When a successful project is deemed unsuccessful
Technical projects can be deemed unsuccessful even if the project is delivered on time, under budget and with all of the scope delivered. The reason for this perception is the lack of tangible or intangible business benefits realised from the implementation. This is mainly due to the project being seen as a technical project delivered by IT and not a business project designed and delivered between IT and the business to maximise business benefit.
When making system changes to core Finance systems it is worth reviewing the current and future processes. A good example is Accounts Receivable. I am unaware of a system out there that will actually bring in cash. A human is required to call the customer up, ask certain questions and record that information in a simple way so it can be reported on. I have seen recently a number of unhappy customers who have implemented new shiny systems to manage their Accounts Receivables process but have not realised the benefits they expected.
How is playing golf similar to aligning systems and processes?
As a keen golfer I sometimes tell a simple story to help customers understand the need to align systems and processes with a clear objective to measure the actual benefit of the project. Imagine you are an occasional golfer. You arrange a session to review your swing and the "pro" provides some tips and changes for you. On your way out you go into the shop where all of the new shiny clubs are calling out "buy me - buy me". The clubs are called "game improving" - they promise that you will hit the ball further, better and so on. You purchase the best set and walk out. When you play golf again you don't see a real improvement. The flaws in your golf swing are still there, and whilst you might occasionally hit the ball further, it does not actual go where you want it. What you really need to do is to invest in golf lessons. You need to learn about your swing, and practice. Many golfers, don't have a standard swing, however a good golf pro can streamline your swing and provide you drills so you have the best chance of hitting the ball where you want to (a key principle in golf).
How does it all fit together?
If that story does not make sense to you, let me explain the points I am making. The shiny new golf clubs are the new IT system you implement to enhance your Accounts Receivables process. If you know how to handle the clubs properly you will see an improvement. The golf lessons are represented by the process review and process enhancements that are required. If you have both there will be a noticeable difference. If you just have the lessons without the clubs - you won't be able to collect the cash in an efficient and consistent manner. If you have the clubs without the lessons - you will have a great new system, but it would not be set up to maximise the benefits for your Accounts Receivables team.
What should be covered in your 'golf lessons'?
The first thing to point out is that golf lessons will vary from golfer to golfer as they will be of varying shape, age and ability. The same could be said for the changes to the business processes for the Accounts Receivables department.
1 - Review your customers. More than likely you will have more customers than time to call them. The key to a successful Accounts Receivables process is to contact the right customers at the right time. By categorising your customers, you can use phone calls for a tranche of them, use dunning or chase letters for a different tranche and perhaps try and move other customers to self service options such as Direct Debits or a portal based system. Where this is done well, the Accounts Receivable team will focus on contacting higher risk customers, or high value customers, enabling a reduction in the amount of overdue debt.
2 - Streamline the dispute process. Where a customer disputes an invoice, generally this will lead to short or non payment of the invoice or invoices. In turn this reduces the amount of debt the Accounts Receivables team can collect. Automating the creation of disputes, and having a write off policy for low value disputes will reduce the overhead to the Accounts Receivables team. Further to this, where you have a dispute you wish to investigate the use of workflow and escalations will improve the efficiency of the process by reducing the time it takes to resolve. In turn this will lead to a tangible benefit by reducing the amount of overdue debt.
3 - Variable real-time credit checking. One rule normally does not fit all. This can be easily seen when reviewing a credit policy. Clients will have a variety of customer types. Some will be high risk, and therefore it is important to ensure that they pay on time and stay within their credit limit. Others will be lower risk and therefore none of their sales orders should ever block. It could be that a certain business unit is not allowed to have real time credit order block due to the nature of its business. Again having clear categorisation of your customers, and linking those groups to common rules will enable the right customer to receive goods at the right time, and where required certain customers not able to receive goods due to adverse situations. This will lead to a reduction of incorrect blocked sales orders and a reduction to the level of bad debt.
It is crucial to align system and business change. Within the world of SAP Receivables Management, I have seen customers ask to implement the solution and not look outside of it to the processes. Normally there will be process changes to core SAP FI-AR as well as implementing SAP Receivables Management, which highlights the point that the system won't fix the issue in isolation. Further to this the scope should be determined based on the new business processes with an understanding of the system capabilities. By following these three key guidelines you should be closer to matching your project expectations with your actual benefits.