By Hernan Pardo
Carlos Marx envisioned that accounting would be increasingly important for business management. In Volume II of Capital, Chapter IV Circulation expenses, in numeral 1. b), it defines: “¡ Accounting, on the other hand, as an ideal control and compendium of the process, is more necessary the more social character this process acquires and more loses its purely individual character; it is more necessary, therefore, in capitalist production than in the scattered production of artisanal and peasant enterprises, and more necessary still in collective production than in capitalist production. “
Our intelligent business management system (IBMSYS) requires that all economic information be qualified by accounting concepts, contained in the account plan, and that its registration and evidence be made only as accounting transactions. With this we can achieve that “control and ideal compendium of the process” is total, using the necessary contingent and control accounts. As a result, a minimum of related information entities and a minimum of algorithms to be programmed are achieved.
The implementation and updating of current business management systems (ERP, CRM, SCM, etc.) requires titanic efforts because the cost and time involved and the chances of failing in the attempt traumatize the adequacy of companies to new technologies of information and telecommunication and the progress of international trade. To guarantee the success of these efforts, a small number of highly specialized consulting firms have been accredited, in exchange for rising costs and user dependence.
A simplified system is required that, due to the advanced synthesis of administrative theory, is more concise but deeper than current systems, achieving its easy understanding by the technicians and professionals in charge of business support areas so that They can implement and update it, preferably directed by the Quality Management Department, with the unrestricted support of senior management. The implementation and updating of business management systems should cease to be the privilege of highly specialized external consultants.
System oriented norms-based processes
Process-oriented business management has managed to close the gap between theory and business reality. The need to offer customers products according to their specifications or expectations and to maintain uniformity in the products or services of the same reference motivated the emergence of control, monitoring and quality management, It was a great success of the International Organization Standardization (ISO) manage to synthesize these theories in ISO 9000 because in a few decades it has been implemented in the vast majority of important human companies.
Companies implement it massively to improve production, achieve recognition and facilitate distribution. They should also implement ISO 14001, environmental management and ISO 45001, occupational health and safety management. Companies that have any relationship with human or animal feed should implement ISO 22001 for food safety management, etc. Towards the future the tendency is to continue simplifying these norms because their success has been due in large part to the fact that they managed to synthesize administrative theories, varied and contradictory at times, simplifying the creation of the global business network, taking advantage of the evolution of the technologies of information and communication, so that we reach the predominance of online commerce.
Accounting as a tool for conceptualization, registration and control of economic information
The vision of accounting as the mental image of the production process has great flaws in the current practice of business management systems, insisting on making separations derived from the tendency of accounting managers to limit their scope. With the new systems the accounting offices tend to disappear; accounting criteria of the administrators is required for the control and analysis of the information, the accounting record work is done automatically. It should not be allowed to consider some economic management registration systems as complementary or parallel to the accounting systems, use of the order accounts to involve them using the contingent and control accounts.
Expert system for implementation
ISO 9001 applies to all types of companies, the design and development of products and services is optional because there are companies that buy to sell without transforming, such as shops and service commissioners, others add some of their own complementary products or services, and many must be designing and developing in order to stay in the market. ISO 9001 can be applied to the entire business structure, the other norms clarify or add other specific controls.
By investigating, we will build a tree of possible implementations in such a way that, as it grows, it is more times that we will find a product ready to implement than the need to create new branches and sub-branches to satisfy a new type of Company. Interviewing the experts of the interested Company, in order to locate it in the implementations tree, can be replaced by access to the already registered information of that company in government or union censuses, tax returns, and records of purchase, sale and production declared. A government committed to standardization and simplification could well request all the necessary data for a rapid implementation of the IBMSYS. Thus we could evolve to expert systems and then to intelligent machines of implementation.
Transactional expert system
The business operation generates instances of predefined processes that combine information analysis and action decisions, when the information is completed and authorization exists, the system can automatically decide on an action. The actions can be of a single instant, like receipt of payments to an invoice or automatic liquidation of a depreciation, or they can initiate an operation that involves other multiple steps such as a credit sale or an automatic production order. In all cases, one or more offset sets of accounting charges are generated that optionally affect contingent accounts, such as annual sales budget or pending orders, and inventory accounts and their results (Assets, Liabilities, Equity, income and expenses of a period ). The affectation of Persons and Things can be determined by the accounts of the Asset, of the Liability, of the Patrimony or of the Debtor and credit contingencies involved.
The steps of the processes that imply an economic change contain descriptions, acronyms, format of the Form of visualization and capture of complementary data, format of the Report for printing and to store the complete transaction, and data of defined occurrence for each type of document that detail how forms, reports and imputations are generated. This will allow the creation of information trees to know how known information should be displayed and unknown information should be requested, how it should be accounted for and how the transaction evidence document should be constructed. That algorithm would be the core of the transactional expert system and would use previous data plus those supplied by the user, flags of the affected accounts and indicators of special deals. Specific algorithms by type of transaction would be terminated and new types of transactions could be added creating the step in the corresponding process, without increasing the code.
The preparation of interactive transactions must allow the procedure to be suspended, without losing the advance, when the user requires it, a transaction must be able to be prepared in more than one session and, in some cases, it must be able to be delegated to another user and also be able to collaboratively do between Multiple users For example, the preparation of the annual budget should involve the administrators of the different dependencies of the Company. Simultaneously several users must be able to be working on the budget, each in their area. Once these steps have been completed, the preparation must be transferred to a budget consolidation committee and the members of this committee must be able to work in all areas until the consensus is approved by this committee, and later by the senior management.
Let’s look at the general system flowchart:
The System Database
The data necessary to manage companies seek to meet the needs of all types of ventures. Proprietary systems such as SAP, mixed as Odoo and open and free software as Idempiere have been implemented in hundreds of thousands of Companies. But its databases are very complicated, Idempiere has more than 800 tables with many relationships that hinder their understanding and restrict potential volunteers to improve the code. Odoo has more than 100 that is 8 times more synthesized in its data than Idempiere. Our IBMSYS system has 26 tables, 4 times more synthesized than Odoo. How was it possible to simplify so much? Using the possibilities of the order accounts it is possible that all the economic information is recorded in accounting and it is also possible to have a unique algorithm to process all possible transactions in any type of company.
Let’s see how a database with 26 tables replaces the 832 of Idempiere and the 107 of Odoo without losing information. This is achieved by preserving the necessary entities to relate the information of Persons things and concepts, plus the information to control access to the system, the definition of productive and administrative processes and the registration of transactions. The rest of the information, specific to each type or subtype of transaction, is accessed only through some register or tuple of the relational entities, so those can be in a single file, which we could call Add-ons, managed in relative shortcut the structures of that information, the initial direction of recording and reading and the size. Robust database managers support this type of add-ons as part of the logical transaction, allowing the consistency of the information to be maintained, even in the event of a System crash. Thus, a simplified relational design and higher operating speed are achieved, and a variable design with which we can modify the structure of some data without modifying the code. The definition of the different complementary data needs by type of transaction is established and processed as additional information of a single unaltered algorithm, both for known types and for those derived from improvements or expansion of operations. The management of variable data in business was synthesized.
Let us see in a diagram the 26 tables with the necessary relations to easily access the information, except for the relations of the Companies table with the other tables shown in another diagram.
ER diagram, IBMSYS relational database:
Simplified data, entities (26) and relationships.
It is only necessary to establish the geographical locations of the Companies and their different dependencies, because that is where the Persons work, the third parties are served and Things are located.
Persons who establish business relationships begin to act as Companies. A Person may be related to one or more Companies, may serve as one or more IBMSYS Users. Each User can perform one or more Roles, totally or partially, according to the assignment of tasks of the personnel plant and the restrictions that the bosses can define.
Each Role can perform one or more steps of the Processes through Menus where those options are shown, pending issues and dashboards that summarize how the role is being played.
The Processes should correspond to the Norms that are applied in the Company, such as quality, environmental, labor, etc.
Persons related to the Company affect one or more accounts and an account may be affected by one or more Persons, this is expressed with the PersonsAccounts table that are related to the Persons and Accounts tables; Examples: Partners, Workers, Customers, Suppliers, Competitors, etc. Similarly, the ThingsAccounts table relates the Things and Accounts tables; Examples: Raw materials, merchandise, consumer items, fixed assets, logistic, financial, processing services, etc. Things have purchase and sale Prices that vary with time and other circumstances.
Sometimes it is necessary to see the accounting information grouped transversely, examples: Analysis of income and expenses by cost center or by consolidated projects that can group many products and services, for this we use the Categories table with 2 possibilities: related to the Accounts by table the CategoriesAccounts table, when it is required to analyze information of a lower level than defined in the Account Plans or Categories directly related to the AccountsPlans table. This relationship can be complemented by business dependence. With these relationships and taking into account that the historical accounting movement is in Imputations and InForce tables, times and amounts currently pending are in force, financial reports and dashboards can be produced.
The Assets, Liabilities, Equity accounts and their results make up the first attributable scope, that is, the imputations of a transaction referred to this area must always add zero (0). But the management of contingencies, for example, budget or pending orders, require other imputable areas because the imputations in each of these areas must also always add zero (0). This is defined in the AccountsPlans table ambitoimputa column.
Companies can be independent or be part of a group, move some Accounts through the PersonsAccounts relationship because each Company is a Legal Person.
Governments, or custom, define Account Plans that Companies must use and, how it is possible for a group of Companies to operate in different countries, it is necessary to be able to present the same accounting information classified according to different account plans, which can be achieved using the EquivalentAccounts table.
The Processes table has one row for each step of these processes that are generally for information and transaction consultation; from multiannual planning, annual budgets, production, maintenance, warranty, purchase or supply programs, etc. up to sales orders and invoices, receipt reports, income receipts, proof of discharge, etc., and automatic settlements when certain criteria such as tax settlement, depreciation, valuation, inflation adjustments, year-end closures, etc., are met. All these processes and many more generate transactions and all will be typified as steps in the Processes table. The AutoTransProgram table relates the automated transaction program with Processes and Calendar, activating them when the time comes and they are authorized by a User if required. All other transactions are activated when an authorized User orders it and the necessary information is ready.
The transactions generate from 2 to thousands of compensated imputations that are recorded in the Imputations table, always measuring their value, in any national and / or virtual currency, more quantity and time if necessary. Some imputations generate or initiate a validity of an account payable or receivable, of a continuous supply of an article for several periods of time, of an item of a contract that is maintained until its objectives are met, of a reference of a production program that enters to be executed, etc., for which it decomposes into maturities, which are kept in the InForce table while they are managed, to program in time the values and quantities involved, necessary when analyzing cash flows or schedules of pending operations .
The rest goes in a single file apart from the relational tables. Blocks of information such as the details of the Processes, or the complementary data of the Transactions, the Imputations and the InForce.
The Things must correspond to the classification of products and services of the United Nations, UNThingsCatalog table and, if required, the tariff position will be in Tariff.
The Things can have 2 relations, even simultaneous with Imputations because the value of the imputation depends on the type of currency (IdMoneda) and its change, which are found in the Things and Prices tables. The other relationship can be presented when an imputation refers to a thing, but does not generate pending, for example the cost of sales of an item. It is necessary to be able to report sales costs per item.
The Persons table can be directly related to the Imputations table when it is a movement that does not generate pending in the InForce table, examples: a cash sale. It is necessary to be able to report sales per customer, including cash.
The Imputations can be related to records of the same table as in the case of the imputation generated by an account receivable and the imputations that pay that debt.
The Companies can be part of more or less complex conglomerates, their national tax unit defines a level of accounting, but it is necessary to subdivide for the local tax, so that the accounting allocations must be detailed at least at the level of the accounts that affect, but may be more detailed as in the case of inventories that require defining the dependency, warehouse, shelf, row and height, or warehouse, in which they are located. IBMSYS allows all the detail that is required without ceasing to define the level of accounting and consolidation levels thanks to the fact that the Companies table has a tree structure where the root corresponds to the maximum business consolidation with the possibility of also consolidating the branches or sub-branches that are wanted, establish the level of accounting at will and detail the dependencies without restriction. The sheets will be the most detailed subdivisions.
Several tables have a tree structure: Locations, Companies, Categories, AccountPlans, Things, UNThingsCatalog, Tariff, Processes, Roles and Norms. Accounts has no own tree structure, but inherits AccountPlans.
To ensure that the accounting charges can discriminate more than the accounts, the Table of Imputations inherits the Company to account for Accounts, but may have a more detailed one, to specify the dependency affected within the same Company.
The TransUser table is a log of the Users for each session, with start and end dates, in which they acted preparing Transactions.
The Imputations table is the one that has the most relations to facilitate the consultation of the detailed history and what is pending in its InForce dependent table.
The following diagram shows the additional relationships of the Companies table with the other tables. The Accounts are related to Companies at Legal Entity level subject to the administration of national taxes or lower if it is required to detail to be able to declare local taxes or because senior management decides, for which different levels of Things can also be established and Imputations Roles and Processes can define other convenient levels including conglomerates of Legal entities. All levels can be consolidated.
It is possible to create an Intelligent Business Management System based on an advanced synthesis of business information. First: using only the accounting for the economic registry, the order accounts are used to register the assets of third parties that the company manages and to include all contingencies, and second by typing all business economic transactions in a single Entity, to store its formats of forms and reports, how they are filled out and how they are accounted for.
Transactions generate offset debit and credit accounting movements (Imputations) that can be a minimum of 2 to thousands. An accounting movement can start a scheduled process (InForce) with maturities by values, amounts or time, whose breaches generate corrective or penalties. So the pending to manage begins with a generator event as the parent of the events of its development.
Business management processes are framed in international norms, with ISO 9001 as a universally accepted reference, so that the other norms are complements to manage specific controls. Process management should be based on information for decision making and the activation of transactions that can be automated in large part, allowing only very justified changes, based on experience and strictly audited in order to promote continuous improvement, without losing the connection with the already registered. Authorized users assume roles that are defined as the ability to execute a subset of options to inform and activate transactions. There will be more and more automaton users that must be supervised by human beings.
Once the IBMSYS has been developed and tested, implementation can be facilitated in companies that currently use ERP / CRM / SCM systems and others, by programming automatic conversions based on the work of groups of researchers studying current systems such as SAP, COMPIERE and their derivatives, ODOO, etc., in such a way that part of the current code of these systems may become IBMSYS data.
The information recorded would simply change format and can make migration almost transparent to users. A new database to help future implementations will be extracted from what the research groups of the old systems synthesize, in addition to the qualitative record in the new implementations and migrations, which will mature an expert system that in the future could Implement almost automatically, acting as an intelligent machine.
Research groups for the migration of old to new systems should specialize for each product and possibly in certain types of companies. For example, in the Universities you can promote groups of researchers studying current systems in related areas such as: the oil and mining sector, the government sector, the industrial sector, the commercial sector, the health sector, the financial sector, etc., detailing according to the scope of the systems implemented, with the possibility of consolidating models by their common processes.
Once the IBMSYS has been implemented in a company, it would be advisable to allow the operation in parallel with the previous systems for a reasonable time, transferring the daily changes and movements in automated batch processes, first from the current system to the new one and then the new one to the replaced one.
- Hernan Pardo is developing business software since 1969. He was trained as a Software Engineer by IBM in Bogota. You can see a summary in spanish of his professional life and his proposal in this blog post: https://hernanpardosilva.blogspot.com/2019/03/nueva-teoria-para-crear-el-sistema-la.html
- Alibaba Cloud provides services for most of the SQl and NoSQL database managers. For example, Postgresql is indicated for the IBMSYS database because it is robust and handles Large Objects that serve to store the required Add-ons, preserving the integrity of the logical transaction even in case of falls and recovery. See: https://www.alibabacloud.com/product/apsaradb-for-rds-postgresql
- The most convenient processing now for business management systems is SaaS (Software as e service) given the reliability and agility provided by large cloud services. See: https://www.alibabacloud.com/knowledge/what-is-saas The trend of enterprise software is on the one hand towards integration, but is still called ERP includes CRM and other supplements, on the other hand local systems give way to Saas cloud. See: https://www.cloudmasters.es/un-pequeno-analisis-de-la-decada-en-lo-referente-a-cloud/
What is an ERP: Complete guide to choose the best ERP of 2019: https://papelesdeinteligencia.com/que-es-un-erp/