© 2018 The Hackett Group, Inc. All rights reserved ...Metrics and Governance Customer-to-Cash...

1© 2018 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.

Expert presenters only at Credit Matters VIII


World class performance is powered by world-class talentTom Bangemann, SVP Business Transformation, The Hackett GroupBen Hartfield, Senior Director, The Hackett InstituteSeptember 2019

Contents

§ Setting the Stage

§ Digital Transformation

§ Talent Management

§ The Hackett Institute

§ Q&A


§ A global strategic business advisory and operations improvement firm

§ We help companies establish and implement sustainable business performance improvements

§ SG&A benchmarking “gold standard” since 1992

§ We start with “why not”, fact-based, research & intellectual capital

§ Senior practitioner model, results focused

§ Assist our clients in designing and implementing World-Class Service Delivery execution capabilities

§ Long term transformation journey assistance through executive advisory membership

§ The Hackett Institute provides educational programs inG&A, currently for analytics and GBS, including professional certification and lifelong learning

Hackett Value Grid™

The Hackett Group

93%of Dow Jones

Industrials

86%of Fortune 100

87%of DAX

52%of FTSE 100

48%of CAC 40

EFFECT

IVEN

ESS

HIGH

The Hackett Group defines and enables world-class performance


Our executive interactions reveal critical imperatives that aggregate into five critical performance themes across the enterprise and within functions

Digital transformation/

innovation01

Information/analytics02

Customer-centricity03

Talent04

Agility05

Top 5 common critical development areas:

Capability priority matrix

OrangeZone

ImportanceModerate Critical

Low

Mod

erat

eA

bilit

y to

add

ress

Increase function customer-centricity

Improve function analytical, modeling and

reporting capabilities

Support enterprise customer-centricity*

Reduce function operating cost

Optimize deployment of function resources across

the organization (BU, corporate, GBS, COE)

Measure and manage function performance and

business value

Align function skills and talent with changing

business needs

Modernize function application platform(s)

Improve function agilityBusiness services function issue

Ensure security of function data and systems

Support enterprise innovation*

Support enterprise digital transformation*

Enterprise Issue

Source: Key issues study, The Hackett Group, 2018


(Digital) business transformation risk drivers

Cybersecurity is the top business risk in 2019 followed by access to critical talent; talent risk is projected to grow the most going forward

48%

39%36%

33% 31% 30% 30%24%

72%

66%

56% 58%

36%41% 39%

34%

Cyber / informationsecurity

Access to critical talent Intensified competition Disruptive innovation Reputational risk Regulatory risk Global trade barriers /tariffs / regulatory

change

Geopolitical risk

2018 Projected (2019-2020)

24%

% Projected increase

27%

20% 25%

5% 11% 9%10%

Source: Key Issues Study, The Hackett Group, 2019

Current and projected high business risks


75%

66%

63%

55%

54%

49%

45%

Customer-focus improvement

Enterprise operations cost optimization

Product/service portfolio innovation/expansion

Expand market presence (e.g., geographies, segments)

Innovate go-to-market strategy

Improve caliber of enterprise talent

Diversity and inclusion promotion program

Global operations/supply-chain optimization

Improve enterprise decision-making capability

Develop or expand corporate social responsibil ity program

SG&A cost optimization

As in 2018, improving customer focus is the top 2019 enterprise initiative; enterprise cost reduction has risen to number two

Percentage of companies with major initiatives on 2019 agenda

Source: Key Issues Study, The Hackett Group, 2019

New capability development Business optimizationCost structure rationalization

51%

48%

50%

49%


Customer-to-Cash End to End Process

Credit Management

Order Management

Customer Billing

Collections Management

Dispute Management

Cash Application

Collections Approach Dispute IdentificationCash PostingUnbilled Management and Billing TriggersOrder Entry

Collections Activity Dispute ResolutionAR ReconciliationBill Calculation and VerificationOrder Processing

Targeting Dispute Escalation and Arbitration

Unallocated and Unapplied cashCustomized BillingCustomer Service

Litigation and Debt Provision

Root Cause EradicationShort PaymentsCredit Note ProcessingContract

Administration

Customer Segmentation

Customer Credit Management

Credit Policy

Commercial Interface

… across the building blocks of effective change: Strategy, People, Process, Technology and Information

RelationshipsMetrics and GovernanceCustomer-to-Cash Policy

Organization and Systems

Customer-to-Cash covers all processes and activities from credit risk assessment through to collections and cash application


Taking an end-to-end view World-class organizations have a significant staffing and process cost advantage

0,013% 0,011%

0,020%

0,005%

0,026%

0,011%

0,017%

0,009%

0,014%

0,005%

0,089%

0,040%

Overall Database World Class

Process Cost* as % Of Revenue

1,6 1,3

3,3

0,9

3,6

1,6

2,4

1,0

1,6

1,0

12,4

5,9

Overall Database World Class

FTE’s Per $ Billion Revenue

Credit Process Customer Billing Collections Cash Application Dispute Mgt.

The process cost and staffing gap is significant…

55% 53%

Source: 2018 Hackett Finance BenchmarkNote: Process cost = Labor costs + Outsourcing costs


A high proportion of Customer-to-Cash transactional finance activities are included (and have been for a number of years) within the scope of GBS

Finance in GBS, organizational model by process (Top quartile)

Source: The Hackett Group’s Annual GBS performance study, 2018

89%83%83%82%

78%77%77%77%75%

71%60%

53%50%49%47%

45%44%

42%36%

64%

6%8%8%

10%13%

12%15%

8%16%

14%33%

17%10%13%

11%18%19%

42%43%

17%

6%8%8%9%

10%12%

8%15%

8%14%

7%29%

40%38%

42%36%37%

17%21%19%

Accounts PayableTravel & Expense

Fixed Asset AccountingGeneral Ledger

CreditIntercompany Accounting

Customer BillingCash Application

Dispute ManagementCollections

Cost AccountingPayroll

Enterprise ConsolidationTreasury Management

External ReportingCompliance Management

Tax ManagementPlanning & Performance Management

Business AnalysisTOTAL

GBS BU Corporate Center


3

3

Characteristics of World Class Customer-to-Cash organizations

CREDIT POLICY – provide framework for the end-to-end process including roles and responsibilities across the O2C process

MASTER DATA – complete and accurate master data to ensure accurate and timely billing and basis for BI and analytics

STANDARDIZE PAYMENT TERMS AND CONTROLS - Standard payment terms are defined, non-standard payment terms are controlled through approval process

DYNAMIC CREDIT MANAGEMENT –Defined inputs, outputs and strategies. Reviews undertaken by exception

ELECTRONIC INVOICING – eliminate manual billing triggers, reduce time to invoice

SEGMENTATION TO SUPPORT COLLECTION STRATEGIES – Define segmentation based on risk and value and drive collections based on segmentation

PROACTIVITY - Ensure key customers are receiving routine customer service calls so issues can be addressed early in the process

TECHNOLOGY LEVERAGE – driving digital engagement, process efficiencies and an exceptional customer experience

EFFECTIVE DISPUTE MANAGEMENT -Disputes are logged in a central repository, workflow underpinned by resolution matrix

PERFORMANCE MEASUREMENT -Performance measurement framework aligned with objectives and targets

12

3

456

7

8

910

CUSTOMER-TO-CASH KEY CAPABILITIES

Contents





§ Q&A


G&A Actual and Forecasted Cost as a Percentage of Revenue through 2020

Source: 2018 Hackett G&A Benchmark database analysis

3,68% 3,53% 3,52% 3,41%

2014 2016 2018 2020F

Finance

HRProcurement

IT

Where you will be without digital

transformation

Digital transformation focus

2.30%

Finance

HRProcurement

IT

Finance

HRProcurement

IT

Finance

HRProcurement

ITWorld-class

digital leaders


Hackett Digital Transformation Landscape

BUSINESS EXPECTATIONS

Cost leadership Delight customers Perfect quality Agile operations Flawless complianceEnable innovation

leadershipSupport decision-making

excellenceExtend service –

partner value

CUSTOMER-CENTRIC

Design thinking Digital customer engagement Customer journey mapping Segmentation Individualization Omnichannel

DIGITAL OPERATIONS

ERPmodernization Cloud Mobility Internet of things Orchestration

Conversational interfaces Smart data capture

Socialtechnologies Block-chain Process mining

Disruptive point solutions

Smart automationRobotic Process Automation Cognitive Automation

DIGITAL INSIGHT

Predictive modeling Analytics Big data

Data visualization Data integration Data mining

INTENSIFYING COMPETITION

Global competition Margin pressure Merger and Acquisition

DISRUPTIVE INNOVATION

Digital disruption Product and service innovation Business model innovation


Digital Transformation Is About Combining New Tools, Techniques and Technologies


Automation Is Bringing Together New Names, with Familiar Names

Source: 2017 & 2018 Awards Submissions, The Hackett Group

Analytics

AI Tools and Techniques

Mobility / Infra.

RPA/Orchestration

Voice / Conversational

Data Smart Data Capture


Automation levels in GBS are often not known as they are not measured

Source: The Hackett Group’s Global Business Services (GBS) performance study, 2016

51%

38%

26%

28%

37%

30%

13%

17%

23%

26%

20%

20%

15%

19%

21%

15%

11%

17%

21%

26%

30%

31%

31%

33%

Process automation level

Business continuity (disruptions,incidents etc.)

Compliance

Process quality

Process cost

Process cycle time

Process perspective - indicators to manage GBS performance

None Measured Targeted Managed

27% 37% 100%

23% 37% 100%

20% 42% 100%

20% 39% 100%

14% 32% 100%

% Managed by GBS maturity stage

23% 11% 67%

Managed - KPIs defined, targets set; major initiatives defined

Targeted - KPIs defined, targets set; no major initiatives defined

Measured - KPIs defined, no targets set, no major initiatives defined

None - limited or no KPIs defined


Unlocking Digital Value – The Race to Transform First

?“When digital transformation is done right, it’s like a caterpillar turning into a

butterfly, but when done wrong, all you have is a really fast caterpillar.”

George Westerman, Principal Research Scientist with the MIT Sloan Initiative on the Digital Economy

Contents





§ Q&A


This was the view in 2015: Robotics Impact on Individual Jobs (Study byOxford University)


Will Robots Take My Job ?

How likely is it that robots will take over my job ? :

https://willrobotstakemyjob.com/

https://willrobotstakemyjob.com/


The World of GBS and their related roles are rapidly changing

New roles have and are emergingTraditional roles are changing

Controller

FP&A

AP Clerk

Shared Services

Data Scientist

Behavioural Scientist

Robotic COE/ Coordinator

Digital Partner

Digital Risk Activist


29%

39%

26%

54%

54%

42%

33%

63%

40%

44%

63%

28%

23%

41%

44%

42%

31%

32%

33%

33%

25%

33%

38%

31%

50%

54%

29%

17%

32%

15%

14%

25%

33%

13%

27%

19%

6%

22%

23%

Internal placement Hire externally Contractor / or ESP

20%

32%

34%

39%

39%

39%

41%

41%

41%

43%

45%

48%

59%

34%

25%

30%

41%

23%

16%

16%

16%

9%

36%

18%

7%

9%

Cybersecurity specialist

Data architect

Data scientist/modeler

Social media manager

Agile project manager

Digital services delivery manager

Customer experience designer

Digital content manager

RPA / intell igent automation

Digital transformation program manager

Chief data officer

AI specialist

Chief digital strategist

Role needed. not created Role created

0

Actual or preferred role fill

New digital roles needed, created and filled


New Career Paths are opening up Huge Opportunities for our People

Source: Hackett Best Practice Conference 2018, Atlanta – Hewlett Packard – Marie Myers


TALENT MANAGEMENT AND ENTERPRISE PERFORMANCE ARE POSITIVELY CORRELATED

48%

Higher Return on Equity

17%

Higher Return on Assets

13%

Higher Net Profit Margin

13%

Higher EBITDA

$

GETTING IT RIGHT MATTERS

%

RETENTIONEffective talent management reduces uncontrolled

attrition, lowers costs and provides more consistency in customer service

SKILLS Skills and competencies over and above technical skills are essential to successfully manage interactions with

clients and deliver customer excellence efficiently

CAREER DEVELOPMENT Active preparation for career development to move

people from role to role and business to shared services and vice versa

DEMAND MANAGEMENT GBS workforce needs to be flexible and

knowledgeable to meet varying customer demand for services

RECRUITMENTHaving an attractive value proposition provides an

edge in competitive GBS locations

TRAININGIs valued by employees, increases competencies, improves morale and productivity and the ability to

add value to business customers

Talent Management does pay off – it is proven

Contents





§ Q&A


Skills shortages will result in lost revenues by 2030The Global Talent Crunch*

Source : ¹Korn Ferry “The Global Talent Crunch; ² Future of Jobs Report 2018, World Economic Forum”

85.2 million workers¹

Total expected talent deficit in 2030

21%

Shortfall of highly skilled workers could equal

21% of the highly skilled workforce

Unrealized annual revenue by 2030

(due to skills shortage)

$8.452 trillion

The equivalent of the current combined

GDP of Germany + Japan

*Scope of data : 20 developed and developing economies across the Americas (Brazil, Mexico, the United States), EMEA (France, Germany, the Netherlands, Russia, Saudi Arabia, South Africa, the United Arab Emirates, and the United Kingdom),and Asia Pacific (Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, Singapore, and Thailand)

54%

of employees will require significant re- and upskilling²

By 2022


GBS digital transformation performance and operating model impactGBS is anticipating dramatic increase in impact of digital transformation over the next 2-3 years

Source: 2019 Key Issues Study, The Hackett Group

GBS roles, skills profiles and needs 17% 61%

Current 2-3 years

Achievement of enterprise objectives 6% 50%

Current* 2-3 years*

Step change

Step change

GBS service delivery model 28% 67%Current 2-3 years

Step change

GBS performance(e.g. cost, quality, cycle-time) 28% 67%

Current 2-3 years

Step change

* Percentage of GBS organizations reporting high or very high impact


The skills initiatives to drive digital transformation success

Source: The Hackett Group GBS Performance Study 2018

Business acumen§ Understand key business drivers§ Business process engineering§ Lean process management§ Knowledge of factors, priorities and business demands§ Identify problems and prioritize alternatives

Data savviness§ Process data and extract relevant information§ Knowledge of analytical tools and methodologies§ Translates analyses into actionable plans

Strategic mindset§ Develop strategic frameworks and visions§ Anticipates market changes§ Address challenges and outline future direction

Agility and change orientation§ Agile development savvy § Understands change management and how to apply to

drive change § Able to deal with ambiguity

Creativity and innovation§ Create diverse and novel ideas§ Create and recognize new patterns/categories§ Curiosity, broad interests, constructive criticism

Relationship management§ Advanced interpersonal skills; high social and emotional

intelligence§ Positively influence decisions§ Open, approachable, collaborative


Attracting people with digital skills requires a mix of newer and traditional methods

Top-tier Practices

Mid-tier Practices

Lower-tier Practices

*Percent using practice effectively

50% 47% 45%35%

Investing in building a strongeremployer brand

Improving our workplaceenvironment and facilities

Increasing flexible workingarrangements

Increasing use of social media inrecruiting

33% 32% 28% 26%

Offering accelerateddevelopment and career paths

Introducing/expanding coachingand mentoring programs

Offering internships/co-ops Increasing compensation andbenefits

18% 16% 13% 8% 5%

Employi…

Develo

pi…

Introd

uci…

Adding

…

Paying

…

Most effective actions to attract talent with digital skills*

Source: The Hackett Group, Digital Skills Poll, 2018


The changing workforce

Builders Baby Boomers Generation X Generation Z Generation AlphaGeneration Y

Pre 1946(74+)

1946-1964(55-73)

1965-1976(43- 54)

1996-2009(10-23)

2010 or later(under 10)

1977-1995(24-42)


Organizations are finding it difficult to attract and retain across the workforce

56%

67%

83%

56%

33%

50%

38%

63%

Attract Retain

Percent respondents answering difficult/very difficult

Professional Technical Operational Millennial

Technical workers are hardest to attract; professionals hardest to retain only slightly edging out Millennials

Source: The Hackett Group, Recruiting & Retaining Quick Polls 2017

ATTRACTION

RETENTION


Increased learning and career development opportunities is the most effective action taken to increase engagement

Changed workforce policiesto promote greater diversity

and inclusion

Created opportunities forbonding among co-workers/

colleagues

Upgraded workplacefacilities

Introduced digital tools toincrease feedback betweenmanagers and employees

Increasedcompensation/earnings

potential

Introduced greater opportunitiesfor achievement

Increased/changed benefits Increased flexible working/ work-life integration opportunities

Created a compelling organizationmission/purpose

Gave staff greater autonomy/voice indecisions

Delivered training to improve manager quality Increased learning and career developmentopportunities

Top Tier

Mid Tier

Lower Tier

Source: The Hackett Group, Employee Engagement Poll, 2018

Top performers are more successful driving greater

engagement through increased flexible working, improving

manager quality and increasing /changing benefits.

Single most effective action to increase engagement


The Hackett Institute’s professional development programs are rooted in both actions and academics; grounded in The Hackett Group’s real-world implementation experiences and informed by unmatched intellectual property derived from our benchmarking data, proprietary research and Best Practices Intelligence Center™.

We offer:

§ Professional education in specialized and emerging disciplines

− Global Business Services (GBS) / shared services− Enterprise Analytics− Robotic Process Automation (RPA)− Cash Management / Working Capital

§ Training relevant to all levels of role and experience

§ A dynamic online learning experience, with self-paced, easy-to-digest lessons

§ Thought provoking, practical learning activities with immediate application to the workplace

§ End-of-course assessment with digital credentials to certify skills and knowledge

§ Accredited professional development, membership and life-long learning opportunities

Professional development from The Hackett Group

The Hackett Institute

Certified Enterprise Analytics

Professionals

Certified GBS Professionals

RPA Master Class

Program

Working Capital Excellence

Flagship certification programs

Specialized master class programs


Certified GBS Professionals program – course structureThree individual training programs with a common core curriculum, each geared for the unique needs of the three gateway GBS roles: associate, manager and leader

GBS Leadership

Team

Team Lead/Manager

Associate

Advanced Diploma in GBS (ADGBS)A current leader of a GBS organization (typically consisting of several leveraged centers and/or outsourcing contracting relationships), GBS centers, or one of the members of the GBS organization’s senior management team

Diploma in GBS (DGBS)Either a midlevel manager running a process work team within a leveraged center, or a senior associate within a leveraged center preparing for a role as a manager

Certificate in GBS (CGBS)Entry-level associate performing transactional or knowledge-based work

20%

10%

70%

Entry is available at any stage and aligns to career pathways.


1. Introduction

2. Key Concepts in Analytics

Defining analytics, asking better questions, selecting KPIs and measures that matter

Introducing the Analytics Maturity Model Descriptive Diagnostic Predictive Prescriptive

3. Analytical Techniques and Tools

1. Historical analysis

2. Variance analysis

3. Trend analysis

4. Comparative analysis

5. Value-based analysis

6. Correlation analysis

7. Time series analysis1

8. Regression analysis

9. Decision tree analysis

10. Machine learninganalysis

11. Natural language processing

Underlying analytics tools

4. Executing Analytics Projects

Quality assurance, risk management, governance

5. Effective Messaging and Emerging Trends

Understand communication, audience, cross cultural messaging and emerging trends in analytics

6. Test Your Knowledge

Key takeaways from #1-5 course sections

Core Frameworks

1. Analytics Maturity Model 2. Insight Cycle

Course Outline

Certificate in Enterprise Analytics Excellence

(1) Includes naïve modeling, probabilistic, deterministic modeling

Data Sourcing

Information Analysis

Data Governance

Information ConsumptionInsight Cycle


Robotic Process Automation master class course outline

RPA training resource library – topical webcasts, case studies and best practices

RPA Fundamentals RPA Delivery Excellence

For GBS team members at all levels, functional associates and managers (finance, HR, IT, procurement and supply chain), and others involved in supporting RPA pilots and full-scale implementations. Can be used to help the entire organization better understand what RPA is, what the benefits are for deploying it, what activities make good RPA candidates, and what steps are in a best practice-based RPA implementation.

Two- to four-hour on-demand master class delivered on The Hackett Institute online learning platform

For managers and team members tasked with strategy, design, build, deployment and organization redesign, governance and CoE setup

Three-day master class delivered through on-site or via Webex classroom training

Orientation§ What is RPA?§ RPA criteria§ Rationale/benefits§ Industrial vs. tactical vs. disposable strategies§ What is cognitive automation/AI?§ RPA lessons learned

Use Cases§ Earliest adopters§ RPA sector trends§ RPA horizontal trends

─ Finance─ HR─ Procurement─ Other

Strategy§ How to engage with RPA§ Different types of RPA strategy§ Short-term and long-term objectives§ Fit with other initiatives§ Target business case§ Stakeholder strategy

Opportunity Identification§ Objectives and criteria§ Initial scoping – selecting

the best processes§ AIM scan – identifying the best subprocesses§ AIM deep dive – drilling into activities§ Road maps/pipelines

Business Case§ Value drivers§ Typical savings per robot§ Main cost types§ Scale and timing§ Typical return/payback§ Business case issues and opportunities

Impact on Operations§ How is RPA changing operating models for:

─ Shared services─ GBS─ Outsourcing

§ Impact on outsourcing/BPO market

Organization and Governance§ To-be operating model§ Required skills§ Governance model§ CoE approach§ Role of outsourcers and

software vendor§ Risk management

Technology§ Technology landscape§ Tool strategy§ Tool selection approach§ Licensing§ Installation§ Run and hosting§ Robot sizing

Vendors/Market§ Leading software vendors§ Points of differentiation§ Specialist niches§ Cognitive automation/AI landscape

How to Implement§ Opportunity identification§ Sprints: Design/build/test § Run, scaling and CoE§ Skills, resources and timelines

Implementation§ Sprint overview: Design/build/test§ Run overview: Run/hosting/RaaS/maintenance

Scaling/CoE§ Common scaling challenges§ CoE role and structure§ Demand management§ Communications§ Change management

Questions?

App feedback please


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may not be duplicated or otherwise distributed without The Hackett Group Inc.’s express written approval.

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Reproduction of this document or any portion thereof without prior written consent is prohibited.

© 2018 The Hackett Group, Inc. All rights reserved ...Metrics and Governance Customer-to-Cash...

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