboards and models.

The highly structured nature of the taxonomies also lends itself to the semi-automatic generation of diverse simple and complex reports across all elements of the taxonomy model.

The above provides a headline level summary of the JAR&A Strategic Engineered Precision Taxonomy (SEPT) approach, and is only one document in a suite which collectively comprehensively defines the elements of the approach, the principles and the tools to be used.


Section 2.2

Definitions of Strategy


There are numerous definitions of strategy.  A few that appeal to me are as follows:

1.  Malcolm McDonald – the right things

Malcolm defines strategy as "doing the right things from the perspective of the customer" and tactics as "doing things right from the perspective of the customer".

He says that if an organization does the right things well it will thrive, if it does the right things not so well it will survive but if it does the wrong things it will die, it is only a matter of how quickly.  The better the organization is at doing the wrong things the faster it will die.


This concept forms the basis of my corporate logo signifying that JAR&A seek to assist clients to thrive through the effective application of information technology.

From this comes the concept of supporting "thrive decisions" and other thrive language in our approach.


2.  Essence of the business and how it thrives – Robertson

I have been aware of this definition for 22 years and it has informed my definition of strategy as "the essence of the business and how it thrives".


3.  Michel Robert – strategic driving force

Michel Robert defines the following strategic driving forces and states that while all are present in an organization to some extent one should be paramount:

1.       Product

2.       User

3.       Market

4.       Technology / Know-How

5.       Production Capacity or Production Capability

6.       Sales / Marketing Method

7.       Distribution

8.       Natural Resources

9.       Size / Growth

10.   Profit


4.  Essential components of strategy

In formulating a strategic view of the organization it is important to take account of the following elements of strategic execution – that is, the essence of the business:

1.       Core economic driver

2.       Core human resource driver

3.       Core market differentiator / value proposition / sales or marketing method

4.       Core customer / market / user

5.       Core asset / product / natural resource / size / growth

6.       Core technology / capability / know-how / distribution

7.       Essential reason the organisation exists (generally NOT profit)

8.       Core values / Other

All of these concepts should be taken into account in formulating a strategic (essence of the business, thrive) solution for an organization.


Section 2.3

What is a strategic taxonomy?


In a previous section I introduced you to the concept of taxonomies and coined the phrase "Strategic Engineered Precision Taxonomy" (or SEPT) and coupled this to configuration.

What IS a strategic taxonomy?

1.  Strategy is "the essence of why the organization exists and how it thrives"

In order to answer the question "what is a strategic taxonomy?" we need to define strategy.

In 1990, having discovered that I could not define strategy in one sentence, I set out to find that definition.  I quickly found that the guru's had diverse definitions that did not fully meet my need but that Macdonald came closer than most.

Over the next ten years I eventually came to the point where I concluded that strategy is "the essence of why the organization exists and how it thrives", strategy is NOT invented, it is discovered, it is the end result of intuitive deduction by the founders of the organization as to a need in society which the founders set out to meet and succeeded in meeting.  The essential strategy changes little or not at all over decades.  Changing this strategy can break the business.

Thus we see that a strategic taxonomy focuses attention on how the organization thrives taking account of the essence of the organization.


2.  In order to thrive "do the right things well"

Macdonald postulates that strategy is "doing the right things as determined by the customer" and that tactics are "doing things right as determined by the customer".

He goes on to say that if your organization does the right things well it WILL thrive.  This has been the essence of my corporate objective for more than fifteen years – bringing engineering disciplines to the IT and ERP industry in order to assist clients to thrive.

Thus, when we say that strategy relates to "how it thrives" we are saying it relates to how you do the right things well.

Thus we see that a strategic taxonomy is a taxonomy that focuses attention on the right things.


3.  High quality executive decisions are the essence of what is required to thrive

I have also come to understand that high quality, strategic executive decisions well executed are the essence of what is required in order for an organization to thrive.

Thus a strategic taxonomy must be designed in such a way that it facilitates, supports and underpins high quality executive strategic decisions – this requires that the essence of the business is always at the forefront of the thinking of executives (and the business).


4.  Focus on fundamental first principles "the essence"

In order to do this a strategic taxonomy must focus on the fundamental first principles building blocks of the business – what is the information that is essential to the success of the business?

Put that information at the top of every list in your integrated business information systems --> your ERP, DW and BI and you will have all who use that data automatically focussing on the essence of the business.

It is a simple concept but extremely powerful.

How do you communicate the strategy, the essence, the thrive focus of the business to all staff?  Populate every drop down list, every master data file with catalogued, hierarchically organized taxonomies that put those parameters at the TOP of the list.

Remember that most people start reading at the top of a list or the front of a book.  As they run out of time or their attention wanes they tend to skim and scan until most never reach the end of the list or the end of the book.

Accordingly, put the most important information at the top of the list, the 20% of the information that will support 80% of the thrive decision making.  This is a strategic taxonomy.


5.  A top down strategic executive view of your information

In order to do this start with a top down strategic executive view of the organization AND the information.

The correct place to start designing your Chart of Accounts, Materials Master List, Item Master, etc is IN THE BOARD ROOM with the Executive Committee with appropriate facilitation and education.

If you do this you will NEVER have an executive tell you they do not understand the system, the system will be configured from their point of view.

Think about it, how can you expect to facilitate executive decision making if you do not involve executives in the high level configuration of your systems?


6.  Strategic intelligence in taxonomies drives a universal strategic view

Once you have incorporated these high level strategic taxonomies in your systems, whether the overall taxonomy or the individual segments of the hierarchy then the default position is that EVERY person who uses those systems will automatically see the executive strategic view of the business.

To do this you must have appropriate high level strategic facilitation starting in the executive suite – understand that you cannot use mid-level personnel to facilitate strategic taxonomies, you must use an executive level facilitator with strong strategic insight into the essence of the business and what is required for it to thrive.


7.  High strategic effectiveness leads to high operational effectiveness

An interesting observation that I have made over the last twenty plus years is that high strategic effectiveness leads to high operational effectiveness and efficiency.

Once everybody is seeing the strategic view and information is highly classified and highly structured executives, managers and supervisors ALL have a more accurate, more dependable, more accessible view of the operations of the business at every level and they are therefore able to take better operational decisions as well as better strategic decisions.


The organization just runs better, leaner, faster, more profitably because the right measures are in place to assist managers to ensure they are doing the right things well.

When I first encountered reduced headcounts, reduced audit time and cost and diverse other operational efficiencies I was unsure as to why they occurred, I started out focussed on high level strategic decision support and found that unintentionally I had ALSO delivered operational efficiencies!

It is a massive opportunity and one you should not let pass you by.


8.  Exploit cognitive span to enhance decision making

A strategic taxonomy is a taxonomy that is designed from the ground up to facilitate decision making – it is structured such that as far as practical there are between five and nine items at every level of every branch of every hierarchy thus enabling viewers to "just get it" cognitively almost instantaneously.

This number – seven plus or minus two is the cognitive span of the average human being.  Lower level staff are likely to have a span of around five while the more intellectually gifted may have a span of nine.  All will start to choke on ten or more and no intelligent interpretation becomes slower and slower as the number increases – visualize making sense of a pie chart with thirty slices – it is impossible.

Working within the constraints of cognitive span we find that posting is MUCH faster and MUCH more accurate, interpretation of reports, dashboards, graphs, etc is much faster and more accurate, drill down is built into the underlying data and query, reporting and analytical software tools FLY over the information facilitating swift and agile inquiry and opening the door to sophisticated models and analysis that are totally outside the realms of possibility with more mundane information lists.

Better, faster decisions enable better more profitable more effective organizations and enhance and accelerate competitive gain and strategic growth – this is the way if you want to be the leader and not the follower in your industry segment.

Notice that the essence of your business is NOT necessarily the essence of your competitors business in the same industry – if it was you would have merged long ago – so their strategic taxonomies are NOT the strategic taxonomies of others in your industry.  Poaching other peoples taxonomies, while seductive is really FALSE ECONOMY!

Your strategic taxonomies will form the basis of information presentation for decades to come and so it behoves executives to make the investment necessary to CRAFT a solution unique to your organization with the most highly trained team possible.


9.  A long term long range view of direction

For this reason strategic taxonomies are crafted with a five, ten or even twenty year view of where the organization is going.

"How can you say that?" I hear you ask.

Well, truth is, in my experience, when you get an executive team in a boardroom in the right state of mind they DO have a long term view – it does NOT have to be exact BUT they can usually give you broad brush strokes of where growth and acquisitions might occur and where they are unlikely to occur – then just leave gaps in your code schemes in the logical places to accommodate this growth – it really is that easy!

So, in short, strategic taxonomies are an essential element of the information resources of any organization that in any way aspires to be a major player in the years ahead.

Do you want to be the target of an acquisition or the organization doing the acquisition?  It could have a profound impact on your future!


Section 2.4

What is an engineered taxonomy?


We have defined taxonomies and now we have defined strategic taxonomies, so what is an engineered taxonomy?

Well, what is engineering?

I set out in 1989 to "bring the disciplines of engineering to the IT industry" and that remains my essential goal.

I have consistently explained this goal as "when you go to an engineer to design a bridge you get the bridge you asked for and IT STANDS UP".

I have amplified this over time with the realization that:

Engineers do NOT design bridges to stand up

--> They design bridges NOT to fall down

So, an engineered taxonomy is a taxonomy designed NOT TO FAIL!

I have done a huge amount of work around this goal and, in the process, come to understand that strategic engineered precision taxonomies (SEPT) are an essential and integral part of ERP, datawarehouse (DW) and business intelligence (BI) configuration and operation.

In fact, I have come to conclude that if you do not have SEPT in your implementation you will NOT achieve the potential of your investment.

It is that simple!

So then, WHAT is an engineered taxonomy?

1.  Rigorous

By rigorous I mean "no short cuts" – analyse every table and maintenance screen of every module of every system that makes up the entire information environment and be thorough and dogmatically scrupulous about analysing every single information item and then coding it.


2.  Systematic

Start at the beginning and proceed till you get to the end, you may need to iterate two or three times to build the complete picture.  Structured system walkthrough's are the order of the day.

Make sure you visit every component.

Build every taxonomy systematically, hierarchically, in a structured way – hierarchy is by its nature systematic.

Do not use personnel or consultants who do not have a proven track record of working systematically.


3.  Detailed

Engineers design bridges down to "the last nut and bolt", engineered taxonomies are the same.

There must be a logical code bin for every piece of information at the most detailed level.  Throwing large numbers of diverse transactions into one information bin is absolutely out.

The metaphor of screws in a hardware store --> arrange all information in precise, small bins


NOT large buckets

Which is the norm in nearly all ERP implementations I have ever seen!


4.  Comprehensive

Cater for ALL reasonably foreseeable eventualities.

How do you do that? you may ask.

Well, start by using ALL the existing data as a "brainstorm list"—make sure that everything that has ever been encountered before is accommodated in your new taxonomies.

NOTE – I did NOT say copy those lists, I said use them as a source of ideas.

Copying old lists is the single biggest reason so many new ERP implementations are a mess and combining lists from several other implementations is a guaranteed way to fail.

Then get ALL the different knowledge and experience sets that represent the information space in a room in a workshop or series of workshops and challenge them to think about EVERYTHING that might possibly occur in that particular information set.

Then add structure to that list, NOT necessarily with all the parties present, typically a skilled facilitator will work alone or with one senior business representative to build comprehensive hierarchies that cater for all the information gathered during the brainstorm session.

Committees and teams are NOT good at building hierarchies, do not even attempt it!

Once you have a solid hierarchy test it with a few of the people who were in the brainstorm session and once you have refined the hierarchy in response to their input take the hierarchy to the whole team for review.


5.  Precise

I have already touched on precision and it is discussed in more detail in a following section.

Precision is central to what is being described here.

We live in a precise world.

Our houses are built precisely, our cars are manufactured precisely, wherever we go we find precision, except in the information lists that drive our ERP's, data warehouses and business intelligence environments!

Those software systems are PRECISION MACHINES and precision machines only produce valuable outputs when they are used precisely and fed precise inputs.

It is a massive delusion of the business information space that systems fed with sloppy, illogical and badly structured data can produce precision decision support and business operation outcomes.

It is an even bigger delusion that personnel who have not be trained in depth in precision and discipline can produce precise configurations.

If you want a high value outcome then it is in your best interests to utilize the most disciplined staff who understand precision as an integral part of their training and day to day practice.


6.  Multi-disciplinary

Engineers work in multi-disciplinary teams.

It is vital when developing engineered taxonomies to mobilize multi-disciplinary teams.

It is no good expecting just Finance or just Operations or just Human Resources or just … to produce a comprehensive engineered taxonomy, all the disciplines in the business who have knowledge and experience that has a bearing on the taxonomy MUST be engaged with during the development of the taxonomy.

AND leadership of this process, or at least custody of the leadership of this process must rest with an executive reporting directly to the CEO and the CEO MUST recognize that he or she is the custodian of the integrated view of the business.

Facilitating and consulting with all disciplines takes time, costs money and requires skilled high level facilitation from a facilitator who understands the multi-facetted nature of business and is able to engage effectively and intelligently with ALL role players and ALL stake-holders.

Complex engineered systems are designed and built by teams managed by mature, highly experienced, highly skilled engineers who know when to call in other specialists.

Engineered taxonomies should be designed and built the same way.


7.  Sustainable

Engineered taxonomies are sustainable.

They are sustainable because every effort has been made to anticipate ALL future growth and information need scenarios.

They are sustainable because high level executive strategic input has engaged with the taxonomy to ensure that it fully takes account of all foreseeable growth.

They are sustainable because hierarchies and code schemes are spaced out and gap coded to accommodate reasonable growth.

They are sustainable because they are designed from the "ground up" to be sustainable.


8.  Reliable and dependable

Engineered taxonomies are reliable and dependable because all the preceding HUMAN ACTIONS result in reliable and dependable outcomes.

An engineered "anything" is the result of meticulously directed, highly trained human creative talent mobilized in systematic disciplined thinking and doing that produces things that are reliable and dependable BECAUSE they were designed by professionals to BE reliable and dependable.

The design, configuration, deployment and operation of any major computerized system, be it an ERP, a data warehouse or a business intelligence solution is FUNDAMENTALLY an engineering endeavour and should be managed accordingly.

Strategic Engineered Precision Taxonomies are a fundamental component of an engineered computerized information system that is designed NOT to FAIL.


Section 2.5

What is a precision taxonomy?


Having defined Taxonomy, Strategic and Engineered we are left to define "Precision".  What is a "Precision Taxonomy"?

1.  A world of precision -- the screw metaphor

In the previous section reference was made to the organization of screws in a hardware store.

In the event that you require, for example, 30 mm, 8 gauge, countersunk head, slotted, brass plated wood screws in order to fasten hinges to a door you expect to walk into the hardware store and find the screws all neatly ordered in containers organized in terms of ALL the above attributes.

You expect to find the screws corresponding to all those attributes arranged so that ONLY ONE SCREW TYPE is contained in every container.

If you were presented with a large drum and told to tip the contents out because the screws you wanted were "certainly in there" you would turn around and go to another hardware store.

In the information context -- for "large drum" read "large spreadsheet".

A precision taxonomy has discrete information bins for every possible combination of attributes that can possibly occur.


2.  Precision language and abbreviations

As discussed in the definition of a Taxonomy, a Taxonomy is a "semantic", that is a "word" structure that describes a particular range of information.

In order to do this we require precision language and, since we cannot always fit a complete language statement into a single description a precision Taxonomy quite frequently requires the use of abbreviations.

Assuming the taxonomy is being developed in English the taxonomist MUST have excellent command of English.  If they are developing for another language they must have excellent command of that language.  For the purposes of this article I will assume that English is the target language.

"Factory" is NOT the same as "manufacturing" one of the semantic errors that I frequently encounter.

The languaging of the entire hierarchy down to the level of the posting line builds an English phrase that more fully describes the detail of what should be posted to the lowest level in the hierarchy.

The choice of language must be lucid and NOT subject to interpretation.  Ten people should interpret the hierarchy the same way.

Where alpha-numeric coding is used codes should, as far as possible, be mnemonic – i.e. the code letters should correspond to the letters of the words in the line of the hierarchy that is being coded.

Knowledge of the difference between vowels and consonants, verbs and nouns is all necessary in selecting the words and code letters to use.

Note also that with precision hierarchies the headings in the hierarchy become the headings on reports, graphs and models thus doing away with the need to manually code such items.  Thus the wording must be chosen, not just for the purposes of ease of interpretation by the person posting but also with regard to ease of interpretation for the person querying the data.


3.  Precision hierarchies

As noted previously, hierarchies should be structured with ideally between five and nine line items at any level of the hierarchy.

Constructing this language again requires an intimate understanding of the language being used AND the concepts behind the language so that appropriate and practical groupings can be selected.

Frequently the taxonomist will be called on to split lists of more than nine items into two categories or groups and to combine lists with less than five items into one group.  Frequently this can require mental semantic and logical gymnastics in order to arrive at sub-lists that make sense to all the people using the Taxonomy.

Once complete all the people reading a Taxonomy should look at it and have an "Aha moment", that is, they should look at the Taxonomy and say "Yes, that is obvious, that is my business" – in all my experience of doing Taxonomies over more than twenty years it has consistently been my experience that what seems obvious at the end was far from obvious at the beginning and has taken FAR MORE time and effort to achieve than seems reasonable to those who were not involved in the semantic and logical manipulation required to arrive at a really high quality taxonomy.


4.  Model the real world

Ultimately, as noted above, the Taxonomy must "model the real world", readers should see their organization in the Taxonomy, it should make perfect sense.

Once it does the default reports make perfect sense.

The posting is easy, fast and effortless.

Operators rapidly learn the codes and therefore post directly without invoking drop down lists by directly typing in the code.

Then advanced reports, dashboards and models become easy to develop and maintain and the value delivery of the information system investment, be it ERP, DW or BI explodes literally exponentially as advanced users accustomed to slogging through illogical unstructured data suddenly find that all the techniques they have longed to use become readily applicable.

Executives, managers and supervisors at all levels suddenly find themselves equipped to ask more difficult and deeper questions, to think more critically about the business and to make BETTER DECISIONS and therefore to ADD MORE VALUE.


5.  Precision code schemes

In the same way that the hierarchy must be constructed with precision language in order to model the world to the human being the code scheme must be constructed with comparable precision in order to create a logical one to one equivalence of the logic in the English hierarchy to the binary world of 0's and 1's which is ALL the computer understands!

There are a wealth of conventions that are applicable to code scheme design.

The use of gap coding, when to use numeric only, when alpha, when alphanumeric and when mnemonic and when not.

The use of delimiters for ease of reading and ease of remembering.

The use of trailing periods "." or other characters to facilitate reading and MUCH MORE IMPORTANTLY to enable query and reporting tools to summarize the data rapidly and accurately with APPARENT knowledge of the hierarchy are vital.

Other devices include forcing "Other" to the end of the list where it is required and coding it either "9" or "z" in order to make sure it stays there and so that simple reports can be written to track the use of "Other" and manage it.

When it comes to major code schemes such as the "Cubic Business Model" in the General Ledger or the Item Master / Product Master / Materials Master the semantics and coding become an order of magnitude more complex and more challenging.

Precision coding is an art in itself.


6.  Precision standards and conventions meticulously and consistently applied

So we see a range of precision standards and conventions which must be meticulously and consistently applied if the full benefit of Taxonomies is to be realized.

Notice that only one deviation from standard in the hierarchy or the code scheme can compromise the ease of use of that scheme.

It takes only a small number of careless or ignorant errors to take a Taxonomy from being a Precision Taxonomy to an increasingly unstructured list and all the hard work in developing that Taxonomy can be very rapidly neutralized.

If the Taxonomy is handed over to be implemented or operated by personnel who have not received proper training in SEPT or who do not have strict discipline and performance measures geared to ensuring they maintain standards, the standards will deteriorate rapidly and the expected benefits will be lost.

So SEPT is not just a theory or a convention, it is a culture of disciplined use of systems driven from the CEO downwards.  The smallest deviations from standards should be immediately trapped and remediated and the necessary controls or education introduced in order to prevent recurrence.


7.  Supported by precision software

It turns out that it is extremely difficult for even someone who is well trained in the principles and disciplines of SEPT to maintain standards in the long term or even to build absolutely consistent hierarchies and code schemes.

To this end JAR&A are currently developing a suite of software to assist with both the construction and maintenance of SEPT solutions.

Precision Taxonomies, as with all other areas of precision in life offer huge benefits and, as with other areas of precision, deviation from standard causes major disruption.

I have absolute certainty that Strategic Engineered Precision Taxonomies are THE way of the FUTURE in business information systems and I look forward to discussing this vision with you!

Section 2.6

The case for Strategic Customization


In the context of ERP, customization tends to be a swear word, however, in my experience there ARE situations where customization IS justified.

I define this customization as "Strategic Customization" it is limited scope, highly focussed precision customization of small components that exploit the Strategic Engineered Precision Taxonomies (SEPT) to create highly valuable functionality at a fraction of the cost of alternative courses of action and which generate very significant business gain relating to the essence of the business and how it thrives.

I want to refer specifically to the following image that I have used regularly on my courses and in Pulse Measurement presentations to Executive Committees in recent years.

The vertical scale represents strategic value, support for high level, high value decision making, return on investment, executive satisfaction and excitement – any measure which reflects a real satisfaction with the investment.

1.  The left-hand scale -- common practice

The left hand scale of 0 to 10 represents the standards that I typically see applied to ERP implementations.

It is characterized by high levels of executive frustration, inability to get answers when they are needed or at all, high system operating costs – senior consultants who make a living hacking things to keep the system going, high levels of customization, high levels of things done outside the system, no standards, etc.

This scale of mediocrity results from the lack of a high level strategic view in the original implementation – support for the essence of the business and how it thrives, the lack of rigour in the implementation (lack of an "engineering approach"), all the things I talk about at my briefings and courses.

The most fundamental weakness of these implementations is the lack of what I term strategic engineered precision configuration built around strategic engineered precision  taxonomies which is the essence of the middle scale.


2.  The middle scale – taxonomy excellence

The middle, green, scale represents what is made possible with outstanding taxonomies – this includes things like “we have so much high quality management information it is fantastic”, “the audit fees have been slashed by 75%”, "we are operating with less staff" / "getting much more done with the same staff", "staff at all levels are strategically aligned", "the entire enterprise is running leaner and much more efficiently AND effectively", "this is one of the best investments we have ever made", "we should have done this years ago", etc.

This outcome results from strategic engineered precision configuration built on strategic engineered precision taxonomies.

Even a mediocre implementation on this scale is likely to produce a better business outcome than an excellent implementation on the left-hand scale.


3.  The right-hand scale – strategic customization built on taxonomy excellence

The right hand, blue, scale represents what is possible if we add “strategic customization” to the mix building on opportunities created by the taxonomies and precision configuration.

It is vital to stress that "strategic customization" relates to customization that supports "the essence of the business and how it thrives" – customization that will not do this is NOT strategic and should be avoided.

Strategic customization relates to small pieces of very clever software or very clever system modification that ONLY works if there are precision taxonomies in place and well maintained.

Strategic customization allows the system to be effortlessly tailored to the operation of the business for limited expenditure in ways that most implementers think are impossible.

An example of strategic customization was a case where an investment of R250,000 in custom software allowed standard functionality in the ERP to be used to budget and project manage marketing across thousands of products and thirty cost bins for a distribution and brand management company that allowed that company to secure the business of one of the top brands in the world resulting in a nearly 15% increase in value of brands managed – in other words it supported strategic growth.  It also delivered high levels of satisfaction to owners of existing brands that were being managed.

The sort of customization that characterises most ERP and Data Warehouse implementations is so far removed from this that it is vital that you do not let that bad experience colour thinking to resist strategic customization.

Strategic customization involves the investment of a small amount of time and money to fine tune an ERP system that has cost hundreds of millions of dollars to develop to fit the target business far more closely and more effectively through primarily use of standard functionality.

The return on investment on really valid strategic customization is huge and it is only possible with precision taxonomies underpinning it.

This is where the opportunity lies for any ERP investment to produce massive return on investment measured in terms of strategic competitiveness in the market place, the ability to run a leaner and more effective and efficient business, undertake strategic acquisitions quickly and efficiently and deliver a return on investment for the ERP implementation that is visible and understood by all in your organization without any calculation.

If this is all done with an outstanding implementation that conforms to the standards set out elsewhere in this document then the value to your organization will be far beyond anything that current paradigms indicate is possible.



I have total certainty that strategic customization is the cherry on the top of any ERP implementation and will deliver the highest return and you should all do what you need to do to ensure that the project executive and then the business are on-board with the value of doing this.

In general, the investment in strategic customization is likely to be small relative to the total cost of any significant ERP related project cost.

Section 2.7

Defining the taxonomy approach


Following are the major components of the taxonomy approach for reference:

1.  The approach is focussed on facilitating executive level strategic decision support

--> operational and tactical decision support at all other levels of the organization follow automatically

--> keep in mind that one bad decision or consistently bad strategic information can weaken or destroy a business while consistently exceptional decisions ahead of the competition will enable a business to thrive.

2.  Comprehensive capture of ALL real world attributes of ALL data elements adds a limited second order cost overhead to the project during configuration but provides huge capacity to answer obscure questions long into the future.  These attributes also drive maximum intelligence in supporting software and code generation algorithms.

3.  Highly structured, highly logical taxonomies that model the real world with a five to ten year executive perspective ensure practical and easy to use code schemes which reflect in the enhanced use of the ERP and other software at all levels of the organization.

4.  Consistently fine granularity of code schemes that model the real world ensures that data can be grouped in all possible ways in order to answer questions that had never previously been thought of.

5.  Comprehensive and rigorous conventions including indents, capitalization, trailing periods, gap coding, groups of seven plus or minus 2, etc enable sophisticated and clever software to be developed, radically improve speed of query and report development and facilitate complex analysis way beyond that which is conventionally achievable.

6.  By ensuring that a consistent strategic executive view of the organization is the default view for every user of the system and every report and query throughout the organization a powerful strategy enhancement spin-off results.  Strategic and competitive efficiencies result.

7. Reports and queries are orders of magnitude easier, faster and cheaper to create and more powerful so everybody uses the system and the system therefore becomes effectively self-auditing with resulting savings in audit fees as a spin-off to the major operational and strategic benefits that result.

8. Workflow, bill of material and other configuration become easier, faster and more amenable to partial automation and more precise with resultant operational efficiencies and increased output with the same head count or reduced head count for the same output.

Note that workflow (process) is an OUTPUT of the taxonomy approach and does NOT lead the project – the taxonomy approach dictates a fundamentally different project design to the conventional ERP or other business information system implementation project.


9.  High levels of precision of master data configuration and maintenance become easily achievable with specialist software resulting in major operational and strategic gains.

10. Highly creative and highly cost effective strategic customization becomes easily and cost effectively achievable resulting in exceptional strategic and operational gains.

11.  All of this is achieved at greatly reduced life time operating cost.

The exact mechanics of achieving these components of the approach will be managed based on the way I have been doing taxonomies and running projects for over 22 years.

Section 2.8

Comparison between a full-house ERP SEPT re-implementation

and a Data Warehouse SEPT implementation


At various points in this document I make reference to re-implementation of your ERP with Strategic Engineered Precision Taxonomies and Configuration and SEPT implementation of your Data Warehouse leaving the ERP largely untouched.

The concept of ERP re-implementation is seductive, most organizations are taking major strategic pain with their ERP's and therefore the logical thing APPEARS to be to re-implement.  For quite some time I was seeing this picture and advised a number of clients to go this route.

At the same time, I worked with another client who successfully embarked on a Data Warehouse only implementation.

Then a client of mine, against my recommendations, decided to do a full re-implementation, I bought into the decision and worked with them to develop the project plan based on a fully fledged SEPT Configuration coupled to a fully-fledged systems engineering implementation laboratory as discussed elsewhere in this document.

The client was an engineering firm and the CEO, who wholeheartedly committed to leading the project, was also an engineer.  With great thoroughness we set about planning the project and he worked up a full cost analysis.  By the time we had allowed for all costs, including temporary staff, cost of senior staff pulled out of the business, comprehensive laboratory testing, etc he arrived at a final budget of around 50 million against my UPPER BOUND estimate of 30 million – I was floored AND seriously embarrassed that I could be so far out.

At the same time, working with another much larger client where the cost of re-implementation would have been in excess of 500 million the penny dropped – the major cost of a full re-implementation of an ERP system involves overhauling and reconfiguring the 80% of the operational and tactical configuration, including workflows (processes) and other mundane components that drive 20% of the value of the investment.

SEPT focuses on the 20% of the investment that delivers 80% of the investment value – BUT, in an ERP re-implementation you have to ALSO do the 80% and so a full SEPT re-implementation of an ERP is likely to be about five times the cost of doing a fully-fledged SEPT Data Warehouse and Business Intelligence implementation against the existing ERP with subsequent trickle down managed by the business!

I have therefore concluded that it is almost impossible to justify a full re-implementation unless the ERP configuration is really so shockingly bad that there really is no alternative but to scrap it and start again.  In 22 years of evaluating ERP implementations I have only twice advised a client to scrap the implementation.  In all other cases I have advised the client to remediate the implementation and "make it work".

The following tabulation provides comparison of the characteristics of these two alternatives:


ERP re-implementation

New Data Warehouse and BI implementation


Trash the existing ERP implementation and configure from scratch as a fully-fledged SEPT ERP implementation project retaining only small components of existing configuration

Retain existing ERP, DW and BI implementations and develop a new SEPT Data Warehouse alongside the existing installations


Big bang commissioning – I hold the view that it is not viable to commission a fully integrated system module by module and still retain full integration – the installation must be fully established and rigorously tested and trained in the laboratory before going live in the business and most, if not all, modules must be commissioned simultaneously

Incremental commissioning of the new SEPT Data Warehouse on an "as required" basis which permits "before" and "after" states to be compared for every element


Trickle the new SEPT taxonomies down into the ERP over a number of years, also on an "as-required" basis


High risk project


High risk mitigation cost (laboratory and level of executive involvement)

Low risk – in fact, almost no risk


All or nothing

Incremental "as required"


Redo the 80% of the ERP implementation that is working but delivering only 20% of the strategic value in order to be able to redo the 20% that will deliver the 80% of value


Most of the rework is NOT strictly necessary

Move directly to the high value investment – the 20% that will deliver 80% of the strategic (thrive) value



Strategic information delivery will take years before it commences

Strategic information delivery can commence within months



Total cost will be of the order of 20% or less of the full cost of re-implementing the ERP


Consider only in extreme cases of seriously sub-optimal ERP operation or entirely obsolete legacy systems (then strictly an implementation, not a "re")

Virtually every organization of any size will derive huge benefit from this




There really is no contest

It is almost impossible to justify this option



This option will pay for itself many times over in just about any organization of even modest size


As you can see, there is a huge case to be made for retaining your existing investment and simply establishing a new instance of your Data Warehouse alongside the existing installations and building an excellent, high value SEPT Data Warehouse and Business Intelligence solution.  Or, if you do not currently have a data warehouse to acquire one now...


Section 2.9

SEPT Examples


Strategic engineered precision taxonomies (SEPT) can be developed at a wide range of complexity and for a wide range of applications.  They also create opportunities for all sorts of elegant software functionality to be created at modest cost which delivers high value strategic outcomes for business.

Following are examples of SEPT applications:

1.  Very basic

Very basic taxonomies with only a few entries for example – MoreGolf gender, other


2.  Simple

Slightly longer lists which provide greater flexibility and options but which are still quick and easy to define and which can open the door for diverse custom analysis and reporting for example ASCO and EOH Creditor reason codes, other


3.  Geographic

Geographic lists should follow some logical progression that reflects the grouping of locations from a practical physical distribution perspective for example ASCO Geographic Regions, Foodcorp Locations and Kangra locations


4.  Intermediate complexity

Custom lists for example ASCO Product Categories, ASCO Marketing Expenses, Foodcorp Functions


5.  Barcoded product

Product categorization through the Product Class linked to the EAN Barcode


6.  Limited product categorization

A product catalogue or product class that does not go to the full level of product classification for example MoreGolf


7.  Master Chart of Accounts

The Chart of Accounts is a very specific and very specialized financial taxonomy for example Foodcorp and MoreGolf


8.  Cubic Business Model

The cubic business model is a very specialized and very specific three dimensional financial taxonomy for example MoreGolf, set-up in ERP – ASCO


9.  Cubic business Model matrix

The cubic business model enables a very specific geometric presentation of the model for example MoreGolf


10. Complex product list

Complex product lists are necessary to catalogue the content of an Item Master, Material Master, Product Master and similar for example Kangra and Robor


11. Mobile plant maintenance

Mobile plant maintenance requires very specific taxonomies for example Kangra


12. Intelligent hierarchy based maintenance

The intelligence in a precision hierarchy allows software to maintain the hierarchy and code scheme by leading the operator through an intelligent interaction based on the configuration associated with the hierarchy for example ASCO


13. Intelligent hierarchy based product configuration and maintenance

Once an intelligent precision (SEPT) hierarchy has been developed, for example for a Product Class, this intelligence can be used to drive precision configuration by cascading defaults down the hierarchy as new products are added, for example ASCO


14. SEPT enables clever customization

Once a SEPT taxonomy is in place it allows reuse of the taxonomy in another module to create virtual integration between modules that are not in any way integrated, for example ASCO Projects and Contracts generation of projects to manage marketing expenses.  A similar approach can be used for managing mining production.


15. Project work break down structure with reusable modules for management purposes

The use of carefully designed taxonomies for project plans with reusable activity blocks at the lowest three levels of the code scheme allows precision project management, for example Medicross.


16. Universal filing code schemes

Fundamental to the ease of document retrieval in any organization is a universal filing code scheme that is used on local and network hard drives, physical files, Outlook, etc for example JAR&A hard drive, projects and Outlook


17. Project filing linked to work breakdown structure

On large projects filing of documents is a key challenge, the filing code scheme should be linked back to the work breakdown structure for example Medicross


18. Random alpha lists

Random alpha lists like customers (debtors), suppliers (creditors)


19. Project numbers and other sequential numeric codes

Sequentially generated lists such as project number lists where the use of check digits is highly desirable


20. Other

The above list is fairly comprehensive, I cannot currently think of other categories of example although there are almost certainly other categories of example that I cannot think of.

The above is list of all examples I can think of.  I hope to produce more detailed material with examples in due course.

Random Selection of Articles by Dr James Robertson

Dr James A Robertson PrEng

Business Systems NOT delivering?

Call the Business Systems Specialist

Dr. James Robinson

Dr James A Robertson -- has been involved in the effective application of Business Information Systems, including but NOT limited to ERP, since 1987 and in the profitable and effective use of computers in Business since 1981.

Drawing on a diversity of experience, including formal military training in Quick Attack techniques at the Regimental Commander level, Dr Robertson has developed highly effective methods of investigating any sub-optimal Business Information Systems situation -- be it an established system or a stalled project or any other source of Executive frustration -- quickly and concisely diagnosing the root cause of the problem and prescribing concise practical actions that Business Executives can effectively act on see the Pulse Measurement page and also the Sample Reports page for redacted real reports.

He has also developed highly effective methods of strategically enriching systems to unlock the full potential of existing investments, see the Precision Configuration page and couples this to architecting small pieces of clever software that harness the full potential of your investment, see the Software page.

If you are having problems with your systems, your project or your IT Department, call The Business Systems Specialist

Business System Failure is RIFE -- we offer insight into why this happens AND WHAT is required to prevent it.

Failure is at epidemic levels with massive damage done to client companies -- if you are NOT aware of the extent of the problem please visit the About Failure page for a catalog of major failures running to billions of Pounds and Dollars.

All evidence indicates that the established players do NOT know how to deliver stable, reliable high value solutions that WORK.

There HAS to be a better way!

This website provides information relating to that way with a large collection of white papers, presentations, standards documents, etc that you can use to start bringing the situation under control

We also offer high level advisory services with regard to the application of the principles advocated on this website

We offer an ENGINEERING APPROACH to addressing these issues

Click here to read more about the Engineering Approach

By Engineering I mean the formal, structured, highly disciplined, highly systematic, highly practical approach that consistently delivers results in ALL areas of human endeavor where formally trained and certified engineers are the ONLY practitioners permitted to operate -- think large buildings, factories, motor vehicles, aircraft -- highly complex systems that work at a level that we take it for granted that they WILL work and where failure is all but unthinkable and, when it happens, attracts immediate public attention and rigorous investigation directed at ensuring that such failures are prevented in the future -- in fact, everything that the management consulting industry that implements complex software systems is NOT

This approach is discussed further on the Engineering Approach page.

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Cnf 068 Discovery -- An Essential Element of SOA Implementation

The importance of effective discovery and the issues that arise from inaccurate discovery including understanding the importance of communication in the first hour of engagement
Std 009 Procurement: 01 Request for Proposal for Business Systems Solution

This is the heart of the tender and contains a large number of tough clauses that are directed at ensuring a realistic bid with a robust platform for realistic negotiation and a tough contract that is directed at ensuring performance

There is a more detailed version of this document at the end of this page for larger projects with a more detailed procurement process

Cnf 000 List of Conference and other Public Presentations

Comprehensive list of Conferences and Presentations by Dr James A Robertson
Cnf 084 ERP and IT in Strategic Management

The application of ERP and IT generally in strategic applications, how to configure systems from a strategic perspective and how to manage them from a strategic perspective
Cnf 073 Critical Factors for I.T. Success in a Declining Economy

Ways of managing Information Technology to obtain longer investment life and greater benefit and return on investment from existing systems and infrastructure

Book -- The Critical Factors for Information Technology Investment Success

In 2003 I undertook an in-depth analysis of all the information and experience that I had gathered with regard to the factors giving rise to Business Information System failure including ERP and general IT and classified this information into a number of categories including "The Factors Causing Failure" and "The Critical Factors for Success" based on this I developed a two day Course "The Critical Factors for Information Technology Investment Success" which is still offered today.

Based on this I wrote the book of the same name, which is available in electronic form here for download:

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Table of Contents


About Dr James A Robertson PrEng -- The Business Systems Doctor -- and Other Topics

Catalogue of Major Business Information System Failures

About the Engineering Approach

James Robertson's Value Add

Attributes of a HIGH VALUE solution

Recognizing Business System Failure

The Critical Human Foundation

Old Software IS Viable

From South Africa

Competencies of Dr James A Robertson PrEng

About Professor Malcolm McDonald

Table of Contents

About my relationship with the Almighty Creator, Yah the Eternally Self-Existing

Comments relating to the Business Systems Industry and other topics

Testimonials and other positive material regarding James Robertson

Reference Articles

List of Articles

Article Catalogue

Achieving High Value Business Information System outcomes

Executive Custody -- What is it and HOW do you get it?

The REAL Issues in Integrated Business Information System Success

Part 1: Introduction

Part 2 -- Mythology and Lack of Executive Custody

Part 3 – Strategic Alignment and Precision Configuration

Why your ERP is NOT delivering and HOW to FIX it

IT Project Management

Pulse Measurement

CEO Anthony Lee Comments on his experience of the Pulse Measurement

No Charge Guarantee on the Pulse Measurement Service

Examples of Pulse Measurement Outcomes

Critical questions regarding the Pulse Measurement™

The Pulse Measurement Workflow

The Critical Factors for Business System (ERP+) Investment Success in the Pulse Measurement

Indicative Pulse Measurement Durations

What is a JAR&A Pulse Measurement?

Survival of the fittest – why it makes sense to measure the pulse of your business

Examples of Pulse Measurement Outcomes over 24 years

Sample Pulse Measurement Reports


Strategic Essence: The Missing Link in Business Information Systems

Strategic Essence: Overview

Strategic Essence: Part 1 -- Strategy Defined

Strategic Essence: Part 2 -- Differentiation

Strategic Essence: Part 3 -- The Essence IS Different

Strategic Essence: Part 4 -- The Essence should be the Point of Departure

Strategic Essence: Part 5 -- Discovering Strategic Essence

Strategy -- the Essence of the Business: What is it and how do you develop actionable strategic plans?

Simple Steps to Increase the Strategic Value of your ERP Investment

Free Strategic Snapshot Toolset and Manual

A strategy focused planning system beyond traditional budgeting

Tough IT and ERP Procurement and Contracting that Works

Robust Business Systems Procurement

Part 1 -- Introduction

Part 2 -- Bill of Services, Laboratory, Go-live Certificate, etc

Part 3 -- Executive Engagement, Bid Compliance, Adjudication and other matters

Procurement Documents

Guidance and Advisory Services

The Art of Project Leadership

Why Regular Communication with the CEO is Vital

The Business Simulation Laboratory

Precision Configuration and Strategic Business Information Architecture

Precision Configuration based on Strategic Engineered Precision Taxonomies

The JAR&A Cubic Business Model

Highly Structured Strategic Chart of Accounts -- a Vital Element of your Corporate Information Arsenal

The Product Catalogue -- an Essential Element of any Precision Configuration

Attributes -- answers to the questions you have NOT yet thought to ask

Case Studies of Notably Successful Projects with high value Precision Configuration

092 Doing things differently and better -- ASCO Case Study 2-- BPM Summit 2013

088 Strategic ERP Invesment -- ASCO Case Study -- Service Management Conference and Exhibition Africa

026 Information Architecture and Design of FIS for Rennies Group -- Financial Information Systems Conf

018 CRM Risk Control: Designing and Implementing an Integrated Risk Mgmt Sys -- Integrated Risk Mgmt Conf

011 V3 Consulting Eng: Benefits of MIS to Professional Practice -- SAICE 15th Ann Conf on Computers in Civil Eng

Strategically Enriching your Business Information Systems

Part 1 -- Introduction

Part 2 -- Principles of Data Engineering

Part 3 -- Steps in applying these recommendations

Simple Steps to increase the strategic information value yield from your Business Systems Investment

The Full JAR&A Taxonomy Manual

Part 1: Introduction, Problem Statement, Definitions and Examples

Part 2: Why Use JAR&A, Required Knowledge and Experience, Cubic Business Model and Chart of Accounts and Taxonomy Software

Part 3: How to do it, Case Studies and White Papers and other References

Example General Ledger Manual

Business Process -- Irrelevant, Distracting and Dangerous

The RIGHT Approach

Custom Strategic Software Design and Oversight of Construction

Standards for Custom Software Specification

What IS Software?

IT Effectiveness

Organizing Outlook

Critical Factors for I.T. Success

A Moral and Ethical Dilemma -- Systems that Fail

Case Studies examining Business Information System failures

The BBC Digital Media Initiative Debacle

The Bridgestone -- IBM Conflict

Speaking and Training

Showcase of Conference Presentations

Most Viewed Presentations

Briefings and Seminars

Why your ERP/BIS is NOT delivering and HOW to FIX it

ERP and IT Procurement that Delivers Results

The Critical Factors for IT and ERP Investment Success

Other Seminars

Conferences and Public Presentations

Conferences 80 to 99 -- 2009 to Present

Conferences 60 to 79 -- 2005 to 2009

Conferences 40 to 59 -- 1996 to 2005

Conferences 20 to 39 -- 1994 to 1996

Conferences 01 to 19 -- 1989 to 1994

On-Line Seminars (Webinars)

Webinar on Preparing and Presenting Webinars

Contacting James A Robertson and Associates Limited