In this multi-part Blog Series, we’ve looked at how companies can identify process pain points, communicate them to executives to secure buy-in, map their Order to Cash (O2C) processes to eliminate bottlenecks AND kick off a pilot project. In this blog, we’ll look at tips for measuring the results of your Sales Order automation initiative and monitoring processes for ongoing improvement.
““Long-range planning does not deal with the future decisions, but with the future of present decisions.”” - Peter Drucker
Your organization has successfully completed a sales order automation pilot project to identify any missed requirements, unexpected process bottlenecks or other unanticipated issues with your plan, and created an opportunity to get buy-in from all the stakeholders in the project, from executives to end users.
Sometimes, when firms come this far and finally go live with their project, the assumption is made that the project is complete and once everything is operational, the initiative can be declared a success.
While there’s definitely an opportunity to celebrate a significant milestone, ‘going live’ with Sales Order automation is typically the beginning of a new, longer stage in an organization’s digital transformation journey.
It’s at this critical stage that measuring results and monitoring key performance indicators will allow your firm to validate the success of the project and establish practices to continually measure and monitor results for ongoing improvement.
Meaningful Calculations for O2C ROI
Going live with a Sales Order automation project can often mean “making good” on the commitments made up front to secure budgets and buy-in that led to the initiative in the first place. When those results don’t live up to expectations, it’s time to look at initial assumptions and at the end result to identify where the discrepancy came from.
The following is a basic summary of some calculations and metrics to consider over the first year and during the course of the first five years to demonstrated quantifiable results of your Sales Order automation project.
Total Cost per order: (Number of sales order processing staff member * Average Annual Salary) / Number of Annual Orders (does not account for overhead or other soft costs)
First Year ROI (%): Annual Savings / Total Cost of Implementation
Payback period: Total Cost of Ownership (Annual Subscription* Number of Years + Implementation Cost) / Annual Savings
5-Year ROI: (Annual Savings * 5) / (Total Cost of Ownership + 5 Year Maintenance Costs)
Monitoring KPIs for Ongoing Optimization
While return on investment calculations and unit costs per invoice provide meaningful metrics on the Sales Order automation initiative itself, establishing and monitoring key performance indicators that aligned with the organization’s business goals elevates the role of AP beyond a cost center to a strategic asset.
Often, other business drivers beyond cost savings are key to Sales Order automation initiatives becoming a priority. In our experience at Artsyl, the need for more timely data and insights about buyer behavior are often key drivers for sales order automation. While these may be viewed as ‘ancillary benefits’ to a project justified based on a calculated ROI, those broader business benefits may be the most impactful and meaningful results to executives and to other stakeholders and departments.
Establishing and monitoring KPIs for the order to cash process that focus on the broader business benefit not only justifies the investment in accounts receivable and customer service - it validates a business approach that can transform other departments, other processes and ultimately, the entire organization.
KPIs that can reflect these broader business impacts include:
Next Steps
Successful completion of a sales order automation project can have a far deeper impact on an organization that lowering order processing costs and timeframes. It can become a springboard for digital transformation within an organization, leading to the digitization and automation of other business processes and an enterprise-wide process revolution.
For more information about how to continue your path towards O2C automation and process improvement, contact your Artsyl Technologies account executive.