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Rule Based Business Process Optimization

Replacing Human Touch Point…Not the Human Logic

Too often business improvement is just about automation without optimization. When optimizing a business process one must always ask the question “what value does this step add”? When dealing with the every growing meta data processed in an ERP such as SAP, this question becomes most relevant. The transformation from transactional to process flow requires that you take this evaluation and expand it to “what value does this step add and does it require human intervention”. Expansion of the evaluation criteria provides true optimization. As an example, consider the Accounts Payable portion of the procure to pay (P2P) process flow. Typically in a manual process flow there are numerous touch points that require a human touch point to apply logic to evaluate the invoice meta data and make a decision. These touch points include but are not limited to data capture, filing of paper invoices, evaluation of meta data for completeness and accuracy, account assignment and invoice approval. With a fully optimized accounts payable solution such as offered by SAP with SAP Invoice Management, it is possible to build a rule set that captures much of the human logic required to process an invoice and to apply that logic systematically.

Rule Categories Examples

               Completeness – Most business processes are based on processing meta data. In AP, the initial meta data is on the invoice. SAP requires that certain information be provided by the supplier. One option is to have a human look at every invoice to see if all the required information is provided. Just one missing data point can result in non value adding time spent researching and collaborating to fill in the blank. Business rules utilize the human logic captured in code to test that every required field provide some meta data. At this point it may be wrong but at least it is there.

               Master Data Validation – Once the meta data capture is complete, business rules compare the input against known values in master data to ensure it is valid. One example would be to ensure the purchase order provided on the invoice is within the SAP number range. If not, automatically route to a predetermine role for resolution.

               Compliance (Legal Requirements) – Business rules can also ensure that information legally required or required by corporate rules is included. One example is       VAT. Business rules can also ensure proper flow of information such as NFE requirements in Brazil.

               Country Specific – Most countries have rules to do business in their specific country such as NFE in Brazil mentioned above or GST / PST in Canada. Human logic encapsulated in a business rule never forgets to ensure the information is there for selected countries but does not bother looking when the invoice is from another country.

               Best Practice – Business rules can also ensure best practice such as capturing at least 2 approvals for invoices over a stated dollar level threshold.

               Most Common / Most Practical – Business rules can also be made flexible so that while typically enforcing process flows such as the 2 approvals required, given selected variables, rules can deviate if it is more common in a specific company to acquire 3 signatures. If due to lack of staff in a remote location one person orders, received and approves purchases, rules can be set to allow one person to handle the process flow in a practical manner.

Reporting on the Rules

When the business process is initially designed for optimal results and automation is applied such as with SAP Invoice Management, it is critical reporting provides process metrics for human analysis. It may be necessary to adjust the follow due to changing business rules. In addition, automation should never be hidden in the “black box”. It is all too easy for those with fraud on their minds to use automation to their advantage if no one is watching the output…so…when you eliminate the human element during the process…do not eliminate the human element in review of the output. Even if you utilize automated trend analysis to spot trouble points, it always requires that human element to decide if variations are random or “randomly on purpose”.

Don’t Rule out Success…Rule in Success!

Not only does the application of business rules enable improved accuracy in the Accounts Payable process flow, it frees up the Accounts Payable Professional to focus more attention on those value adding task such as cash flow management and vendor relationships. The economy has resulted in cyclical employment levels in back office functions like Accounts Payable. Capturing and automating the human logic where possible, prevents the loss of critical process knowledge during economic downturns.

In my various speaking engagements, I often ask how many things typically go wrong when processing an invoice…the answers normally vary between 5 and 15. SAP Invoice Management applies 47 unique business rules and if you consider many are run twice…once for PO invoices and once for Non PO Invoices…the rules are applied 71 times. Checking an invoice with 47 rules rather than 15 yields significant improvement in the completeness and accuracy of financial data while ensuring compliance. In summary, utilize business rules as an integral component of your business process improves initiatives to drive increased success to your efforts.

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1 Comment

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  1. Navaneetha Krishnan
    Hi Thomas,
    I read through this blog and it sounds fairly a good topic to dwell further on. A good thought to add value in the process chain. As you rightly put it, from transaction flow, to business rule validation and automatic and optimised flow regulation, the topic can be the central point of discussion for various clients who have stable processes now, but with abundant manual intervention.

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