The Great Moldovan Bank Robbery

I’m in Moldova for a few days. It’s Saturday evening and it’s dark and wet, and the road from the capital, Chisinau, to the southern regional town of Cahul is shrouded in fog, and often more pothole than road. It’s not the best time of year to visit this small landlocked country on the eastern edge of Europe, but needs must. Even if it’s the poorest country in Europe it’s not the most unfriendly or unwelcoming. Far from it. The greatest danger to life and limb lies is the abundance of tuica, the local spirit.

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Moldova possesses few natural resources other than its rich agricultural land and a reputation for fine wines. Tourist attractions are sadly thin on the ground (two rock monasteries and a small waterfall), and its topography, though pleasant, is unspectacular. Road and rail networks are poor, so it’s not easy to get around the country.

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Though unassertive, the country has endured the misfortune of lying in the path of greater powers; it’s been a trampling ground for centuries. In more recent years it has become a pawn in the geopolitical games of East and West, its sizeable Russian-speaking minority tugging generally eastwards (with encouragement from the Kremlin), and its Romanian majority generally westwards (with encouragement from Brussels). A sizeable eastern chunk of the country, Transnistria, has already seceded and hosts a small number of Russian troops.

Although a country of fewer than three million it’s a patchwork of ethnicities, Romanian, Russian, Gagauz (Christian Turkic), Bulgarian and others, each with different natural loyalties, traditions and sometimes languages. Populations have been forcibly imposed and removed over the last century, at the whim of foreign dictators such as Stalin.

But not content with rape and pillage by others, Moldova also consumes itself. Economic progress has been considerable in the last ten years but has recently been derailed by one huge high-level bank robbery. It’s alleged that former Prime Minister, Vlad Filat, and businessman Ilan Shor, together with other bureaucrats and politicians, recently stole nearly one billion USD from the country’s banking sector through carefully misplaced loans. This amounts to 12.5 percent of the country’s GDP. So it’s no wonder the mood is depressed. And although these villains may yet get their comeuppance, their prosecution is probably politically motivated, instigated by the next set of gangsters.

If you talk to Moldovans of a certain age you will hear repeatedly that things were better in Soviet days, declining only after Gorbachev initiated his ‘disastrous’ reforms. For once, and for the moment, I am inclined to agree. There was corruption of a kind in the old days, and abuse of power, but on an altogether different scale.

It is hard to understand how anyone in power or otherwise, and especially those elected to further the good of a needy people, can steal so much from a population that can barely get by. Sadly, at the moment, this is a country where you simply do what you can get away with, where morality in public life is of no consequence at all.

Many Moldovans have left the country. As much as 25 per cent of the country’s GDP is made up of remittances from abroad. And yet, there is a ray of hope. Many of the young educated professional people I have spoken to here still believe that the gangster culture of the country will eventually give way to a more benign culture, and that democratic, responsible ideals will yet triumph. After all, most of the new democracies of Central and Eastern Europe emerged eventually from just such moral and economic chaos.

 

 

Stumped by Trump

The classroom bully rarely swaggers into adult life. Like Biff in Back to the Future his strategies succeed in the playground and fail in later life. Eschewing education, ridiculing the swot, his choices turn out to be few. The swagger, jeering, fast cars and blondes of his teenage years, morph into a low-life job, credit card debt, and a trailer park finale. I say ‘his’, because I suspect that female bullies are fewer, and I have no personal experience of them.

Biff rides high…

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Biff sinks low…

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And then there’s Donald Trump.

I was astonished to read on the BBC News site this morning of more embarrassing antics  – mocking a disabled New York Times reporter who had denied Trump’s claims that ‘thousands’ of New Jersey Muslims had celebrated the events of 9/11.

http://www.bbc.com/news/world-us-canada-34940861

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Trump denies vehemently that he meant to mock (when has he ever admitted error and apologised?), but it’s hard to see the purpose of the arm-flailing routine if it’s not to mimic Serge Kovaleski, who has a serious and debilitating joint condition. He claims he was mocking incompetent denial in an unspecific way, but if it wasn’t deliberate, it was foolish. I suspect that much of the time Trump is only half aware of what he’s doing. His trademark is what-you-see-is-what-you-get. He is a raw, unadulterated bully, unashamed even of his basest instincts.

Would this be the right approach to world leaders if he were to become President?

Donald Trump’s policies include:

  • Registration of all Muslims in a central database
  • Surveillance of mosques
  • Building a wall between Mexico and the USA
  • Forced repatriation of 11 million illegal immigrants
  • Refusal to accept Syrian asylum seekers
  • Increased use of ‘strong interrogation’ techniques (otherwise known as torture)
  • Ignoring climate science, which he believes to be a hoax

Anti-establishment candidates are popular the world over, and that’s a sad reflection on politics as they are, but few are as crazy as Trump. Of course, there’s something refreshing about a man who speaks his mind, but we’d surely appreciate a better mind than his. (That said, his daring to say that the world isn’t a better place after the removal of tyrants such as Saddam Hussein and Muammar Gaddhafi is welcome, at least to me. The jury is still out on that.)

Politicians are often bullies. Take Alex Salmond, former leader of the Scottish Nationalists – a clever, hectoring, verbal bully of the worst kind – but such politicians are at least intellectual, debating bullies, not bullies of the teenage playground variety reaching for personal insult when reason fails.

AND YET, despite everything, Donald Trump is still riding high in the polls.

That is what stumps me.

In most of the world he might (just) be tolerated as a clown, an idiot, a thorn in the flesh, but in the United States he is the Republican front runner. How is that possible?

 

 

Dirt

When I was a very young child my mother used to say, ‘You’ve got to eat a peck of dirt before you die.’ I didn’t then know what she meant, nor picked up the context in which she said it, so I imagined a final ritual that involved the picking up and consumption of a small amount of soil. Being of a precociously logical disposition it also occurred to me that if avoided ingesting soil I might live forever.

We lived in the country, and there was dirt aplenty in the garden. Soft, gritty, not unpalatable. The ‘pecking’ aspect confused me, though. We kept hens and I understood what it meant to peck. Hens pecked at dirt continuously, even appeared to be eating it, courting, I supposed, an early demise. But in the absence of beaks, I couldn’t see how how we might do it.

I came to understand the meaning eventually, and agree wholeheartedly with both its metaphorical and its literal intent. Indeed sometimes I feel we don’t eat enough dirt. People are absurdly squeamish about cleanliness. If I drop food on the kitchen floor, I’ll happily pick it up and eat it. I don’t scour and swab my kitchen surfaces obsessively with industrial-grade disinfectants, in fear of bacteria. I’ll happily live with domestic animals without worrying about fur and hair. I wash my hands only when I should (see below). And I don’t mind dogs in restaurants or feeding them from the table.

I’ve no idea whether it’s true that overly zealous cleaning renders us vulnerable to bacteria and allergies, but people often say it. It may be one of those dubious factoids. But it makes a kind of sense, though has disturbing reverberations of homeopathic theory (dirt cures dirt). But whatever the truth of this, why waste so much time with dishcloth, bucket, mop, scrubbing brush, bleach, scouring powder and detergent? There are better things to do.

Some employers see it as their duty to enjoin hygienic behaviour on their employees. This notice, sent to me by my brother,  and posted in the lavatories of the bank he works for, gives us remarkably detailed instructions on how we should wash our hands. Banks are, after all, often in the business of laundry.

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Paradoxically, soil might be our saviour. Or at least it’s sometimes mentioned as such, with great fanfare. I was thinking of this when I read, yet again, in last week’s British papers the usual story about the ‘end of antibiotics.’ The tabloids reach for this alarmist notion every three or four months. Bacteria, we are told, are fighting back. The fittest of them have survived the onslaught of antibiotics, developing resistance as a result of our foolish overuse use of them, or incorrect use  (YOU MUST FINISH THE COURSE). I have no doubt it is true.

But, as I recall, the papers also regularly publish another contrasting ‘good news’ story, that researchers have found whole classes of new antibiotics by delving into dirt, where antibiotics of miraculous capability lurk in the microbes that inhabit soil.

What to believe?

Look at this story, for example, from January:

http://www.bbc.com/news/health-30657486

I am an optimist. A peck of soil will be our saviour. Be grateful to dirt.

Sweetening the Pill

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‘People buy from people,’ we’re told, again and again, if we’re in the business of sales. It’s not about the product: it’s about YOU.

I say this myself to our sales staff in LLP Group and systems@work. We write and sell software, and provide the consulting days that make the software work. Of course, I don’t mean to imply that the software product and what it can do is irrelevant, but rather that in making our software work for a customer it’s only partly about the product, and as much about the skills of the people involved in the sale and implementation, including their personal skills of persuasion and determination. Assuming, of course, that during the sales process our sales staff are selling as if they are honest and realistic consultants, which, often, they have been.

People buy from people. And people buy from people they like. And sometimes people like people because they give them things.

Sales has always been a muddy business. The trick of making people like you should be about what you’re bringing to them ‘professionally’ rather than ‘personally’, but sometimes it isn’t. There are the dinners, the gifts, the ‘training’ trips, the nightclubs, the seats at sporting fixtures, all those benefits that oil the wheels of sales. They’re often above board, completely visible, accountable (even tax deductible) and bring no long-term personal benefit to the recipient, but sometimes they’re not.

The rule in my company is that anything we give to a client or a potential client  (and we set a very low maximum) the recipient must be able to declare to his or her boss. We give bottles of wine at Christmas, and we take our visitors out to dinner.

Sales is certainly cleaner than it was, but we’d be lying if we suggested that the reason we are generous to potential clients and existing clients has nothing to do with wanting their business. There are grey areas.

In the world of business-to-business software sales in the private sector it is not complicated. But it all gets much more difficult in areas where ethics and public money are involved, such as in the purchase of pharmaceutical products by publicly funded health services. Pharmaceutical products must be good for the patient, and affordable for the tax payer.

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Over the last few years the practices of pharmaceutical sales teams have come under the spotlight and, as in China recently, pharmaceutical companies have been prosecuted and fined for ‘bribing’ doctors to buy their products.

I don’t know if there has ever been direct under-the-table bribing, such as cash in brown paper bags, but the tentacles of pharmaceutical companies go so deep into the institutions they sell to that it’s difficult to disentangle the ethical from the unethical. They sponsor research, they provide samples, they run training courses, they pay for doctors to go to, and speak at, conferences, they run educational seminars, and often entertain on a lavish scale.  It is no wonder that the objective independence of those who recommend and prescribe particular products is undermined, consciously or otherwise.

So great have been some recent scandals that regulation has now begun to intrude on these practices. One consequence is that pharmaceutical companies must now track and report on all the ‘benefits’ they provide to Health Care Professionals (HCPs). This reporting is enforced both internally but also by statutory bodies. The value of all benefits must be reported by expense type, by organisation and by individual (and by the role they perform in the organisation).

This is where expense@work comes in. I’ve recently been engaged in trying to sell our expense management software to a pharmaceutical company that’s under pressure to provide exactly this kind of HCP reporting. It’s easy for us, and I can easily configure the system to track expenses not just by the elements that are needed for accounting purposes (expense type, description, gross value, VAT value and net value, in transaction and local currency) but also by organisation and particular health care professional (if appropriate) and by pharmaceutical product area and product.

I can picture the sales representatives assiduously entering these data into our system and I don’t suppose they would like doing it, but transparency in the slightly murky area of pharmaceutical sales is long overdue.

Pharmaceutical companies are essential. Where would be without them? And it is legitimate that they should actively advertise and promote their products. This means relationships with HCPs at all levels. The provision of education and training is part of the process too. But even if there’s complete transparency, it’s still important to be nice. People will always buy from people.

 

Clouds – Nimbus, 9, or Cuckoo?

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I am distrustful of bandwagons, and rarely board them as they rattle noisily by. It’s not that I’m against enthusiasm, or novelty, it’s just that bandwagons are often driven with irrational exuberance, and very often they crash. I prefer the slower vehicles that come along behind. They set out in the same direction, but with more care and circumspection, and they reach their destination more reliably.

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I remember the bandwagon of the Dotcom boom – and the bust that followed it. Whilst there’s no doubt that the internet changed our lives, I’d rather call it accelerated evolution than revolution. Its victims were more often its most ardent supporters, hell bent on delightful ideas that lacked even a modicum of commercial good sense or realism, than the ancien regime.

The advent of the internet was evolution. It simply extended what we already had, and what we already did as business IT consultants. It didn’t, despite the fears of some, invalidate what we already knew. Business systems nestle as comfortably in the internet as they previously did in their more confined circumstances. The basic problems of system integration, of manufacturing, retail, services, accounting, distribution, CRM, and the rest, are of the same type as before, as complex as ever and we, who understand them, are as valuable as ever.

During the feverish years of the dotcom boom one of my colleagues told me that if we weren’t immediately reborn as ‘Dot LLP’  (instead of LLP Group) we’d be annihilated within six months. I laughed. We didn’t, and we’re still going strong. We learned some of the new dotcom tricks, and we go on learning.

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The Cloud, I fear, is currently another bandwagon. We won’t be boarding it with too much haste, even if its direction is the right one. We’ll be waiting for the slower train that won’t go off the rails.

The Cloud is an excellent idea. It comes in many forms. As those who tout it say, it allows businesses, even software authors such as we are (systems@work) to concentrate on what we do best. The business of managing IT infrastructure, handling communications, backups, performance, security, and so on, isn’t the business that most of us are in. It’s not our field of battle, so better to leave it to the experts. No need to employ specialists if others can do the job at a competitive price and relieve us of unproductive anxiety. We must concentrate on our core business activities.

All of that is true, and if we could all dump our systems onto rented hardware at reasonable cost, why not? Sometimes it’s possible and the right thing to do.

But that’s not exactly what the Cloud is meant to be. Certainly not all it’s meant to be. It’s not just a matter of hosting the particular collection of business software that we’ve amassed and integrated, it’s also about using a standard piece of software in a ‘multi-tenanted’ environment – one size, one copy suits all. And if we use this piece of software for accounting, this piece of software for distribution, and that piece of software for manufacturing, it may be about using multiple standard pieces of software in a number of different Clouds. It’s about business software becoming a commodity that can be accesses as easily as water through a tap.

Many business worry about the security of their data. But these issues of security are solvable, even if many companies are reluctant to let the ‘professionals’ look after their data. The fact is that data are vulnerable wherever they’re located, whether in-house or hosted, and the issues of security can be solved or not as easily in one environment as the other.

It is the issue of ‘standard software’ and ‘integration’ that don’t yet fit perfectly well within the Cloud. Sometimes, if the purpose of a piece of software is such that it can stand alone and if it’s used without alteration (even if configured for a particular company’s purposes) the Cloud can be a good place to put it, but if standard software has been modified, or extended, or is integrated in complex ways with other pieces of software, and other databases, then making this work with a Cloud-based solution will be difficult, and with a ‘pure’ multi-tenant Cloud based solution (one copy of the software serving everyone) it will be well-nigh impossible. Ensuring the consistency and coherence of systems and databases that are in multiple environments that you do not fully control will be difficult.

As time goes by, new techniques for integration may make this task easier, but we we’re not yet at that destination.

So, I am cautious about Cloud-based offerings in the world of business IT. They may work for some, but for many they aren’t yet the right solution. What seems initially like a good idea founders when a business needs something special from a standard software offering, or some special way of interfacing systems, and many businesses find themselves trapped by the choice they’ve made if it’s located in the Cloud. They’ve exchanged one limitation – the anxiety of running their own infrastructure – for another – the anxiety that comes from being limited by someone else’s standard software and infrastructure.

Whilst the provision and management of infrastructure isn’t usually the basis of a company’s competitive edge, the business software on it, often is.

As a software author (systems@work) we’re cautious. We offer configured systems in a hosted environment, and this suits customers who don’t need any software modifications and who don’t need interfaces between Cloud-based and non-Cloud systems, or who need only simple ones. And we offer on-premise installation and full-blown integrations when they’re needed.

But for now, the Cloud isn’t always the answer and we won’t be betting the business on it.

 

The Art of the Pointless

I was a child when Roald Dahl’s Charlie and the Chocolate Factory was first published.  It was a brilliant piece of wish-fulfilment fantasy and story-telling, and was devoid of the customary moralising and sententiousness that infects much of children’s literature. It was simply mischievous, and spoke to what a child would want to hear, not what a parent might wish a child to enjoy. It was written by a writer who hadn’t forgotten how a child sees the world.

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But even then it wasn’t the chocolate aspect that attracted me to the story. It was the factory aspect. I am more nerd that chocoholic. I love machines.

One of the great joys of being a business systems consultant (see LLP Group) is finding yourself in all sorts of places, looking at devices that aren’t part of your everyday life. I’ve seen machines that fold letters and pop them into envelopes. I’ve seen drums like cement mixers in which pills are coated with colourful sugary syrup to make them more palatable. I’ve seen high-speed water-jet looms that weave cloth at near supersnic speeds, and machines that make, freeze and package ice lollies.

But, as every child knows, the most fun is to be had in a chocolate factory. I’ve seen the way wafers are baked, smeared with sweet hazelnut paste, sandwiched together, sliced and then coated with molten chocolate in a chocolate drizzling machine. I’ve seen the bars slipped into packaging and then boxed. What could be more exciting than that? Certainly not the eating part.

Machinery is fascinating. Sometimes the manipulations of materials mimic the way we do things ourselves. There are parts that resemble hands, arms, and fingers, but they move more quickly and more accurately than we do and never tire. But usually they do just one thing. They make chocolates or they pop letters in envelopes, but if they do one, they don’t do the other.

It seems odd to me now that at university my friends and I were so disparaging of engineering students. They were generally considered the dullest. They played rugby and drank more beer than most of us. But when I see the machines that engineers must imagine and build, I regret my prejudice. Some of them might surely have become today’s Brunel, or Telford.

Engineering is sometimes art. Look at this exercise in Lego. It’s beautiful and pointless.

 

What is art if not the celebration of human imagination, dexterity, precision, calculation and determination, and of the fact that we are driven by more than necessity. It’s all the more pure when there is no point to it at all.

SunSystems and Manufacturing – A Transylvanian Tale

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Imagine Transylvania in 1997, a part of Romania still largely populated by vampires and werewolves. It’s a place that’s bitterly cold in winter, scorching hot in summer, and most terrible of all, it was then a dark corner of the world where accounting was done largely on paper by huge armies of accountants, and a place where manufacturing planning systems were entirely unknown.

Welcome to my accounting department….

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Imagine, also, that South African Breweries (SAB), a newly acquisitive international brewer, had acquired Ursus, in Cluj Napoca, one of Romania’s best-known breweries.

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Acquisitions at any time, and in any place, are a cultural nightmare, but international acquisitions are the most difficult, especially in emerging markets. The nominal cost might be attractive, but the challenge can be almost unmanageable.

The first step in any acquisition is to establish reliable financial systems, but the brewery’s army of accountants couldn’t tell SAB what they really wanted to know about Ursus, at least not in a timely, GAAP-compliant way.

What they really needed was a flexible financial system that could meet Romanian statutory requirements and report intelligibly to their South African headquarters. Given that SAB manufactures beer, a large system such as SAP or Oracle might be the obvious choice because they do manufacturing, sales, purchasing and distribution as well as accounting. But there wasn’t a hope in hell, nor in Transylvania, of implementing such complexity. And local financial software systems were fit only for the undead nature of Romanian statutory accounting, not for the sophistications of GAAP reporting.

So we, LLP Group, and our recently formed subsidiary in Bucharest got the job of implementing Infor’s SunSystems and of making it work in a manufacturing environment.

Manufacturing accounting is all about calculating the cost of finished goods. A finished item, such as a labelled bottle of beer, comprises packaging  and content. Content, in turn, comprises this and that – water, sugar, yeast and whatever else goes into a bottle of beer. There’s a bill of materials that describes the component parts of every item, and the cost of labour and machinery involved in producing it. Most companies calculate a ‘standard cost’ for each item and component based on estimated costs of components and labour, and in many countries it’s perfectly permissible to value stock on the basis of standard costs, as long as the actual costs vary within reasonable limits.

But not so in Transylvania. The law demands that ‘actual’ costs be calculated, or the next best thing, a rolling average of actual costs. You can do this in SunSystems, using a T-code for each finished or semi-finished product, crediting a production account with all the products that come out of the production process at standard cost, debiting all the materials and labour consumed at standard costs. Purchase price variances, and manufacturing variances emerge, that must then be allocated against materials consumed at the next higher level in the bill of materials, and materials still unused.  It’s an intricate calculation, and one that even manufacturing systems didn’t do well in the 1990s, but to do it in SunSystems takes more courage that knocking on the door of Dracula’s castle.

It helps, of course, if the number of finished and semi-finished products is few, and in the end the packaging materials were more complicated than the beer itself. It helps, too, if you know manufacturing systems, and we used Fourth Shift, a small but powerful manufacturing system, solely for the definition of bills of materials and the calculation of standard costs. It doesn’t help, though, if inflation is running rampant and you have to recalculate your standard costs several times a year.

But we made it work, or rather my colleague Jiri Stiller, now manager of all of LLP Group’s operations in Central and Eastern Europe, did it, spending a year in Romania, in Cluj Napoca and Bucharest. He wore garlic next to the skin and never went out after dark, but as far as I can tell, his blood is still human and he’s very much alive.

SAB used SunSystems for many years, but eventually moved to their standard software system – SAP. Romania has changed too, and Cluj Napoca is now a pleasant, modern, easy city, where you needn’t fear vampires nor accountants.

SunSystems is a wonderfully well-designed financial system. Its unified ledger and transaction analysis concept makes it one of the most flexible and versatile in the world. It can do almost anything, even in Transylvania.

NOT Jiri Stiller – at least not during the day.

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