A proven architecture for driving digital business

Greg Bateup: Yes, of course. Earlier this year Capgemini released a report called “Reimagining finance for the digital age,” which in part looked at what organizations expect from automation and other new technologies, such as platforms, artificial intelligence (AI), and robotic process automation (RPA). This started us thinking about how Capgemini’s Global Enterprise Model© (GEM) and its seven levers should evolve in light of this new technology.

For example, we looked at how the grade mix lever of GEM would need to change based on an improved span of control, as AI and RPA undertake lower end tasks. How our location mix would evolve based on the different skillsets available across different locations, and what skills and competencies our employees would require in a digital context. We took all of this and embedded it into our Digital Global Enterprise Model (D-GEM), which really puts technology at the heart of the operating model.

Against this backdrop, how do you see the report-to-analyze (R2A), credit-to-cash (C2C), and process-to-pay (P2P) functions evolving within D-GEM?

S, Ramakrishnan: These are interesting times indeed! As Greg mentioned, the industry is moving towards a more automation-focused or automation-first approach. In the R2A area, I see multiple opportunities. D-GEM encompasses and leverages Capgemini’s ESOAR (Eliminate, Standardize, Optimize, Automate, Robotize) methodology to make processes lean before automating them.

For example, in the journals process, we use the “Eliminate” function to reduce the number of journals by implementing thresholds. The “Optimize” function helps our clients to get the very best out of their ERP system, as many organizations don’t always use the available functionalities within their ERP. For example, within SAP, there’s a functionality called IDoc, which if you activate it, enables you to post your transactions automatically within the same platform.

There are multiple automation tools available in the market, and Capgemini has a number of tools such as Trintech, which can automate the account reconciliation management process or the actual process of reconciling and clearing the open line items in accounts. With D-GEM, there are a lot of opportunities of leveraging ESOAR to make your processes lean and world class.

Caroline Schneider: The evolution of GEM to D-GEM is pretty exciting in relation to order-to-cash (O2C) and C2C activities! Historically, the approach to O2C focused on how to build an experienced team and how to standardize the team’s repetitive activities, such as keystroking.

With D-GEM it’s really about how can we automate first. How can we virtualize the tasks team members have carried out historically in a manual way and do them much faster. It’s also looking at what team members are analyzing; what are they actually doing in the system, who are they talking to, what are those touch points, putting a technology wrapper around these activities, and delivering results that we’ve never been able to deliver to our clients before.

It’s all very exciting! Even implementing technology such as voicebots in the collections process. Collections is a process that is ripe for digitizing certain customer interaction activities. Self-service portals, voicebots, chatbots, and robotics are enabling us to carry out activities such as emailing, reading and responding to emails, and much of the back-office work in an enhanced and streamlined way. It’s a very exciting journey that the explosion of digital will enable us to deliver to our customers and clients over the next few years.
Greg Bateup: There’s also an interesting convergence going on within the source-to-pay (S2P) at the moment. For example, in the transactional processing area, which has traditionally been very manual and slow to upgrade, where technology such as optical character recognition (OCR) to scan invoices is being enhanced by robotics.

At the same time, electronic invoicing is starting to accelerate. This technology has been around for 10 years but it’s starting to show real results and people are also starting to make investments in upstream processes. In the procurement function, electronic invoicing is driving the changes to reduce exceptions, which have traditionally been the weak spot. Within the traditional catalog space, AI and chatbots are transforming activities such as the guided buying process to help users find and buy the right item. It’s coming from two different angles – finance and procurement and it’s quite exciting.

What impact will D-GEM have on an organization’s people? How will automation transform the finance team of the future?

Caroline: This is a great question! When you have all of this automation, you need people in your core team with the right technical skills who understand how to manage the automation. Historically, organizations have had a delivery-centric model, with people wielding strong delivery skill sets managing activities, including automation.

With D-GEM, we’ve anticipate the requirement for either a virtual delivery center, or a team that understands how to manage and optimize platforms to ensure clients leverage all functionalities of their ERP, as well as manage fallouts from the processing that occur on a daily basis. This means a large part of the team will be dedicated to automation governance and ensuring the throughput of automated transactions, coupled with what remains of your delivery team with much higher skillsets focused on more complex tasks. It’s really about striking a balance between these two teams, and it’s going to be pretty exciting to see how our team designs evolve with digital.

Rama: I agree with Caroline. If you look at R2R, traditionally about 70% of the effort goes in recording and only 30% effort is put on reporting and analysis. With automation, this changes – the time spent on recording is reduced and the time spent on reporting and analyzing these transactions increases.

With a process such as intercompany reconciliations where a huge amount of effort is spent on recording transactions, leveraging automation or blockchain to ensure that the transactions are recorded correctly will enable us to change this balance to 30% record and the remaining 70% on reporting and analysis. The team will be involved in more value added functions such as monitoring and analyzing the exceptions and ensuring that KPIs are met, as well as maintaining clean and hygienic books of accounts.

To summarize, the focus will shift from recording to reporting and analyzing, which represents the cream of the process.

What does D-GEM mean for our clients and the outcomes they expect? Also what challenges do you think they are facing when it comes to implementation?

Rama: It really is an exciting time to be a client. With the industry moving towards an automation-first mindset, Capgemini’s D-GEM model and ESOAR methodology enables you to make the end-to-end process lean by making changes on both the client organization side and the service provider side.

As your processes become lean, you can move to more hygienic accounting and reduce your balance sheet risk to a minimum. This also means that your lean processes are then geared up to be scalable in the future. Many of our clients have been through a number acquisitions; it’s easier to acquire a company when you have a standard process with standard technology to embed the new company into your way of working.

However, this also comes with certain challenges. When you eliminate or automate processes, there’s a huge amount of change management effort that’s required within the transformation program. For example, imagine a client operating in 75 global markets needs to set a tolerance limit for journal entries. It’s not as easy as simply sending an email on the tolerance limit policy and incorporating it. Each country has a certain set of legal requirements, challenges, and change management requirements. It’s important that the change is understood, communicated, cascaded, and then executed properly within the client organization.

The second key challenge is alignment with the client organization’s IT in incorporating new technologies. For example, not many of our clients or their IT teams are conversant about blockchain and its benefits. They are important stakeholders in our transformation projects and it’s very important to align with them.

Caroline: It’s much harder to change existing processes when they are already solidified, so taking the time to invest in the transition and transformation process up front will save time, provide the best business case, and top quartile results early in the process.

You mentioned blockchain as an example of how emerging technology will impact processes. We’re doing a lot of work in R2R with blockchain and exploring Blockchain for O2C. Blockchain represents a huge leap to eliminate the exceptions, as traditionally we’ve always looked at how we resolve exceptions faster. AI, blockchain, and other emerging technologies are set to make a huge impact on our delivery models of the future.

Greg: While the current focus is on managing exceptions, in the future it will be about eliminating them altogether. In terms of what it means for clients, I agree that change management is very important.

In the P2P space, the procurement organization is sometimes outside the finance organization, and it’s important to understand the key stakeholders that need to be engaged. In terms of outcomes, there’s a lot more focus on the value we can bring to the business through automation. Efficiencies improve as back-office processes start to be streamlined. The focus then shifts to the value we can actually drive, such as working capital improvement and speed to market. These aspects will become more important in the future as we deliver these operating models.

Greg Bateup  has worked with clients to deliver business transformation and BPO services for almost 30 years. For the last few years, Greg has focused on the digital transformation of the source-to-pay function, and how organizations can not only drive efficiencies in the procurement function, but also drive compliance and savings.

Caroline Schneider has been delivering and designing O2C solutions for clients for 20 years. She is passionate about delivering solutions to clients to maximize their working capital through technology, automation, and industrialized process design.

Ramakrishnan S 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.