IMPROVING ORDER-TO-CASH

CYCLE.

WHITE PAPER

Wipro BPO Ltd.

Abstract
Order to Cash cycle—The sequential steps from acquisition of a customer’s order up to the
customer’s money reaching the operator’s bank account represents the financial lifeblood of any
communications company. Order-to-Cash cycle also does a lot more – series of milestones or
activities go a long way to determine the customer experience and perception of the communication
provider.

Wipro Technologies
I n n o v a t i v e S o l u t i o n s, Qu a lity L e a d e r sh ip
WHITE PAPER IMPROVING ORDER-TO-CASH CYCLE.

Table of Contents

Introduction.............................................................................................................. 3

A typical order-to-cash cycle................................................................................. 3

Current challenges in Order to Cash for telecom industry................................. 4

Challenges faced By Wipro In providing order management services.............. 4

Solution.................................................................................................................... 5

Reduction in backlog orders.................................................................................. 5

Our process improvement initiatives.................................................................... 5

Benefits.................................................................................................................... 7

Conclusion/Summary............................................................................................. 9

Appendices............................................................................................................ 10

References............................................................................................................. 10

Table of Contents
WHITE PAPER IMPROVING ORDER-TO-CASH CYCLE.

Introduction
Key business pains included:

The order to cash cycle is the financial lifeblood of any organization. Not only does it determine
how quickly an order from a customer is translated into cash in the bank, it also determines
the customer experience and perception of the service provider. This is further compounded
by challenges such a price pressures, cost pressures, increasing stakeholder value that are
often seem contradictory in nature. All these aspects make it imperative for an organization to
focus on having a best-in-class Order-to-Cash Cycle

To be a best-in-class process, entire “Order to Cash” cycle for an organization needs to be

optimized. True optimization of the order-to-cash cycle requires end-to-end view of the entire
process, and achieving this involves far more than fine-tuning some systems and processes.
Moving an end-to-end process will involve changing the culture significantly, with substantial
support and inputs from management.

Our approach towards the end-to-end optimization has been elaborated further in this paper.

A typical Order-to-Cash cycle

As mentioned earlier, the true optimization of the order-to-cash cycle requires the organization
to adopt end-to-end view of the entire process as opposed to resolving issues in organization
silos. A typical Order-to-Cash cycle is as represented in the figure.

Sa l es Logis ti cs B il ling Cust o mer

on
Q u i c k T i m e ™ a n d a Q u i c k T i m e ™ a n d a Q u i c k T i m e ™ a n d a Q u i c k T i m e ™ a n d a Q u i c k T i m e ™ a n d a Q u i c k T i m e ™ a n d a
d e c o m p r e s s o r d e c o m p r e s s o r d e c o m p r e s s o r d e c o m p r e s s o r d e c o m p r e s s o r d e c o m p r e s s o r
a r e n e e d e d t o s e e t h i so p ai cr teu r e .
rdering n e e d e d t o s e e t h i s a r ep i c t un re ee . d e d t o s e e t hupi s a r pe i c t u nr ee e. d e d t Te
o ss et e/ t h i s
t urn a -r e p i c tn ue r ee d. e d t o s e e t h
c i sare a r pe i c t un r ee e. d e d t o s e e t h i s p i c t u r e .

Acquisiti

A typical order-to-Cash Cycle

Till date, the approach has been a reactive attitude to problems in one area – ordering,
provisioning etc. It is necessary to look at constituents that will make a successful order-to-
cash cycle as shown in table.

People/Organization Roles/responsibilities
Skill sets
Organization alignment
Policies & procedures Credit
Terms of trade
Escalation protocols
Technology Automation
Workflow, ERP
Data integrity
Culture Accountability
Cross—functional teamwork
Measures & controls Benchmarks
SLAs
Accuracy

Constituents of a successful Order-to-Cash cycle

© Wipro Technologies Page : 03 of 11

WHITE PAPER IMPROVING ORDER-TO-CASH CYCLE.

Current challenges in Order to Cash for telecom

industry
Increasing pressures on service provider to
• Reduce time to market the product and services,
• Improve their margins
• Retain existing customers & attract new ones
• Price pressures with reducing tariffs/costs,
• High cost of business processes
• Multiple non-integrated legacy systems
• Varied statutory and compliance requirements across different countries/regions
• Varied supplier/vendor performance and agreements across different regions

Challenges faced by Wipro in providing order

management services
The Client, post process re-engineering & application transformation, now has a single SAP
Wipro BPO provides near end-to-end order management services for a large telecom company
for their high-end international MPLS products. The challenges faced in the process reflect
the overall challenges faced by telecom companies across the world. These challenges are
further compounded by multiple third party service providers who do not have full control over
the entire cycle.

Some of the challenges are listed below:

• High number of orders with incomplete information (Our experience shows that
typically > 30% of orders received are either incomplete or carry incorrect information)
• High lead time to receive from customer order sign to order entry in Order
Management system (OMS) (> 15 business days)
• High percentage of non-standard orders leading to disparity among what the system
and processes were designed to do vis-à-vis what now needs to be achieved
• High level of rework in the process which are typically as a result of:
− Non-standardized orders getting stalled in the OMS workflow
− Capacity management issues leading to faults
• High level of dependency on various internal functions and suppliers to drive the
orders to completion
• System inability to easily adapt to in—flight changes from the customers
• Absence of performance based reward/penalty scheme with various network vendors
across the world
• Ease of tracking progress of orders through various stages in the O2C lifecycle

These challenges lead to the following issues

• Increase in number of orders getting into backlog as result of non-delivery on time
• Increase in the overall order cycle time
• As a result, lower ability to deliver an order to the customer on the committed date

To tackle the above mentioned issues, we focused our solution efforts on couple of key areas
to start with:
• Reduction in percentage of backlog orders
• Reduction in the overall cycle time of orders

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WHITE PAPER IMPROVING ORDER-TO-CASH CYCLE.

Solution
Reduction in backlog orders
A series of initiatives were taken to reduce the orders getting into backlog. Some of the
areas addressed and improvement done were as follows:
• Creation of business reporting to track the progress of orders. Exception reports
by various categories viz. country, order types, teams, suppliers—helped focus on
specific areas and concentrate efforts on problem solving
• Workload balancing of order processing teams according to incoming order load
gave desired attention to each set of orders
• Creation of escalation matrix with the client and diligent adherence to the same,
helped in clearing backlog
• Regular joint reviews with clients and their suppliers helped in quicker resolutions
of issues and quick movement of orders through the cycle

Our process improvement initiatives

On the journey to enhance the overall customer experience for our client, Wipro BPO team
proposed the process improvement ideas to the client. These ideas were aligned with the
client’s strategic objectives and reviewed on a regular basis. The schematic representation
of the process improvement breakdown has been demonstrated in the attached figure.

Process improvement methodology like six sigma and lean is used in areas of improving
Cycle time (CT) and Right First Time (RFT). In our opinion, this will reduce not only the
overall O2C cycle time but improve the predictability. This, in turn, will help improve the
overall customer experience.

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WHITE PAPER IMPROVING ORDER-TO-CASH CYCLE.

Process improvement initiatives that have been already completed are listed here:
• Order entry
− Reducing the number of incomplete orders from 35% to 25%
− Completing order entry of clean orders (those with full information) within the
same day
• Resource management
− Reduction in errors and delay in allocating resources from 83% to 22%
• Supplier management
− Fixing SLA’s with the suppliers for delivery to the customer. This was done
along with client support
• Testing and configuration
− Reduction in failure during testing from 60% to 30%
• Improve upstream data quality to reduce downstream impacts (clean v/s unclean
orders)
• Improve individual agent productivity
• Stage wise throughput improvement

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WHITE PAPER IMPROVING ORDER-TO-CASH CYCLE.

Benefits
In our Order-to-Cash cycle management case study, at the start, some of the problem areas
were prioritized and issues related to them were addressed. These initiatives yield results with
the oder backlog coming down from 45% levels to sub 5% level as shown below.

This also resulted in Cycle time reduction from 70+ days to mid 20’s.

Reduction ccle time from 70 days to 30 days has resulted in net blling benefit to the client
to the tune of USD 26.9 MM. This is as a result of cient being able to start the billing to its
customer earlier due to reduction in ccle time.

Additional solutions are being identified. In the view of framing an overall solution approach for
our client, Wipro BPO has developed a following solutions roadmap.

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WHITE PAPER IMPROVING ORDER-TO-CASH CYCLE.

This road map spans across four broad phases:

• Standardize
• Consolidate
• Optimize
• Automate
Note: These phases are not necessarily sequential. Some of the actions within the phases
may run in parallel.

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WHITE PAPER IMPROVING ORDER-TO-CASH CYCLE.

Conclusion/Summary
The key to order management is the ability to fulfill orders in time as this has a direct bearing
on the revenue/cash flow (and hence the bottom line) of any organization. The need to improve
cash flow is one the key drivers to any improvement in the order management cycle.

Three key elements to improve in the Order to Cash cycle are:

• Customer experience—providing flexible, and predictable service/lead times
• Revenue/cash flow
• Fulfilling the order in a predictable cost base—Improving on operational eficiency by
eliminating NVA and bottlenecks

Customer experience is perceived through 4 key requirements that a product/service company

needs to deliver on. They are—a. choice, b. predictability, c. flexibility, d. cost.

We envisage the future state of the O2C process that could be quantified by an internal scored
card that is based on the 3 principles mentioned above.

This scorecard is the vision that may help us measure the efficiency and effectiveness of
Order to Cash cycle of a telecom organization.

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WHITE PAPER IMPROVING ORDER-TO-CASH CYCLE.

Appendices
References
Communications Review Vol. 11, No. 3 by PriceWaterhouseCoopers

Communications Newsletter (2006) by IBM.

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 About Wipro Technologies
Wipro is the first PCMM Level 5 and SEI CMMi Level 5 certified IT Services company globally.
Wipro provides comprehensive IT solutions and services (including systems integration, IS
outsourcing, package implementation, software application development and maintenance)
and Research & Development services (hardware and software design, development and
implementation) to corporations globally.
Wipro’s unique value proposition is further delivered through our pioneering Offshore
Outsourcing Model and stringent Quality Processes of SEI and Six Sigma.

Wipro in Energy and Utilities

We have worked with over 75 top Energy and Utility companies across North America and
Europe in regulated as well as deregulated markets providing solutions in areas such as
customer care, billing and settlement, work and asset management and grid operations.
The cumulative experience of over 5,500 person years spans IT consulting, systems
integration, business process outsourcing and application development and management
services. Wipro Technologies provides solutions for Regional Transmission Operators and
Independent System Operators that cover transmission billing, price transparency portals,
RTO interoperability, market trials and integration. For investor owned utility companies
Wipro provides solutions that cover customer care and billing, call centre solutions, retail
choice and business intelligence solutions and field force automation solutions. Some of
our well known customers are Thames Water, Pinnacle West and National Grid Transco.

For further information and more details about our services, email us at [email protected] or
visit us at http://www.wipro.com/utilities

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