The importance of change management in your accounts payable transformation roadmap
It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.
- Charles Darwin
You’ve decided to automate your accounts payable workflow. Perhaps you’ve already done your research and chosen the best solution provider for your needs. You may have even appointed a project manager to develop an implementation roadmap and oversee the path to AP automation. But have you considered the importance of Change Management as part of your accounts payable transformation roadmap?
According to research from global management consulting firm McKinsey, 70% of change programs fail to achieve their goals, mainly due to employee resistance and lack of management support. This can be especially true in functions, like accounts payable (AP), that have traditionally operated as back-office departments with little attention from executive leadership.
Implementing a new AP automation solution is not just another IT project. It is an opportunity to transform the accounts payable department to a spend management knowledge hub, the one function that controls much of the critical business data that impacts the CFO agenda.
A structured approach to Change Management is one way of preventing your accounts payable transformation from being one among the 70% that fail.
Even if your objective is not a complete transformation of the department, Change Management is a critical component of the AP automation process, because failure means missed payments, damaged supplier relationships, and risk if invoices do not get approved promptly – all challenges that can impact your business over a significant amount of time.
What is Change Management?
Change Management and Project Management are typically both required to enable change. Most organizations realize that Project Management is essential to a successful project. But while Project Management mainly focuses on managing the project scope, budget, and timeline, Change Management focuses on the people and helping them transition and adopt the technology and the new processes.
Prosci Change Management Learning Center (developers of the ADKAR methodology) defines Change Management as “the process, tools and techniques to manage the people-side of change to achieve a required business outcome.”
Take a structured approach towards Change Management
There are a couple of different methodologies available for those who want to take a structured approach towards Change Management. John P. Kotter is one of the foremost speakers on the topics of change, and has developed an eight-step model to manage it.
- Build a need for change:
- Establish a sense of urgency and form a guiding coalition
- Change direction:
- Create and communicate a vision for change
- Change behavior:
- Empower others to act on the vision and create short-term wins
- Sustain change:
- Build more best practices and institutionalize new approaches
If you don’t make the proper case for change, you might end up with the status quo and the question “why are we doing this?”. Without a vision, you risk confusion and a lack of understanding of the direction in which the organization is going. And without enough skills or incentives to change behavior, you may cause anxiety in your employees, who won’t understand how to undertake new challenges and won’t be inspired to learn.
Build the Case For Change Management in Your Transformation Roadmap
If you’ve decided to automate your accounts payable process, you probably have a good picture of the case for change and what your main challenges are.
Are you struggling with the lengthy closing of the accounting period? Does increased invoice volume mean adding more people to your organization? Are you unable to pay on time and missing early payment discounts? Do you have poor visibility into the invoice process, resulting in inaccurate and poor cash forecasting and uncomfortable audit controls?
Your decision to automate is probably driven by a desire to improve efficiency and increase control, insights, and compliance. Make sure those pains are documented and quantified in a business case and known to the entire organization, both inside and outside AP.
As a next step, form a structured network of change agents within different levels of the organization inside and outside accounts payable - including sponsors in the C-suite such as the CFO, CIO, and CPO.
Shared goals between procurement and finance are an essential component in realizing your business case. If procurement is driven by increasing spend under management, the team may be tempted to quickly approve invoices with a broader tolerance threshold than the finance team. Depending on the cause of invoice discrepancy, how much the approval is costing the organization and, most importantly, if the supplier is repeatedly sending erroneous invoices, there is likely a systemic issue of cascading problems that need to be corrected. Negotiating a 10% savings is worthless if 5% overcharges are repeatedly being accepted. A similar case may occur regarding supplier discounts for early payments versus optimizing cash flow.
According to a survey from Robert Half Management Resources and Robert Half Technology, 51% of CFOs said they work more frequently with their company’s CIO today than in the past years. And they should - because decisions like choosing an AP automation solution, for example, is no longer just a decision for IT and a question of fit with IT strategy. The right cloud solutions provide business value that on-premise solutions can’t, using big data analyses from the millions of invoices that are processed through the same cloud and feedback process benchmarks specific to your industry and company profile.
Mutual understanding between departments of what builds the case for change and the business case is imperative when developing the roadmap for your accounts payable transformation.
Establish and Communicate Your Vision
Now that you know why you need to change, the next step is to turn these pain points into a compelling vision and use your change agents to communicate that vision. Is your AP organization going to become the future spend management knowledge hub, and the CFO’s best friend? Will your AP clerks be the new top consultants of the organization, supporting procurement in strategic sourcing initiatives and providing the CFO and business users with actionable insights regarding their spending behavior?
Whatever your vision is, make sure to communicate it and give all employees plenty of lead time to prepare for the future. Communicate early rather than late, and target your message to your audience and personas. Different personas will have experienced specific challenges in the process, so include the most pertinent points for those affected, and make sure your communication addresses how these will be solved with the new solution.
With a structured Change Management approach, an accounts payable transformation roadmap and implementation plan should be accompanied by a communication plan. This plan should detail stakeholder groups, a change impact analysis, and specific messaging for each group through a variety of channels: group meetings, one-on-ones, emails, community sites, and so on. The communication plan is the common tool for the change agent network to make sure that each stakeholder group is receiving the information they need at the right time in the project. It is also the tool by which to synchronize messaging from top management and cascade it downwards in the organization.
Training your users on the new solution is part of the implementation project. The key is that changing behaviors is much broader than a training session, and needs to extend beyond the initial training class. The real learning takes place once they are back on the job,using the solution in real-life situations. The AP team needs to take ownership of the solution and understand how it works and how they can continuously improve. Make sure your education plan is not short-sighted. To succeed, you need to appoint super users that can act as change agents and that understand and support your vision.
Establish success cases that change agents can communicate. For example: “We went from more than 35 days of invoice processing time to only 10 days in just six weeks. We now have full line item transparency into both orders based and non-order-based invoice data. And we can monitor cash flow in real time. As a result, internal audit now holds us as a good example within the company.” Promote and reinforce behaviors that set good examples, and support your realization of the business case for automating.
Continue to build on best practices and make sure to train new employees coming into the organization on the system, as well as your vision and case for change. If you selected the right AP automation solution, the solution itself could be the very tool you need to sustain and reinforce continuous improvements. Modern cloud solutions provide you with the benchmarks to improve your process, increasing touchless ratios, decreasing processing time, and realizing more value from your supplier base. The solution can prompt you with tips and tricks for working smarter, analyzing and comparing your use pattern against big data from the millions of invoices that are processed through the same cloud.
Align role descriptions and individual performance metrics to each goal within your accounts payable transformation roadmap. If your future AP department is going to be the spend management value hub, your personnel need KPIs beyond accuracy and transaction volumes.
With a structure in place that aligns processes, metrics, and communication that goes beyond the implementation project your AP transformation is more likely to succeed. As the research from global management consulting firm McKinsey shows: when people are invested in change, it is 30% more likely to stick.
Your business is probably being defrauded right now. Here’s how to spot it and stop it.