CFOs become performance accelerators
Consumer experience has advanced drastically in recent years through services provided by the likes of Amazon, Uber and Netflix. While these companies have very functional front-ends which the customers see and interact with, the secret to their superior user experience actually lies in their back-end operations and processes.
Increased customer expectations driven by experiences with these brands are now also impacting the business-to-business world. Having a product that provides strong value to a market is no longer enough; businesses need to invest in their back-end operations to ensure their internal processes are frictionless and seamless.
As the executive with the closest ties to business outcomes, it now falls to the CFO to lead this transformation. Historically, somebody who put numbers on a spreadsheet and reported them to the chief executive, the CFO must now manage and accelerate corporate performance, while acting as a key business partner to other executives.
“CFOs have a central role to play in driving transformation for the business,” says Andy Joeres, regional vice president, UK and Ireland, at Celonis. Their software enables companies to improve the flow of their business processes to transform operations. “The need to adapt to the rise of new technologies is absolutely imperative. CFOs need to utilise technology and data as a better evidence base for making informed decisions.”
Organisations have historically looked at everything from a departmental or functional point of view. While this may make sense, it can create silos and a tendency for line-of-business leaders to look at their own processes or activities through a restricted lens. These leaders will have their own systems and key performance indicators (KPIs) to support the silos they’ve built. To accelerate performance, CFOs need to take a step back and look at the entire state of business operations.
CFOs now have a central role to play in driving business transformation and process improvement - the need to adapt to the rise of new technologies is absolutely imperative -Andy Joeres, RVP Celonis, UKI
In a study by Celonis, 82 per cent of CFOs conceded they didn’t think about looking at their as-is processes before evaluating ways of accelerating corporate performance. This means decisions are being made on gut feeling, past performance or through subjective discussions with colleagues. Basing decisions on what is happening now in an organisation will drive the best results, but relies on visibility of data across entire businesses processes.
“The typical processes we think as being aligned to a CFO are naturally in areas such as working capital, but how many functions does a purchase-to-pay process cross?” Mr Joeres asks. “CFOs now have to be able to look at that process in its entirety and instead of just thinking about how to increase working capital, they must also be thinking about areas they traditionally haven’t had to consider, such as delivery. Customer satisfaction and on-time payments rely on on-time delivery, so both need to be on a CFO’s radar.”
The challenge for CFOs is having a holistic view of the business, getting away from the silos and being able to look at processes in an end-to-end fashion. Only a data-driven approach will provide the objectivity they need to optimise business processes. Leveraging innovative technology such as process mining, enables this data-driven approach. It adds a technology layer that allows CFOs to accelerate performance and make decisions which are smarter and easier to execute because they’re based on objective evidence.
Celonis’ process mining technology reconstructs what happens in a business process, learns how the operation works and detects hidden inefficiencies. By using their technology, businesses can quickly determine the root causes of these inefficiencies, take immediate corrective action and ultimately remove operational friction. Celonis has more than 700 customers globally, including Vodafone, Uber, GSK and AstraZeneca.
“We look at process mining from three areas: discover, enhance and monitor,” says Mr Joeres. “Discover is about understanding exactly what’s going on in the business today. We bring all the data together and visualise any process a finance leader wants to address. In the enhance part, it’s important to recommend the specific action that is going to drive the best business outcome in real time. We enable finance teams to take the actions that are needed to remove friction and accelerate performance.
“The final part, monitor, is about ongoing, continuous improvement. It’s crucial to maintain, monitor and uncover long-term trends so you can spot additional recurring bottlenecks and understand the ongoing root causes of those issues over time.
“We’re increasingly seeing heads of finance being measured on KPIs that may not be relevant to process improvement or business outcomes. They’re just KPIs for the sake of KPIs. With our process mining technology, we’re able to define KPIs that will continually improve processes and drive the desired business outcomes.”
Telecoms giant Vodafone turned to Celonis because it lacked the necessary insight into its purchasing operation, consisting of more than 800,000 purchase orders (POs), five million invoices and 50 million assets annually. Celonis’ process mining technology bridged the information gap and created full transparency by reconstructing and visualising Vodafone’s as-is purchase-to-pay process. This provided insight into the bigger picture as well as enabling the team to drill down into individual processes and take action to drive the perfect PO rate.
“I like to use the perfect PO initiative – right first time ordering – as the perfect use case for how process mining enabled us to transform the business to perform on a world-class level,” says Israel Expósito Peraza, Vodafone’s head of data governance and analytics. “When we kicked off this initiative our perfect PO ratio was 73 per cent. Only six months later, we over-achieved the 80 per cent annual target by hitting the 85 per cent level.” Vodafone’s perfect PO rate is now up to 96 per cent.
By eliminating procurement errors, Vodafone is maximising catalogue buying and speeding up the release of a PO to a supplier. The rise in the number of POs completed correctly the first time has helped to reduce the cost of each PO from $3.22 to $2.85. This in turn resulted in an 11 per cent cost-saving improvement as well as a 20 per cent growth in time to market – in just six months of using Celonis.
For more information please visit celonis.com