guarantee a successful digital transformation. Businesses often overlook certain critical aspects of the transformation process, which could lead to considerable losses in terms of effort and investments. In fact, the ratio of the failure of digital transformations is as high as ~70%10.
O2C transformations can falter because of a number of reasons, some of which are as follows:
To be successful, a guided, disciplined, and phased approach is required.
Before starting their digital transformation journeys, businesses need to develop a clear understanding of their existing levels of maturity with regard to the adoption of digital technologies. Tony Saldanha suggests that businesses can categorize themselves into one of five different stages of transformation. Accurate assessment of the existing stage can help a business take the right steps to digitally transform its O2C processes:
Tony Saldana highlights that “there are very specific reliability drivers (and therefore checklists) to improve the success rate of each of the five stages of digital transformation.” He defined two disciplines or risk factors that are necessary for the successful delivery of each maturity stage. They are as follows:
The checklist enables organizations to take care of the risk factors, based on the stage they want to leapfrog to. After assessing the stage of maturity and defining the risk factors, organizations need to work on becoming fully prepared to follow a phased framework for their digital transformation.
The six-step framework given below will assist organizations in prioritizing processes, selecting the transformative steps, and identifying the suitable technologies for a successful O2C transformation:
Setting the End Objective -> Assessing the Gaps in Current Processes -> Ideation of Solution -> Prioritization of Solution -> Building the Roadmap for Implementation -> Solution Pilot
Considering the complexity of the O2C operations, a clear end objective would make it easy to define the final roadmap. For instance, while having to decide between prioritizing an automated pull in a remittance advice system from pending payments or providing visibility across an O2C process, a customer-centric solution will favor the second option, while an operation-focused solution will prefer the first.
ii. Customers’ preferences need to be assessed during the O2C process. This may include surveys to identify other portals that they may use which offer better prices, resolve disputes quickly, have smooth invoicing, billing, and cash applications. This is done so that solutions can be improved and made to be at par, or better than those offered offered by competitors
ii. Solution: Exploring the possible solutions for identified problems (without finalizing the solution though) for instance, using ML an IR to convert email and portal data into remittance advice or using macros and RPA for it, all solutions should be listed down; All the solutions should be checked with AR analysts for feedback and stakeholder alignment
For instance, to assess the priority of implementing online credit application in credit management, electronic presentment, and payment in Payment Portal, the assessment can be carried out as follows:
Procter & Gamble (P&G) is a multinational FMCG conglomerate, having several business units. Leaders at P&G wanted to transform the corporation with the large-scale application of digital technology and advanced analytics across every aspect of the company’s operations and activities. P&G’s goal was to carry out an end-to-end digital transformation across the entire organization to achieve efficiency and productivity, and generate maximum business value. P&G aimed for a holistic digital transformation from two perspectives:
P&G first broke down the end objective into achievable business goals. The key challenge was inefficient use of data and redundant data handling systems. The technicians at P&G were often tasked with re-entering the same data across multiple systems. P&G needed an integrated and synchronized system that would enable easy interaction with real-time data. Also, to increase the process reliability and operational safety, P&G needed visibility across the whole supply chain
While ideating the right solution, P&G ensured the stakeholder alignment. The major sources of interactions included:
Team feedback through weekly meetings with its leadership team all over the world
Based on the gap analysis and feedback received, P&G identified broad areas where it needed transformation and laid out the possible solutions for it. A cluster of solutions include:
After the implementation of the solution, P&G put in place indicators to continuously track the progress of the transformation. Some examples of the tracking include:
During the whole digital transformation journey, measured it digital transformation journey through business outcome and KPIs. P&G has achieved a partially-synchronized state and is successfully moving toward becoming fully synchronized. In terms of visibility, it envisions a system in place where one can directly see any product at any moment as it goes through the manufacturing line, along with the cost of the product at each stage of its journey. It is working to integrate its operational system with the financial system to achieve true real-time visibility across all functions.
In some cases, the end-to-end transformation may not be the best option for improving existing processes. Even in such cases, the processes of assessment and implementation remain the same. For example, P&G was struggling with high travel expenses and wanted to find a solution that could identify the root cause of the issue and provide its resolution. It first conducted a gap analysis, asking the right questions to identify the information that it would need to analyze the expenses, the types of solutions that would help it resolve the issue, and the cost-benefit analysis of these solutions.
This helped the SSC realize that while the optimization of travel expenses was certainly needed, an end-to-end transformation of the expense management process may perhaps be unnecessary. A thorough analysis and a stakeholder’s feedback revealed that all the relevant data on financial transactions is directly available through credit card companies. P&G just needed to build a policy to leverage that data in an optimal manner to generate insights to reduce the travel expenses. By leveraging existing analysis technologies and datasets, P&G decided to remove the travel management system completely and instead, set up travel-related policies, such as the maximum amount per trip without further checks.
For its implementation, P&G chose a phased approach, to be able to measure the outcomes of new policies by defining suitable indicators. To achieve this, instead of applying these changes across the organization, P&G started with a pilot in the UK. P&G was able to register a 30% reduction in costs for business trips – from a total travel budget of USD 400 Mn – without end-to-end transformation.
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