The Order-to-Cash process is often one of the last process areas that transition to a Shared Services or a Business Services delivery model. The reason O2C processes are usually last is that these processes are closer to the customer, resulting in significant influence and oversight being required by individual business units and geographies. Since company revenues and profitability are tightly linked with customer experience, there is often hesitancy from business owners to relinquish control of the underlying work processes that are a part of Order-to-Cash.
The results for many companies from this tight control of O2C include non-standard business processes, unnecessary complexity, and decentralized work activities in local geographies. While decentralized processes can create high-touch delivery for customers, maintaining processes that are of the highest quality requires significant staffing and often re-work when work-steps are frequently inconsistent or broken and transitions between work activities are not standardized or clearly defined.
Utilizing a GPO model eliminates barriers to achieving standard processes and results in greater centralization of work activities based on the underlying requirements to complete the work, instead of being based on the needs of a divergent set of business owners with limited experience in O2C and conflicting approaches for how work should be performed. While regional and local differences are possible, starting with a position that processes should be standard globally and across all lines of business with deviations only when necessary, can be a very powerful approach. This design is even more effective when individual processes are closely managed by a single Global Process Owner.
A PeercastTM discussion in our Accounts Receivable (O2C) research area featured a large global company with over $70B in annual revenue discussing their approach to implementing and utilizing Global Process Owners (GPO’s) for the end-to-end Order-to-Cash process. With the transition to GPO’s as part of a multi-year improvement project, they were able to reduce headcount from 350 FTE’s to 250 FTE’s with a cost savings of USD $8M per year. In the new design, the company has separated GPO responsibilities for the Collections, Claims, and Cash Application processes.
For details, Peeriosity members are encouraged to sign into the members’ area to view the complete presentation and listen to the recorded Peercast.
iPollingTM Results Review
Peeriosity’s iPollingTM was used to provide supporting data for the Peercast. The first question asked members to identify the most significant benefit from having a GPO for Order-to-Cash. The results indicate that 62% of Peeriosity member companies are using a GPO model for Order-to-Cash. Of the 62% who have implemented GPO’s, 40% indicated that leadership in bringing O2C areas together with a common set of aligned goals has been the greatest benefit, 20% indicated that leadership in increasing standardization and improving quality has been the greatest benefit, 20% cited leadership in setting the overall strategy for O2C was greatest, with 20% citing some other option including “all of the above”.
The second question asked about the scope of responsibilities for the O2C Global Process Owner, and specifically the mix for which the GPO has ownership for strategy, policy, and operations. In other words, what roles does the GPO have in determining the strategy? Once the strategy has been defined, what role does the GPO have in determining policies? And finally, what role does the GPO have for operations, which is defined as the actual people and resources who complete the work activities?
While the mix of responses indicates a wide range of approaches by Peeriosity member companies, 55% of the companies use a model where the GPO’s have responsibility for the people in addition to responsibilities for some mix of process and strategy. Here are the details:
Here are some of the comments from members:
- The GPO role includes all of these leadership areas.
- Our transformation goal – standardize, automate, and simplify.
- Our company is still developing a strategy to establish GPO in Order to Cash.
- We don’t have a GPO for OTC yet.
- Our organization doesn’t currently operate with an end-to-end O2C process owner due to the various e-commerce solutions across various lines of business.
- We are planning to re-implement Global Process Owners. Previous attempts were of limited success as mandate and resourcing were insufficient.
Implementing Global Process Owners for Order-to-Cash can have a positive impact on driving process improvements with increases in-process quality and reductions in headcount and cost. Because of the sensitivity of businesses and geographies to how Order-to-Cash processes impact customers, success requires top-level sponsorship and commitment where the GPO’s can truly be “owners” and not just “process advisors”.
Does your company have Global Process Owners for Order-to-Cash? How are the roles defined? Do the GPO’s have responsibility for the people, in addition for responsibility for either strategy or the overall process?
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 iPolling.
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.