By Heather Hurst | Senior Director of Corporate Communications at Workfront
It’s difficult to overstate the effects of the digital revolution. Technology continues to drastically transform the way we interact, communicate, shop, bank, consume entertainment, earn money, work, and experience life in general. And the more we live our lives online — or in a digitally connected way — the bigger the digital paper trail we leave behind.
Just how much data are we talking about? IBM senior vice-president John Kelly, speaking at the company’s 2015 Cognitive Colloquium event, reported that we are generating a million GB of health data for each person during a lifetime (times that by 7 billion people), and that by the year 2020, cars will be generating 350 MB of data per second. Those numbers don’t even touch the amount of data we generate at work—where most adults spend most of their waking hours, and which is increasingly happening in the cloud.
According to another estimate shared at the colloquium, 93% of all high-value work will be digital by 2020. That’s a lot of data, but how much of it is accessible, usable, or useful? Not much. "80% of all data is dark and unstructured,” said Kelly. “We can't read it or use in our computing systems.” And the data keeps piling up.
Of course, technology often arises that provides the solution to our trickiest technological problems, and the “system of record” is just such a solution.
What is a System of Record?
According to Bain Capital’s Ajay Agarwal, “A system of record (SOR) is software that serves as the backbone for a particular business process.” It’s an information storage and retrieval system that can serve as an authoritative source of truth, helping organizations get a handle on the overwhelming amounts of data that characterize modern working life.
Systems of record have been around for decades, starting as on-premises installations in the 1980s and 90s. Because such installations were so expensive and complicated at that time, vendors tended to bundle as many functions as possible (finance, HR, customer data, etc.) into the same solution. With the rise of the Internet and the SaaS software model in the early 2000s, SORs started to specialize. Think SalesForce, Workday, NetSuite, and Marketo.
A solution can be considered a system of record, Agarwal says, if:
- it runs a mission-critical business process
- it stores proprietary business data
- large portions of the employee population interact with it daily or weekly
- its outputs form the foundation for important business decisions
- it codifies solutions that are “inside the heads of human beings”
- it learns and improves over time
There are four SOR types commonly recognized as essential by enterprises today—and there’s a fifth category that’s rapidly gaining traction, given the unique challenges of modern work management. Here’s a brief overview of each class of SOR: what they do for organizations today, why they’re important, how they’re helping teams survive the digital work crisis.
1. Customer System of Record
As systems of record have fragmented and specialized, one side effect is that small- and mid-sized companies now have affordable access to the same kind of technology that was once only available to large operations that could afford a massive on-premises installation. This has been the case with customer relationship management (CRM) systems, like Salesforce, which are used by companies of all sizes, regardless of size, maturity, or industry.
CRMs host demographic and transactional details about consumers and prospects, acting as the system of record for sales and customer-support interactions. They store contact information and touchpoints with each customer, providing a centralized repository that adds speed, accuracy, and personalization to the sales cycle. And they add a layer of efficiency and transparency to customer support efforts. These are essential advantages in a digital climate of limited attention spans, intense competition, and endless distractions.
“Ultimately, there’s a very simple question you should ask yourself if you’re considering a CRM: Do you want to grow your business?” writes Hubspot’s Leslie Ye. “Your ability to do so is dependent on contacting your prospects at the right intervals and providing them relevant information at the right time, and you simply can't do this effectively without a CRM.”
2. Finance System of Record
If your financial processes rely on multiple software programs or databases, it’s important to designate one of them as the master system, whose data would trump any competing number from any other system. There are also comprehensive solutions, like industry-leading SAP, that centralize nearly every financial operation into single integrated software system, including:
- financial planning and analysis
- accounting, closing, tax management and compliance
- treasury and cash management
- accounts payable and receivable
According to a survey of 1,500 finance executives by Oxford Economics in partnership with SAP, 95% of the top-performing leaders consider cloud-based applications “critically or very important” to the finance function’s successful performance today, compared to just 70% of non-leaders.
3. HR System of Record
The ongoing digital transformation has brought big changes and new challenges to modern HR management—including the gig economy, dispersed work teams, and the Hollywood model of work to name just a few. The potential employee pool has gone from local to global, and the rapid pace of change is creating a very real skills gap in many industries. According to pwc.com’s global CEO survey, 73% of CEOs said availability of skills was a serious concern, and 81% of CEOs are looking for a much broader range of skills when hiring than in the past.
A human resources system of record helps address these problems by centralizing HR information, consolidating functions, automating tasks, and providing unprecedented insights, no matter how remote or dispersed your work team may be. Not only does it serve as a central and secure data repository for employee data (contact information, salary, skills and training, etc.), it also assists the HR team with:
- planning for when and whom to hire
- candidate marketing
- screening and recruiting
- managing and developing talent
- employee engagement
- building and strengthening the culture
- measuring productivity and business outcomes
According to McKinsey Global Institute, “Companies can capture substantial value by applying digital innovations to some of the most critical organizational challenges: matching the supply of and demand for labor, boosting productivity, and getting the most out of people.” The institute estimates businesses could increase output by 9 percent, reduce employee-related costs by 7 percent, and add an average of 275 basis points to profit margins by using “digital labor platforms to their full potential.”
4. IT System of Record
Centralization. Consolidation. Transparency. Efficiency. Automation. Insights. By now you may have noticed these same adjectives could be applied to any system of record; they all serve the same global purposes. But they must be tailored to specific business functions. In the IT world, a configuration management database (CMDB) serves as a system of record for IT governance. It can be used for:
- application development
- field service management
- IT request management
- managing core IT processes
- security operations
- standardizing service delivery
- automating manual setup tasks
- maintaining focus on high-value projects
- alerts and insights into problems and outages
Joe Corpion, head of ServiceNow’s global IT operations says having a real-time view of business service health “gives us a single pane of glass where we see the health of all of our business services. Instead of struggling with siloed infrastructure on multiple monitoring screens, we work together as a team to quickly resolve service issues. That’s critical.”
5. Operational System of Record
Whether you work with customers on a marketing team, with numbers on a finance team, with employees on an HR team, or with code on an IT team, you have projects to manage and tasks to complete. You have budgets, assignments, deadlines, resources, and goals. You have direct reports, colleagues, team members, and stakeholders to keep in the loop. We call all of this the “DNA of work.” It’s the connective tissue that you don’t always see but that holds everything together. And you need an operational system of record to keep track of it all.
An operational system of record (OSR) preserves and archives the context of all tasks, content, and collaboration so it can be analyzed, reported, optimized, and automated. It connects your enterprise horizontally and vertically, and it works seamlessly with other specialized systems of record, providing:
- visibility into the complete lifecycle of work, so you can make smarter decision and prioritize appropriately
- speed, predictability, and maximized work capacity
- automation of routine tasks and workflows
- reliability and confidence in meeting deadlines
- higher-quality work output
- automated reviews and approvals
- streamlined client deliverables, resource management, and project financials
- reduced risk of compliance mismanagement
“Workfront’s flexibility enables us to do everything we need to do to fulfill our vision of greater work collaboration and transparency,” says Cynthia Boon of GM Financial. “Now we are pushing optimized processes organization-wide for better, keener insights that further enhance productivity.”
The Five Systems of Record Every Organization Needs
In the early days of on-premises systems of record, the goal was to squeeze as many different functions as possible into each solution. And it worked okay, for that particular time and place. But with the explosion of data that the modern organization must somehow corral, comprehend, and analyze in order to stay competitive and relevant, a suite of specialized systems is needed. One to manage customer data, one to streamline financial operations, one to keep on top of employee functions, one for IT governance, and, finally, an operational system of record that connects the entire enterprise to give you a view of the truth about your most critical work—across all departments—with embedded intelligence and workflow automation to provide business insights at scale.
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