The Case for Convergence in F&A Transformation

600px-shutterstock_149939726In today’s globalized world, many companies have F&A departments spread throughout a range of geographies, including the Americas, Europe and Asia. Such widespread corporate presence opens the door to markets across the map. But international access presents its share of challenges—especially when it comes to managing cash.

When we’re asked to address client challenges like improving working capital or delivering higher quality, timely reporting, many times one of the first root causes is the “run your own shop” approach to regional and global F&A departments. It’s not uncommon to find each finance function operating its own processes and technologies. As a result, many globalized businesses suffer from significant – and costly – F&A disruptions, needless repetition, undue human error and frequent reporting delays.

The Transformation Essentials

You hear a lot these days about business transformation, in the finance department and throughout any organization. Usually the conversation is in terms of digital transformation. The idea of the F&A function requiring minimal technology is going by the way of the dodo. Business leaders know that automation is key to all areas of success, including the formerly paper-heavy, manual finance function. Continue reading

Fortune Favors the Transformed

As we boldly march into 2017, there are few things that are certain. And, one of these certainties is uncertainty. If there is one thing all the economists, pundits and industry commenters can agree on is that the future is coming faster than ever before.

The 2017 —and foreseeable future— business environment will be characterized by constant change, from fluctuating markets to political disruption to new technology. The C-suite is feeling the pressure from all sides, and large global corporate entities (with firmly established and entrenched procedures) are expected to be as nimble as a Silicon Valley startup.

In a recently published report, Future-proofing the CEO: Why Chief Executives need to adapt in an unpredictable world, 71% of those polled thought that technology and digital would be the biggest driver of change in their industry over the next 10 years, yet only 40% thought their businesses were currently well prepared for this change.

For companies looking to stay ahead of the competition, acquire or merge with another company, or create new business lines, this ability to keep pace with technology and digital change is a Number 1 priority.

The Process Principle

Yet, technology is not the sole factor in digital transformation, whether it’s the Finance department or any other area of business. Real transformation cannot happen without the underlying processes changing. Outcomes can be aligned with strategy, but unless there is a serious rethink about how things are done, technology will never reach its full potential. Continue reading

The Whys and How of AP Transformation

invoicingIn the past, the Accounts Payable (AP) department was viewed as a necessary cost center. Yet, best-in-class companies understand that by refining AP processes and technology they can realize significant cost savings, drive up the number of transactions processed and reduce errors.

The Why of AP Transformation

CFOs, Controllers and accounting department managers need to be able to accurately evaluate how their teams are performing. Companies often look to benchmarking surveys or their process partners to get insights on how their internal finance processes stack up to other organizations in terms of cost-efficiency, transaction speed and error rates.

Recently, APQC, an authority in benchmarking, best practices, process and performance improvement, and knowledge management, released a survey of 997 organizations concerning the costs of AP processes. The member-based organization calculated the metric based on “the annual process cost divided by the total number of invoices processed annually.”

The result makes a strong case for investing in automation. Why? Manual labor is still rampant in the AP process. APQC notes that manual labor accounts for 62% of total AP costs. This need for human intervention is triggered by PO, shipping and receiving data errors, and invoices requiring employee involvement.

When this all shakes out, laggard AP departments spend two and a half times more than top performers spend on invoice processing.

The How of AP Transformation

Today, AP has become a significant strategic component in successful enterprises. By leveraging AP strategically, they can achieve additional savings by utilizing discounts and avoiding penalties.

AP operations can fulfill a more strategic role in the enterprise and realize significant cost reductions while increasing efficiency when you deploy these improvements:

Centralization & Standardization—Key to realizing significant improvements in AP functions is consolidating and creating consistent processes. Unifying multiple geographic locations has a three-pronged effect: 1.) It reduces variations within AP processes; 2.) It eliminates redundant costs; 3.) It provides stronger internal control over the overall AP process.

Digitalize—Invoice data entry and other aspects of the average AP process are both low-valued and labor-intensive. OCR technologies, e-invoices, EDI are some key initial steps to digitalizing the intake process, and avoid drowning in paper. For faster, more efficient and direct AP processing, automated workflow technologies, RPA and more advanced business process management (BPM) technologies can stitch together all the transactions steps and build business (matching, routing) rules around them. This allows for “hands-free” automated purchase order matching.

Optimize—After the initial gains in transaction speed, reduced costs and decreased errors have been realized, it’s important to not get complacent. Once a new benchmark is set in terms of veracity, volume or velocity of AP transactions, ongoing work is needed to not only monitor existing KPIs but to constantly look for new ways to improve the process.

Do your AP processes, benchmarks and KPIs measure up? We’d be happy to offer a free assessment of your current practices.

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2017: What’s Your Email Resolution?

startup-photosAccording to a recent study by McKinsey Global Institute, the average American worker spends 28% of the workweek reading and answering email. The report didn’t specify which departments they polled, but if you ask anyone in the F&A department, many people might respond that they strive for a mere 28%.

For finance professionals, trying to stay on top of email is a losing battle. Just as you read and reply to one, another one (or two) pours in. And the very act of replying can be self-defeating as it inevitably results in a response email, increasing the futility of Inbox Zero.

Another part of the problem is that email is addictive. The anticipation or rush of new emails can trigger a surge of the chemical dopamine, a key player in our information-seeking behavior.

Perhaps even worse, email can dumb us down when it comes to performing our work. Neuroscientist Daniel J Levitin is quoted as saying: “When trying to concentrate on a task, an unread email in your inbox can reduce your effective IQ by 10 points.”

If all this sounds frighteningly familiar in your F&A department, it might be time to consider putting this atop the New Year’s resolution list: Break the email habit. Continue reading

F&A: What Have You Done for Me Lately?

As we head into 2017, and into the fourth generation of business process services, there is little doubt that the F&A market has matured, dropping to six percent in 2015 after double-digit growth three years earlier. This will no doubt influence the year ahead, in both how process services are offered, and what clients are looking for.

With improvements having been achieved from a best-practices approach, location strategy and access to F&A tools, clients are now indicating that cost savings and existing productivity gains are very nice and well, but there is a deep desire for delivering on business outcomes.

Providers as Capacity Catalysts

Organizations are asking providers “what have you done for me lately?’ and are eyeing the ability to add capacity to their business in four strategic ways:

Actionable Intelligence: Some companies, for instance, want to tap into business insights to improve the customer experience, better their market performance or quickly respond to industry trends. There is little doubt, in our experience, that 2017 will see an increase in the application of analytics. Continue reading

The New Agenda: Solving Business Challenges

marketing-board-strategyYears ago, Seth Godin wrote about the “race to the bottom” in which commodity producers constantly look to drive their costs to zero, and be the cheapest choice. The danger of this race, he said, is that we just might win.

Over the past 20 years, outsourcing has become synonymous with “cheaper” point solutions. Driving cost reductions was the primary motivation for organizations to send tasks to BPO providers.

However, we are witnessing a pivotal shift in the industry. Customer experience (CX) is quickly climbing to the top of the CEO agenda as companies begin to understand the impact on the bottom line.

On top of the desire to improve the customer experience, CFOs and other C-suite executives are tasked with making complex decisions on a variety of fronts. The needs for consistent and accurate reporting to guide business insights, as well as better cash management in order to act upon new opportunities or break into new markets are key to staying ahead —and surpassing— the competition. Continue reading

Cash (Application) is King

600px-shutterstock_158110817Cash application is a deceptively simple process: apply customer payments to open receivables. Many companies admit they are not handling it well. Yet, the trickle down effect is quite significant, resulting in better visibility for A/R managers and lower cycle times.

Unfortunately, the cash application process is often neglected, and in many companies, highly manual and time-consuming. It’s not uncommon to find personnel scanning (and re-scanning) remittances, searching for POs and keying in payment details manually. Combine this inefficient environment with a fast-changing world where remittance is now sent in a variety of formats from paper checks to credit card to e-transfers, and the ultimate result is a bottleneck between customer payment and working capital. Continue reading

BPaaS: Follow the Yellow Brick Road

In order to arrive at the ultimate destination of Business Process as a Service (BPaaS) “plug and play” success (“The Emerald City”), it requires an understanding of the journey (“The Yellow Brick Road”) and its potential dangers (“Lions and tigers and bears—oh my!”).

Despite all the drum-banging around digital transformation, recent survey results of business process buyers and providers indicate that most are not ready to embrace the magnitude of the change required to achieve the next level of “plug and play” services.

“I could think of things I never thunk before. 
 And then, I’d sit and think some more.” The Scarecrow

Technology is hyper-dynamic. Almost everything that makes your life easier and more convenient is digital. Less than 20 years ago a cellphone was the size and weight of a brick, certainly not “smart” and out of reach financially for most people. Now we can chat with friends using voice commands, ask Siri or Cortana to look up bits of information we’ve forgotten or even watch movies or listen to podcasts as we sit patiently in airport waiting areas.

As individual humans we can adapt pretty easily to technology and its impact on our lives. However, large corporate enterprises are often still supporting legacy systems dating back to the 70s and 80s struggle to keep up.

Yet, every CIO and senior executive understands that digital technologies, intelligent automation and advanced analytics are the “brains” of the organization, helping to deliver the insights required to stay nimble and competitive.

“I could stay young and chipper 
and I’d lock it with a zipper, 
 if I only had a heart.” The Tin Woodsman

A 2015 study by HfS Research of 178 service buyers shows that “seven-out-of-ten enterprises over $10B in revenues do not expect their core enterprises to be delivered As-a-Service for the next 5 years.” They will, instead, be leaning on traditional labor arbitrage models.

Why? Most likely because process and technology are the heart of any operation, and many companies are not as far along the maturity curve as hoped. To stay “young and chipper” companies need to adopt technology, rethink old ways of doing things and step out of their comfort zone, exploring new possibilities.

HfS has noted, “Worryingly, as the future reality for business operations unravels, new research shows more than two-thirds of today’s enterprises are simply not ready for what’s coming. They’re blissfully unaware that their comfortable world of reactionary operations and legacy status quo is going to get ripped apart.”

As well, in the 2016 SSON survey of 500 Shared Services and Outsourcing practitioners, 79% believe their strategy will deliver dramatic and recognized value beyond cost savings. “Most respondents agree that Process Excellence is driving radical change… while innovations such as RPA and Digital Disruption get lower ratings.”

It would seem that there is still plenty of opportunity to simplify operations and take action against significant process inefficiencies throughout the enterprise. This needs to happen first before real change can take place.

Enter the shiny promised land of the Emerald City of BPaaS (Business Process-as-a-Service), a 5th Gen BPO offering that optimizes processes to help clients reduce capex and opex, helps organizations have greater capacity elasticity and improved time to market.

Two of the (many) key attributes of BPaaS address the heart of every organization’s first step toward “plug and play” success: The need to simplify and standardize.

  • Simplification: Practitioners are hosted and leveraged (1:many) across different clients in a shared service model.
  • Standardization: Services are delivered with standard F&A processes with some configuration (and little or no customization).

However, streamlining and standardizing business functions aren’t the only factors in a successful journey. There is a need to re-visit the fundamental reasons for why such projects fail to deliver the expected result.

“But I could show my prowess, be a lion not a mowess, if I only had the nerve. Oh I’d be in my stride, a king down to the core I would roar the way I’ve never roared before.” The Cowardly Lion

What’s the biggest barrier to change? It’s usually a potent mix of a couple of factors:

  • People’s comfort with the status quo.
  • A lack of understanding of the degree of change required.
  • A breakdown in communication

These can be the true “lions and tigers and bears” that businesses will encounter on their journey. To drive change, organizations need to be courageous. They need to have the nerve and resilience to conceive of, implement and enforce digital and process transformation.

This means getting the right level of executive sponsorship to own and drive the change process. There needs to be an atmosphere of creative willingness to write off legacy technology and processes in favor of simple, less complex options. It means starting with the end in mind and being clear about the business outcomes you want to impact.

As well, it’s essential to communicate intentions and leverage key stakeholders. In our experience with facilitating change for our clients, one place to start is to develop “Vision Champions” by leveraging your in-house experts in the vision, design and communications process. And, then testing for understanding and acceptance.

Companies know and understand this in theory, but the practice of change management is often a lesson in the cold reality of dealing with human resistance to change and unexpected hurdles that arise along the way.

Here at Sutherland, we are not only process leaders, delivering “plug and play” business process services, but our #1 job is helping our clients realize change through F&A transformation. It’s what we do day in, day out.

In my next post I’ll share how we helped a client define the business outcome and then enable technology, process redesign and change management practices to achieve their goal.

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Built to Scale: A Balanced Approach to Mid-Market Success

rainy-dayMid-market companies – those with revenues between $10 million and $1 billion – are powerful players in the marketplace. They’re the fourth-largest global economy in the world, employing 34% of the U.S. workforce. According to the latest Middle Market Power Index from Dun & Bradstreet, the growth of U.S. middle market firms is outpacing the national average; since 2011, they’ve shown an 87% increase in number of firms, a 103% surge in employment and a 100% rise in revenue.

However, while desire for growth is insatiable to any business, it’s not the only prerequisite to success. Once mid-market organizations reach a certain size, they need the ability to scale. Many midcaps falter, when it comes to making the leap to the next level, for one simple reason: They confused growth with scaling. Continue reading

The Five Levers of Customer Experience

client focusThis article is written by: Hari Srihari, Vice President of Supply Chain Management for Sutherland Global Services

Organizations around the world know that improving the customer experience is essential to ongoing competitiveness. Yet achieving customer visibility through an integrated front-to-back-office 360-degree customer view can be challenging.

As companies continue to expand their organizational footprint via expansion, mergers and acquisitions, their technology infrastructure becomes more complex and disparate. From lead and order management through supply chain order fulfillment, a wealth of customer and operational data resides in various platforms, including legacy on premise, cloud-based, and hybrid systems.

What can be done to unlock the operational insights of these systems to improve both the overall customer experience and deliver business metrics for better financial performance?

There are five key levers that can be employed to create a more predictable experience for your customers and deliver actionable insights for your company.

  1. Customer Demand Management is needed to create positive interactions and create loyalty. This includes creating an Omni-channel experience for your customers to make it easy to do business with you and internally, maintaining a single source, 360-degree view of the customer to optimize the overall process.

Continue reading