By tobyehatch-Oracle on Dec 02, 2015
By Guest Blogger, Gilles Demarquet
In a previous post, I suggested three important aspects to consider when looking at the coexistence of on-premises and cloud applications. And I promised to expand on the need for consistency when managing and sharing common reference data, like cost center hierarchies or chart of accounts, when using this hybrid approach.
What does that mean?
Many applications use the “same” master/reference data but often with subtle variations or differences. For example, one application may need to roll up cost centers by function, while another may need to summarize cost centers by geographic location.
How do you define the hierarchies used in these applications? How do you ensure that the applications use definitions that consistently describe the common components of the hierarchy, while being flexible enough to include hierarchy components for their unique purposes? How do you coordinate hierarchy changes among these applications to reflect business changes?
Historically, I have seen a couple of approaches:
1. Define the hierarchies directly in each of the applications.
Of course, this approach means that any hierarchy definition must be replicated (often manually) in every single application. Along with duplication of effort, this introduces the risk associated in ensuring that changes are done completely and consistently. And, if you have both on-premises and cloud environments, this effort may be more challenging because you may have to perform such changes in different kind of environments.
All-in-all, this is NOT the recommended approach.
2. Maintain hierarchy definitions in isolation from the applications.
The idea is to make the changes once, in a single place, and then propagate them to the various applications that require the use of this reference information.
Experience has shown me that this is the preferred way to proceed. It creates a common vocabulary throughout the organization and contributes to the organization’s ability to maintain a single version of the facts.
What do you need to be able to effectively manage your organization’s hierarchy definitions?
It boils down to three considerations – committed people, strong processes, and technology to maintain consistent definitions for the reference data used in your on-premises and cloud applications. I will expand on each of these considerations in subsequent posts.
To learn more about software solutions for defining and maintaining enterprise hierarchies, click here.