How to dive in at the deep end – and come out ahead
Have you ever seen a swimming race? At school, perhaps, or maybe an Olympic event on TV? While I’m no expert, I have Ironman triathletes in my team, and I’ve learnt quite a lot from working with them.
Swimming competitions are not like track events at all – and I don’t just mean they’re wetter. In a marathon, or a 100m sprint, competitors can see how they’re doing in relation to other people; but in a freestyle swimming event, the opportunity to gauge their relative performance must be pretty limited. Olympic swimmers only know their finishing position when they look at the scoreboard. Until that moment, they’re literally immersed in the world defined by the lane they occupy.
Objective and practical
Business can be like this. The shared service finance and accounting (F&A) function of a major manufacturing client of ours thought it was performing fairly well in its SAP implementation and process performance – but was only able to judge by its own frame of reference. What it needed was someone sitting poolside who could not only gauge relative performance, but who could make recommendations for individual improvement that were drawn from a wider range of experience.
Did this company want to be presented with a redefined strategic charter, or with statements of principle? It did not. It wanted practical recommendations that would deliver tangible results, which is why it turned to Capgemini.
ESOAR in action
We took a close look at the client’s previous process documentation – not just across the broad sweep of things, but at detailed elements of routine – and assessed them in the context of our ESOAR approach. This documentation review directed us to specific areas requiring a deep dive during workshop sessions and work shadowing.
The order of the ESOAR steps is really important – the best and also the fastest results can be achieved by first looking at what can be eliminated, standardized, and optimized within existing practices, before moving on to introduce new elements in the form of automation and robotics.
From the nine process maps we reviewed remotely, we were able to make 30 recommendations. We then explored three particular process areas – procure-to-pay (P2P), record-to-report (R2R), and order-to-cash (O2C) – and went deeper. For instance, we shadowed in-house teams while they were executing a payment run, so we could see how they were selecting their parameters. This led to even more recommendations – as many as 300.
More than half these recommendations needed no investment. After all, eliminating redundant process steps, such as printing out hard copies to make comparisons with files on-screen, costs nothing, and even saves money.
We standardized processes between countries. We also optimized the company’s use of SAP and other applications: although a great deal of functionality was available to the client in many cases they weren’t taking full advantage of it. Again, these were process improvements that could be achieved quickly and without investment.
Eliminate redundant and overlapping processes, e.g., country corrections and low value period end entries in R2A; disputes root causes in O2C; and processing of hard copy invoices in P2P
Standardize inconsistent processes, e.g., allocation logic across business units, and Chart of Accounts and accounts risk rating in R2A; tolerance levels on disputed/deducted amounts and resolution status and reason codes in O2C; and new vendor creation to a consolidated list of vendors
Optimize tasks and associated documentation, e.g., synchronizing ERP and reporting tool validation and master data in R2A; monitoring of price list timetable and introducing price reconciliation points with large and high-risk customers in O2C; reducing paperwork and streamline passage of supplier invoice through accounts payable in P2P
Automate various finance functions, e.g., developing RPA for data transfer to reporting module/system in R2A; automatic creation of dispute cases based on deductions and automated routing of dispute cases based on customer portfolio, cause, and value in O2C; and integrating intelligent character recognition (ICR) with accounts payable workflow and introducing a vendor self-service portal to resolve queries in P2P
Introduce robotics to repetitive and time-consuming tasks, e.g., leveraging RPA to prepare trial balance review package and notify end user via email in R2A; leveraging RPA for data transfer from ERP to reporting if no interface possible and to fetch and consolidate dispute data for quick and easy resolution in O2C; and leveraging RPA for invoice data transfer and creating a robot to generate a list of vendor accounts that need periodic checking in P2P
Of course, in some cases investment was indeed needed – for example, to implement both the bank communication module and the workflows in accounts payable. The returns on these investments were considerable – but one of the principal lessons of this project overall was that significant dividends could be earned simply by doing more with what was already established and installed – for instance, with major software platforms such as SAP.
Another major conclusion that could be drawn was that process improvement isn’t just about the processes themselves. It’s about the people, the corporate culture, the attitudes and habits. We tuned into all this, and helped them explore how they could do things faster, more smoothly, and to a higher quality. They liked this. They were expecting to be preached at, and they found otherwise. They found we understood their pain points and gave them practical solutions rather than a strategic direction.
As a result of the ESOAR project, our client has improved the control it has over its processes, and decreased the amount of effort required to carry them out. Importantly, it also has more insight into the effectiveness of its own actions. It’s almost as though it can now cheer itself on from the side of the pool.
Some more tangible business outcomes of the project, include:
- 25% improvement of payment on time
- 30% increase in invoice processing efficiency
- 15-point increase in user satisfaction
- 50% increase in payment process efficiency.
Kamila Sicinska leads the Polish business process transformation team in helping global players to set up their transformation agenda, and transform their processes, technology, and organization.
Quick wins – and long-term transformation
When complexity is multiplied by scale, the challenges can be considerable. That has certainly been the case for a client of ours. This organization is one of the world’s leading fast-moving consumer goods companies. It owns and operates several hundreds of consumer brands, with a portfolio of products covering the beauty, personal care, food, and home care segments.
Our client was looking for a step change in performance as well as a dramatic reduction in the complexity of its business processes, which were intensive, manual, tedious, time-consuming and prone to error. There were multiple input mechanisms and touch points, and there was no standard way of operating: different regions had different processes and templates.
What’s more, the costs associated with internal control and compliance were high, and there was a significant lack of consistency in the internal control environment.
ESOAR in action
Here, as in so many other cases, Capgemini’s ESOAR methodology provided a logical sequence of steps to achieve desired outcome. This proven methodology introduces standardization across the enterprise and can deliver substantial efficiency results. ESOAR was used as a platform to identify and execute “quick-win” opportunities, in four key steps: ideation, design, build, and implementation. As a start, we gathered data on current practices and assessed the potential for improvement by answering the following questions:
- What does the existing model look like today, and what are the issues?
- What are the leading industry best practices today and in the future, and where does the existing model fall short?
- Armed with this insight, what opportunities exist to eliminate, standardize, optimize, automate, and robotize to reach a future proof best-in-class process?
The design process addressed not just quick wins, but the medium- and long-term business requirements, and the initiatives that might help meet them. We worked in the context of the organization’s current processes and technology, and ensured we could make a business case for change.
The build process addressed quick-win solutions in the first instance, and kicked off the medium- and long-term projects. We considered the implications of the changes we would be introducing, and developed training programs that would help to ease the transition.
The implementation process was based on the ESOAR methodology, and was executed in line with the transformation roadmap we had agreed with our client. It took advantage of Capgemini’s Accelerated Solutions Environment (ASE) to build a collaborative solution with our client’s active participation.
As part of this, we designed a Global Process Model (GPM), and aligned it across the organization’s various entities, including the scope of activities undertaken by retained and other third-party service providers. Governance, risk, and compliance services were centralized from Capgemini.
The transformation projects we delivered included:
- Transformation of account reconciliation, fixed asset accounting, bank reconciliation, month-end close, and supply chain finance
- Pilot projects introducing innovative solutions involving chatbots, AI, analytics, blockchain, and data mining to identify deviations in complex processes.
Our ESOAR methodology has led to a range of business outcomes for our client, including:
- End-to-end process integration, enhanced visibility, and transparency
- Standardized operating procedures and “golden rules” established
- Lower cost of compliance through automated controls
- 44% effort reduction for account reconciliation, fixed assets, bank reconciliation, and intercompany areas through ESOAR-driven transformation.
S, Ramakrishnan is a result-oriented professional who brings in more than 18 years of experience in F&A including transformation, transition, global service delivery, consulting, integration, and audit compliance.
How to improve the Big Picture – and the detail too
When you’re in business, there’s something that’s even more important than making a sale, and that’s actually getting paid for it. Receiving the funds, applying them to the correct invoices within 24 hours of receiving funds at the bank, and ensuring the values tally – the effectiveness of this process can make a huge difference to the financial strength and stability of an organization.
I work in a team that oversees these credit-to-cash (C2C) transactions on behalf of clients, and one of the main metrics we use to gauge process efficiency is the auto match rate (AMR).
For one of our clients – a large and well-known retailer – AMR was sub-optimal, and as its name suggests, in order to improve it, we looked at ways of increasing the number of transactions that went through automatically, without the need for any human intervention.
Our client had recently changed lockboxes, and the auto match rates were in decline. We knew that we needed to augment the process to increase the hit rates.
ESOAR in action
To kick off this process, we brought together a multidisciplinary team that included a developer, RPA expert, network support, project management, and process experts to pinpoint improvements by looking at the process through an ESOAR lens.
We needed to narrow our focus to target improvements that would impact results quickly, focusing on a series of “sprints” – smaller transformational elements, in which each of the improvements collectively could make a substantial difference to the overall process.
We soon found ESOAR lent itself very well to the task in hand.
Macro and micro applications
Our holistic approach to our client’s C2C issue was to employ ESOAR principles to identify and then co-create a solution. In addition, our sprint-based approach leveraged an agile methodology in fast, easily manageable initiatives to deliver immediate results. Our solution:
- Improved AMR for electronic payments
- Laid the groundwork for additional initiatives deployed in secondary sprints.
Importantly, we found that ESOAR methodology can be applied not only to the entire C2C process, but also to specific individual elements. It works at all levels – and since the exercise’s conclusion, we’ve extended the application of ESOAR to:
- Address other operational challenges
- Zone in on a specific sub-process that needed attention – for example, collections, credit, master data, cash applications, disputes
- Drive an automation-first approach to C2C through a review of existing technology and optimizing first
- Identify opportunities to make other manual processes touch-less.
Even a marginal decline in a company’s AMR can impact customer experience, days sales outstanding (DSO), aging, and the number of resources required to support the work. You don’t need to have the journey figured out before you make changes. You can make improvements one small step at a time.
Our ESOAR methodology has delivered a range of tangible business outcomes for our client, including:
- Significantly improved AMR:
- 9% for the client’s payment method specific to this project
- 3% overall impact on the client’s match rate
- Increased speed, efficiency, and effectiveness of the client’s cash application
- Improved DSO.
Caroline Schneider has been delivering and designing O2C solutions for clients for over 20 years. She is passionate about delivering solutions to clients to maximize their working capital through technology, automation, and industrialized process design. compliance.