Global organizations are complex, and they are complex not because business leaders made it complex but because global companies grow both organically and inorganically. With every acquisition, come in new processes, systems and technologies which need to be accommodated in the global business and technology framework. Also, process maturity from one market to another varies and this drives the need for local processes, not matter how hard companies try to drive standard global processes. To drive simplicity, it is imperative that we understand complexity and more importantly what drives complexity. Let us take a case study to dig deeper into this topic:
A Case Study:
A large 11+ BN USD global conglomerate with multiple business units across 40+ countries wants to standardize the Procure to Pay Process for indirect materials on a new IT solution which includes self service procurement through catalogs. The company has a group procurement function which handles procurement for certain categories of indirects. The business units are independent entities with their own procurement functions with certain categories handled locally by the buyers at the manufacturing locations. The key imperatives of the initiative for the two key stakeholders of the project, i.e. finance and procurement are as below:
- Finance – “To drive compliance”
- Procurement-“To maximize savings through catalog enabled self-service procurement”
By looking at the above imperatives, one can spot the dichotomy. Driving compliance is typically associated with a structured and fairly rigid centrally controlled process whereas self-service procurement is associated with a higher degree of devolved, end user centric process. Conventional wisdom would state that achieving both of these in an IT solution is very unlikely, but with the advent of cloud, this is rendered a reality. I will elucidate how, but not just yet.
Deconstructing the Complexity:
To decode the complexity at play, let us look at the digital process chain in the planned procure to pay value chain:
Given the above process which is spread across applications and is broken, there is information asymmetry, to counter which companies end up setting up complex approval flows for a simple process like Purchase Order creation. I have come across use cases where there is a 7 stage Purchase order approval process, to setup which companies spend 2/3rd of their planned roll out time. While this helps addressing the compliance aspect, it makes the process arduous for users to work with and leaves very less time for project teams to deliver on content which will drive user adoption such as catalog enablement.
Designing for simplicity:
One of the key refrain that companies and IT teams in particular should exercise while enabling a business process on a cloud solution, is to mimic the conventional process in the solution during the “ To-Be” process design phase. The cloud by its very nature breaks down silos across process areas and gives a single unbroken digital process chain, which renders the checkpoints and corresponding approval flows redundant. To understand this, let us take a look at the below screenshot:
In the above case where the Procure to Pay process is enabled on the Ariba-Procure to Pay solution, all the business documents in the process, i.e. the central contract, the payment terms, the catalog, the requisition, the budgets, released purchase orders, receipts and invoices are all linked together and an approver or a user with the right authorization can move across the process with just a few clicks. Imagine being able to review a requisition, look at the available budget, study the contract terms and consumption, track the purchase orders released and item receipts all in a single screen. This makes a bulk of the approvals redundant thereby speeding up the process. Should there be a need for approvals still, the setup time of approvals on the cloud is a fraction of that in an on-premise solution as almost all of it is done from the front end and furthermore, ad-hoc approvers can be added on the fly by users, should the need arise.
This capability of the cloud to simplify helps address the dichotomous objectives of IT initiatives such as Procure to Pay, enables to drive compliance and user adoption without compromising on either.
This is where the role of the IT leaders comes into play, in walking the business leaders and stakeholders through on what is possible with the cloud and that it can drastically simplify their business process by removing the silos that existed in processes enabled by traditional software. It is almost a given that they would recognize the value and drive the transformation in their organizations and teams through simplification. But this is change management even before the project is kicked off, at the very inception, where the “To-Be” processes are being defined. Change management to make business and IT stakeholders “Think Simple” with the power of the cloud.
Now that we have looked at designing for simplicity, the next logical topic would be to look at “designing for scale”, which would be my next post.
This blogpost originally appeared in Linkedin:> here