“That’s the way we’ve always done it.” How often do you hear that phrase when talking about business processes, especially in your Accounts Payable department? It seems like every organization has used very manual processes for their financial operations at some point, including far too many tasks that do not even add value – simply because that’s the way it has always been done.
Other resources you might find helpful:
But it’s 2019 now. Digital transformation in business processes is not just a concept or a distant goal anymore. It’s considered vital to your organization’s success. It is the fabric of every conversation we have with CFOs who are looking for that “edge” that can help drive innovation within their financial organizations. So why are we still hearing that AP and AR teams are operating the way they’ve “always done it”?
Transformation is defined as a thorough or dramatic change in form or appearance. For businesses, this means changing the way things have always been done. Digital transformation at its core is shifting your manual processes to electronic. Theoretically, this should help your teams have the data they need at their fingertips to make decisions at the furthest edges of your business. Traditionally, decisions were made using historical data that needed to be extracted into a report. With the digitization of businesses and explosion of “Big Data” from external sources, decisions are now made with real-time data.
Often, digital transformation is associated with refreshing technology, implementing new technology, or automating workflows. While all of these can be part of the transformation process, the real aim should be to improve business outcomes (both internally and externally).
While organizational change can be frightening and stressful, it doesn’t have to be. This fear often is rooted in the association of technological change and loss of jobs. Change is difficult and inherently unsettling for humans, but we have been evolving since the beginning of time. When planning a transformation project, it is always good to involve key people from your organization and practice smart change management.
To most effectively improve your organization through digital transformation, you should consider the four areas most affected by the change:
The goal of any transformation initiative should be to make employees more productive while meeting the specific needs of your customers. Most transformation projects focus on employees and the automation of specific business processes. While automating processes is good, the bigger questions should be: How can I help my employees to affect organizational change? How can we become more agile to respond to the innovation going on around us? What can my teams be doing to add value to their business partners?
In addition to your employees, you must also consider how innovation will make your customers’ lives easier and not complicate how they interact with you. These days, everyone is multitasking, and distractions are all around. How will you answer your customers’ AP or AR support questions in a timely manner and to their satisfaction? How do you measure and anticipate customer and market sentiment?
While your employees’ satisfaction should be a high priority, negatively impacting the customer experience hits top-line revenue and should always be top-of-mind when looking at transformation.
Changes in processes are usually what causes the most fear in organizations. As humans, there is comfort in how we have always done things. Change requires stepping outside of that comfort zone – not to mention many unknowns: What will my job be like in the future? Will my job be eliminated with automation? What if I don’t succeed in my new responsibilities? When communicated properly, your employees should see this transformation as making their jobs better and helping them to create more value to their specific business partners and customers.
Many times, when companies implement process improvement, they think only about automation. Automation is necessary to implement process change, but it isn’t by itself truly transformational. Digital transformation efforts should use departmental process automation as a springboard to free up their employees to look at other organizational processes. How can these departments use the additional time freed from manual processes to work across departments and exponentially increase organizational efficiency?
When strung together across departments, process changes should positively affect the bottom line. By reducing barriers created by traditional processes, your teams will be more collaborative and create operational efficiencies. Leveraging those efficiencies will give you more capital to reinvest in activities that drive top-line revenue.
Technology is often the first and only thought when planning a digital transformation project. While it is a very important part of the initiative, your project should look at how a process can benefit from a technology, rather than forcing a technology to fit a process. Technology and the resulting innovation move like a freight train (just try to stop it). In fact, they are changing so quickly that if you are transforming only to use the latest technology, that technology will probably be yesterday’s news by the time the project is over. Technology is a great enabler, but it should be considered just that – a means to overall transformation.
Many B2B companies are turning to robotics and artificial intelligence to help drive operational efficiency by eliminating manual, repetitive tasks. They are trying to force fit these technologies into processes that involve heavy data entry. While the elimination of data entry is valuable, make sure you are looking to technology that can evolve as your processes evolve. Many companies have spent a ton of money on robotics only to see that effort wasted when processes or systems change. Technology should evolve with process and system change, rather than preventing them from changing.
And don’t just consider the technology within your organization. You should have an eye on the technologies your customers and business partners are using. Organizations are often the last to adopt technology that has been in the consumers’ hands for years. Look to technologies the consumer has adopted and see where those could benefit your business. This will keep your team from getting overwhelmed by “bleeding edge” technology and instead investing in “leading edge” technology.
This final piece of the transformation equation often gets overlooked. When looking at how you can enable your team to be more effective, you should consider the following question: How can I put actionable data in my team’s hands at the right time? It is real-time data that gives your team the ability to affect decisions now – and not to waste time reflecting on decisions made last month. Implemented with the previous three strategies, this can lead to one of the most immediate impacts.
Big Data and the Internet of Things (IoT) have been well-documented as game changers. By looking at systems and data outside of your organization, companies can begin to move from reactionary to predictive. Adding this type of third-party data to your mix enables your teams to make informed decisions. For example, analyzing customer sentiment through social media will enrich the internal data your company uses to forecast.
This aspect of transformation can require resources that many traditional organizations don’t have, like data scientists. But investment in the right people and technologies can have an exponential effect on your transformation project’s effectiveness.
When executed correctly, your transformation initiatives should empower your employees to think outside the box and try something radical. These radical changes are the ones that catapult your organization ahead of the competition. Digital transformation provides organization agility, which frees up your teams to create more value. Let your employees know that failure is acceptable and part of the process when trying new processes. You will learn from the failures and ultimately create an innovative, digitally transformed organization.
Are you ready to digitally transform your AP and AR departments? Contact us.