It Counts. No, it doesn’t.
November 6th, 2009 by clmmatrix
For years we’ve been hearing about the day when every product will contain a microchip that disseminates information. And, for the most part, that day has come. There are microchips in our cars and tires to alert us about potential problems, there are microchips in our phones, elevators, doors, etc. And, it looks like this trend is about to get a boost. Xerox just announced a big breakthrough in its “printable electronics” technology.
Like our Easy Tags, this technology will allow RFID tags on every box of cereal, every frozen food package, and every can in a supermarket. So now all we’ll have to do is walk past the cash register to check out. And, our refrigerators will probably be able to produce a grocery list in real time — just before we run out of things.
This type of “smart tracking” is also pretty useful in the workplace. Now, we might not care so much about keeping track of every pencil and paperclip, but, it comes in very handy when you want to track things like revenue and risk.
Think about the contract process for many companies…A contract gets initiated and there are typically a few adjustments to be made along the way. The client wants just a little extra added. The salesperson needs authorization in order to accommodate the request. He emails his boss who realizes he has to get approval from the product team. The boss emails the head of the product team who is busy and can’t get right back to him. Several days and numerous emails later, the boss picks up the phone, the product guy agrees the addition is okay, the contract is adjusted and the sale is finalized.
The quarter is ending and everyone is happy that the quota has been made. Like kids waiting for Christmas morning, the sales team eagerly awaits their pats on the back.
But, the sales team didn’t make quota. Turns out the finance team wouldn’t allow that transaction to be recognized. There was no documented evidence the chain of command followed corporate policy.
So, instead of a team of happy campers, we have a wee bit of dissention between sales and compliance.
The sale guys are right — the revenue should count. They got the necessary approvals.
The finance guys are right — the revenue shouldn’t count. They have no proof that required approvals were granted and without out that there’s the risk of material weakness in corporate policy. Something that will send a cold chill down the spine of the analysts community.
Why can’t we create “smart contracts?” Why can’t we apply some sort of RFID tag to every transaction so we can get better visibility into what is happening? It would certainly beat submitting every email and recording each conversation that involved a contract.
The good news is, that this RFID concept does exist for contracts, maybe not in the same way it works for cereal boxes, but automated workflow rules and notifications create smart contracts and smart processes — eliminating unstructured, untraceable conversations.
As approvals are needed, they are logged into the system. An email alert goes out to the person who needs to take action. Rules can be set up to escalate the process too. If Person A misses the deadline to respond, the authorization request is automatically sent to Person B. Rules and corporate governance are built right into the system so no one has to ponder what’s acceptable, no one has to wait longer than necessary, no one has to be disappointed the sale didn’t go through and no one has to go to jail or answer to an angry public.
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