Enabling Agility through Unified Natural Models

In January we started talking about 'Unified Natural Models' as part of the Microsoft Dynamics AX 2012 architecture. As with the previous post, I would like to explain this concept in more detail describing ‘natural models’ and how they benefit our customers.

The heart of Microsoft Dynamics AX 2012 is a set of unified ‘natural models’ that let you see, measure and change your business to pursue new opportunities. ‘Natural models’ are a set of application concepts that let you represent your business in the software. Think about application concepts like products, resources (for example people, machines, and tools), organization models & hierarchies (relationships between people, departments, etc.), financial dimensions, as well as ‘business processes’ like procure-to-pay. All these concepts are required to reflect your organization and processes in the ERP application.

Historically ERP applications creators have made distinct design choices that were often optimized to serve specific scenarios or industries, depending on their heritage. Over time, as the customer bases and usage scenarios of these applications grew, customers either had to live with manual workarounds, buy additional applications or use sub-optimal ‘bolt on’ solutions to deal with these changing usage scenarios.

When we developed Microsoft Dynamics AX 2012, we purposefully reviewed every application concept involved in representing businesses in software. In each case, limitations that forced workarounds and compromises that would have been necessary in older ERP products were lifted, and new capabilities were added to provide a very rich representation of a business, its structure, processes and policies within the software. Microsoft Dynamics AX 2012 unified, natural models make modeling simple businesses fast and easy, and yet still provide the richness and flexibility to represent the most complex organizations.

Let’s for take a deeper look at a few examples of 'natural models’ that have been implemented in Microsoft Dynamics AX 2012:

The Unified Product Model - A product model is a key construct within any ERP system as it captures the physical products and/or services that a company uses, produces and/or distributes. A specific manufacturing process can require a convergent or divergent product structure, for example assembling components into a computer requires a convergent structure; processing livestock into beef products requires a divergent product structure. Products can have different configurations for example, in the case of computers: Hard Disk size, processor speed, screen size, etc. can all have different attributes required to describe the product, including language dependent product descriptions, material properties, etc.

Having a comprehensive product model that can capture all the different variations of products being used within these processes prevents cumbersome workarounds and expensive customization to ‘right fit’ the ERP architecture to the ‘real world’ product attributes.

Declarative Workflows - Historically many business processes and process flows in ERP systems have been captured in the actual 'code’. Therefore any necessary changes required costly development resources. We have made it much easier for business users to represent the real world business processes in their software by introducing graphical workflows. This minimizes the need for code changes in the software when real-world processes change. Instead, required adjustments can simply be ‘modeled’ by business users through a graphical interface. In these declarative workflows, complex decision trees can be easily modeled; specific tasks can be automatically executed, executed in parallel or submitted to cues for approval. In addition, the execution of workflows can be closely monitored and analyzed for further process optimization.

Take for example the escalation procedures related to case management in the customer service department. These can be modeled within the visual editor using ‘drag & drop’ and natural language statements, including multiple escalation scenarios which can be easily defined based on the organization hierarchy and on customer priorities.

A Flexible Organization Model – In many enterprise class ERP systems today, an organization structure is considered a ‘static entity’ within the ERP architecture making it difficult to change. In addition in ERP systems common in the SMB market, the data model of the systems often requires operational entities (e.g. departments, resources, cost centers) to be modeled within a legal entity. In the real world, we all realize that organizational structure is dynamic in nature and companies need to be able to facilitate change in their organizations. This is especially true when they are targeting new market segments, pursing mergers/acquisitions or entering new geographies. Effectively measuring the performance across a changing environment especially when the ERP system is unable to facilitate this organizational change can be quite challenging. In reality, many organizations separate statutory structures (legal entities, required for external reporting) from the managerial or operating structures used for internal profit & loss reporting and measuring the performance of an organization. The inability to support separate structures can therefore be quite limiting.

Through the new organization model in Microsoft Dynamics AX 2012 we enable customers to easily model complex, and distributed organizations with the ability to define different organization types for legal entities and organizational units as well as organizational hierarchies so that they can reflect their organizations more naturally. These hierarchies can co-exist, and can have different effective dates so organizational change can be modeled and then implemented more easily. This has drastically increased the flexibility of the system! Our customers can easily enable and implement organizational change while continuously measuring the organizational unit’s performance.

In addition, default business rules and organization policies for e.g. expense reporting or audit control can be applied utilizing the hierarchies to ease the implementation of these policies for the organization.

Here are some additional examples of core concepts that provide ‘natural models’ to facilitate organization agility:

• The easy to use Financial Dimensions provide improved visibility with unlimited views on the business. These dimensions can be easily setup by a business user allowing them to categorize and analyze transactions across multiple axes.
• A unified business process repository of operational as well as financial & administrative processes supports business process and model innovation. For example having processes for both discrete (including demand pull and push, MRP and Lean) as well as process manufacturing in one solution allows for a better fit to real world manufacturing requirements while enabling rapid operational innovation.
• ‘Date effectivity’ for data and models at the framework level, with additional security control on future effective information, streamlines the definition of “to be” organizational structures, hierarchies, processes, and policies, and enables before and after reporting across organizational changes.

Our focus on defining system concepts through models means our solution is simpler to setup and simpler to change because the software reflects the real world in a more natural way.
The result? Microsoft Dynamics AX 2012 delivers the agility our customers can rely on to pursue new business opportunities more quickly and with reduced risk.

/Kees