Discuss, debate and exchange ideas on latest trends and opportunities in the Business Process Management (BPM) landscape. Deliberate on adding “business value” to clients, vendors, employees and various other stakeholders to enhance customer satisfaction and sustain long term partnerships.

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March 28, 2013

Why Accelerated Financial Closing - a Perspective

Financial closing and reporting is not a new jargon and it is happening from times of immemorial. Now-a-days accelerating the closing and reporting process is gaining more importance.  What could be the benefits by achieving faster close?

What is the objective of financial close and reporting?
- The very objective of financial closing and reporting the results to external and internal stakeholders is to get insights of the company's performance during a period and bring that to the knowledge of Investors, regulators, management and other stakeholders in the organization.

If this is the objective of financial closing and reporting, why there is a need to accelerate closing process?  Can this bring in tangible benefits to the organization?
Financial closing and reporting is not a new jargon and it is happening from times of immemorial. Now-a-days accelerating the closing and reporting process is gaining more importance.  What could be the benefits by achieving faster close?

Major benefits for an organization due to accelerated close will be:

Sooner the close, sooner the organization can act:
If the financial information is available sooner, the management can act quickly based on the information available to bring in changes to its objectives, targets, short term and long term plans. Unless the 'adequate and complete' information is available on time, the decision making of the management will get delayed which would considerably affect the performance and growth of any organization. Companies would be at a competitive disadvantage if the management does not receive complete, accurate, and timely reporting data to act upon
For eg:
Consider company A & B (in similar industry) having a regular close and reporting cycle of 30 & 8 working days respectively. Both the companies are producing a particular product line which is getting slowly outdated and hence the revenue from that product line is getting lower and lower. Since, company B is closing and reporting faster, it spotted the revenue dip in that particular line of product and observed that the product is going obsolete and hence reduced the demand forecast and consequently the production.
Company A, as a result of the time it takes to close and report, never adjusted its forecast for the product and hence resulted in excess production resulting in loss from that line of product.
This is a very basic example of how the timely reporting of financials (whether internal or external) would assist management to get more time on analysis which can drive better informed decisions"
Please note - Top Performers provides results to senior management much faster, in 5 working days (i.e. 3 days to close and 2 days to report) (Source - Hackett)

More time to analyze the data than time spent on data collection and preparation of reports:
In majority of the companies / organization, the finance resources spent their significant time in data collection, collation and consolidation and hence no time is available for disposal for those resources to do any meaningful analysis of the financial data reported. If the period closing timelines are shorter, it gives more time for the management to analyze the data and hence more insights will be available to the factors driving the numbers reported.
Please note - The payback from the systems integration is evident in the high degree of automation: Top Performers automate 90% of journal entries (Source - Hackett)

Finance resources can be redeployed:
If the finance resources can do a faster close, the same resources can be re-deployed for other value added activities performed by separate teams of the organization. By closing and reporting faster, financial personnel can also partner with operations in making strategic decisions including mergers, acquisitions, process re-engineering etc. This will also ensure that the organization will minimize its size and cost of overall finance function.
Please note: Account-to-Report process cost for Top Performers is 52% lower than for the Peer Group, reflecting the Top Performer Group's more efficient and effective leverage of sustainable Best Practices (Source - Hackett)

Eliminates inefficiencies in downstream processes:
When an organization is constantly reducing its closing and reporting cycle, it will start identifying the inefficiencies in all the downstream processes such as Procure to pay, Order to cash etc. This will ensure that all the downstream processes become efficient and effective to support faster closing and reporting.
Please note - "Top performer has 8.5 FTEs per Billion dollar revenue in Account to Report function"

Improve stakeholder's confidence:
Faster reporting will also instill, improve and re-enforce shareholder's confidence in the organization. Closing quickly and efficiently gives the market more comfort with the reported numbers. Closing faster reduces uncertainty in the market, which will be appreciated and supported by the investors.
It has to be noted that Infosys is one of very few companies who reports their results to the market faster than their peers in the industry

Complex reporting requirements:
Increased complexities in reporting and more and more disclosure requirement for the purpose of transparency makes it imperative for the companies to have a system which could be as dynamic as the changes in reporting requirements and assists in faster and timely period closing & reporting.
Reader should also read this in conjunction with the Thought leadership article on Transformation in the Finance Department, where it indicates the maturity levels of Record to Report processes, which will also drive accelerated closing and reporting. 

Inviting comments from the readers of this blog..........
Accelerated closing and reporting - How to get there? - Coming soon............

March 25, 2013

Symbiotic Relationships in the ecosystem of Supply Chain Management

Nature has never seized to inspire us mortals; the closer you observe, the more the number of lessons it has to offer in every field of life. Symbiosis is a concept that Supply chain professionals can heavily derive from in order to develop and maintain effective relationships.

The romance between a flower "kali" and a honey bee "Bhanwara" has inspired the lyrics of innumerable Bollywood songs. But, ask an ecologist and he will kill the romance out of the relationship and give you a lecture on Symbiosis.

Nature has never seized to inspire us mortals; the closer you observe, the more the number of lessons it has to offer in every field of life. Having been a microbiology student myself and now a Sourcing & Procurement professional, I cannot help but compare the relationships that exist in a Supply chain system with those that exist within any other ecosystem.

Symbiosis (unlike organisms living together) is a concept that Supply chain professionals can heavily derive from in order to develop and maintain effective relationships. Let's compare and understand these better,

  1. The Flower and the Honey bee (Mutualism): In this type of relationship both the parties involved, benefit from each other just like a honey bee gets its food from a flower while helping the flower reproduce.  Supply chain financing which is an upcoming trend in the world of Supply chain management is a classic example of this theory. A larger organization with better credit rating and brand equity helps a smaller supplier get a loan for working capital and benefits by getting better payment terms and rebates in return. Both the organizations also benefit from a healthy professional relationship built on trust.
  2. The Egret and the Buffalo (Commensalism): In this type of relationship only one of the parties involved benefits from the relationship while the other neither benefits nor loses anything. Just like an Egret feeds on the insects that come to the surface due to cattle's grazing, but the cattle do not get anything in return. A befitting example would be an automotive company manufacturing cars while and there are several mechanic shops that find occupation in offering maintenance services. 
  3. Mosquitoes and humans (Parasitism): In this kind of a relationship one party benefits at the expense of the other just like a mosquito bites a human being to feed on the blood while infecting the human being with Malaria. The traditional way in which buyers worked whose sole agenda used to be to suck the even the last penny out of a supplier is a classic example of this type of a relationship.

Being a firm believer in equality, mutualism is the symbiosis I favor the most. Most contemporary business evolutions and path breaking ideas in the corporate world are designed to benefit from the synergy that mutualism brings to the table. For Example, collaboration between a bank and an affinity organization which benefits all parties involved including the bank, the affinity organization and the card holder. Other examples of such collaboration are Search engines and online marketing and Dell's collaboration with Microsoft.

March 22, 2013

Smart HR with Smartphones

Mobility has come a long way. Bulky Personal Computers and complex operating systems are on their way out. The desktop paradigm and the workstations are dying. Million dollar single function systems and complex interfaces are being questioned. A new eco-system is emerging in the space.

The year was 2005 and I was in Dalian, China. We were part of a pursuit team for one of the biggest HR outsourcing deals in the BPO industry. The president of our company was talking to the client - the HR head of a manufacturing global  giant. "Kiosks don't work. We have tried it before. Computers are out of question. These are people on the factory floor," He roared. My then president, known for her sharp thinking, picked her phone and held it in the air, "I can get you hardware companies here in China to build a handheld computer that can do everything, that can be done on a desktop and still be carried around. And it will be specific for your company. I will bear the costs. It will be cheaper than deploying people all around to manage stuff," she responded back. There was disbelief in the room. We had made prototypes in the past for showing multimedia run on the mobile. WAP was known.  But a HR device for the factory floor that is customized was something that was not thought of. But the vision got across. We got the deal. But the device never got developed.

Almost 8 years later, mobility has come a long way. Bulky Personal Computers and complex operating systems are on their way out. The desktop paradigm and the workstations are dying. Million dollar single function systems and complex interfaces are being questioned. A new eco-system is emerging in the space. It has already taken over our personal computing space. It may not be long before it reaches our work areas. Dedicated workspaces may not be in vogue for long. Factory floors or field work will not constrain a worker from interacting with their office systems anymore. Laptops, virtual office tokens, even swipe capturing devices may all merge into the mobile device. This can in one act of convergence become the ID card, credit card and access card.

Sadly, no player in the HR industry has boldly taken the plunge yet or pronounced the vision like my then president 8 year back. We continue to build complex HR systems and sell services around them. Companies are still commissioning systems based on what will reduce administrative load as the primary motive. The employee comes very late in the picture. Our systems will have to be built with mobile as the primary system. The architecture need to be new. Not clip a few things and fit the desktop onto the mobile.

The entire paradigm needs to change. We need to build an HR service offering that has the mobile as the center and the way people work and interact on the mobile as the platform. The mobile will be the primary device that can be projected on a larger screen. With this ESS/MSS may have a whole new adoption level taking away the transactional layer in HRO and give way for value added HRO to emerge. I am excited to see the new reality emerging, Are you?

March 20, 2013

Automate procurement - save big bucks

Automation of procurement can bring big wins. It can reduce costs, increase productivity and maintain high level of operational effectiveness. Business benefits achieved from automation are worth every penny spent on implementing the cost of new technology.

In the current economy, organizations are seeking ways and means to conserve resources and cut costs.  Organizations can save a lot of time and money by automating procurement, or the buying and sourcing of goods and services, according to some analysts. In a new report, The Hackett Group mentioned that "world-class" procurement executives--those rated as most effective and efficient--invest substantially more money in IT than their peers, while actually spending less overall and operating with a smaller staff. World-class procurement organizations are more than twice as likely as other companies to make high use of sophisticated reporting tools for spending analysis, said Christopher Sawchuck, senior business adviser at Hackett, in an interview with eWEEK.com. They also use online tools to communicate requests for information, proposals or quotes 78 percent more often than other organizations.

Monetary savings: Automation of procurement can deliver big savings by reducing administrative costs and shortening procurement cycle. An automated approach enables to drive down the cost of supplies as a result of supplier rationalization and identifying preferred suppliers. It also ensures only preferred suppliers are used across the organization.  In organizations, where purchasing responsibilities are spread over several departments or locations, automation can maximize buying power by consolidation of processes thereby reducing per transaction cost and achieving higher volume discounts. Ariba, Emptoris, Infosys ProcureEdge, Procure+, ebuy 4, Oracle iProcurement, PeopleSoft e Procurement are amongst the top procurement tools generally used by world class organizations.

Time savings: Automation saves time as goods and services can be procured quickly. Processes done manually used to take hours or days can just be done with few clicks. Procurement staff will not waste time over transactional processes like invoice matching, generating requisitions/purchase order, etc . Time spent on administrative tasks like contract creation, creating RFx, vendor management, etc will also reduce.  Procurement staff will spend time effectively in more strategic activities than transactional and administrative activities.

Increased accuracy: Automation increases accuracy as electronic capture of data will leave no scope for clerical errors, order mistakes. Automated processes will provide better, deeper and timely visibility to both procurement and management on spend patterns, status tracking, contracts, etc.

Enhanced negotiation: Better visibility of procurement pattern (volume, price and frequency of purchase), spend pattern - procurement personnel's will be geared better to effectively negotiate with suppliers in terms of  price breaks, volume discounts and favorable payment terms resulting in cost savings.

Increased compliance: Automation brings transparency to management. As the procurement processes are standardized, enforcing buyers to follow a single standard of buying a certain product across. It delivers greater control over spending by eliminating maverick buying or purchasing items outside preferred systems. Centralized tracking allows procurement to monitor off- contract buying and ensures better contract compliance.  Manual processes are error prone. Automation can ensure procurement is carefully managed and risk of fraud is reduced.

So automation of procurement can bring big wins. It can reduce costs, increase productivity and maintain high level of operational effectiveness. Business benefits achieved from automation are worth every penny spent on implementing the cost of new technology. Organizations having automated processes report savings in the range of 5 percent to 15 percent -- through efficiencies as well as direct cost savings on their automation investments.

March 19, 2013

What Customers Want From Their Procurement Partners... a Fresh Perspective...

No two clients are the same, and their problems require individual attention with equal precision, from every possible angle.

This is a narration from an episode of the well-known American television medical drama, Grey's Anatomy:

"In order to get a good diagnosis, doctors have to constantly change their perspective. We start by getting the patient's point of view, though they often don't have a clue what's going on. So we look at the patient from every possible angle. We rule things out. We uncover new information, trying to get to what's actually wrong. We're asked for second opinions, hoping we'll see something others might have missed. For the patient, a fresh perspective can mean the difference between living and dying...

When we look for second opinions, it can shed new light on the problem; makes you see it in a whole new way. After all the opinions have been heard and every point of view has been considered, you finally find what you're after - the truth. But the truth isn't where it ends, that's just where you begin again with a whole new set of questions..."

Similarly, when procurement partners design solutions for customers, who approach them akin to patients with their purchasing problems, their system is suffering / unwell and needs the most accurate diagnosis from partners. It is up to partners, as doctors in the situation, to assess the state of affairs with complete and thorough diligence, multiple approaches, several best practices and flexible ideas of providing a timely and exact solution / cure to our clients without medical non-sense/scare mongering (sometimes rampant in medical and procurement partner fraternity).

No two clients are the same, and their problems require individual attention with equal precision, from every possible angle.

Let's continue the discussion and share some examples too of experience as Doctors or Patients here. Cheers !

March 14, 2013

Guiding lights: bridging the gap between Information Technology and Procurement

As companies move closer towards adopting mobile trends and capabilities, they will require skilled and knowledgeable category experts as a "guiding light" in bridging the gap between Information Technology and Procurement who understand the risks and sensitivities of sourcing.

Over the last several years while the world slowly climbs out of a global recession, analysts have been projecting sales increases or decreases in technology products and services globally.  Due to rapid changing market, economic, and political conditions, many analysts have had to recant and readjust their projections. 

What we know for certain, is the fact that there has been a significant increase in Cloud base offering, BYOD adoption, and the proliferation of smartphone and tablet devices and demand for related service investments, creating a highly competitive environment.   Suppliers continue to contend for market share supremacy while increasing their breadth of portfolio offerings.  In part, we are seeing an increase in merger and acquisition activity, including newly formed partnerships, which give the traditional supplier landscape "new definition" which can be ambiguous to the customer but not to skilled category experts and analysts in the sourcing and procurement BPO industry.

As companies move closer towards adopting these mobile trends and capabilities, they will require skilled and knowledgeable category experts as a "guiding light" in bridging the gap between Information Technology and Procurement who understand the risks and sensitivities of sourcing these new commodities while uncovering wasteful spend, identify process gaps, and strategically sourcing products and services to achieve optimal savings by knowing which levers to pull.

The best place to start in efforts to achieve the greatest savings results can be initiated through:

  • Rapid category spend and contract analysis to assess the client's current spend patterns and behaviors
  • Explore the "low hanging fruit" to yield immediate savings
  • Identify and mitigate any potential risk exposure
  • Develop a pipelines of potential sourcing projects
  • Formulate the right sourcing strategy for each to ensure successful outcomes

Maybe your company is not as far along the maturity curve in technology and procurement operations.  Maybe your technology roadmap does not have any immediate implementations projects for new technology.  Significant savings can also be found through demand management exercises  to understand and uncover any wasteful spend such as software and asset management, print demand audits, and assessing telecom contracts and usage where clients have historically enjoyed double digit savings and better visibility through optimization and implementation of best practices.

March 12, 2013

Measuring Training Effectiveness: Let's Not Overdo

Talk about measuring training effectiveness and think about the post-course happy sheet-the feedback form!! This has become a standard staple safe game plan. But this falls short of a meaningful business performance indicator because liking a training/trainer, environment and eventually individual's training experience, after all, does not necessarily lead to learning.

Most organizations do nothing to assess the true effects of their training and development programs, though almost everyone has a vision to measure training effectiveness. Amidst continuing economic turmoil, corporates spend billions on formal training and development while making no effort to invest in measuring the efficacy. Hardly any other area of business would have such a huge investment accompanied by so little meaningful follow-up.

We have an ingrained infatuation with Return on investment which has led to some complex mathematical formulas which largely fails to address the inherent uniqueness of the training world which is better measured against 'Return on expectations'.

So what do we do?

Simplify and measure only what absolutely needs to be measured. Don't measure metrics because data is available.

What are the various aspects to be evaluated?

  • Training project
  • Training program
  • Training Delivery
  • Training Curriculum

For a 360 degree understanding of the impact of the training, we have to evaluate all the above aspects in isolation to appreciate their inherent differences.

Generally, researchers develop their own scales for measuring variables for different attributes. The scales should be reliable, valid, sensitive, generalizable, and relevant. Now, let's focus on the relevance before we embark on the effectiveness study. No learning is bad; however, a lot of learning at the organization's expense can be unnecessary. Let's focus on the study to weed these elements of redundancies out of training offerings; automatically the training will become more effective.

Possibly an independent review of the training repository might be beneficial to assess what is relevant for the 80% of the mass population. It may also be worthwhile to evaluate training programs that are not utilized over the period of time and resources are spent to update and maintain the above mentioned four training aspects.

There is an inherent latency of training effectiveness; hence there is a need for observing the effectiveness pattern over period of time, the periodicity being contingent upon the training curriculum.

It can be an instantaneous measure if there is a knowledge point to be checked, or a 30/60/90 day observation period to map the progressive exhibited change. The fast feedback approach will not be clinical in analysis always.

The traditional way of measuring learning often overlooks the softer, intangible aspects of measuring effectiveness.

The hard benefits are quantifiable, example; increase in the quality of work by, measuring error percentage, however, overall behavioral change resulting in increased ownership of the job often does not get measured. There is a need to tap these softer aspects and articulate its inherent business value.

One way of ensuring this is to make sure the trainee is not deserted after the training/ post course feedback session, in fact close monitoring of the trainee from a discrete distance and ensuring pressure of performance doesn't impact outcome is a better measure of training effectiveness.

I have a game-plan to propose. This probably will not find takers among my own training fraternity, but, I feel it's still worth a try. Let's sanitize the training offering and observe the withdrawal symptoms one at a time. If, on removing a training offering doesn't result in any adverse indicators over a period of 7/ 15/30/60 and may be 90 days period, then it's probably time to say adieu to that particular training. At least it makes a case for dissecting the return on expectation from that particular training, against the actual training offering and set the stone rolling in the right direction for measuring effectiveness. If we find favorable outcome then we can move to more complex terrain and study withdrawal pattern of co-related trainings and then proceed to make the study more complex but more meaningful.


March 11, 2013

Freight fright - Why is arranging freight such a fright for most transport managers?

Even though most companies utilize 3PLs to manage incoming and outgoing logistics, a common complaint is the unending issues that crop up after work hours that keep a transportation manager awake all night.

One traffic planner responsible for managing the freight between the manufacturing plant to warehouses to customer gave the following list of "issues" that a 3 PL required his attention on a typical Friday evening:

  • The warehouse was closed, does the truck need to wait incurring waiting charges or cancel the shipment and incur cancellation charges as well as delays?
  • The spot rate had changed for a particular carrier by $300 compared to the regular price, do we go ahead or search for another carrier?
  • A change in customer need, requires the material to be redirected mid-shipment to another location....do we go ahead? Who will be expected to bear the charges
  • The containerization done was inaccurate and now the shipping documents need to be changed while the trucks waited outside the warehouse
  • An order needs to be shipped by premium freight - what are the approvals required and how will billing be done?

These issues were over and above the commonly faced problems relating to accidents, primary carriers not being available or increased fuel rates. One solution is to have rigidly designed and documented approval procedures and "what if" scenarios....but will this work when the scenarios itself change by the minute and most decisions are judgmental in nature taking into account the urgency of the shipment and the customer relationship? A work around is to define a range within which one is willing to compromise one the cost impact. For instance most companies absorb increase in rates if it is less than a threshold value, approvals are done away with for decisions where the cost impact is less than this value. But what does one do with "issues" where there is an impact on lead times? Delays due to wrong containerization, inaccurate documentation or even accidents can damage customer satisfaction in the long run.  Some companies use a dedicated traffic coordination team to manage such issues or escalations while others outsource this to a 4PL. The value they bring needs to be measured in ROI terms but few companies go down this route stating the benefits are so evident that measuring this is purely academic....an idea that the transport manager would quickly agree to.

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