While the concept of end-to-end process design for Order-to-Cash (O2C) has been around for a number of years now, the reality is that a large number of companies are still struggling to make significant progress in that area. While the benefits of such a design are clearly documented, the challenges inherent to making this type of transition, such as functional silos, company culture, and customer-facing language barriers, continue to be a roadblock for many companies.
Recently, the Order-to-Cash Global Process Leader at a global life sciences company with over $25 Billion in revenue and 30,000 employees, shared this company’s experiences in implementing an end-to-end process design for O2C. One key driver to this organizational transition was the consolidation of over 50 legacy ERP systems to a single instance of SAP in 2013, which allowed the company to have a simplified global business model, with standardized processes and technologies, including a combination of captive and outsourced service centers and several centers of excellence.
The company utilizes an Order-to-Cash Global Process Owner (GPO) to provide centralized direction for end-to-end processes spanning multiple centers of excellence and delivery organizations. The GPO focuses on overall performance, including efficiency, repeatability, and compliance, as well as overall strategy and policy.
Some of the critical success factors of the implementation of an end-to-end design included the following:
- Develop a clear message of “why are we doing this”, combined with active leadership and sponsorship
- Have a dedicated project team for the duration of the project
- Present the standard template and the new operating model and encourage feedback
- Document processes in “Standard Operating Procedures” including links to process steps & screenshots
- Have a robust change management strategy to train all end users on the processes and system
- Recap country by country just before Go-Live reminding them about the new operating model and BPO handoffs
- Support hyper care and Go-Live with swat teams or on-site
- Maintain weekly/bi-weekly meetings between BPO / Affiliate / Plant and GPL teams
- Develop a future steady-state governance model
Since implementing their end-to-end structure for O2C, they have seen significant improvements in such areas as order-to-invoice cycle time, invoices cleared within payment terms, cost per master data record, and their overall quality review score.
The presenter shared many other details regarding this transition, including specifics about their O2C operating model, their support structure, and key metrics, all of which can be found on the Peeriosity member website.
iPollingTM Results Review
Utilizing Peeriosity’s iPollingTM technology, a poll was recently administered that provides some additional insight regarding the utilization of an Order-to-Cash process design. The first poll question looked at the status of companies in creating an Order-to-Cash organization that includes all major process areas (Order Processing, Billing, Customer Payment Processing, Credit, and Collections). A significant percentage (82%) have either fully implemented this type of organization (38%) or have partially done so (44%), which clearly demonstrates the potential value of this structure.
The second poll question then looked at the future plans of the companies participating in the research as it relates to O2C end-to-end process design. Reviewing the results, 44% of the companies indicated that they will continue to enhance a fully integrated end-to-end process design, closely followed by 38% responding that they will keep the current traditional individual function design for the foreseeable future.
Some of the comments related to this poll from Peeriosity members include the following:
Manufacturing Member: We have implemented SAP OTC for our much smaller, Canadian business, but have not jumped into our domestic business, due to a complicated transition. However, it is being evaluated & will be done in the future.
Computers & Electronics Member: We have 4 of the 5 functions within our SSC…Order Processing is a function that we have made several pitches to assume, but, to date, we have not been successful!
Consumer Products & Services Member: Order Processing is separate, but the rest of the process is consolidated into one global organization.
Non-Profit Member: Most of the O2C steps are consolidated with the Finance Shared Services team, but various lines of business perform the order-taking process and integrate customers and transactions into accounting ERP.
Manufacturing: We have AR/Credit standardized and performed in Shared Services, but the Order Management function is still performed by the business units, with no plans to change.
Consumer Products & Services Member: We evaluated and decided not to pursue pulling together Order-to-Cash end-to-end (a bit different than “denying” it). There are many seams with organizations outside of O2C, and we felt the seams we have today were more effective than the new seams we would create by bringing O2C together.
Healthcare, Pharmaceuticals, Biotech Member: Order Processing is a separate organizational function from the Accounts Receivable, Customer Payment Processing, and Credit & Collections. No planned action to change.
Consumer Products & Services Member: All of the functions listed (except Credit) fall within our Global Business Service group. The Credit team rolls up under our Treasury organization but works closely with our Accounts Receivable team.
While the majority of companies have made at least partial progress toward the implementation of end-to-end process design in Order-to-Cash, many are either continuing to refine that design or move additional process areas into it. For most, this takes a number of years, and gradual progress is the typical progression to this type of organizational design and its related synergies. However, this shift isn’t universal, with 38% of the companies participating in our research expecting to maintain a traditional functional design, at least for the foreseeable future.
What is the status at your company regarding the implementation of end-to-end process design for O2C? Is your current structure meeting your needs or is it time to take another look at this powerful organizational design?
Who are your peers and how are you collaborating with them?
“PeercastsTM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion. Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content. Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member. Using Peeriosity’s integrated email system, Peer MailTM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees.
“iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility of all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPollingTM.
Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers. Membership is for practitioners only, with no consultants or vendors permitted. To learn more about Peeriosity, click here.