What do you say when the CEO is asking why your company didn’t reduce the “order-to-cash” cycle time by 10 percent, as planned? Even if your company has a robust corporate performance management (CPM) system, chances are you won’t have a good answer.
CPM is the strategy, methods and processes that an organization deploys to direct its employees, partners, suppliers and customers to achieve a common set of goals and objectives. Companies measure performance through various mechanisms, including budgeting, score-carding and querying results and variances with business intelligence. Each of these tactics transforms data collected by transactional systems (such as CRM and ERP) into insight about top-line performance objectives. But CPM doesn’t give the business stakeholders any visibility into what’s actually happening. It’s the end-users of the enterprise applications who execute the transactions that drive the processes that drive the business. Are employees actually using the right transactions to execute the business process? Are they using them in the right way? Are the employees efficient, or are they making significant errors? Are the transactions effective, or are they cumbersome, requiring employee-invented workarounds?
‘Executives discovered, within weeks, that the OTC process was compromised by ineffective and inefficient transactional execution.’
There’s a new generation of solutions that can give you those answers and not leave your CEO hanging: end-user performance and management (EPM). EPM solutions give organizations a new focus on end-user adoption, utilization and performance, uniquely capturing a complete picture of the end-user experience and behavior, including:
- Actual user-experienced response time for key system transactions, such as navigating between application screens, save operations and execute operations
- Comprehensive error metrics including system and application errors and user-created errors
- Comprehensive application utilization: which transactions are used, in what sequence and for how long
Order-to-cash
To understand the impact of this insight, consider the following scenario concerning a billion-dollar heavy equipment manufacturer in Georgia. One core priority for this manufacturer was to improve the order-to-cash (OTC) process. This process comprises a number of unique business processes, from order entry to cash receipt. Because most companies are functionally managed, the order-to-cash process usually touches multiple enterprise applications and departments including sales, order entry, order fulfillment and accounting. Therefore, it is important for each department to complete its part of the overall process error free and transfer correct information across functional boundaries.
Eighteen months after this company had implemented new software applications to improve process efficiency, the order-to-cash cycle had not improved. The company implemented an EPM solution to “take the guess work” out of managing applications. Executives discovered, within weeks, that the OTC process was compromised by ineffective and inefficient transactional execution.
What was going wrong?
The sales reps weren’t using the CRM system to manage their pipeline. Instead, they created prospect records near the end of the lengthy sales cycle. That meant that materials management wasn’t getting long-term visibility into upcoming demand. An unexpected upsurge in demand could blindside materials planning and production, with customer orders placed on back order. Add six days to the OTC cycle time!
The order-entry processes of the new application were cumbersome. Although it had been heavily customized, it didn’t give the customer service associates a streamlined way of calculating the shipping cost. Associates were actually exiting the application and using a spreadsheet application to calculate the shipping cost. This inefficiency dampened productivity, and each day ended with a backlog of un-entered orders. Add one day to the OTC cycle time!
There were similar problems in order fulfillment. To ensure no backlogs in the fulfillment process, the company assigned each employee a unique user ID, with two dedicated workstations for each inventory associate. However, it had become the norm that the employee with the first transaction of the day signed on, and everyone else used that active workstation to execute his or her order and fulfillment transactions. That led to a perpetual queue, and each day would end with a number of unfulfilled orders. Add one day to the OTC time!
Finance and accounting was one area that actually worked. Invoices were entered without any errors in a timely and efficient way. DSO variance reporting was effectively executed, and the cash remittance process was working the way it was meant to.
Experience and performance metrics
Consider what happened when we added end-user experience and performance metrics to the mix. In sales, utilization metrics about sales reps’ use of the activity management transactions of the CRM application quickly showed management how little the reps were using the system—and which reps, managers and geographies hadn’t fully adopted the application. With this knowledge, management was able to take remedial action.
The EPM solution identified the precise point when the order-entry associates exited the primary application to execute the user-defined workaround using Excel. Once this ineffective function was identified, the application engineering team modified the application and obviated the employee-invented workaround.
With order and fulfillment, EPM utilization statistics exposed the fact that the employees were sharing a single user ID, and managerial oversight soon put a stop to it.
And in finance and accounting, EPM workflow and end-user error metrics made it obvious that everyone had adopted the application and was using it efficiently and effectively to execute the core business processes. Knowing where you don’t have problems is as valuable as knowing where you do. This lets you give priority attention to the real problems.
Peter Drucker, one of the most influential business thinkers of the past century, said, “You cannot manage what you cannot measure.” The phrase has become a common business bromide, but at the time, it was the kind of insight that raised the bar for professional corporate performance management. It’s time to raise that bar once again—by delving deeper and measuring the experience received and the performance achieved by the end-users of the enterprise applications that deliver the business results.
Corporate performance management is all about understanding the difference between what you’ve planned and what actually happens. If that understanding stops short of the end-user performance, this critical link in corporate performance is ignored, and performance management can not achieve its full potential. End-user experience and performance management solutions let your organization realize that potential by delivering an end-to-end analysis capability for an end-to-end corporate performance management strategy.
