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Engaging Your O2C Outsource Partner A Webinar Mark Davison Sr. Director

Order to Cash Outsourcing - Engaging Your O2C Outsourcing Partner

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Learn about Order to Cash Outsourcing and the Best Practices for engaging an O2C Outsourcing Partner. Topics include Order to Cash Process issues, process analysis, implementation strategy and anticipated benefits. For more information on the benefits of Outsourcing your Order to Cash Process, please visit http://www.order-to-cash.net , or contact us at 888-608-9975.

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Page 1: Order to Cash Outsourcing - Engaging Your O2C Outsourcing Partner

 

Engaging Your O2C Outsource PartnerA Webinar

Mark DavisonSr. Director

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Agenda

Introduction

Context for Change

Engaging the Outsourcer

Watch Outs

Benefits

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Introduction

• Many challenges of competing in today’s constantly changing economy • Drives thinking around whether to outsource part or all of the order to cash 

(O2C) cycle– How to do it to achieve greater business value and outcomes?– Where to start?

• Outsourcing to a third party has been around for quite some time– Can be threatening and puzzling– Touches customers, suppliers, employees, manufacturing plants, pricing, costs, 

delivery and cash– Sensitivity and complexity makes outsourcing O2C susceptible to difficulties and 

interruptions• Outsourcing can lead to the following significant benefits

– Improve productivity and competitiveness– Business transformation– World class processing capabilities – Ever-improving outcomes

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A company’s O2C cycle will include several or all the following steps:• Presales (lead management, 

pricing, quoting, credit check)• Order generation• Plan/produce• Ship/deliver• Invoice• Collect/process payment• Customer service• Analytics

Company’s face these challenges:

The O2C Cycle – Challenges and Impacts

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Background for Change

• CEOs, investors and customers expect business improvements, and for business leaders to drive them

• But the business may lack time, resources and expertise• Work processes that make up O2C extend into nearly every 

aspect of business operations– Mishaps can be costly– Help from those who have “been there, done that” can be invaluable– Outside experts provide insight/advice required to 

• Analyze and propose sound recommendations• Author and/or drive the changes needed

• It can be difficult for management to achieve these improvements without outside help– This drives the need for third party expertise

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Using Outside Experts - Solutioning

• Working “outside the forest”– Those working within a business are often bound by a set of written and 

unwritten organizational and cultural rules/behaviors that impact their thoughts and actions

– They are “connected” to a business through the compensation and benefits they receive – to managers, supervisors and co-workers - via reporting and working relationships that influence assignments, success, promotions and financial rewards

– A third party outsourcer is not encumbered by these constraints and limitations• Has the independence to develop the open and uninhibited solutions required to 

achieve difficult goals that impact the organization and allocation of people, work and assets

• Can identify opportunities for strategic and tactical change, process simplification/standardization and cost efficiencies that may not, cannot or would not have been able to have been envisioned, proposed or implemented by internal staff

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Using Outside Experts – Implementation

• Pushing for Transformation– Wider latitude to recommend the “thorny” changes needed to drive transformation

– Possesses knowledge of how to navigate the challenging obstacles often in the way of deeply cutting waste and cost without impacting operations and customers, thus increasing the chances of success

– Leverages experience to promote value creation and transformation, educating those inside the business on new practices, procedures, techniques and tools

– Ensures that the business continues to meet its commitments to customers and service levels during implementation

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How To Engage An Outside Partner

• For the business:– Understand the objectives, scope, work processes, requirements and expectations for the “current state” and “future state.” 

– Formulate a vision and value proposition to guide and justify the investment in making the O2C transformation

• Avoid the temptation to advance without doing these important predecessor steps

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Defining Requirements

• The most critical step of the planning process 

• Often underestimated and not performed well

• Look on many levels and in areas such as– Tactical operations– Critical and/or unique needs and expectations• May be undocumented or unstated

– Internal and external perspectives 

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Sample Questions to Ask

• What is the scope?• What do customers need/want from the process?• Where are the “pain points”?• What are the company’s goals and objectives, and how do they align with O2C?• What does the business require in terms of cost savings, financial controls, capital, etc.?• What are the customer service requirements and expectations?• What quality/defect levels are required?• What business processes are required?• What organization is needed?• What technologies are needed?• How can technology be used to create an advantage?• What are the cultural and adoption challenges?

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Credit Analysis & Processing Order Processing Carrier and

LogisticsReturns

Processing Billing and Collections

Reporting and Analytics

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Sample Questions to Ask

The answers to the questions on the previous page, and many others, are used to develop:• The “requirements” – a complete and accurate document of requirements and expectations for performing the services in scope

• The “value proposition” - a thoughtful and achievable value proposition that represents the financial goals of the business, and which will become the beacon for steering the initiative as it moves from concept to implementation

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Using the Requirements Definition

• Basis for solutioning, including– The “Service Delivery Model” – work processes, best practices, technology, organization and staffing

– The “Commercial Model” – the contract structure/contents, pricing options, SLAs and delivery metrics agreed upon

– The Partner – the definition of the knowledge, experience and expertise of the outsource firm that will make the most suitable partner

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Watch Outs

• The solution must be constructed to match the business requirements (and expectations) – If the requirements are incorrect, the solution will be similarly 

incorrect– This will cause problems before, during and after implementation

• The greatest risks are often found in problems that – Expose customer-facing difficulties– Cause embarrassing and expensive rework– Internal changes driven by a commercial model that drives 

behavior in the wrong direction• It’s essential to spend time on gathering sound and thorough 

information to define requirements and expectations up front.

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The Value Proposition

• Details the costs, savings and other benefits to be gained from shifting the work to an outside party

• Used to align stakeholders and justify the investment of time and resources

• Guiding light to keep all participants in the process focused on the ultimate goals of improved process speed and quality; better work processes, risk management, stewardship, controls and compliance; and financial savings or benefits expected to be realized by the business

• Visible part of the initiative’s metrics and a yardstick against which to measure actual results from the implementation, evaluate financial progress, and make course corrections if needed

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Next Steps in the Life Cycle

• Selecting a third party to provide O2C services

• Then … contracting, engagement, implementation planning and launch

• Post launch … stabilize and mature the initiative, transformation, realize the benefits, and prove the value proposition 

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The Benefits of Outsourcing O2C

• Simplification and standardization• Reduction of redundant work effort• Centralization of common services to create efficiencies• Improved customer service levels• Strategic flexibility/scalability to increase/decrease staff when 

needed• Automation through use of vendor-provided technologies• Improved controls and oversight• Cultural change• Reductions to direct cost• Continuous process/productivity improvements• Improved business outcomes

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Driving the Benefits to Realization

• Focus on key metrics and institute processes that – capture the appropriate measurements diligently during and after implementation 

– utilize the measurements to accomplish the following:• Monitor and improve, or course correct, operations• Identify trends and leading indicators• Improve visibility to controls• Gather data to analyze root causes of problems and implement corrective/preventive actions

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Conclusion

• It’s a journey that requires investment of time and resources– begins with the need to drive better business results from order processing functions, 

achieve targeted cost savings and productivity improvements– progresses through implementation planning and execution, to stable operations and 

transformation– Success depends heavily on definition of requirements and expectations as well as on 

the selection of a third party provider that can truly partner, lead and support the process of outsourcing and deliver results.

• Key “watch outs” include:– Developing a sound, achievable vision– Defining requirements well– Agreeing on a value proposition and driving toward it– Defining the characteristics of a suitable partner

• Businesses and outsourcers can align with regard to vision, delivery, relationship management and customer service and satisfaction

• Others have done it and have successfully realized significant benefits• When will you?

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