WHITE PAPER

Order to Cash - Process Automation

Unlock Efficiencies….
Operations, Maintenance & Services Business

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 The Order-To-Cash process
begins with everything required
to manage and process customers
orders and finishes with
monitoring and collecting
money from customers.

One of the common factors between ORDER and CASH is that ……both are dynamic in nature. 2
 Speed of response is the
first Casualty and then
comes the Quality.

 The typical “Order To Cash” cycle normally refers to the process wherein taking a Customer Sales Order and then fulfilling the
orders either by sourcing or producing and then shipping, logistics, invoicing, receipts and is colossal key financial playing yard of any
organization.

 As oppose, Order to Cash process for an Operations, Maintenance & Service businesses is bi-polar opposite to the then traditional
business’s. Not only does it determine how the Contracts are created, re-iterated over the negotiations & Service level terms based on
the “Delegated Authority Plan” and then finally released till the point of Execution with adherence to the Service Level Obligations.

 The time might just be ripe for change in thinking when it comes to putting together an Enterprise Order To Cash paradigm in place
….. a more cohesive & comprehensive approach enabling Businesses to horn there competitive edge, unlock efficiencies, increase
speed, significant cost reduction thereby have direct impact on the Top line and bottom line across the Enterprise.

 Having said that, whilst further compounded by challenges, as Business’s are under tremendous pressure over price, cost, improving
working capital, increasing stakeholders value and minimise bad dept. and makes it imperative for businesses to focus on having a best-
in-class Order-to-Cash exemplar.

Globalisation demands huge transformation in Processes and Systems & the Key to attain this transformation is create an ability to Learn, De-learn & Re-learn.
Mesh of manual
touch-points

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 If we cant measure,
we cant control.

Varied statutory and compliance

High lead time over the requirements across different
Customer Contract sign off countries/regions
Siloed systems and processes leading to delays Lack of performance visibility
and errors, and costs that are still unacceptable. to the Customers leading to
Lower Customer Satisfaction
Inability of system to Resource or Capacity
easily adapt to changes management issues
from the customers Delayed & expensive execution leading to waste

High Order rework

Retain existing Customers & attract new ones

Lower Customer Satisfaction High volume of non-standard Contracts leading to disparity

High level of internal and among what the system and processes designed to do as
external dependency on various oppose to ….what now needs to be achieved.
Slower fulfillment functions to drive completion

Delayed in Collections
No Single version of truth across organisation over High vulnerability to errors
Business Exceptions including Contracts Obligation
committed along with Liquidity damages.
Multiple non-integrated legacy systems Varied Customer commitments &
performance across different regions

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The World is changing fast, Big will not beat the small anymore, only the Fast will beat the BIG.
 Any System doesn’t
guarantee success, only the
pursuit of it. You have to
catch it up with yourself.

 Only the Big Enterprises need an Order-To-Cash exemplar.

 Process integration Enablement will be way too expensive… lack of Systems, Technology or Trained Staff.

 What “should be” or “can be” or “should not be” automated in the Process lifecycle.

 We will have to make a big time change in the existing System, Processes & last but not the least the People.

 We built, integrate, automate and enable and then no one makes use of it.
……. Change Management.

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Processes / Resources are like IT assets, the cannot do same thing year on year at the same cost, so either upgrade them or retire them, last thing we can do is keep them at the same cost.
 True optimization of the
Order-To-Cash cycle requires
end-to-end view of the entire
process map.

Contract

Approvals
Customer Retention

Billing

Cost & Time

Liabilities

Receivables

Maximize Service Profitability

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The Devil and the God both lies in detail.
 Building a Contract holds numerous iterative steps
that consumes critical time & resources including
everything from creating, negotiating, printing,
Contract
sorting, certifying, sealing, scanning and stuffing
attachments in emails for Customer closure

 Contract’s enables providing Services to the Customer’s who has purchased services to cover Operations, Maintenance, Warranty & Repair for an
acquired Install-base : Washing Machine, Wind Turbine, Mobile Tower, Laptop or Crane.

 The critical phase in Order-To-Cash process includes Contract Creation embedded with Committed Obligations, Billing Schedule, Taxation, Credit
definitions and last but not the least mapping of Install-base to these Contracts.

 Essentially, these Service Contracts represents long-term agreements between companies and customers wherein customers are guaranteed services
over the Install-base within tolerance limits over the committed obligations for defined parameters, for example, Adherence, Availability Time and
Response Time.

Customer
 To ensure continuous operations, Customers typically maintains running Service Contracts for their Install-
base with the desired Service Level Obligations while field technicians can perform their services for the
Install-base mapped against these Customer Service Contracts.
Credit Service
Installbase
 For instance in a case, a field technician at the Telecom Tower Site finds the failure of the Component at the Mgmt. Contracts

Telecom Tower. The technician then, over his handheld device verifies that the customer has a valid Service
Contract for this Install-base in order to perform the needed repairs / parts replacement over the Breakdown
or even for the Scheduled Maintenance. Obligation
Definition

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Enterprises gaining competitive separation, will be focusing on the Next Practices and not the Best Practices.
 Systems manual or automated
must be in place to capture
flow & derivatives at each
Approvals
phase.

 Federated and inconsistent manual process over the multiple iterations in regard with approvals over deviations from various stakeholder internal &
external calls in for - Delegated Authority Plan wherein the approvals for Contract Period, Rates quoted , Obligations committed, Year on year
escalations are approved in timely manner and is in concurrence with all stakeholders across the board.

 Enables businesses to have log of all deviations / approvals and send all its Contracts / addendums electronically thereby lowering reduction of
Contract document handling time, increased process controls and visibility and provides an competitive edge.

 Major popular ERP’s, supports the functionality of having section or value based approval subject to the defined standard base value their by enabling
business to have Process Standardization and avoid system proliferation.

Contract
Approve Release Contract

DAP
Notify Previous Initiator To
Reject Approver & Modify
Initiator Contract

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Sometimes we have to jump first and then find our wings on the way down.
 CRM staff spend days chasing customers if
invoices were received or were erroneous or did not
get the necessary supporting documentation with
Billing
the invoice.

 Billing plays cardinal in the complete Order-To-Cash Cycle as it

triggers the financial transaction with the Customer.

 Scenario’s for Billing may vary from

 Billing after Contract is Released,
 Once a Service Order is completed,
 Value Added Service,
 Usage Based Billing,
 Delivery Related Billing

 The Pricing configured in the ERP system enables

determining and calculating prices, taxes, discounts
and other pricing conditions.

 Most of the popular ERP Systems are capable of

generating the Billing Due List subject to the
Billing Plan configured in the system.
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 Order-To-Cash Process is the key enablers for
business acceleration & builds excellence into every Liabilities
warp & weft of the fabric of companies, to lead to a
‘World Class Enterprise’ .

 Liabilities in services business essentially are connected to the obligations committed in

the Service Contract with the Customer and may come in a form of claim over service
adherence, availability, breakdowns, insurance, response time, performance and would
vary from business to business.

 The key components in the Install-base inherits its respective warranties like
Compressor warranty in cases of Refrigerator’s wherein the Refrigerator might come
with 2 year warranty and the compressor with in Refrigerator comes with a back to back
vendor warranty of 5 years.

 On booking the Service Orders over repair, the ERP system apparently determines
whether a warranty exists and then assigns this accordingly and subsequently on
calculating prices for the services / components in billing, warranties can be taken into
account accordingly.

 This in way also effects the Net Receivable as the liabilities towards customer claim
would end up into a settlement effecting Customer Receivables with Credit Note.
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Most Enterprises cant keep breaches under wraps, its is a major blow for their business.
 OTC cycle determines how quickly an order from
customer is translated into cash in the bank.
Receivables

 The last mile and the key rational of doing any business stands at Receivables and is always a priority item for businesses.
 Automating the Accounts Receivable process offers an array of benefits, all of which improves efficiencies, cut costs and has a direct impact on cash
flow, so there's no doubt that improving A/R process Enterprises can significantly enhance bottom lines.

 Enterprise providing the Services, checks if the prospective customer is of sufficient credit worthiness to warrant the
Credit Mgmt. supply of the services under an account arrangement.

 Bill takes place subject to Billing after Contract is Released or once a Services is rendered.
Bill Distribution
 Whilst Billing is subject to the scheduled frequency concurred in Contract.

 Collections team identifies the Customer collection into the bank account, books it into the A/R system, identifies
Collections
invoices that are short paid / unpaid as of the due date & allocates it to an Bill & ensure reconciliation.

 The Customer disputes the Service availed and disputes the adherence to the Service level obligations committed.
Dispute Mgmt.  This is apparently handled by Customer Relationship Mgmt. team.

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 Saving money
by Saving

 Increased transparency & Improved collaboration across the Business value chain and
faster Service Rollouts with high level of Data integrity leading to Lower processing costs & time
thereby directly impacting the bottom line.
 Maximize return on
company’s investments.

¥ Enables management to have centralized control

with increased integrated competitiveness & accelerated
closeout business processes.

 Drive real-time visibility of

§ Maximize the value of every all customer-facing processes.
existing customer relationship.
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The best IDEA will not work unless you work the IDEA
 Effectively managing Customer
lifecycle from quote to order to
sales to service to cash is cardinal
for every companies Growth &
Profitability

 A decade ago, Business Leaders would be in a fire fighting mode most of the time, whilst Technology was still seen as esoteric & something new that had
to be mastered, but todays integrated systems have given them time to step back, innovate & strategize. Is it possible, as the world is changing so rapidly
but the automation of key processes such as OTC remains a stick-in-the-mud. Until recently, many Enterprises did seem stuck in a time wrap of old
paradigm with clinical consideration over agility.

 Even the established Enterprises, the multi million dollar gorillas, too took quite a while to come to grips of heterogeneity as the dilemma perhaps, the
challenge for many enterprises is a matter of change management, as it is bit difficult for them to spruce things up without causing disruption to business
and might have to re-tool, re-architect or completely replace existing business applications and infrastructure & perhaps re-train or re-deploy resources.

 Apparently, it is a gradual journey & needs a defined roadmap, as the process automation is generally delivered in a fragmented way across a number of
business silos, while needs a cardinal powerful process owner with a stark mandate to work cross functionally and requires a single sponsor who can
effect end-to-end inflection and those responsible for customer relationships preciously guard customer facing activities. Having said that whilst, a 'one
size that fits all' approach cannot be contemplated as no two businesses are same, there are industry specific processes and specific customer requirements
to factor in.
 Thus far, the OTC approach elaborated in this white paper is completely backend Enterprise system agnostic. The framework would provide the ability to
gather relevant data from with in the enterprise, connect the data into information and information into knowledge which in effect is the lifeline of today’s
modern enterprises thereby enabling Enterprises from doing things a traditional way to a more agile, cohesive & comprehensive approach.

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Re-think Change… Automation perhaps Innovation here is Evolutionary rather than Revolutionary
  Naresh is a Business Partner IT and serves an Indian Multinational Enterprise. He has over 18 years of
professional IT experience in software design, development and implementation of ERP/CRM vertical
market segment.

 Naresh has managed IT, Manufacturing, EPC, Operations, Maintenance & Services, Retail, Insurance,
Healthcare and Logistics domains. He has been cardinally instrumental and has successfully managed
Business Transformation initiatives thereby enabling end to end processes including :
 Order-To-Cash
 Procure-To-Pay
 Commissioning-To-Sustenance (Operations)
To contact the author, please write to
 Hire to Retire Nash_RKR@Hotmail.com

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Automation wont cause it, it is the effect of the Process Enablement.
 The information herein is for informational purposes only and represents the current view of the author
as of the date of this presentation.
 The contents hereof are subject to change without notice.
 The author assumes no responsibility or liability for any errors or inaccuracies that may appear in this
publication & specifically disclaim any liability with respect to this document, and no contractual
obligations are formed either directly or indirectly by this document.
 This document may not be reproduced or transmitted in any form or by any means, for any purpose,
without our prior written permission.
 Other names and brands (if any used) may be claimed as the property of others.

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