How I Got to the Root of My Program’s Problem

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By Conrado Morlan

I once led a program to implement a new regional billing system. But to my surprise, the key performance indicators (KPIs) did not show the improvement we had expected.

Four of the program’s KPIs were low: quality of invoices, number of credit notes, internal cost per invoice and days of outstanding debt. Only one KPI showed improvement: duration of the monthly and annual billing closing processing time.

One stakeholder commented that the only “benefit” of the new billing system was to produce worthless invoices faster and reduce customer satisfaction quickly.

I needed to demonstrate the benefits, value and importance of the new billing system and improve the KPIs. So I used this SIPOC (supplier, input, process, output and customer) tool to help me focus on KPIs that were low: 

Exhibit 1

First, I identified the suppliers and input affecting the quality of invoices: The sales department provided the customer data, billing address and financial information. The contracts department provided the type of contract, contract terms, rates and volume discounts. Operations provided the manual orders and confirmation of order delivery.

This led me to discover the most common invoice errors: incorrect billing addresses, incorrect financial information and rates, invalid account numbers and missing discounts. All of these errors meant someone had to manually create credit notes, which increased the cost per invoice dramatically as well as adding to costs like postage and overtime.

I met with sales, contracts and operations to identify their data sources and the state of them. Sales used a customer relationship management (CRM) application to manage clients, but we discovered that its data was often incorrect, incomplete or missing entirely. Next we discovered that many contracts had expired, and rates and volume discounts needed to be updated.

The operations department electronically sent online and manual orders to the billing system several times a day. I discovered that the online orders had the fewest errors. But the manual orders, despite having great KPI scores, were filled with errors.

With these findings in hand, I recommended a joint effort to solve the billing problems. The goal was to show improvements in the three months. The following action items were established and assigned to the different areas:

  • Sales—Cleanse CRM data and update customer master file
  • Sales and contracts—Notify customers of contract expirations and submit contract renewals including new rates and volume discounts
  • Change management—Create and deliver mandatory training to sales, contracts, operations and finance to explain the consequences of supplying bad data
  • Finance—Establish monthly workshops with stakeholders to review the progress, record results and review improvements
  • Billing center—Suggest changes to technology and processes that would improve operation and effectiveness
  • Sales, contracts, finance, billing center, project management and change management—Produce/update lessons learned binder
  • All areas—Update KPIs to be more meaningful

After the first three months, we started to see improvement in the quality of invoices. Customers also noted it; the customer satisfaction level increased progressively quarter after quarter.

In addition, the company’s cash flow improved with the better quality of invoices. Customers received the correct invoice the first time and so were able to pay on time. Fewer credit notes meant less rework, which helped the billing center focus on its core functions.

At the end of all this, I was able to report a successful program. And  stakeholders learned that KPIs results are in the eye of the beholder.

How are project problems tackled at your organization? Do you find your KPIs are accurate reflections of the truth?

Posted by Conrado Morlan on: May 08, 2016 08:00 AM | Permalink

Comments (9)

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Thanks for posting this Conrado. Sounds like a solid turn around and improvement on the KPIs, across the board. Very interesting to read about the incorrect billing addresses, incorrect financial information and rates, invalid account numbers and missing discounts. Seems kind of surprising this day in age. Glad to hear you improved the project quality and program success! Congratulations!

A very thoughtfully written article; very informative, thank you.

Very informative article. Thanks for sharing.

Jason,
Thank you for taking the time to read the post.
Yes, it is kind of surprising but many times we made a lot of assumptions in projects and we tend to forget that the solution my be in front of our eyes.

Anne Marie,
Than you for reading the post. I am glad you enjoy it,

Jo Ann,
thank you reading the post.

Thanks for sharing this. I think it shows again, that we often overlook the small mistakes that add up to make our projects fail. Yet adjustments in those "small" things have great effect on outcomes & customer satisfaction.

But I think sorting out things like wrong billing addresses can go a long way to even make work less frustrating for our own staff. I remember in one company I worked we actually dedicated 1 member of staff for 3 weeks to call up all our clients to get updates on their contact details & billing addresses, since it had become a serious problem. But even this only works if you then also train all relevant staff to be diligently updating information moving forward.

Anonymous
Nice article. Thank you for sharing.

Congratulations on your stakeholder engagement work (improving / hopefully winning them over with your program success)!

Gina

I find it ironic that so many software changes and implementations try to occur in a vacuum with only one department or set of users involved. This was a great example of the inner-connectivity we see in so many organizations today. It is easy to point fingers and assign blame, but as your case study points out, it wasn't just the "billing department'
who was responsible for successes or failures. I'm glad you were empowered and able to assemble so many stakeholders together for improvement. Great article, thanks for sharing.

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