This analysis really comes into its own when managers provide values for each stage of the order-to-cash process: How much working capital is being held up between delivery and invoice? Or between invoice and due date? What are the working-capital benefits of early payment? The answers to these questions can produce significant cost reductions by showing managers how to speed up payment cycles without renegotiating payment terms. In many industries, for example, payment terms are based on the date of invoice, meaning that speed of invoicing affects costs. In these situations, capturing delivery data is important. Simple changes, such as issuing handheld computers to delivery drivers or improving telephone connections, may release millions in working capital.
Cheap CRM does not, of course, deliver all the benefits of a full CRM program. It won’t capture all customer information in one place, nor will it address the problematic issues of data duplication, multiple data sources, or manual processes. If classical CRM encompasses four phases — identifying customers, differentiating between them, interacting with them, and customizing the service offering — then our system stops halfway.
Our approach can be criticized from another angle. Although it is far less complex than a full CRM system, the activity is not simple. Raw downloads require the analyst to re-create the accounting rules that transform transactional data into general ledger results. These rules are usually complex and are rarely documented; reconciling the data is time consuming.
The analysis, however, can yield huge benefits. The necessarily laborious process provides information about both data and processes that can create receptivity to change. The project is low risk and allows numerous exit junctures. It can also lay a firm foundation for a future, more comprehensive CRM program.
Best of all, some of the benefits of CRM — differentiation of customers, improved order-to-cash process, lower operating expenses, and cash release — come early and cheap.
Viren Doshi (email@example.com) is a vice president with Booz Allen Hamilton in Paris. An expert in leading strategy-based transformations, Mr. Doshi works with companies in the energy sector across Europe and the Middle East.
Richard Verity (firstname.lastname@example.org) is a principal in Booz Allen Hamilton’s London office. He serves energy and chemical companies and specializes in operational improvement along the supply chain, including sourcing, performance measurement, and demand management.