Accounts Payable, The Role of Process, & The Customer–Never Think “Bloodless”

As anyone who knows me, knows (me), I speak at a lot of conferences. I get the opportunity - and never see it as anything less than a true "thank you" opportunity - to put out my sometimes saw-toothed thoughts in front of hundreds of thousands of people a year - and they often genuinely seem interested and listen to me.

But as some of you could probably guess, I'm in demand enough to charge a fee - and a nice one - for that speech - or panel - or whatever. This gives me the best of all possible worlds.

But even though I'm always on time and usually have a contract associated with the speaking engagement that sets out clear terms of the engagement, in the last two years, I've probably run across more late payments than timely payments. What makes it both frustrating and a case study is that the accounts payable departments of larger companies actually are entirely consistent in how they run - and in how customer UNFRIENDLY they are - because of the way that they run.

To clarify, not all accounts payable departments fit the model that I'm about to describe - but enough do to create an educational post on what not to do at a company - and on how to fix it. I'm going to leave out names of the companies because I'm not trying to embarrass the companies. In fact, what I constantly find is that the CRM delivery organization at these companies tends to be outstanding - in direct contradistinction to the accounts payable.

The Aggregate Scenario (based on true stories)

This is ripped from the headlines. In the fall of 2010, I spoke at a conference at an event that was genuinely interesting, had a fabulous customer attendance and lots of interactions with the attendees and was, even as an event, a really well done show. Bravo/kudos to the event planners and this large companies delivery organization.

When the event ended, I went home and my wife and I submitted the invoice to the company for payment. Our agreement called for net 30. Well 30 days came and went but I didn't happen to notice it and I heard nothing about it from the vendor so, in blissful ignorance, I traveled through life not aware that we hadn't been paid. At the end of the year - some 60 days later, I noticed I hadn't been paid. So we queried the company. No response. Then in January of this year, we began to press for payment in earnest since it was some 75 days late. No response. I sent an email to the event organizers, who to their credit, jumped on it immediately. They got in touch with accounts payable. Accounts payable, after a leisurely roughly one week, decided to let me know that they needed our wiring information on a company letterhead. I sent a note asking accounts payable a couple of questions. No response again. I went to the event organizers and they got the accounts payable people to answer the questions. Wiring info was sent.

I waited a week, nothing whatever. No response. Once again to the good event organizers. They got accounts payable to tell me that they had received and validated my wiring information. Pretty much it for information. Another nearly a week. No response to me either proactively or for a query of mine. Event organizers again. Finally I got a response. They told me that their next check run related to my check was probably going to be in 3 weeks from the date AND that they wouldn't know if I was in it until that time and they'd let me know then. In other words, the only thing I heard was that I was going to maybe be in a check run that was going to maybe occur in 3 weeks. The tone was literally nothing. No "we're sorry but..." Just that there was going to likely be this check run.

Bloodless.

Needless to say, I was furious. Nearly 90 days out and what I'm being told was that I was in their process and that was that. It didn't matter that I had gone out of my way to discount the event, to cap expenses, to reluctantly fly a long distance all out of regard for the host. It didn't matter that the host delivery organization was as frustrated as I was. AP was going to stick to an onerous process that seemingly had little flexibility at all.

I sent a scathing note that basically excoriated the company AP department for their absolutely cold response - a response governed by a rigid process that the accounts payable department had. I pretty much told them that this was going to impact my relationship to the organization. This was (I found out later) backed up by the events organizers with a rather tough but very complimentary discussion of my impact and influence and how AP was damaging the relationship and it better get fixed fast.

This finally "broke" their stiff process and two days later I was paid.

But this got me to thinking about the impact of inflexible processes as represented by more than just this company's accounts payable department.

Life, Liberty and the Pursuit of Process are Incongruous

Contemporary customers are more demanding than they ever have been. They have more choice, more opportunity and more channels to communicate in to more people.  Consequently, their interactions with a company become increasingly complex and at the same time increasingly diverse.  Meaning, each of the customers involved with the company is demanding more than treatment as a demographic slice. They are demanding response as an individual. That means that businesses are in a more difficult (and more promising) situation than ever before.  In traditional CRM, business rules, processes, and technology systems were the foundation (whether we liked it or not) for how businesses handled customers. It was easier to set up repetitive processes that varied only according to business rules set up to diversify the use of those processes. That was a good thing then, because the ability to count on a process that worked that had also been vetted as business-friendly (though not always customer friendly) was a good thing. Business Process Management as a business science boomed. Business process re-engineering, a 90s watchword was still going reasonably strongly (though admittedly losing cache and value by the early part of the millennium). But BPM dominated all process discussions and even CRM related business processes were considered agnostic in their grand scheme of things. How it impacted the customer and how the customer impacted it was not the point. Lean, defect-free processes a la Six Sigma were the watchword, even during traditional CRM’s heyday.

But even then signs of potential problems arose. For example, one mid-sized company (kind of in the middle of the middle) I knew had a financial process that they had developed which saved them roughly $40,000 per year (their estimate) due to its efficiency. But when they went to ecommerce at the request of their customer base, they found that the process, which involved customer data, had been engineered such that it made customers put in some of the same data on the ecommerce site twice, irritating customers.  When they realized they couldn’t modify the process to take care of that glitch, they did the customer-centric thing, rather than the lean thing, and eliminated the process, despite the savings it had been providing to them.

This type of issue is an indicator of a very important aspect that is even more important in the era of the social customer. Business processes are not in any way free of either impacting or being impacted by actual human beings. In the case of a business that could mean customers (or employees or both). Companies who were intensely process focused like Sword-Ciboodle and Pegasystems have realized this in the past few years and have changed their m.o. away from agnostic and toward customer centric when it comes to building process maps and looking at the processes that run companies. Perhaps the most important lesson in this is that, in fact, there is no process in a company be it in finance, human resources, manufacturing, marketing, sales, customer service, supply chain, that escapes the collaborative value chain – and especially the customers that are engaged in it.

That is particularly the case in the social customer era.

Why? Because the business value chain has shifted from an optimally seamless collaboration between the company, its employees, partners and suppliers to a collaborative value chain that also engages a part of customer life. It looks something like this now (pardon my graphically challenged self):

If you’ll note what you see here that makes this different than the past meaning the enterprise value chain (see the sentence above) past., customers are not only the recipients of the value chain’s theoretically seamless functioning (which of course would make efficient processes very important) but are participants to the extent they choose to be in that value chain, which means that they now, more than ever, are impacted by the processes driving the corporate side of the value chain and have impact on those corporate processes – because of their participation.  So nothing is agnostic any more. 

A perfect example? The impact that the inflexible accounts payable department processes have on someone like me – where, rather than seeing me as an actual human being impacted by the rigidity of the process, I’m merely another object represented by a geometric shape in the workflow diagram.

Now, the case could be made that the highly efficient process isn’t agnostic because if it works, the customer or the employee that the process affects has a positive experience with it.

That’s true.

For example, 90% of all customer inquiries to customer service are not complaints, they are what they seem to be – queries, like, “what’s your address?”  An effective process that allows the customer to get the answer in the shortest time possible is the right process. But it’s not agnostic.  Because, as you can see in the diagram, as free of customer input the process may be, the collaborative value chain, the model for the 21st century enterprise, requires the interaction with the actual customer who is being impacted by things that have nothing to do with the company they are currently interacting with. Among those things could be friends, family, bad days at work, other companies they are interacting with, lack of sleep, a fabulous windfall, a great night of sex, whatever. Something outside the purview of the enterprise’s value chain but still impacting the relationship and interaction that the customer is having with that value chain.

In other words, something that NO process can anticipate or plan for yet something that will affect how a customer is experiencing a company on any given day.

So what does that mean, exactly when it comes to processes?

First, please let me be clear. There is a lot of value in having processes that work for the bulk of the business outcomes that you are attempting to achieve with them.  Roger T. Burleson, a BPM specialist/author says it very well:

“Consequently, process makes the perfect organizer of business requirements.  It shows the transformation of inputs into outputs.  It defines the triggering events to which the business must respond, as well as the criteria required for closure.  It shows who cares and the role that stakeholders must play.  It defines the guidance needed to carry out the process and attain the required outcomes.  It defines the needed physical capability required from people, technology, and facilities in order to succeed.  It defines the required measurement system and performance targets to establish assessment of business, as well as human performance and evaluation systems.  It provides the opportunity to learn and share the knowledge gained for further improvement and for best practices.  Based on this understanding, knowledge, business rules, and technology requirements will have full traceability back to business drivers.”

There is one simple rule that has to be observed when it comes to how a company interacts with customers and how processes intersect those interactions  the ones that lead to outcomes. When the processes damage customer experience, the processes need to be either fixed, eliminated, temporarily “suspended,” or replaced, with clear regard for what that does to the business results that it was getting.  But that still means it has to be flexible enough allow for an alteration in the process routine.

But, process wonks will say, you do that, you defile the purpose of processes!

Nope.

Let me give you another example

A few weeks ago, I was flying back from San Francisco on United (an airline that I have to admit is getting a little better than it was).  We had a really nice, garrulous pilot from (I think he said) North Carolina, who greeted us when we got on the plane and kept us apprised of various things that were going on or that they were doing in the cockpit from time to time.  We landed back at Dulles Airport in the DC area – a very smooth landing. After we stopped and were just arriving at the gate, the pilot told us that the plane had landed itself on autopilot –something that apparently each plane at least in the United fleet, if not an FAA rule for all airlines, had to do every thirty days. They (the pilot and co-pilot) didn’t do anything to land the plane except keep their hands on things they needed to if the landing wasn’t going according to plan.  Of course, he was smart enough to wait until we landed and taxied before he told us. When we were getting off the plane, one of the passengers said to the pilot, “nice landing.” The pilot responded “I’ll let the plane know you said that.”  Ha.

Think about the metaphor that really isn’t a metaphor here. The plane landed perfectly and according to routines and subroutines that were programmed into the vehicle’s computers. But these routines and subroutines were created by humans based on the equipment that the plane had, the years of practices that worked for landing the plane and the mechanical perfection of the automated routines.

BUT….the pilots still had their hands on the things they had to just in the unlikely case something went wrong with the the routines/subroutines – be it mechanical, programmed bug or something outside their control like weather or some change in the control tower etc.  Meaning even in something as unlikely to be outside the scope of the ordinary – a successful landing e.g outcome – as this, there were alternate avenues built in. The pilots were using autopilot which they expected to do the job but were not slaves to it – and had protocols to deal with possible failures at varying levels.

Let’s now morph this into a business environment.

Remember what I said earlier? When it comes to customer service for example, 90% of the customer inquiries are benign – meaning “not complaints.” For that 90% of interactions, processes are a godsend. They are heaven. They are wonderful. Why, because they provide a reproducible way for a customer or an employee to do something that is pretty well going automatically do it as well or better than a human can do it manually. After all, the process was designed by a human based on what they perceive has been successful prior practices that have generally worked for the bulk of the actions that created the need for the process. So that means, when the process is working, the human’s request that led to the use of that process and rules, made it easier on the human being to get the result they were looking for. So for example, I need an address as a customer, I ask the question, the query returns an answer to the question, I am given the option of capturing that answer via an email to me, or a text message or whatever, I make my choice, and it runs a script that does what I chose.

Yay. I’m happy.

But where all this goes awry is in that percentage of queries that don’t support the reason for the process, such as the broken payment to me.  Human error might be the reason that the processes associated with timely payment didn’t work but that doesn’t mask the issue in any way nor change the premise. Processes have to be sufficiently flexible to withstand issues that turn the process itself into a negative experience. And, even though its okay to expect the process to follow a fairly consistent routine (after all, that’s what makes it a process) protocols should be in place to deal with it when it breaks or when something that creates an exception to the process flow arises.

What I mean by that is there should be a procedure that involves specifically named people or at least a designated job description who are empowered to go outside the process’ routine to take care of matters so that it doesn’t impact the customer’s experience in a way that creates angst or disgust, so to speak.

Another example

If you look at Bruce Temkin’s 2010 Service Experience Index (done while he was still at Forrester, now he is perhaps the leading customer experience analyst/consultant in the world – and doing his own thing at Temkin Group) , you will find that in the 2010 Index, that Capital One Bank rests at 113 – a horrible low score. What it indicates is that Capital One customers are, comparatively and absolutely, subjected to very bad service interactions that leaves them unhappy.  My wife and I have had that experience more than once when our very customer friendly bank – a local chain called Chevy Chase Bank, was acquired by Capital One.

A simple example. We have business accounts and personal accounts. All the personal accounts are tied together by something called a Platinum package. The business account can’t be part of that. When we had Chevy Chas Bank as our bank, if I wanted to transfer funds from the business account to the personal account, I filled out a transfer slip. The transfer was recorded, the funds shifted, I got a receipt. Out the door I went.  Now, I have to fill out a withdrawal slip for the business account and then a deposit slip for the personal account and then, if I don’t ask for the receipts (both of them) I don’t get them. Their explanation is that I can’t just transfer funds between a business and personal account.  Funny, I could with Chevy Chase. But, as we’ve found out over and over again, rather than organizing the bank to be customer-friendly, Capital One is unyieldingly process-driven and exceedingly customer unfriendly, putting us in a place that has us on the edge of transferring six accounts from them to some other bank.  They have repeated instituted policies driven by processes that work for them and not customers and according to their own staff, they are losing customers regularly due to their medieval agnostic customer unfriendly approach to processes.

I’m sure that we can continue to tell a lot of stories and feel free to do that in the comments section if you want (remember process breaks experience tales of woe).

The lessons here are simple

Processes are NOT the core of a business. They are important, no, critical, to dealing with the bulk of the operational side of the business, but the core of the business is, you guessed it, customers. Which means that processes need to serve customers as well as business operations.  Roger Burleson is right, business outcomes are what you are always aimed for. Processes that can be associated with business rules are great for many the necessary outcomes, but when there are unexpected alternate outcomes there needs to be a protocol for dealing with those unaccounted for results.  Companies that have the flexibility to “break” the process when they need to and the empowered employees to do the breaking will be more successful than those that rigidly adhere to the processes despite the problems it causes their own customers.  This applies to all departments at all companies of all sizes. Including accounts payable. Bloodless is never a word that should appear in a discussion of a customer/company relationship, even when it relates to processes.

Never.

Comments

[Doug van Aman]

Process can never account for the common sense required to handle an exception. It happened again today to my wife. A 20-something Banana Republic clerk refused to allow my wife's 83-year-old mom (using a walker) to use the store's non-public restroom. It was against policy. My wife's response: She will never buy anything again from Banana Republic because of decidedly unfriendly and unhelpful customer service.

[cell phone accessories wholesale]

Companies who were deeply developed focused like Sword-Ciboodle and Pegasystems have realized this in the past few years and have transformed their m.o. left from cynic and toward client centric when it comes to structure procedure maps and looking at the processes that run companies. Maybe the most significant message in this is that, in fact, there is no procedure in a company in finance, human resources, manufacturing, marketing, sales, customer service, supply chain, which escapes the collaborative value chain and especially the clients that are affianced in it.

[Graeme Jeffrey Boorer]

Accounts Departments: The Last Bastion of Customer Abuse & Negative Experience! Whether you are a customer querying a bill, a supplier (like you) seeking payment or an employee clarifying personal expenses, seldom will "accounts" adopt a collaborative approach to an issue or problem.

Why? In my view many "bean counters" often see their role as divorced from making the business better - as the name suggests they count the beans other produce, roast and use to deliver the coffee! Until that perception changes, don't be suprised if your "customer-centric" progress is scuttled by accounts.

From experience, a successful CRM program must incorporate "finance and accounts" as key stakeholders from day one. Not because they are passionate about customer experience, retention, ROMI etc but because they appreciate the benefits they gain ie lower staff turnover from dealing with fewer angry customers, more accurate reports and analysis - and out on time, less credit risk, fewer bad debts, etc - benefits that turn them on.

Yes finance and accounts can be a drag when involved in a CRM project, and yes it can take some doing to get them fully involved, but given their potential to undo the positives your CRM initiatives will deliver, its really worth the effort!

[Andrea Incalza]

Hi Paul, i totally agree with Mark Tamis and i think that ACM is a good point to start rethinking customer management and process management by the enterprise knowledge workers. but i think also that adaptivecase management must continuously interact with VOC and Customer Experience Modelling outcomes in order to garantee shared value.

[@collsdad]

Paul,

I'm going to take a wild stab in the dark here and hypothesize that the fact you went round the houses with the event organisers and their accounts department was that they were 2 entirely different Organisations. Something similar happened to me with a travel booking I had some time ago, as far as I was concerned the contract I had for the travel was with the carrier so when I cancelled I expected a refund to be a simple process, but alas they had entirely outsourced their Finance to a third party who simply followed the defined 'process' (and rules) and was unable to step outside of this, empathise with (me) the customer.

Subsequently this 'outsourcing' created a negative customer experience for me although strictly this was NOT because they had outsourced their actual customer service, it was a breakdown between the customer services part of the carrier's organisation and the fully outsourced payments and billing department. Subsequently I remain wary of the the 'benefits' of BPO particularly where it impacts the customer experience. Customer Experience is a brand's DNA, it's ability to differentiate and delight its customers. Why would you outsource that?

[Hank Barnes]

Paul,

Great post about the problems with process. I recently blogged on a similar vein that can be found here: http://blogs.adobe.com/experiencedelivers/2011/02/09/customer-first-technology-second/

Having spent many years in the process industry, I was definitely in the camp of BPM being a path toward competitive advantage. I was wrong. BPM is a piece of the puzzle, but, particularly for processes that impact customers (or employees), the experience (and not just the UI) is the path to advantage.

There are moments of truth in every interaction, when a company can take that extra step, no matter how small, to help the customer achieve their desired outcome easily. Or they can take a different path, cite "this is our process", and leave the customer at best frustrated, at worst angry and vocal about the bad experience.

In today's environment, with the participant control of their value chain that you mention, its all about experience first (with a focus on achieving outcomes) and technology as a support agent for that--whether that be BPM, CRM, Social, or something else.

[Dorothy Hintz]

Hey Paul,

You've touched a plank on my wheelhouse. Too many times middle size companies continue to exist with processes that are 'garden grown volunteers' as pointed out by Andrew. The redundancies & inefficiencies inherent in seat of the pants processes make it difficult for an organization to be responsive to internal or external customers.

I'm going to use your auto pilot story as part of organizing our engineers to get on board with the operational processes we are implementing. It's a perfect analogy for how to take advantage of the positives of processes while keeping your eye on the real objectives including happy customers.

[Andrew-b-schultz]

Nice article Paul. I'm going to add the SMB (not middle-middle, but lower middle) perspective I have here.

I like your distinction between customer-centric and business-centric processes; and I'm glad that you pointed out the continuing need for processes, albeit flexible ones able to react when necessary for a customer's happiness.

I'm often working with companies where a process simply doesn't exist, or if it does, it's a "wild" process - one that grew outside of the garden wall on its own, with no one monitoring or guiding it, which has built-in inefficiencies, 2X more steps than necessary, doesn't leverage appropriate technology, etc. These companies don't usually have a strong ability to respond to the needs of customers; I would say they're categorically worse off than those that have rigid processes. I believe the first step here is to create a process, hopefully with built-in flexibility the first time; but we can't move directly from chaos to productive flexibility.

[twitter.com/PaulSweeney]

You know, this one really really resonates with me. It actually gets my blood boiling. Brace yourself for the rant:

(1) The Check Out - Handing over the cash, the exchange, the inevitable human factors involved. Getting your invoice / payment handled well by the company is just so important. It is so fraught with potential misunderstanding because it's at the point where you are most vulnerable as the customer. That's why I always check to see if the assistant smiled at me while handling over the change, and not the slap down and spin to serve the next customer, now that I'm no longer important. My father says, "If you hit the last high C nobody remembers that you fumbled the earlier piece".

(2) Process - Sorry Paul, this wasn't about process IMHO. This was about an organisation, and a department head saying "we hold on to money", we don't pay out early, we're a profit centre because of the way we handle money. It's also that AP culture. I've seen it up close and I can honestly say that those that pay out the money associate more with AP culture than the company culture.

(3) People In The Process - All the research on customer contact shows that the customer has the best experience where they know they can reach a real human being at any point in their "automated self service routine", be that in your IVR, or your webpage. Your AP people were not available, and were "behind the wall" of the companies contact infrastructure. Did you ever have a direct number to the person who could make your payment happen? my guess is nope.

Your interaction with AP was bloodless because they, as a department, and as people, had no flesh in the game. They get paid regardless.

[Mikeboysen]

To sum this up...

Once you go outside-in, there's no going back.

MikeB

[Marktamis]

Hi Paul,

I always love the stories you tell and the way you bring your message across :)

Business Process Management is increasingly showing its shortcomings, especially when dealing with customer needs and expectations. I have been looking at Adaptive Case Management as a wel to inject agility and human discernment into interactions. I think this would be a great approach for adapting companies to the needs of the Social Customer.

Cheers,
Mark