Whether through rapid growth, acquisition or some other business change, an organization’s back finance office operations can grow chaotic over time, and sometimes overnight. That chaos often culminates in emergencies, like a payments backlog, bad data or a process that no longer makes sense.
Some of our most satisfying engagements with clients have started as emergencies that were resolved when a hard-working team of internal resources and external partners applied their respective expertise not only to clean up the chaos but rebuild the structures that were toppled during the effort in a better way. The best part of such engagements is that the results achieved by such a partnership continue to deliver value even after the cleanup is done.
Blended teams bring with them the potential to identify improvement opportunities together, even while the team is tackling the crisis. This is because the partner firm whose resources are supplementing internal ones often has more than just tactical skills. Often, they have the experience and training to observe, analyze, propose and implement structural process changes that will generate efficiencies beyond the immediate crisis.
The Value of an Outside Perspective
Standardizing day-to-day processes is not a foremost concern for most leaders, but they are often surprised by the savings achieved through greater consistency.
To illustrate, one client was required to update subledgers for regulatory reporting. The reporting group had a goal of recording 85 percent of the transactions in the same month they were identified. Month after month, multiple errors kept the group from achieving this goal. To get on track, the department leader added an external partner resource to the team, merely to accelerate the work.
Looking with a fresh eye, the new team member soon realized that each person in the group was approaching the same task in a different way. The new member proposed developing a single template for everyone’s use, incorporating good ideas from others in the group. Controls were built into the template to prevent errors, and repeatable tasks were encoded as macros to speed the process along.
Automating even in this small way, the group began routinely to outperform the 85 percent goal by 10 percent or more and was even able to achieve 100-percent success in some months. Eventually, the improved process led to automation opportunities, which in turn reduced the size of the reporting group, resulting in 70 percent savings on labor alone.
Three Steps to Process Efficiency
Organizations that function in chaos, or simply lack clarity on the “company way” of doing business, need to pay more for their internal resources. They need people who already know the work well or have enough experience to figure things out on their own. In the absence of a standard approach, these individuals will rely on prior experience and develop their own tools and methods, even as they work on the same tasks. Not surprisingly, results, output and quality will vary, too. Conversely, a department whose processes are clearly defined and documented can hire from a broader pool of less-experienced individuals and train them from an established playbook.
When external partners take on operational tasks, they often are the first to see the improvements that are possible. Invariably – even in the best of organizations – an outsider who becomes involved with a specific task will uncover gaps, overlaps, and even collisions within the processes surrounding the task. The first step when this discovery is made, however, is to eliminate the problem at hand (record transactions, apply payments, etc.) and then create cohesion in the process by fixing the apparent flaws. To borrow a term from emergency medicine, this step is stabilizing the process.
As team members engage with the updated, stabilized process, they can now spot exception cases and non-routine outcomes. These variants may indicate events that shouldn’t occur, or they may demonstrate that the process is not yet fully understood or needs to be tweaked further. Where possible, variants should be minimized. When variants are necessary, there should be clear procedures for how to handle them. This constitutes the second step to process efficiency, which is to standardize.
Once the standardized process is understood by the whole team, it can be used to run the function. New hires can start with much less experience, because they can be trained to the standard. Performance measures can be based on the standard. As new variants emerge, they are detected immediately and either eliminated or incorporated into the process. As standardized processes are continuously evaluated and adapted to business changes, process steps and roles may be merged or eliminated. This is the third, often iterative, step toward efficiency – streamline.
Some experts would go further and add a fourth step to the process improvement triad – automate. Robotic process automation (RPA) is a significant technique of process optimization, made possible by the first three steps. It is a natural opportunity to be considered when working with an experienced and trusted partner, as we wrote in another post recently.
Completing the process improvement steps above is entirely possible to do internally when an organization has sufficient resources and time in which to step back and evaluate its own way of working, disengaging from the daily “do” mode to arrive at a new, more efficient way of doing things, and then implement, test, document and socialize those changes – but who has that luxury?
The beauty of blended teams is that by working side-by-side on day-to-day tasks, those teams have a better chance to uncover the flaws and invent lasting improvements together, with no need for a separate problem discovery process. Simply capitalizing on that synergy can deliver the results many finance organizations crave – a clean, uniform and well-understood process ready to be automated when the time is right.