It seems like you can’t log into the Internet without being bombarded with proclamations about new business technologies solutions that are streamlining and improving back office processing across the globe. Apparently, Skynet isn’t only planning the destruction of mankind; it’s also processing and paying your invoices.While there are many new and promising technologies that have been emerging in the world of operations, such as Robotic Process Automation (RPA), Electronic Invoice Presentation and Payment (EIPP) and Optical Character Recognition (OCR), it appears that many Shared Services organizations are not as quick to adopt them.
A recent study published by Auxis, A Deeper Exploration of Shared Services in Latin America, provides some insights into the levels of technology adoption in Americas-oriented Shared Service Centers.
The survey queried respondents from over 30 Shared Service Centers located in a wide range of countries across Latin America, including Brazil, Costa Rica, Colombia, Mexico, Argentina, Panama, Uruguay, Peru, and Venezuela. The company demographic ranged from regional, mid-sized companies with at least $250M in revenue to large, global enterprises with revenues of more than $25B. Survey respondents provided services to the Americas region, including Latin America, the United States, Canada and the Caribbean Basin.
According to the survey, the overall adoption and penetration of new business technologies were relatively low. The leading new technologies highlighted in the survey were Workflow (65% of respondents currently employ) and Digital Imaging (62%), followed by automated Account Reconciliations (45%) and Employee and Vendor Portals (42%). Some of the “hotter” industry solutions had much more limited deployment: EIPP – 29%; Cloud Solutions – 19%; OCR – 19%. And what of the most hyped back office solution in recent years, RPA? None of the more than 30 respondents to the survey currently had deployed an RPA solution, and only 16% had plans to deploy the solution in the next two years.
Is this an indictment of the technologies themselves, or the organizations’ resistance to change and tactical focus? Likely, the answer is a little of both, but clearly, there is still a lot of manual, transactional work happening out there, and this will continue for the foreseeable future, all hype aside.
Part of the issue is the hype itself. The solution providers are presenting a picture of a “processing panacea”, with these technologies greatly increasing operating efficiency and performance, while drastically reducing overhead and operating cost. But the reality is that many transactional environments do not work smoothly, but with disjointed, “siloed” processes, numerous manual workarounds and processing exceptions, and limited visibility into day-to-day activities being the norm for most organizations.
Cost is also a factor, as most shared services organizations run extremely lean and often with zero-based budgets, expected to do more with less. Getting investment money in these areas is a challenging process, and without a clear and convincing use case and ROI, shared services leaders are reluctant to make the request.
This is not to suggest that I am downplaying the effectiveness of some of these new technologies for business solutions to improve and enhance operations. I am a firm believer in automating and eliminating manual processes wherever possible, and in enhancing the effectiveness of business processes and the organizations that drive them. Technology needs to be a key element of the back office processing, but it is not an answer by itself.
Implementing any of these technology solutions is the same as implementing any other technology solution. It requires a detailed understanding of the processes and systems that it is being integrated into, and the inherent challenges of those processes and systems. Software vendors often minimize the effort involved in implementing a solution, making it sound like it can be simply “dropped into” an operation and be up and running in days. I imagine that the person who first developed the wheel minimized the need for balance and clear roads to his customers.
RPA, EIPP, and any other solution require a similar methodology to implementing an ERP: requirements definition, functional and technical specifications, design and implementation, testing, training and deployment.
Better yet, take those disjointed, manual processes and clean them up first (robots don’t like exceptions). Eliminate unnecessary steps or redundancies; simplify overly complex processes and standardize diverse operations and systems wherever possible; restructure roles and responsibilities and increase focus on higher value activities. Carve out highly transactional, rules-based activities and leverage lower cost offshore markets when possible to reduce overhead cost (and provide funds for investment).
In my recent blog post, “Changing the Back Office Dynamic", I highlighted some of the ways to optimize back office processes.
Technology clearly plays an important role in the ability to improve and optimize back office operations (and always has since the invention of the abacus.) But poorly implemented technology or unrealistic expectations about what that technology can accomplish can have the opposite effect.
The reality is in the data, showing limited new technology adoption in the shared services operations that were surveyed. The software vendors need to present a realistic picture about what their solutions can accomplish, and more critically, what it will take to implement them effectively. And back office organizations need to “clean up their acts.” Take a step back to understand the issues and challenges better and improve weak operations and the organizations that support them.
Combining improved processes with a focused organization and well-designed and well-implemented technology solutions? That’s a future that can happen right now.