OCTOBER 16, 2014
Your organization may not yet be an international concern, but with globalization it could become one soon. If you are already global, there are countless reasons to implement consistent AP processes across locations. Here are a few of the important ones, along with some real-world guidelines for pulling off worldwide AP integration.
Why do this?
Even for domestic organizations, replacing a hodgepodge of regional processes with a consistent, consolidated AP process gives you better visibility and management of finances, especially cash. It gives you a foundation for improving internal controls, compliance and audit initiatives, business continuance plans, forecasting, and spending analyses. It allows you to rationalize staffing across regions, eliminate potential points of fraud, and enable regional centers to share resources virtually when backlogs attack. These benefits are amplified when applied to a global organization.
Tip: Even if you don't work for a global organization, a consolidated AP process will put you in the driver's seat during future mergers or expansions.
Enabling better cash control
Better addressing audit and compliance rules
Simplifying and standardizing internal controls
Eliminating possible points of fraud
Rationalizing staffing levels
Fostering better planning, forecasting, and spending analyses
Improving business continuance/disaster recovery capabilities
Where and how to start
Step one for implementing a best-practice-based global AP process is to recruit an executive sponsor. You need someone with clout to have your back during a potentially disruptive project of this magnitude.
Step two is learning as much as you can about your globally dispersed AP offices and their current challenges. You'll need to research and understand AP staffing levels, staff capabilities, and responsibilities at each location, along with processing volumes and peak times. Each office may have different purchase order (PO) and non-PO invoice approval and processing procedures based on local culture and customs.
Your enterprise resource planning (ERP) support staffers must participate because they know the functions and features of your ERP system and how it can be enhanced to create a global AP system. You may want to consider bringing in outside talent, most likely a firm with knowledge and experience in both your ERP system and global AP business process improvement, to reduce the risk of rookie mistakes.
Tip: It's a good idea to spend time evaluating invoices from each location to familiarize yourself with vendors, customs, and local documentation.
Continuing to wear your AP hat, you need to delve into accounting and tax rules and regulations for the countries each regional office supports. Value-added tax (VAT) is truly foreign to most AP folks, and you may need a crash course from your tax department in VAT concepts, as well as how VAT is applied differently worldwide.
Beware that if your company participated in mergers or acquisitions over the years, some outliers may not yet have migrated invoice processing to the parent ERP. This greatly complicates matters because the project becomes a two-step affair for them (and you), and you'll need to bring them into the fold during discovery, testing, training, and rollout phases.
Tip: Make sure outlier groups are represented on your team so their processing flow requirements can be incorporated into the new system.
Out of your comfort zone
It's time to switch hats (to a sombrero or a fez, perhaps) and go on a culture quest. You need an understanding of the languages, currencies, conversion rules, and conversion processes among the locations. Understanding the cultures of the remote AP workers themselves and how local customs shape their vendor interactions should also be part of your up-front discovery.
Put on a propeller beanie and make friends with information technology (IT). They build and maintain the plumbing that underpins your ERP and your global communications and security networks. It's no exaggeration to say they are as important as your AP organization to project success. Unfortunately, you don't have direct control over IT. Kill ‘em with kindness now. You'll need their willing support under difficult circumstances later.
You must rely on multiple regional IT groups for local software and hardware installation and desktop support, so understanding how these regional groups are organized is important. For example, in Asia, the group in Japan may be responsible for offices in the Philippines, Singapore, and Taiwan, but not Mainland China.
Tip: Now is the time to build both relationships and your list of contacts with an eye toward recruiting key members of your project team.
Engage IT folks in a number of deployment decisions early, such as whether the system should be implemented in the cloud or in company-owned data centers; how to plan for seamless failover when outages occur; and how security, business continuance, and disaster recovery programs can be best planned, executed, and tested.
One potential point of contention with IT is the number of system technical environments you will need. Many organizations have only two environments: a combined development and test environment for installing, testing, and training on system prototypes; and a production environment, where approved prototypes are moved for daily production use. This approach can work for small projects but is inadequate for your global undertaking.
At a minimum, insist on three separate environments: one each for development, testing/training, and production. Better yet, negotiate a fourth system by splitting testing and training to reduce contention risk. No matter the number of environments, work with IT to formalize the process for moving the system from one environment to the next, including a hard-and-fast rule that no production change can be made before it is reviewed and approved by AP in the testing environment.
Tip: Adding technical environments was once costly and difficult. That's no longer the case because server virtualization has greatly decreased the cost and complexity of adding environments.
Select, negotiate, and organize
Just like you won over the IT folks, it's time to do the same with the people at your global project management office (PMO). A project of this scope means you can't do everything yourself, and you will need to work closely with a lead project manager who, in turn, will direct a team of regional project managers.
With your tentative list of key participants from IT, ERP, and AP in hand — as well as a similar list of tax, compliance, and legal gurus, and perhaps process consultants — work with the PMO to select the right project team members. This may require careful negotiations with prospective project team member bosses because you are asking to take some of their best people for an extended duration. Remind them that the results will make their lives easier and the participants will return with a sense of accomplishment and a taste of leadership.
It will be difficult to keep in touch with the selected team members in so many far-flung locations, so establish your communication channels and methods right up front. Don't reinvent the wheel here because if your cohorts are overwhelmed learning new communication tools, they'll be far less enthusiastic about learning and testing the global AP system.
Tip: Because success lies heavily with the geographically dispersed project team, it is imperative that key team members meet face-to-face for major project planning and kickoff meetings.
Prime the global pump
With preliminaries out of the way, you, your key team members, and your executive sponsor must build the blueprint for your global AP system, including a virtual model of the new management organization and business process flow. For example, will all process flow be centralized? Or will some of it be decentralized, allowing regions a degree of autonomy to handle time zone, language, currency, and cultural differences in their areas?
A best practice is to take into account your findings regarding staff, volumes, and peaks; ERP capabilities; taxes, including VAT; currency conversion; outliers; cultures; and customs. These should be incorporated into a tentative process map. Have other team members dissect the map and point out errors and potential roadblocks — but insist they suggest fixes, too.
Tip: Keep in mind that organizations often follow procedures that have been in place for years for reasons that no longer exist. The "we've always done it that way" mentality will color some of the objections.
With luck, the team will not only hone the new process, but will also identify existing processes that should be modified and problems that can be eliminated right away, saving valuable time later. For example, do you need to clean up and standardize the vendor files among the regions?
Your new global AP process will rely on a boatload of existing data and supporting systems, and they must be accurate. Owners and users of this data and these systems should be brought into the team early. Your PMO should have a lot of experience developing cross-departmental plans, sussing out system interdependencies, and validating data. You need to trust the lead project manager to play a big role here.
Test, fix, repeat, and train
With the consolidated global AP process and infrastructure now planned, you have enough source material to develop global testing and training plans. Many good systems either died on the vine or couldn't overcome poor first impressions because of problems that could have been detected by better testing. Don't just assume that because systems and processes work for a few motivated testers that they will stand up to production workers at full tilt.
Tip: Full "load testing" must be completed successfully before you go live, or else you'll soon be polishing your resume.
Basic technical and functional testing might be relatively straightforward and led by the ERP and IT groups with your firm oversight. Process and system interaction testing is harder and where you earn your pay. Your process testing team should be headed by professional testers, either employees or contractors. They must work with your implementation and production teams to document test cases and create test data that mirror real-world processes, interactions, and common payment errors. Each region will have unique cases and issues that only local stakeholders can ferret out. So before you approve a comprehensive test plan, make sure each region develops its own test cases and data in support of the global plan.
Testing is a big dance, usually conducted outside of normal working hours. Plan ahead. Nothing is more frustrating than finding your database server shut down for after-hours maintenance when you have all the testers ready.
It's a good idea to kick off each test cycle with a quick conference call. Do a roll call and make sure members from every group involved are on board, know that testing is about to begin, and know when their services are needed. Time is of the essence. Time spent chasing someone to test a critical component or bring up a database is not time well spent.
Execute the test plan and resolve problems in stages before moving on to final acceptance and load testing. Fixes can (and some likely will) create unintended problems elsewhere, so repeat the testing and resolution cycle until all problems are fixed or you have identified reasonable workarounds.
Tip: Because testing and problem resolution is so critical, assign hard dates and personal (not just group) responsibilities in the project plan.
Engage your corporate training group or training consultants at the same time as the testing group. Trainers' jobs won't be easy, as their training must span technical, financial, process, cultural, and maybe language matters. It probably won't be quick either, because they need to learn all this stuff themselves before they can train others.
Tip: One size does not fit all. Have training plans vetted by local financial, legal, compliance, technical, and cultural experts before giving them approval. An inoffensive acronym in one language may be a very rude word in another.
By now your technical support and problem reporting procedures should be established, both globally and locally. You remembered to train support folks well in advance, did you not?
Make it so!
It's time to flip the switch. Rolling out a new system of this scale affects the entire organization and must be orchestrated carefully. So don't flip the big red switch just yet. Instead, roll out to the central location and a few motivated regional offices. Keep the old systems and processes running for a short time just in case. Unforeseen things do happen.
You've got only one chance to get this right the first time. Coddle the pioneers and take their comments and problem reports to heart. Don't let a number on the schedule dictate your next move. Instead, fix all the reported issues and ensure that all the goals are met before moving forward. Don't let little bugs propagate, and the pioneers will let you know the system is ready for prime time.
And don't keep it to yourself. With initial success under your belt, throw a party to give the tireless participants a break and a sense of accomplishment and pride. Compile the quality enhancements, time and money saved, and other measurable improvements of global AP and advertise them to all, especially the regions not yet converted. Make them eager to be next.
Keep the ball rolling
Now stop partying. There's more work to do, and it's time to get more aggressive. You've learned from mistakes, improved testing and training, and fixed the known bugs and issues. Roll out the system to other handfuls of regional offices at a faster pace, taking time between to review lessons learned and make improvements. As the last group goes live, you can look back with pride on your creation and look forward to a bit more recreation.
Wynne Cerone is a managing partner with Woodbury Consulting Partners. She can be reached at firstname.lastname@example.org.
David Buttgereit is a managing senior partner with BPM Group. He can be reached at email@example.com.