Technologies & Standardization in Outsourcing & Process Organizations
Process Standardization:
The era of computerization and internet world, had enabled processes gets executed from remote locations. This is a phenomenal change as compared to the way the processes, which were handled in the early and middle of the current century.
Process standardization is of primary importance to large and globally diversified organizations to drive resilience, one standard, one global approach and meet regulatory and for stakeholders delight.
Global Operating Models:
Standardization of processes aims to achieve consistency of delivery and resilient processes, irrespective of the person who handles the process. Many of the large organizations like to move from people driven processes to process driven ones. In a large and multi-geography companies, the processes are diverse in view of the local regulations, taxes, special interest laws, governmental interventions and so many other reasons.
However, organizations operating in multiple countries and continents can't afford to have non standard processes, which can result in delivery surprises, inconsistencies, large scale errors and lack of a global perspective in the identification and implementation of innovations.
Bouquet of Technologies:
Technologies in this context represents, variety of Technologies used for the same function in different countries in a large multi geography organization. The usage of different technologies or applications are driven by the following reasons;
Usage of different version of ERP in different countries or different regions
Usage of Non standard applications Vs. standard applications in different countries
Applications having different functionalities or features resulting in inconsistencies and Secured Vs. Non Secured IT applications environment.
Reasons for Variety of Technologies:
Decentralized decision making in IT investments or in new application developments
Profitable Vs. Non profitable countries that impacts their affordability in IT investments
Home grown technologies which is used only for that country
Legacy systems which had not been upgraded for a long time.
Non standard technologies procured over a period of time to meet specific needs.
Case Capsule 1:
In a large global organization, Dealer promotion incentives and special marketing programmes had a budget of $ 1 Billion+ There were certain improvements identified in the audit of such transactions, which resulted in a savings of $ 1 million per annum for one country.
The losses in dealer incentives were due to incorrect dealer claims beyond their eligibility, duplicate claims, Claims from different subsidiaries etc., When the proposal came in to implement the improvements for other countries, Non standard technologies and workflow systems came as a major impediment in the implementation. This resulted in delays in the adoption of a standard process.
Process Implications:
Bouquet of technologies have the following negative implications against the process standardization.
There is a large scale dependence on people and manual processes.
Inconsistencies in deliveries - A Standard set of processes can't be driven across large organizations
A series of negative incidents or errors which could result in customer dissatisfaction or sometimes subject to regulatory scrutiny.
Process surprises and audit findings including material audit items which takes time and effort to fix such items.
Limited scope for innovations and improvements in this area since, most of the time is lost in fixing errors and in damage control.
Case Capsule 2:
A large corporation had successfully developed a Robotics programme to do automated postings to an ERP application. This had been rolled out for one country and was running successfully. When a proposal came in for the global adoption of the programme, different versions of ERP systems posed a major challenge in terms of quick adoption.
Certain reports downloaded from the ERP enabled the feed for Robots to post the entries ultimately to the ERP. However, such a report was not existing for country 2 because of the different ERP version. The other challenge was for programmers to do some workarounds, to do seamless posting to the ERP. This resulted in multiple versions of Robotics programmes for one of the region and undue delays in adoption.
Key Takeaways:
A Global operating model or GOM is important for every organization to achieve standardization
Any new technology adoption need to be on a global scale, rather than a piecemeal approach
A Global ERP implementation approach, standardize the process to a very great extent. But the process standardization beyond this, is also an essential ingredient to achieve the desired future state.
All technology innovations such as Robotics or other emerging technologies need to take cognizance of the current technology state and devise mechanisms for improvements.
Regulatory frameworks in Accounting standards, the Central bank, Global compliance legislations such as Sarbanes Oxley, GDPR, Basel or other regulations also looks at the organizations resilience and standardization of work practices in some way or the other.