Anchor:
Today we are going to talk about process benchmarking and assessment to cash. So you have seen a lot of shiny tools in the session that have spoken to a lot of customers’ prospects, who are evaluating solutions. So the first thing that comes to anyone’s mind is, how am I going to sell this to my organization or am I going to sell this to my AR analyst who wants a shining tool but also wants to keep the job right. So making sure you go through the entire assessment. So, we’ll talk to Tim and Karen today to understand how in WESCO, what was the journey, they took from the point of looking at a shiny tool to getting it implemented. So the first step of this is always going to be assessing your current systems and current processes, and then taking it from there so I want to get started and maybe the first question we can take is, why do you think in AR assessment of your AR systems and processes is necessary before you kick start a project to get the value out of it. What do you think is the value that you can earn?
Karen Koenig:
Thanks. So, just to give you a little background on WESCO. We’re a distribution company. We started as an electrical distributor, and we’ve grown through acquisition over the last, say 15 years into datacom security, safety, you name it, we sell it. We have 4 million skews, so we don’t manufacture anything we just buy and sell. We currently have 11 ERPs and 19 instances of those ERPs. So, one of our issues to cash and I was just in another session with a group who was saying the same thing. And all the focus now is on the front end quarter management side to replace a legacy system and kind of get the sales focus and the orders, flowing better for accuracy. And so we’re kind of taking a backseat. But we still have goals to take care of. So it’s just nice to see some products, and if you will try to self fund our initiatives versus waiting for the larger ERP projects to happen. We’re selfish, we’re being asked to do more with less. And so we decided to take a look at this HighRadius product. I was first introduced to it about two and a half years ago, more through one of the webinars, we were having a lot of work on customer portals extracting data customer portals and just didn’t work out. But we’re a customer of Billtrust now. We use an open scan to process our cash applications. They told us last year they were discontinuing that we had to upgrade to their cloud version. So we decided to take a look at multiple products. So that’s really why we started on the journey that you know our cash app process had to change.
Tim Murray:
As we start to define shiny new tools, we just want to jump in headfirst and just automate and we don’t want to do that. A lot of people just say, “This is a great tool.” We want to sit back and say, “We don’t want to fail.” Now without going in, without more knowledge about space. So we’re going to do an assessment, we want to understand what the best practices were out there in the industry and what would make us world-class, where are we at now compared to those. So that’s why we decided to do an assessment and benchmarking to figure out where we’re at.
Karen Koenig:
Just by a show of hands, how many people are currently HighRadius users here, so you already have the product. How many people have done the assessment process? So just a few. So how many are thinking about doing the assessment process a little bit more? Okay, so we’ll try to talk to that also.
Tim Murray:
It talks about a few of the objectives that we laid out at the beginning. Starting, we just wanted to expose our leaders that are key staff members to have another view of the AR world and the staff about 108 people in the organization, our cash app crew, I guess we have probably 20 to 25 scattered, most centralized, but a lot of people have been there for a long time, and they have a view that is the WESCO view but this may not always be right. So I think we want to get them exposed to other things out there, what is best in class. We also want to understand where we stood in a relationship. Some folks thought we were there, and there’s somebody with a new set of eyes looking at it. I’m not quite sure that we were, we found out that we weren’t. And then that provided us with support to go to our senior management and say this is what we want to do and these are the results we want to get into some point. In our scope, it was credit collections and cash application disputes, and I think we did a little bit with invoicing.
Karen Koenig:
And we also own customer master data. Tim owns that acquisition, and we were just putting in a customer data hub and we’re starting on a new European journey. I guess that’s technically public knowledge, I guess it’s some public disclosure so we haven’t started our ERP journey but we were starting to do work on our master data. So we started with the customer first, and then we moved to the supplier and now we’re working on a product which obviously with 4 million products, it’s a much bigger challenge.
Anchor:
So we talked about what are the key reasons why anyone would do an AR assessment and what are the objectives you’re looking at, identifying the best practices, making sure you have a stakeholder buy-in from all the stakeholders. So, can you walk us through the assessment process like what does this involve from start to end on a high level?
Tim Murray:
Okay, so we started this in the August-September timeframe of 17 and worked with HighRadius on this. We had some pre-work to do. There were some AS-IS questionnaires for each of the areas. So we obtained those, we put groups together from across the organization and had them answer the AS-IS questions and kind of went through and did a time study as well. Looking at different activities in each of those areas and trying to get a consensus for how much time was spent doing each of those. And, they use that to extrapolate, how many people we had in the group, what our current budgets were, to see where we were spending the majority of our time. And, you know, after we get the results a little bit later but we can use that as the AS-IS straight from the people that are doing that work too. If we can to get the best in class, these are things that we can eliminate or change the way we do it and make life better for everybody but we can also start shifting over to different areas to work on.
Anchor:
So who did the time study?
Tim Murray:
Within our group, say for example for the cash app, it wasn’t down to the detailed level of minutes. It took our cash app group over 20 people in Pittsburgh. We probably took the top four or five people that we identified, and we listed out the main activities from your best estimate of what percentage of your time was spent going out employing email remittances together, and then trying to match it up or going out to the customer portal. We’re clearing exceptions. So we did that by percentage-based. And we did that across the other areas.
Karen Koenig:
Yeah so, it was not scientific and so that’s one of the things you have to just keep in mind, that is directional. We surveyed some of our credit collections people and just said what percentage of the time, and we gave them a week, we asked them to kind of think about their normal week. And, it was fairly consistent. We do have a decentralized team. So probably our cash app is headquartered in Pittsburgh as well as customer master data but then our credit and collections are pretty decentralized. With the rest of our decentralized organization, we sent out these surveys, people put in the percentage of time and then we came back and added them up.
And, people were fairly consistent, someone may have put 5% and someone else may put 10% or 15% but then that became a kind of an average. So it is directional but it’s information you don’t have. If you have longer, you could do something more detailed but HighRadius leads you through it, and once again we were trying to get more directional. The process was guided by HighRadius. They have a series of excel sheets with data. We didn’t think about some of the data, so we needed to gather it and estimate it.
Tim Murray:
We started in August of 17 with some of the pre-work. I think in September, three HighRadius individuals came on-site with us. And then we brought in some of our regional managers. We had some of the other participants on the phone. They helped take part in the surveys or the AS-IS. And we spent two to three days with the HighRadius folks in town, walking through each area individually, they asked questions, digging deeper and we showed them some demonstrations of what people are doing now.
So, each area where we probably spent half a day just walking through it, providing as much information as we could, they asked a lot of questions, then they also took some time and provided us with what it could look like in the HighRadius world or a more automated world. After those two on-site days, they went back and evaluated the data more. We had some more conference calls. After that, follow up. And then we ultimately got a recommendation, and I went back and looked at a 45-page deck by area, showing- here’s where you’re at now, here’s best in class, and here’s what a recommendation would be going forward, and then it even went to the level of your potential savings about your current cost and bucketed costs by area or activity that you’re doing and where they thought they could save. So that’s where Karen said it was directional. And I would agree with that, we weren’t taking those numbers to our CFO and say we can save on this, because then we don’t want to commit to that much, to be honest. But looking at it, it still felt directionally right. And as we’re getting into the cash app area now, we’ve committed to our boss- certain savings, but we think the savings will be well above that. Realistically, it will be able to redeploy people to do more value-added work.
Karen Koenig:
And I’ve been a part of many over my career. Many consultants came in and network studies, and so this report did show us the substantial savings. So we looked at the compelling drivers. And then I think they were taking some leaps of knowing they already have some history with other customers. But I think the approach we’re taking in this is another question you probably need to ask yourself- why are you doing this? So what’s driving my boss to ask us to maybe move to a shared service to get efficiency. He wants us to maintain our current headcount but be able to take on more volume. So, he sees us as a growing company. And so he wants to be able to kind of be able to surface that additional volume with the same headcount. So some other people might say- “I want to decrease my costs. You know I want to be the lowest cost operator.”
So, you need to know what’s one of their main objectives. One of the things I’ve never heard at least at WESCO is yet, we just outsource everything to set up the captives and go to India to get overnight processing. I think we do have inefficiencies and so this to me just sounded real and I know one of the things we’re doing with the cash app, we just signed. We’ve been working on this obviously for a long time but we just got signed up in January, we’re going with PNC- the PNC product through PNC. We’re just trying to take the first step with the cash app, and we’ve committed to a break-even proposition right now. And if we get more savings that’ll help us feel, hopefully, other modules and other projects. Any other questions? Those were good and I’d rather have the audience drive the questions versus what we had kind of prepared and hopefully they’ll be the same.
Audience:
Hi, I’m Josh Langford. Before implementing HighRadius, or maybe even other products in the past, was there any groundwork? What would you recommend as far as groundwork with the data that you currently have? We’re getting ready to go live with the GBS next year. We’re also looking at products to go along with that but as far as master data- what challenges do you run into and what would you suggest you do first before you try to just throw them both together at the same time, I guess?
Tim Murray:
I guess from the cash side, know where you’re at now. I spent probably the first six months just trying to understand our cash app process and understand what we’re getting payments from. What percentage is coming in via check and remittance, and we’re hitting like a 93% auto rate on checks. So that’s flowing through and there is some upfront work that HighRadius is going to help us with, so we’re not, the OCR software is gonna be better I think with HighRadius. So we have some savings there.
But our real pain point was with ACH payments or EFT payments and we had about 10% of our remittances coming in via EDI, so we have a process to match that up and that flows through, but the other million invoices that are closed throughout the year, they’re manually keyed in. So we’re trying to match up that email remittance, and we now have I think about 30 customers that we have to go out the corners and go down the remittance, so people are just, they’re just data jockeys, they’re just going around trying to find the data and closing it and it’s. I mean, quite honestly it’s not satisfying for him, it’s not satisfying work. We want to try to figure out a way to automate it. We try to close everything at the end of the month, and we have people staying there manually doing this until 10 p.m. On the 31st of October when their kids are out trick or treating so we’re trying to sell it as we want to get capacity we want to try to figure out where our current pain points are so I think that’s a big piece from the master data standpoint. Just understanding how your customers relate to each other. The hierarchies, who’s paying for who, we have some files that I think are going to be able to lift us and give those to HighRadius, so they know whenever a payment comes in, it’s going to be for these customers and look at the invoices for these customers.
Karen Koenig:
It’s a master date I would say, and that’s where our organization decided to start with master data so we invested. And they did customer first, then supplier and then still tackling that product but you know just trying to make sure we had that kind of end to end process. I think that’s the other thing that you know we can think about parts of the organization might be optimized but when someone’s looking at that end to end and that’s what an ERP does, it kind of takes that same data. And so as it might be the data might be right in one system but now when you try to use that same data across the whole organization, I think that’s what they say is causing the most problems.
And then, cash. I was just gonna say why we chose cash app in the order to cash area and this was based on HighRadius, the recommendation is if you would start to say with collections because that’s where you know we were all saying hey our collectors are inefficient they’re doing this. But if you don’t have a real-time cash application. Your collectors are still kind of hunting and did that payment come and I gotta go find the check or I know the checks they wanted to post. And so really we’re starting with a cash app, and it is when you think about it is kind of the furthest removed from the customer so it’ll have less impact. So we’re starting with a cash app, we’re shooting for a same-day cash application. So the cash will come in the morning, and I think by 10 am you’re saying, we’re going to have our cash applied so that then the group’s just working on the exceptions. And then those collectors are going to be able to say, “Okay well that cash came in. Now I know exactly what’s open and I could go after that.”
Tim Murray:
Two other things came to mind as far as prep for the cash-out. One is trying to get your email remittance if you can into a centralized mailbox it makes it a lot easier to be able to put those on the HighRadius. And if somebody is saying we have the number of people I think they’re still sending it to an individual, and then the individual sends to us and they don’t realize how much of a delay that’s putting into the process, they just want to see it it’s like no you need to get that in so that we have it whenever the payment comes in. So that’s one. And then we also have, you know, I mentioned the EFT portion and going out and grabbing things down from the email boxes. There are several larger businesses where we don’t macros through Excel, to be able to match things up, that we don’t push through or preprocessor now. So we are trying to document those as much as possible so that we can hand that over to HighRadius and say “Okay these are the trouble customers that we match and someone way.”
Karen Koenig:
So here’s our logic that we’re doing so I’m assuming that’s going to help you guys, absolutely whenever you go for implementation, I don’t know if you have a lot of customers or people that don’t pay by invoice number, or they’re paying by packing list bill lighting alarm, build trust wasn’t set up for that or our systems are not set up for that so we kind of have to take it offline and work it as a macro. So we would consider those are kind of pain points, customers and once again we’re just trying to address that pain points to get a little capacity, and we’re hoping I think the cash app product does match against maybe like 15 different you can match against, maybe 15 different fields record attributes versus just invoice number, so our current software does invoice number. And we have another issue that I’m hoping we don’t break. So we have 350 branches and our legacy order system. We have a six-digit invoice. And that invoice number is individual to each one of those 350 branches. So it is feasible that a customer can get the same invoice number from the same branch. Within a year that AP group kicks it out as a duplicate payment or you know duplicate item or we can be across branches, we could have the same invoice number so it’s someone’s as a scary face yes it’s a very scary thing, hence the need for new. You know the order management system. So, Bill is sort of one of our key contacts at HighRadius. When he saw the screen, he called it Pac Man, he said this is like Pac Man. And so, it’s a homegrown system but we looked it up and I think Pac Man is only 30 years old and our legacy order management system is four years old. Pac man’s dad.
Anchor:
So I think that brings up a good point of the importance of knowing your current process and systems and how they work together and identifying what is unique to your company or your organization because cash application across the board is more or less identifying which invoices is the customer trying to pay, whether using checks or features. But knowing what is unique, so that the solution can be configured the right way the process improvements that can be done because if we’re doing a project anyways, why don’t we just instead of just looking at implementing a solution also look at what are the process changes we can do and an assessment would pave measures on it.
Karen Koenig:
I think that’s important and we did some work, at times we implemented SAP, and we had pics which were very old and kind of green screen and were 400 based. I think one of the things we have to think about in just one of the challenges is, is it a special process, do we need customization and enhancement, or how do we change, and use kind of standard features so I believe that HighRadius will be very flexible and will customize things for you and help you but I always try to ask it should we be customizing at this point like is. Is this normal or doing an enhancement or should we just try to change the process. So I think one of the other things. As your kind of preparation Is there any really bad processes that you could even lean out, maybe use some lean principles and continuous improvement to, you know, make it a little simpler. But that’s a change management process what your president said, you have to hold their hand through change so that’s part of the issue.
Anchor:
So when you talk about this change management. If even if you’re going for an assessment or a project it says a lot of stakeholders involved so who are all the stakeholders that you typically would recommend or you address go-ahead brought into the assessment from an assessment standpoint.
Tim Murray:
We do have support from our CFO.
Tim Murray:
Our CEO indirectly has support from him. He has, we have six key strategic initiatives. One of them is a digital transformation. So he wants to see digital across the company, increased technology capabilities and operational excellence. So those are just a few that just fall into and whenever we went to our CFO, and he’s like yeah, by all means, let’s start looking at this and he supports us. His main thing was, is our IT department able to support it. So that was our next step is let’s go talk to it. We pulled in, as part of the assessment with three people from where it grew as part of the team working through where we’re at. Currently, and because so much. It was our internal IT thoughts from certain people were hey we can build this, we don’t need to go somewhere else. But we’ve seen how long it takes to make a change in one area, and I think we’d rather go to like a best in class software than to say okay this he already does everything for us.
And then internally we think about 20 people from financial services on it. Five regional managers weren’t there answering the as-is, we had like the next level down to managers, supervisors and some analyst, and we probably have four I think on each team and we said okay you guys go off answer these questionnaires, do the analysis to see kind of get a consensus for where this area is at. So they were involved and they went and we got the on-site and kind of the rehash of everything and to dig deeper, the regional managers were there to hear it, so that we didn’t want the regional managers just saying oh yeah this is what we’re doing. It’s a level down below that couple levels down that know what’s going on. And then the three-foot HighRadius.
Karen Koenig:
I needed to think to get my first direct reports of my leaders if we bought in, but they had to kind of make sure that their first thought, the people that are out in the field doing it could understand what we were trying to change, and why we were trying to change. I think there’s a question in the back.
Audience:
I had a question. As you’re implementing something like this you have to build your business case and justification. So I was curious about how accurate, or the savings that you had predicted versus what you’re realizing with HighRadius implemented.
Karen Koenig:
So I once again we signed in January and we have a kickoff meeting last week so we haven’t implemented but if there’s anyone else in the room that has already implemented it and they want to answer that they can’t so once again we went a little conservative, so we could have taken like the full savings that they were projecting. We kind of made it an even payout scenario right now. And we’re hoping that if we do get some more savings that we’re going to be able to redeploy those resources that I have talked to a few people. We just had lunch with a team that implemented four years ago, they went from three cash out people to one, but then they were just able to redeploy those people into other jobs.
Audience:
Yeah, hi, Jacob Matthew from Warner Brothers. And as you went down this path, you run into the were unanticipated both on the positive and negative side.
Tim Murray:
I can take one. And it was billed sort of like saying okay, it’s starting to make sense to start with a cash app and I think that’s where we were at as a foundational element. I think just getting good data out there isn’t diving into collections. We were expecting them to try to sell us all of it. And he’s like, you’re not doing well on your Oracle collections, with the capabilities you have out there you have to build your processes. Internally, before you try to automate something that you don’t even have a good handle on yet so it’s kind of bearing some of our words but it was a surprise to me that he wasn’t just saying put it all in. It was the start of this. And I think part of our philosophy is, let’s get a win. Let’s get a quick win, we can see the benefit there, and cheer questions earlier about are we going to achieve those benefits? I’m very confident that we’re going to get that breakeven and we’re going to be able to redeploy people based upon. Even if we get half of that EFT matched up. And I think we should have, well above that. It’s gonna save a lot of resources, right there.
Karen Koenig:
Yeah, so one of the things was so we have Oracle, as this main platform and we implemented, I guess in 2010, but we never got our collection strategies to work. So we’re not using the universal work queue. So, the whole team says they can do it better. And so during the process as well how do you figure out what you want to do during the week right so we had like four or five different people say well weekly I pull my, my trial balance down and then I sort it and summarize it and prioritize it and then I give it out to my team, and someone else said well I do it monthly and I still do it by hand. That was a little scary.
And so, you know, those were some of the things that maybe I didn’t realize how antiquated some of the groups were still kind of working not using the system so now we’re starting to try to use the universal working, what’s not perfect and part of that is because we have these 350 branches. Some of our consolidated customers, if you will, are seen it’s kind of individual customers. It’s hard to aggregate it so, you know, it wasn’t necessarily all my, my team, refusing to use it. There were some complications, but we’re not using the promise to pay feature either. So we are collecting promise to pays but we’re putting it more like in a dispute note or cash app notes, versus using a field where we could kind of aggregate some of that so you know it was just, it did expose some probably antiquated processes or and that was great for my team to see so when we were having the as-is, you know, current state scenario was like well I do this and someone was vibrating beating their chests, you know, this is a great way then they could hear the four people were doing it differently. And then they kind of said boy. Should we try to be doing this together right or best practice.
Karen Koenig:
So sorry we’re right on the cutoff time for today, but if you do have additional questions you weren’t able to grab these folks, feel free to go by those demo stations as well we’ve got some knowledgeable crew over there they can help you out with additional questions, as well as maybe these guys for a few more minutes. Please put your phones and rate this session so we can make sure the content is really rich for next year. We have some awesome upcoming sessions, not only here but throughout so be feel free to follow the signs and then also if you have a question about where the room is you can get with somebody from the minute made stuff. Thanks so much. Thank you, guys.
