CaseStudy
‘You have to take people with you’
Having experienced numerous finance transformation projects over the years, Chris Argent MAAT knows how important stakeholder buy-in is at all levels
Words: Annie Makoff Photography: David McHugh/ UNP
Project casebook
Company data
Income (total gross) at 2013/14 year-end
Staff at 2013/14 year-end
Results
John Lewis Partnership suppliers successfully moved over to new system
Achieved 60% compliance on system’s three-way match process
The challenge
To implement a financial optimisation programme at John Lewis Partnership head office to automate non-core spend processes and generate rich data and business intelligence to improve forecasting and decision-making.
Finance
Headcount: Approximately 500.
Key teams: All John Lewis corporate functions including finance, governance and IT, as well as external change consultants.
Approach
Engage key stakeholders in implementation of the two-part approach consisting of: (1) a pay-to-source project that streamlined and automated non-core spend processes; and (2) utilising data generated by the new system to improve financial modelling.
Outcomes
• Moved 80% of 4,000 John Lewis suppliers successfully over to the new system. • Achieved 100% compliance with the new ‘no PO, no pay’ policy. • Achieved 60% compliance on system’s three-way match process. • Reduced cost per transaction
When Chris Argent MAAT was ‘parachuted’ in to lead a financial optimisation programme at the John Lewis Partnership in 2013, he was confident he would be able to transform procurement processes and help the finance team embrace automation and utilise data analytics.
After all, it was nothing he hadn’t done before. Argent had already worked with BT, SSP Group and CIBC, transforming digital finance systems and bringing sustainable change to working practices.
Poor visibility
The situation at the John Lewis Partnership head office was a familiar one: manual purchasing systems and an overall lack of visibility over what was spent, whether it was office stationery, HR software or marketing consultancy services.
“There were no auditable approvals, and budget holders weren’t signing off spend until after it had been spent,” says Argent. “It also wasn’t possible to consolidate spend. If there were several departments buying stationery, you wouldn’t necessarily know. Ideally, you would ask the supplier to consolidate the amounts and ask for a discount as you’re giving them more business, but there was no visibility of overall spend to do this.”
Processes were inefficient, often involving telephone calls to suppliers to place orders or arrange deliveries and then waiting for invoices to arrive by post, followed by manual invoice matching and processing. According to Argent, non-retail spend was seen as less of a priority because it was not a core business spend.
He was therefore tasked with implementing a new digital finance system for non-core spend to automate and streamline processes, improve visibility and drive down costs. With the newly available data generated from the new system, the team would, in theory, be in a strong position to fully utilise data analytics and business intelligence to improve decision-making.
But this part was doomed to fail right from the start, Argent explains, although he didn’t know it at the time. So what went wrong?
THE SECTOR
Large retail group
THE CHALLENGE
Implement a financial optimisation programme at John Lewis Partnership to automate non-core spend processes
THE OUTCOME
Moved 80% of 4,000 suppliers over to new system; achieved 100% compliance with 'no PO, no pay' policy; achieved 60% compliance on system's three-way match process; reduced cost per transaction
Ideally, you would ask the supplier to consolidate the amounts and ask for a discount as you’re giving them more business, but there was no visibility of overall spend.
Image: David McHugh/ UNP
Engagement and buy
“The project was in two parts. Part one was a source-to-pay [S2P] transformation programme which was actually a huge success,” he says. “I supported implementation of a fully automated and streamlined purchasing system, which enabled the team to manage the entire procurement processes digitally. But part two, which should have involved making use of all the data and business intelligence created by the new system, just didn’t happen, which was immensely frustrating.”
It was a year of ‘transformation success’ followed by a year of ‘reporting failure’. The team involved with part one was highly engaged with the new system. It had reduced the cost per transaction, revolutionised the procurement process and made people’s jobs easier. But part two involved much more strategic decision-making and the team involved in that part, says Argent, was not ready.
Although the systems were up and running, and working extremely well at the back end, interpreting the data required both buy-in from the top and staff training. The lack of engagement at senior levels meant that the new system and its many capabilities were ignored.
“People had to learn new skills and new ways of working,” Argent explains. “They had to learn how to use and interpret the data they now had at their fingertips, how to be stronger data analysts and financial business partners. Here was a system with a new analytics capability, a new financial modelling capability, but it had to be learnt. But because it was slightly more strategic, it was seen as an extra job and people just continued doing what they did before. Without a senior stakeholder buy-in and a clear mandate, it was never going to happen.”
Frustratingly for Argent, the business intelligence and analytics part of the programme was effectively mothballed and all but forgotten. There were some individuals on the team who were keen to utilise the system but, as they were in the minority, the impact was limited.
“It’s like someone gives you a new phone but you don’t use it because you don’t know how,” Argent says. “That’s why a top-down mandate along with training is so important. But it was seen as a voluntary DIY exercise rather than something that was mandated. You have to have that senior buy-in and you have to make time for these things, even in a busy retail environment.”
Shifting perception
For Argent, it served as an important lesson: leaders need to back transformation from concept right through to compliance.
“The opportunity to use data created by the new system wasn’t taken up,” he says. “If you’re working in a manual, paper-based world there is no data. Then, all of a sudden, you’ve automated everything, but people are still coming at it from a manual point of view.”
Yet despite the frustration and professional disappointment for Argent, who had to get up to speed with the role within a matter of days rather than months when he was brought in, the experience provided a wealth of learning opportunities.
“You learn more from your failures than from your successes,” he points out. “I’ve thought a lot about what went wrong to ensure it didn’t happen again. Stakeholder buy-in is important but, before all of that, you have to go in with a ‘people-first’ approach.”
This, he says, was the biggest learning point. It may take longer because it requires a lot of conversations with key stakeholders and those directly affected by the change, and it can also frustrate technical teams who often just want to get on with the job, but it is a critical element.
“Never start a project before you have fully engaged people, particularly sponsors, users and users’ managers,” he adds. “It’s not just top-down senior engagement, which I see in every change management textbook, it needs a much wider management exercise.”
Sometimes those doing the transformation want the change more than leadership and that was the case here.
Make the case
Argent admits that he would put “much more effort now” into managing these relationships because he understands the need to get people onside. He says: “If people don’t understand the why or what the business case is, they won’t engage.”
In the case of the John Lewis Partnership, Argent still would have experienced significant blockers because management wasn’t fully onside, but he believes he would have got further with a people-first approach.
The first part of the project was a huge success and is still in active use today. It has reduced cost per transaction due to improved visibility and consolidated spend, while 80% of 4,000 John Lewis suppliers moved successfully over to the new system. In addition, the ‘three-way match’ process that matches purchase order numbers with correct invoices achieved as much as a 60% compliance rate compared with a 5% match rate when the system was first implemented.
There was also 100% compliance with the purchase order (PO) policy of ‘no PO, no pay’. This policy was initially contentious due to concerns it would affect suppliers negatively. But it ensured spend was always pre-approved and supplier invoices were paid automatically – and quickly – based on pre-agreed terms rather than a paper invoice, which also reduced time spent on unnecessary queries.
“It’s always an interesting dynamic when you implement organisational change,” says Argent. “Sometimes those doing the transformation want the change more than leadership and that was the case here. I engaged a lot of people by talking about the benefits of automation, analytics and agility. It was a huge shame the second part of the project wasn’t a success, but sometimes you have to cut your losses, learn from them and move on.”
Did you know?
Chris Argent MAAT runs finance-focused networking and events outfit Generation CFO. AAT and GenCFO have partnered for two annual events, the GenCFO Academy and the Digital Finance Function Awards.
‘You have to take people with you’
Having experienced numerous finance transformation projects over the years, Chris Argent MAAT knows how important stakeholder buy-in is at all levels
Words: Annie Makoff Photography: David McHugh / UNP
