The way business is conducted is likely to change in the coming quarters, and managing the complexity of organizations will take on new meaning. A modern platform for document and business process management is the only way for a multi-departmental company to function as one body.
The economic slowdown that has lasted for several years and the crisis caused by the pandemic has made companies even more aware that those who can adapt will win. In this “new normal”, legal and administrative organizations with complex dispersed processes will have a greater need to adapt to an increasingly digitized world.
The highest degree of complexity
In order achieve success a business must modify not only its structures, but also its processes, to be in line with the Structure follows Strategy principle. One of the pillars of large-scale operations is proper coordination, i.e. controlling the complexity of the organization.
Tracking information on the effectiveness of each of the companies in the capital group and HR issues at the management level do not exhaust the list of tasks requiring coordination. Supporting operations in different time zones and languages are just the most superficial aspects for companies that open branches abroad, it is also crucial to manage compliance with local legal provisions of varying complexity. In addition, there is a constant need to keep abreast of updates and new statutes. Failure to comply with regulations may lead to significant financial penalties and loss of goodwill.
A 2013 study by Deloitte on 53 international industrial companies showed that one of the biggest challenges for such large organizations is the complexity of decision-making processes. 73 percent of companies surveyed indicated that subsidiaries generally have separate boards of directors, and 84 percent of parent companies have certain thresholds for actions or spending in the subsidiary without approval. Furthermore, 68 percent of the respondents indicated that the supervisory boards of the parent companies spent an inordinate amount of time supervising the activities of, and analyzing the risks associated with, subsidiaries.
Is it possible to manage a large company without a modern, centralized and dedicated business process management system? Even at this moment there are multinational corporations which are using a patchwork of solutions that do not ensure a consistent approach to management and compliance in different countries. As a result of these separate systems there are inconsistencies which can cause costly errors and require compliance efforts to double or even triple.
Costs call for digitization
Paper is still the dominant medium of information in a large proportion of companies around the world. In warehouses, records are kept on cards, employees have to sign printed contracts, and write out applications for holidays or business trips with a pen. The shameful leader in the field of overcomplicated office paperwork is usually invoice workflows.
Furthermore, geographically dispersed and multi-company structures incur particularly high costs connected with paperwork; costs not simply about transporting or storing paper. In the world of the Internet of Things, artificial intelligence, robotics, drones, autonomous vehicles, 3D printing, cloud processes and other digital technologies, paper-based processes create bottlenecks in business processes.
An average employee spends 5 to 15 percent of his working time per month looking for lost contracts, invoices, letters, orders, or logistic documents. Statistically, 7.5% of documents in a company are irretrievably lost, either due to unconscious or deliberate human activity. A dismissed employee may withhold documents. A desperate salesperson may make changes to a contract unfavorable for a company. A document can also simply get lost when it is sent to the wrong person, falls in a drawer, falls off a desk, or even… falls out of the window.
Failure to comply with the statutory obligations to verify a contractor’s bona fides is associated with wide range of negative consequences, including: loss of your reputation as a reliable business partner, inability to deduct VAT, being involved in a chain of transactions aimed at tax fraud, termination of credit lines by banks, and in extreme cases even bankruptcy.
Few companies are completely aware of the macro scale operational losses incurred from using paper. In multi-company enterprises, there are situations where each contract is even photocopied multiple times, because multiple offices need access to it. If this situation generates costs of thousands of zlotys per month (€1000/mo.) and continues for years it can become normalized. Unfortunately, then only crises make companies aware of the need to eliminate these wasteful situations.
A digital platform is like the heart and brain of a company
One of the biggest challenges in multi-company structures is ensuring access to information. In many companies ‘information silos’ develop over time, i.e. handy databases, statements, and contract templates. This data is saved in various formats and often cannot be accessed because it is saved on the company’s network drive.
The lack of process standardization and the impossibility of delivering comprehensive and contemporaneous reports based on the companies’ full data set increases the difficulty of optimizing costs and boosting efficiency. This is why one of the pillars of an organization’s readiness to expand is deploying digital infrastructure to support a company’s current and future growth.
A comprehensive entity management system is not an end in itself, it is the starting point for ensuring compliance. With a capital group operating on the scale of thousands of documents a day, manually determining some things is simply unrealistic: e.g. how many contracts, for what values, by which subsidiaries, and if cost consolidation is possible. Therefore, investing in a solution which provides tools for the continual automation and optimization of processes will raise the effectiveness of your organization.
Data: a company’s digital gold
The digitization of business reality also brings new benefits that cannot be achieved with analog processes. Company data has become a new economic resource used to create and capture value.
Data-Driven Decision Making (DDDM) is the practice of collecting data, analyzing it, and making decisions based on the conclusions drawn from that information. Thanks to DDDM, organizations are becoming more agile, discovering new business opportunities more quickly, and reacting more quickly to market changes.
In a data-driven economy, organizations focused on a standardized scalable platform for business process management have a huge advantage. Such a system is able to record and extract all the data related to the online activities and interactions between users on the platform. Visualizations of the case paths for all processes can indicate “bottlenecks”, the execution times of individual steps (both in a specific case of the process and on average), and is a real basis for introducing modifications and process innovations.
Digitization means security and concrete savings
Savings on the costs of handling paper documents allow you to get a return on investment for your digital transformation within a few months. A consistent, digital environment enables more efficient and cheaper results of activities that were previously repetitive and time-consuming when performed manually. It is easy to notice specific benefits, such as shortening the duration of processes, saving many hours a month, or freeing up time to performing more complex tasks. It is worth remembering that there is clear profit motive behind this transformation. Organizing electronic document workflows and storing invoices in electronic form will allow you to estimate directly attributable savings per year resulting from the cessation of handling, sending, and archiving paper documents.
In an era when the work of specialists is more and more valuable, especially in highly developed countries, this also saves your employees’s time; freeing them up for more creative tasks that generate added value for the company. Cost cutting, however, is not enough. It is equally important to eliminate the operational risks associated with manually dealing with documents. Losing track, or being unaware, of a deadline may result in contractual penalties. And the various consequences of signing a contract with the inaccurate content should also be remembered. Digital platforms are especially useful during inspections by government or when audits are being carried out before the sale of the company, especially when it is necessary to refer to documents or how to accept them.
Digitization: How to start?
Where to start the digitizing processes in a multi-company enterprise? First of all, you should analyze what processes are key to the further development of the company. If a given process already works well in the ERP system, there is no need to change it unless there are problems with supporting its operation.
Standardization of process support in the entire company or group of companies will be ensured by an electronic document workflow system which is integrated with key ERP or CRM systems. In situations where individual companies use different ERP systems, which often happens in the case of takeovers or mergers, the electronic document workflow system becomes the bridge connecting data from many sources.
When preparing to digitize your first process it is recommended to choose one document workflow, and then, when that process is successfully completed, gradually digitize the others one after another. First, it is necessary to analyze what workflow paths are, i.e. to whom and in what order the document is to be sent, and what actions each person is to perform, e.g. only accept the content, or accept and sign it digitally. At this conceptual stage it is highly recommended to consider what data should be aggregated and used to report the effectiveness of the process(es) in order to further optimize them.
In the case of contract workflows, the appropriate type of electronic signature should be specified for each type of contract. In the case of contracts of mandate, signatures using emails and SMS codes are convenient. On the other hand, when signing contracts with foreign clients, it may turn out that there may be a problem with receiving a text message or obtaining the mobile phone number of the decision maker. Qualified electronic signatures are part of Polish and EU law but are not a universal solution because many Polish/EU companies, and even more foreign companies, do not have qualified certificates.
Once processes are implemented and running, the system begins collecting data. They can be used for reporting, both within the electronic document flow system, or through an external BI platform.
A small step for a business process, a giant leap for your business!
Electronic documents workflows are often seen through the prism of individual processes, e.g. cost invoice workflow or business trip acceptance. However, this is the only one small step on a ladder. This is an organizational change as radical as landing on the moon. The efficiencies and possibilities that come with operating in this ‘low-g’ environment open a new era in the history your company, and mark the transition to a new level of organizational development.