2. Introduction
The concept of “the Perfect Order” originally evolved to describe an order that delivered exactly what the
customer wanted—products delivered in full, on time, and to specification. However, there is much more to
executing an order than just delivering a product.
Modern companies define the Order-to-Cash (O2C) process as the complete set of operations necessary
to turn a sale into tangible financial gain (see Figure 1). From this perspective, the Perfect Order must not
only meet the customer’s expectations, but also deliver the desired results for the company.
Figure 1: The Order to Cash Cycle
Most companies use Enterprise Resource Planning (ERP) software such as SAP® as the basis for an
integrated, end-to-end O2C system. Redefining the Perfect Order to include every step of the O2C
process is useful for evaluating the efficiency and effectiveness of SAP® implementation.
The capability for perfection is a sign that that the company’s systems are functioning at a high level, even
if not every order turns out to be perfect in operation.
Part 1 of this paper defines the requirements for delivering the Perfect Order and the benefits of meeting
those requirements. Part 2 discusses how to optimize SAP® to achieve the capability for perfection.
Part 1: The Perfect Order
Defining Perfection
The O2C pipeline encompasses every process from the initial entry of an order to the collection of final
payment. Each step involves different functional units of the organization and numerous subprocesses.
Companies can and should examine each major step in detail and define benchmarks for optimal
performance.
At a high level, the Perfect Order can be defined as one that:
• moves seamlessly through the O2C pipeline,
• is error free, and
• is processed and reconciled in a timely fashion.
While a simplification, this definition provides a powerful perspective for evaluating an organization’s O2C
system. Its three requirements are further explored below.
Moves seamlessly through the O2C pipeline: This is the starting point of the quest for perfection, the
baseline requirement for an effective O2C system. A Perfect Order is only possible if an organization has
a highly integrated O2C system that moves data between functional units in a highly automated fashion.
A company must be able to identify and repair process leaks that prevent an order and all of its related
information from flowing from one step to the next.
Is error-free: Like all data-intensive processes, O2C is vulnerable to errors resulting from improper
data entry and out-of-date or otherwise inaccurate information. As in all integrated processes, errors
introduced in one functional area are compounded as they pass through the system. Any organization
striving for the Perfect Order must have processes in place to reliably prevent errors and to rapidly detect
and repair any errors that do occur.
Is processed and reconciled in a timely fashion: O2C is the process of converting a successful sale into a
tangible financial gain for the company. The amount of time it takes for that conversion to occur directly
The Quest for the Perfect Order 2
3. impacts the company’s cash flow. Any company on the quest for the Perfect Order must use the right
metrics to measure the performance and efficiency of its O2C system and look for ways to eliminate
unnecessary steps and speed up processing at every point in the pipeline.
The above requirements can serve as an effective roadmap to guide organizations in optimizing their
O2C processes. Companies that meet these requirements are operating at a high level of efficiency.
Valuing Perfection
The ability to deliver the Perfect Order has tangible, measurable business benefits. While companies
don’t have the luxury of pursuing perfection at any cost, they should not engage in shortsighted cost-
cutting that impairs their ability to deliver results.
O2C is an unusual business process in that it is simultaneously viewed as a cost center and as a critical
function. Improving O2C processing with an eye toward increasing efficiency and efficacy can yield
positive results on both sides of the ledger.
Specifically, improving O2C processing can result in:
• lower overhead costs
• improved working capital efficiency
• higher customer satisfaction
Each of these is a desirable outcome, and even more so in the current economic climate, as discussed
below.
Lower overhead costs: In a 2011 survey, Aberdeen Group found that 67% of respondents cited lowering
overall costs as the number one business driver to improve O2C performance—up from 48% in the 2007
survey, the last one prior to the current downturn. Integration and automation of O2C components
yields real efficiency benefits that can lower cost per transaction. For example, Aberdeen reported that
companies that had invested in baseline integration across order entry, credit, billing, and collections—
the minimum level necessary to execute a Perfect Order—were able to process 41% more invoices per
FTE than those that had not1.
Improved working capital efficiency: With companies facing greater pressure to seek internal sources
of financing, better cash flow management may be one of the most lucrative opportunities available to
them. Days Sales Outstanding (DSO) is a useful metric for measuring overall O2C efficiency. An analysis
by Citibank revealed that its top 3,000 global customers each had an average of $1.3 billion in trapped
working capital that could be released if they simply reached their industry-average DSO benchmarks
(see Figure 2).2 By defining the DSO benchmark for a Perfect Order and continually working toward it,
companies of all sizes can reduce borrowing costs and improve cash flow.
Figure 2: Median DSO by Industry (source: Citibank)
The Quest for the Perfect Order 3
4. Higher customer satisfaction: While much of the O2C process is focused on internal systems and financial
transactions, the customer-centric component should not be ignored. Reducing order error rates and
decreasing order fulfillment times not only saves money, but also makes customers happier. In a competitive
environment where price and quality are near parity, this is often the difference between making and losing a
sale. A 2007 study by AMR showed that on average only 80% of orders met the customers’ expectations for
accurate, on-time fulfillment and suggested that companies establish 95% as the minimum score to ensure
customer satisfaction.3
The quest for the Perfect Order is not just an exercise in optimization for its own sake. It has tangible business
benefits that can directly contribute to the organization’s bottom line.
Part 2: SAP® and the Perfect Order
Pursuing Perfection
SAP® is an excellent platform for building an integrated O2C system capable of delivering the Perfect Order.
The combination of function-specific modules within a unified enterprise architecture maps well to the cross-
functional nature of O2C. Nevertheless, SAP® has its limitations, and companies pursuing the Perfect Order
must deal with the system’s shortcomings that can cause leaks and inefficiencies in the O2C pipeline.
A useful way to plan an optimization strategy for SAP® Order-to-Cash processing is to look at the three
Perfect Order requirements defined in Part 1 and consider how to meet the challenges posed by SAP®’s
limitations. Table 1 identifies key challenges faced by SAP® customers and provides recommendations for
meeting those challenges.
Table 1: Challenges to achieving the Perfect Order with SAP
Requirement: Orders move seamlessly through the O2C pipeline
Challenge: Integrating external data and processes. Recommendation: Ideally, data from outside
Despite SAP®’s extensive functionality, some aspects systems comes into SAP® via EDI or some other fully
of the O2C process happen outside the SAP® system automated, fully electronic system. Companies that
in most companies. For example, orders taken over have not invested in EDI must find ways to optimize
the Web may need to be consolidated and input their existing IT infrastructure to standardize and
into the system manually or via a batch update, or automate external data inputs to SAP® and minimize
analysts may use external software to score accounts manual data entry and processing.
receivable. Customer remittance information also
generally comes in from outside banking or payment
services. All of this information must get into SAP®
accurately and on time for the O2C pipeline to
function properly.
Challenge: Capturing ad hoc information. Recommendation: Organizations face a constant
SAP® is designed to represent business processes dilemma between eliminating and accommodating
in a structured, formal manner. In the real world, ad hoc processes. Complete elimination may not be
employees often use ad hoc processes to achievable and risks stifling employees’ innovation. A
supplement the strict definition of a task imposed better strategy is to look for ways to bring the results
by SAP®. In O2C, this can manifest as notes or of these ad hoc processes into SAP® in the same way
memos attached to a sales order or “rule of thumb” that other external data is entered into the system.
calculations of a customer’s credit rating.
The Quest for the Perfect Order 4
5. Requirement: Orders are error-free.
Challenge: Eliminating data entry errors. Recommendation: Minimizing the need for manual
The mundane task of entering data into SAP® is data entry is the surest way to cut down on errors.
a major source of errors, which is exacerbated by This means not only automating processes but
SAP®’s well-documented usability shortcomings. literally minimizing the number of fields and forms
Even in a highly automated O2C system, humans a user must interact with when entering data.
have to enter data manually at times. Simple data- Streamlining overloaded SAP® data-entry interfaces
entry mistakes can result in misquotes, shipping and enabling record-based, rather than form-based,
errors, invoice errors, and other blunders that hurt entry can dramatically reduce errors.
the customer experience and increase processing
costs.
Challenge: Performing maintenance on open orders. Recommendation: SAP® users must have easy,
A discovery of an error or changes to sale conditions, flexible tools for searching through open orders using
such as pricing, inventory availability, etc., may a variety of available criteria, in order to be able to
necessitate a change to an open order. SAP®s native make changes with the confidence that they are only
tools for finding and changing specific fields in open affecting the intended records. This includes finding
orders are slow and inflexible, which increases the and extracting specific records grouped under a
likelihood of persisting errors and inaccuracies. single header.
Requirement: Orders are processed and reconciled in a timely manner.
Challenge: Speeding up data operations. Recommendation: Streamlining data entry by
SAP® usability issues can turn core O2C activities eliminating unnecessary fields and enabling batch
like entering sales orders and processing invoices updates can have a dramatic impact on the time
into bottlenecks. The accumulated time spent on it takes to perform common SAP® operations.
relatively simple, common tasks can have a material Empowering business unit developers to create
impact on an organization’s DSO performance. simple automation routines is another strategy for
speeding up data-intensive operations.
Challenge: Enabling rapid exception handling. Recommendation: Giving users workflow tools that
SAP® workflow tools are optimized for capturing are easy to use and flexible enough to handle a
intended processes and actions, not for dealing with variety of scenarios can prevent isolated exceptions
the unexpected. Common O2C exceptions, such as from slowing down the overall system.
credit extension or discounting, need rapid resolution
to keep customers happy and the sales pipeline full.
By focusing on the requirements for delivering the Perfect Order, companies will gain a useful structure for
evaluating the effectiveness of their O2C process and targeting limitations in their SAP® systems.
The Winshuttle Solution
As a leader in SAP® usability optimization, Winshuttle provides practical solutions to help companies get the
most out of their SAP® installation. Winshuttle tools directly address the challenges SAP® customers face
when pursuing the Perfect Order, as summarized in Table 2.
The Quest for the Perfect Order 5
6. Table 2: Winshuttle solutions for achieving the Perfect Order
Perfect Order Challenge Winshuttle Solution
Integrating external data and processes Winshuttle Transaction allows customers to use
familiar tools like Microsoft Excel and Microsoft
Access to facilitate data integration and migration
from external systems into SAP®.
Capturing ad hoc information Winshuttle Query and Transaction makes round
tripping of information from Excel to SAP efficient
and secure.
Winshuttle Forms helps organizations gather semi-
structured and unstructured data for input into SAP.
Eliminating data entry errors Winshuttle Transaction gives users a simplified
interface for entering data.
Winshuttle Workflow allows business unit developers
to design data entry forms tailored to their groups’
specific needs.
Performing maintenance on open orders Winshuttle Query allows users to quickly find open
orders meeting specific criteria.
Winshuttle Transaction makes updating open orders
fast and secure.
Speeding up data operations Winshuttle Server allows batch processing of data
operations.
Winshuttle Direct supports a full range of BAPI
processes without writing code.
Enabling rapid exception handling Winshuttle Workflow provides simple tools for
creating custom workflows without writing code.
Conclusion
Having consistent Perfect Order capability allows companies to gain a significant competitive advantage in
today’s marketplace. SAP® provides a solid foundation for developing an integrated Order-to-Cash pipeline
capable of delivering the Perfect Order. However, companies on the quest for the Perfect Order must invest
in process optimization to overcome the system’s limitations. Winshuttle’s proven solutions can help SAP®
users realize the ideal potential of their SAP® investment, leading to higher customer satisfaction, increased
productivity, and improved bottom line.
For more information about how Winshuttle can help your company on its quest for the Perfect Order, go to
www.winshuttle.com or email info@winshuttle.com.
1
Scott Pezza, The Order-to-Cash Cycle: Enhancing Performance with Process Automation, The Aberdeen Group, 2011.
2
“Receivables Management: The Untapped Frontier,” Treasury Today, April 2010.
3
Jane Barrett & Stephen Hochman, DDSN for Discreet Organizations, AMR Research, March 2007.
The Quest for the Perfect Order 6
7. Winshuttle is the ERP Usability Company, providing software products that enable business
users to work with SAP directly from Excel, Web forms and other interfaces without any
programming. Winshuttle focuses on a simple fact – when using SAP applications, time is
money. Winshuttle’s usability solutions radically accelerate SAP user transactions, saving
and redirecting millions of dollars for SAP’s customers every day. These financial benefits are
achieved by significantly reducing employee and contractor costs and increasing resources to
address more strategic priorities. Thousands of customers use Winshuttle to make their SAP
lives easier.
Headquartered in Bothell, Washington, Winshuttle has offices in the United Kingdom, France,
Germany, and India. For more information, visit www.winshuttle.com.
Corporate Headquarters United Kingdom Germany
Bothell, WA London, U.K. Bremerhaven, Germany
Tel + 1 (800) 711-9798 Tel +44 (0) 208 704 4170 Tel +49 (0) 471 140840
Fax + 1 (425) 527-6666 Fax +44 (0) 208 711 2665 Fax +49 (0)471 140849
www.winshuttle.com www.winshuttle.co.uk www.winshuttle-software.de
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Maisons-Alfort, France Research & Development
Tel +33 (0) 148 937 171 Chandigarh, India
Fax +33 (0) 143 683 768 Tel +91 (0) 172 663 9800
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