Process Improvement Starts at the Top
2017-05-02News Image

Increasing Efficiency


A number of years ago I was engaged by a software company to help them better utilize their ERP system to run their business. Some of the mid-level managers were frustrated with the lack of information provided by the accounting department and how long it took to get what they did. At the same time the CEO was closely monitoring the results provided and driving his team to improve performance.


The Situation


I was brought in by one of the departmental managers to do an assessment of the closing process each month and provide results to the management team. Being a younger consultant I started where I was comfortable, with the manager who brought me in. We worked up a schedule with other department heads including the controller and his team and planned to finish with interviewing the CEO. (Based on my experience in this project, I now start with the CEO to learn about the strategic direction of the company, but that might be a topic for a future blog post.)
Besides doing this engagement for this software company I also consulted with their clients to either implement or re-implement the ERP system this company sold. And in those engagements I always helped them look for ways to get the books closed in 5 business days. One client I worked with did a presentation at a user-group explaining how they got the close cycle down to 2 business days.


With that background, I worked my way through the various departments ending up with the controller. Along the way we considered the processes that drove accounting transactions in each department such as billing procedures, expense reporting and approval processes. In each department we found ways to utilize the existing software to eliminate manual steps which usually involved duplicate entry into the system as well as various spreadsheets.


When I met with the controller I learned that it took much more than 5 days to close the books. In fact, it could take as long as 3 weeks to close the books each month. It is difficult for department heads and executives to manage the business in an informed manner without information for that long of a period. Much of that extra time was spent entering and massaging data in spreadsheets that the CEO relied on.


Streamlining the Accounting System


The controller and I devised some ways to generate the information required by the CEO and department heads from inside their existing system. We came up with ways to creatively use the system to replace most of the work being done in the external spreadsheets. Some of it wasn’t even all that creative; it was just a matter of training the users on how to use standard features they just were not aware of. Based on these planned changes we estimated that the close cycle could be shortened to 5 business days.


Finish Line or Road Block?


In my final meeting with the CEO, I took him through my findings and showed him how the statements could be produced in just 5 days. The only difference was that the data was not quite formatted the same as the spreadsheet reports he was accustomed to receiving. As I approached this conclusion he looked at me and said “I’ve spent years working to get the information delivered to me in the format I want it. Your recommended reports are not in that format so unless you are able to produce it that way we will stick with what we are doing”. In the end they shortened their 2-3 week close cycle by a few days, but it still took too long to disseminate information.


If you are the CEO and you want your staff to make better use of your ERP or Accounting system so that everyone gets better, more timely information then be open to change and communicate that to the rest of the team. I’ll bet many of them will be open to improving how they use the current system and everyone will have better information on which to base everyday decisions.

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