What do you say when the chief executive officer is asking why your company didn't reduce its order-to-cash cycle time as planned? Even if your company has a robust corporate performance management (CPM) system, chances are you won't have a good answer.
CPM comprises the strategy, methods, and processes that an organization deploys to direct its employees, partners, suppliers, and customers to achieve a common set of goals. Companies measure performance through various mechanisms, including budgeting, scorecarding, and querying results and variances through 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 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 those employees using those transactions 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?
There's a new generation of solutions that can give you those answers and make sure you don't leave your CEO hanging: end-user performance 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:
- user-experienced response time for key system transactions;
- comprehensive error metrics including system and application errors and user-created errors; and
- comprehensive application utilization, revealing which transactions are used, in what sequence, and for how long.
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 process, which 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 in an error-free manner and to then transfer correct information across functional boundaries.
Eighteen months after this company had implemented a new software application to improve process efficiency, the order-to-cash cycle had not improved. The company implemented an EPM solution to take the guesswork out of managing applications. Executives discovered, within weeks, that the order-to-cash 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 materials management wasn't getting long-term visibility into upcoming demand, thereby extending order-to-cash by six days.
The order-entry processes of the new application were cumbersome. Despite heavy customization, the software didn't give the customer service associates a streamlined way of calculating shipping costs. Associates were actually exiting the application and using a spreadsheet to make their calculations. This inefficiency dampened productivity, and each day ended with a backlog of un-entered orders. Add one day to the order-to-cash cycle time!
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 another day to the order-to-cash time!
Experience and performance metrics
Consider what happened when we added end-user experience and performance metrics to the mix:
- Utilization metrics captured sales reps' use of the activity management transactions of the CRM application -- and quickly revealed how little the reps were using the system. The system also showed 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. 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.
Peter Drucker, one of the most influential business thinkers of the past century, once said, "You cannot manage what you cannot measure." That's become a common business bromide, but when Drucker first coined the phrase, 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.
About the Author
Lori Wizdo is a veteran marketing executive with over 25 years of experience conceptualizing and implementing comprehensive marketing programs for pioneering software companies. Prior to joining Knoa, she was vice president of marketing for Identify Software, where her accomplishments in creating market awareness, gaining analyst endorsements, and launching sales programs contributed to the company's revenue growth from $6 million to $23 million, as well as its ultimate acquisition by BMC Software.