Okay so, first of all, thank you for joining us, Frederic. Thank you all for joining us here today at this panel session as well. So Frederic, let’s start off by asking you. What you think are the key factors that are responsible for a successful digital O2C transformation project?
[00:40] Frederic Berthoud:
For me, the key factors for the success of this transformation project go on. As it is a transformation project so we have stakeholder alignment. We need not only different stakeholders from the project from Business, IT, Finance and so on, who need to be aligned at the beginning of the contract and also all along with the contract. You will also need to have a very important sponsorship stakeholder on the main stakeholder just to ship off and go on with the transformation. Also, add some budget, and be sure that you will have the means. The resources and the money to go on with your project. To go on with your transformation project you will also need to define a clear vision and a clear target so that you can define your strategy and then apply at the tactical level. And as this is a transformation project based on digital transformation so we know when you see the same Fine Art use. The digital practice-changing every day, every year, every month. We have a lot of changes and new technologies and so on.
[1:49] Frederic Berthoud:
Also for this kind of project, there are some skills that you will need to mobilize. Part of them is business-skills, changing the processes in your organization, the way you work with your customers because we are on Order to cash projects, and you will also need to have some new technology skills for the IT team. Probably moving from skills more based on ERP or previews IT technology. Just move them to the new skills that we need.
Of course. So what about you Lisa? I know that you’ve successfully implemented a project at Nidec. Can you share with us a little bit of what your strategy and game plan was?
[2:29] Lisa Tanner:
Sure. Well, as far as strategy and game plan– The first thing we had to do was define why we wanted to change anything. You know that was really the most critical thing that we did. Stepping back and looking at our processes. Nidec is an acquisition company globally. We have 170 locations all across the world and so when we stopped back home and looked at the other perspective. We had effectively 170 locations doing something different, every single one of them. So from a compliance standpoint, this was just a nightmare when it came to audits and etc. So we sat back and we defined why we want to move forward with an automation project and development of shared services and very simply, it was to standardize and optimize the existing processes and practices, and actually put some control and transparency around them. So, once we knew why we were doing what we were doing the steps to move forward and how we were going to accomplish that became a whole lot clearer than it was. It then became about selecting a partner.
So tell me a little bit more about that. What did your selection process look like as you’re looking to evaluate vendors in the space?
[3:30] Lisa Tanner:
While in short, we started out working with our internal IT departments and saying, “Okay, this is what we need to do”. We want to bring in and do collections management for all of these locations and at one point. We want to do a cash application at one point of reference. You know what this looks like and so we looked at it. There were 14 different ERP systems. So, we started trying to develop what those requirements were going to look like. You know how were we going to get into a single system with 14 different systems, feeding it information, and my IT department was really instrumental in helping us write the requirements so essentially we just stepped back and we said okay, we’re going to go out to market but before we do that we need to define what it is we want to accomplish, as in how and what is our goal? And you know, what do we want that outcome to look like? So that was all part of preparing the RFP process and then defining each one of the things that we needed a system to do for us. So we literally sat down with our cash application person. And we said, okay, walk me through your day. What are your pain points? What is the most difficult thing you do step by step? And we wrote down all of the requirements that we would have for the automated system based on what was complicated about posting. So posting a check, posting an EFT, posting in ACH, posting a wire, posting in this ERP system, you know, this currency, what were all of the requirements that we needed for our wish list. We built our wish list and then took it to an RFP process.
So in looking at this, since you’ve both done implementations and put together these, what would you recommend in terms of best practices when looking at these high-level requirements and outlining? And what would you say are the best practices to do that and approaching it?
[4:30] Frederic Berthoud:
So following the introduction on the key success factor for me, you will have some high requirements and the business idea is about defining the clear goals and objectives of the project. Both on the business part and IT part also because this is transformation. It is important that you know what you want to do for business, and then you will learn the IT capacity of digitalization that you want to implement. What could be also important is that you have all the stakeholders on the same page. And then for what will be the target also, and it can be quite difficult at the beginning because you can add different approaches or different objectives. If you speak about order to cash and we have a great team. In finance, you will have a circulation of Customer Care or some administration so you need to align all the needs that you want to work on the project. And then it will be very important, especially if we think about self-service centers or organizations. You will have an internal customer approach to business. And then from the shared service center, you will have to define what will be delivered of services– the quality. What do you want to implement as a service for the business? Or what you want to keep in the business which will be very interesting to work on at the beginning and define the target.
This internal customer approach, can you just elaborate a little bit on that?
[5:30] Frederic Berthoud:
Yes. For the self-service center, the business, such as the credit management team or business team, credit or finance will be considered as an internal customer. You will have to define working on the approach to set up shots and center, you will have to define what are the activities that you want to put in your self-service center or keep a business level. We have quite a long period where we need to stabilize and work with the business and be sure that the business understands the fact that stabilization is mandatory. And you should not expect it to be of high quality at once.
So, Lisa, you mentioned the RFP process a little bit and Frederic told us a sort of high-level outline. Lisa, could you give us a little bit more insight into how your RFP process went about for Nidec?
[9:04] Lisa Tanner:
Absolutely. In fact, I lost the clicker. But we had slides. Here we go. So, this is actually the RFP that I used, and essentially what we did was we defined what our core purpose was. Now this RFP is designed for a shared service environment and Frederic has spoken about shared service but I want to stress that I went through the same process with convincing the C suite partners, and an organization that was not a shared service center. My part in my prior position with Coleman company was we actually brought automation into the Coleman company and there was no shared service involved in that. So the process is pretty much the same. When in shared services you do have a lot more things to take into account like those internal customers, becoming a much larger group than they do when it’s just one company, trying to convince their controller, their CFO, their CEO, this is the right way to go. So, the RFP is so critical because it really defines your purpose to start with.
[10:24] Lisa Tanner:
Okay, these are the submission guidelines only, but we basically broke it out and we told the betters what they would have to do, where their proposal would be and when. And we even walked them through what our decision processes were going to be. And this told the potential partners, and in this case, this went out to at least 12 different organizations, HighRadius being one of them. What is it we want to accomplish? What is the timeline that we expect to accomplish it in? And what do we need from you? And along with that, we had a spreadsheet that contained all of the must-haves. So, every organization had to answer yes we can do that or no, we can’t do that. Or yes we can do that but it’s customization.
How did you do the evaluation? Did you have a team member or was it you alone that the evaluation as these vendors came back with their answers?
[10:40] Lisa Tanner:
Actually, I did. I actually did the analysis of the responses that came back. So as we got those back, it’s really simple to do a gap analysis. They get three points. If they don’t do it, they get no points. And if they do it but it requires customization then they got one point for that one. All right, and you just took your scores at the end, and the company that had the highest score was the one who was going to offer you out of the box, most of what you needed or what your requirements were, it made it very simple to see who was giving us the most back for the buck, so to speak.
Excellent. Thank you. So, Frederic, you mentioned a little bit about the internal customer. So, in talking about this RFP process how important these key stakeholders are. So could you just elaborate a little bit more on what would be the key stakeholders, you would want to engage in an order to cash transformation?
[12:15] Frederic Berthoud:
Yes, for me the risk of stakeholder is quite obvious when you speak about order to cash. It’s about the conditions in this process which are a simulation of customer service or sales administration depending on your organization, and also finance, and this is a usual day to day stakeholder. You will need an executive-level stakeholder participant in this project, just to be able to make any decision between customer service and finance, as they will probably not agree on what we should do with the customer. And then of course, as this is also a digital project, we need to have some IT in the project. It was not as involved as a previous project on the ERP transformation project but with the new technologies and digitalization for me, an important stakeholder is a customer. Of course, because when you speak about a customer portal when you speak about tenants and economy payments, then you really have to onboard some customers to work with, you define the needs and the requirements and also to consider what we are profiting from them and what you can offer them. If you do a customer portal on transformation then what do they want from the portal– do we want to be able to pay? Do you want to be able to declare or dispute? Undocumented or download a copy of the invoice? And these are several from simple functionality that you will discuss with them. So the customer probably will be more and more involved in this kind of project as not an internal customer but as an external customer.
So interesting enough most people have a portfolio of customers. So you might have different kinds of like a continued segment or did you kind of look at certain types of customers who will want certain types of things and then make a recommendation for which one, which features which benefits made the most sense.
[14:50] Frederic Berthoud:
Yes, taking back the example of the customer portal you will need to segment your customer portfolio. If you only have big customers like the wholesalers and distributors and are sure that what we offer them on the portal is different than small customers. Maybe for small customers, we just have a simple functionality. I want to get my invoices to the portal. I want to be able to print it and download a copy. I want to be able to see, to pay online, and to see what is my account receivable or my situation with the company and when will be the next payment and so on. The customer will probably want to see the global situation, what are the payment, a match, what are the possible deductions, what are the disputes in progress? What is the structure of the dispute resolution process and so on? So, to be different according to the customer segmentation Yes.
Okay. But the key stakeholder regardless, the customer should be included. So Lisa, what do you think about aligning with the IT teams for new AR and tech projects? Did you face any challenges when you were trying to convince your IT team with the partner that you had identified through your evaluation process?
[15:05] Lisa Tanner:
Yeah. Most definitely. We had a bit of a unique IT situation within Nidec. I could answer this on two sides. When I was with the Coleman company and we first implemented HighRadius, we had the exact same situation, we didn’t want to push back. They were like, no we don’t want anybody else doing this. You know there’s pricing there’s this, there’s that and we want to keep all of this in house. So we actually allowed our internal IT team to make their own proposal for accomplishing what we wanted to accomplish with automation, and it was pretty incredible. They needed to hire this huge team of people. You know, I mean minions and other things and the cost spent internally, doing what we were talking about doing with HighRadius was unbelievable. I mean it was gonna cost us 10 times to do it ourselves, what HighRadius was already doing so it really made the case for SASS, in and of itself right there. I mean, once we put that in front of the CFO and the CEO, this is our cost internally. This is our cost with this partner, it was kind of a done deal. Exactly they did. It was fabulous. Now with Nidec, it was a bit of a different challenge.
[17:24] Lisa Tanner:
We at Nidec outsource all of it’s IT. We have no internal IT resources at all. And when you think about it, we have 14 different ERP systems out there, across continents. So, we had no centralized source for IT. We had to work with a different IT team for each and every ERP. And then we had consolidated systems where we had two ERPs and one company. The only one that met the customer which sent us a payment. That would have invoices from both systems in it, and somehow we had to break that down and get that into both systems, and then we had to work with two separate IT teams in order to do that, as well as the development team at HighRadius. So we definitely had some challenges on the IT side, engaging them early in the blueprint phase, and really working with them to help them understand what the objective was, was the key to understanding the amount of IT resources that we were going to require. So that brings me to make sure to engage them early. So tell me a little bit more about the gap analysis and what that entailed in terms of like working with IT or working with it as it just passes the process right well our gap analysis really didn’t lead us to our IT groups so to speak. Our gap analysis was really based on what our requirements were from the end product. Okay, all right, start with the end, get to where you want to go. Exactly so we wanted to automate the cash application, we wanted to automate credit decisions. We wanted to automate and digitize the way that we were building our customers, you know, move them out of paper, within Nidec. We hadn’t accomplished any of those things but we had different partners for each and every task right so we had one company that we had outsourced management of collections, and we had another company that we had outsourced to that was managing the electronic going. We had another company that we had outsourced to that was consolidating our risk management information and credit applications. So, for anyone working in the department, they had to log in to all these different systems in order to do their job every day. On top of that, they had to log in to all these different ERPs to research and do their work, so it’s crazy. I did an analysis, 60% of a person’s day was literally logging in and out of systems Well, yeah. In fact, we did a slide.
[20:07] Lisa Tanner:
Oh, and it’s not here, sorry. Yes, This was our gap analysis score. But we actually did a slide, the one that I was looking for isn’t there. We actually did a slide with pictures for our CEO and COO, that showed all of the different modules that we were looking to integrate and the current logins that were required for each one of those functions, right? so when you went to risk management, you had this company that you logged into for the online application, and the detail and then you have this company that you logged into to see the history, and then you logged into this ERP to see the internal history. It was just crazy. And again, it made the case for us, once they could see how much non-value add-effort was going into doing the job. Automating just absolutely made sense. But yes, these are some of the questions that were within our gap analysis, and then you can see very simply, the customers would just answer yes or no. And at the top, where the total scores based on the same models that I told you. So in this example, we had a vendor that had a score of 363, a vendor with 307, a vendor was 741 and 386. It’s kind of easy to see which vendor based on our requirements came out on top. You know this was going to be the vendor that we were going to attempt to work with. Whoops, that wasn’t good, sorry, this was going to be the vendor that we were going to recommend to the CFO and the CEO to work with going forward based on that scoring. And you can see cash applications through pyramid link customers, foot remittance across all business units, I mean we literally detailed everything we wanted the system to do step by step.
Thank you. So, that is pretty comprehensive. So, Frederic, you mentioned the importance of business sponsorship. Do you think that making the business case is the way to go?
[22:20] Frederic Berthoud:
Yes, making your business case is one way to go and for many companies now it’s mandatory exercise before you start any project, but it’s also tricky exercise because if you beat your business case one of the key elements that you will need to work on is an assumption. And mainly for the order to cash project, you will have two: one is your classic killer KPI for a business case on the element you want to follow. It’s about a contradiction or it comes with intimidation, especially if it costs to shutter the center of cost arbitration. Because we speak about order to cash, we need a cash impact on the transformation projects, and you want your customers to pay on time or faster than they do. So you want to have better working capital and so on. So this will be the two main elements that we need to put in your business case. But you also need to add some qualitative elements, because it’s not only about cash, and headcounts. Of course, you can say, I will reduce manual activity, non-value-added manual activities with automation, and then I can use the team to do more value-added activities, such as according to the customer to know when they will pay or in case a dispute or an issue the invoice, you see something you can cosplay and then say, if I do this, I will have a better impact on the cash collection activity and get my cash faster. It’s a tricky exercise, for me, it does as this will be based on assumption. And you can check if your business case was correct only at the end of the project when you go. We are the actual elements to confirm your assumption. So until the end of the project, you never know if your assumptions were caught or not, so we need to readjust them and so on. Another very important element is that this business game needs to be very dated. We started with the owner stakeholder discussion. And then when you build this business case, you need to give the view to the business case with these two different stakeholders finance, credit and show them the view and what is the most interesting for them. And if we speak, then you will need them to validate a business case to be sure that they have blocked the project. One of the important elements is that when you go to the business and you say, my assumption is that I will reduce it by 50% or we reduce it by 20%. For example, if you in a digitization project the solution, cost formation with a shared service center for new causes. If you are set on top of your project, you need to have a global view, just to avoid going to your executives. Remember to say, with my solution, we say 50% of my accounts. We mentioned the shared service center. I will say 50% of my accounts. So if you don’t have the global view join us as we only have 51 projects and 53 years. Again, you will have no one. It’s not possible, because we need people to walk. So it’s very important that you work on this, which relies on the contract adding to the global view, not working SEO, but under a global view and then every date we hold a different stakeholder that they agree because in many companies, the executive committee we say okay this is a business case. Now we put it in your objective and your budget to the need to validate costs.
Thank you, Frederic. So, we’re coming down with time now. So as a concluding thought I would ask both of you. Do you think you would like to share some of the best practices for AR teams that are in route to this digital transformation so if we were to sum it up could you give me a few, what you would recommend as the key things the best practices that may be having lessons learned from you, Lisa perhaps you could share.
[26:30] Lisa Tanner:
Lessons learned for me. You know the very most important thing is to know why. All right, why, why are you going this route? What is your purpose? And, I took this to my CEO, my CFO, when I wanted to bring this in. And I told her I said, You know, I mean, why we want to do this is because in the long term we want to grow. Shared Services and under the current model right now we are going to need an army of people in order to manage all of the different businesses coming in and trying to do the AR and logging into all of these systems. To me, if you can clearly articulate to your CFO, to your CEO, why there’s value-added in moving to this format. You’re going to get them behind you 110%. ROI is always key, you need to have a solid ROI. You need to be able to outline the cost of the project and do it very clearly, but you also need to show them how long it’s going to take for that investment to pay back, and in most cases or what I found in both of my implementations, was that the payback timeline was really very very short. You know, could be six months, could be three years depending on which aspect of the project you’re talking about or total project. But if you show them. When the project pays off and begins to become a profitable investment for them. It’s definitely going to go a lot smoother and faster for you.
[28:12] Frederic Berthoud:
I would rather come to this conclusion which is a very good one. Most of the time the transformation project will be one year, two years, three years. So one important element is that you keep speaking with your stakeholder on sponsors of the project, just to be shown that you probably will give you, will remain, well throughout the end of the project, and probably as the priority of the company or the project can mention during the period of the contract to the time of the project, you need to be sure that you have a meeting point. A walking session with an analyst to update them on the progress of the project, where we are? where we go. If we are late or not. If we need to address the business case or the result of the projects. Then we share all these elements because, and also for the digital transformation, you may have a lot of changing technology and getting one to ask you, we need to address and be sure that you get sponsorship, all along with the projects and it’s not just a presentation at the beginning and then you go on. And we see you again it’s here just to, to see and to check if we have the results expected on it.
[29:25] Lisa Tanner:
And if I can jump in real quick To that end, we actually utilized our poor blocker. It’s a PowerPoint, and it’s broken into four points, and in the top corner, we said what we accomplished each week and what we were going to accomplish the next week. Any roadblocks that there might be in one corner and then the final block was. Are we on task? Are we not on task, or are we may be on task maybe not on task so red, yellow, green, green being Go Red being not and this was a really easy way for us to disseminate information out to the stakeholders on how the project was progressing at any point in time, and we just added to that each week, and it also gave us the ability to go back over time throughout the entire course of the project, and see where we were at any given point. The advantage to this is, if you are sharing services and you’re going to bring more companies in on the acquisition business, you can always refer back to that, in the course of the project. And what you learned.
So, we have time for questions. Okay, a couple of minutes. Does anyone have any questions for Frederic or Lisa today? The answer to everything oh we do have a question these two gentlemen over here who want to go first.
Hi, I’m Doug Dunlap from Tetra Technologies, I just wanted to add to what you were saying is, the ROI is very important, and the way that we’re doing it but I also was very successful in communicating that we are turning ourselves as a department as a group within the company from a cost center to a revenue-generating department. So, therefore, all of the intrinsic value that we’re creating are real dollars because if you value time management, all of those things are equivalent to money. So I took it upon myself to try to make a very low estimate of all of the dollars that we would be creating, whether it be savings or someone’s time and intrinsic value, and my internal customer’s acceptance of what we were doing because it would become easier, more clear and understanding, and they would know exactly what they’re going to get whether it be the sales group or the Operations Group, but the intrinsic values is what I wanted to tell you about.
[31:50] Lisa Tanner:
Yeah, absolutely agree 110%.
[31:56] Frederic Berthoud:
For me a comment on this. I fully agree with you. The point is that, for the credit management team, it will be a success when they will be considered by the company as a customer-focused and have success with the trader, and not as the finance guy will be always right, turn the money from the customer that will train and bothering trying to sell more, so he can go to this situation to succeed.
Looking at things at the cost of money for projects, then you can turn that around and you could say, it is equivalent to that same of the value of having that money sooner or the value of not spending it, leaving it in the business to, you know, be available for money for your intrinsic value. You’re letting your shareowners know what you’re creating-
[32:59] Frederic Berthoud:
If you can break the fate of the credit manager, which is to fight with the trader victory.
So did you have? So for me. My name is Renee Urbina, thank you very much. I’m with Curtiss Wright Corporation. So the framework that I normally participate in from a finance transformation perspective is. I appreciate all of the qualitative information that you shared with us and how to inform them of the various benefits that you’re going to get to right, which is what some of the data that you shared often for us and for some of my former companies. It boils down to the bottom line right so the bottom line distills to the most essential of things and limited of things so one of them would be alright If this is an AR activity. Did you get the improvement and if so how much. And you talked about ROI and by the way, did you get ROI? What was your hourly target? Did you get it, and how long whatever. And then the last one may be an efficiency factor so-net. Did I improve my efficiency by x, whatever that was? So, did you start with that and did you achieve that as a consequence of absolutely those things so you feel like you’ve hit on those marks.
[34:10] Lisa Tanner:
Absolutely and in fact, I’m actually very grateful. We were very conservative and what we said we were going to accomplish. For example, with cash application automation. Just as a step one, we said that our objective was to achieve an 80% automation. The business was absolutely blown away by that we showed them what the labor savings were going to be. We broke out the ROI, too, to the number. 80% is our objective, when we went live, we were stabilized at 85%. And we were able to enhance that up to 90% in at least one of the systems. So yes, we were absolutely absolutely able to go back to the business and say, here are the results, here’s what we said we wanted to accomplish. Here are the results of what we actually have accomplished. And we could even put $1 on it so that that has been, you know, very very beneficial.
And I think this point is more important than that you’re keeping track, you’ve got some kind of reporting absolutely you understand where you were going, where you want to be so if you die, you’ve got to have insight into that as well. Absolutely. Congratulations. Very good point. Thank you. Any other questions?
[0:10] Host: Okay so, first of all, thank you for joining us, Frederic. Thank you all for joining us here today at this panel session as well. So Frederic, let's start off by asking you. What you think are the key factors that are responsible for a successful digital O2C transformation project? [00:40] Frederic Berthoud: For me, the key factors for the success of this transformation project go on. As it is a transformation project so we have stakeholder alignment. We need not only different stakeholders from the project from Business, IT, Finance and so on, who need to be aligned at the beginning of the contract and also all along with the contract. You will also need to have a very important sponsorship stakeholder on the main stakeholder just to ship off and go on with the transformation. Also, add some budget, and be sure that you will have the means. The resources and the money to go on with your project. To go on with your transformation project you will also need to define a clear vision and a clear target so that you can define your strategy and then apply at the tactical level. And as this…
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