Gatekeepers keep processes flowing

There’s a tendency, in IT situations, to try and encode the many options that may occur in the handling of a process into the application that is created (or purchased) to handle the process.

But leading organizations — ones that manage costs well, execute near-flawlessly, keep customers happy, etc. — often have far less complex systems support.

Instead, they deal in gatekeepers: people whose job it is to decide, on a case-by-case basis, what actions to take. (At the limits, almost all employees are able to exercise judgement in this way, and gatekeeping becomes a “difficult situation” escape valve rather than a key inflection point in routine items.

Gatekeepers stand at the barriers between organizational units, or, if you prefer, at the hand-off points.

Take, for instance, this situation: an enterprise which has explicit rules for payment of invoices. There is a corporate commitment to pay on the forty-fifth day after receipt of the invoice from the vendor (and a corporate rule to never pay before the forty-fifth day). There are two major steps in making a payment: the budget centre or department that will be charged must approve payment (and are generally where the invoice was received), and the payables department must complete the process so that payment is made.

The gatekeeper can exist on either side of the inter-departmental divide: in this particular company, gatekeepers exist on both sides.

The gatekeeper in the department is the administrative assistant. This company has set up procedures that require the assistant to log all received invoices.

Using their ERP package, payment requests are initiated and routed to the appropriate manager for sign-off. The administrative assistant keeps track of the required signing authority level and routes it directly to the level required, having already approved payment on behalf of the intervening levels.

The assistant also tracks how “stale” an invoice is before she receives it, and creates a monthly report for all managers in the unit showing the amount of ageing the unit was responsible for, both in terms of waiting to approve items and waiting to initiate items’ processing.

The gatekeeper in the accounts payable unit, in turn, tracks invoices entered into the system but not yet handled within accounts payable. Again a administrative assistant is the gatekeeper: the goal here is to follow up with the units to ensure any incomplete items are completed in time for processing.

Special payment processing for immediate action occurs only when the company has been at fault in failing to complete the payables process within forty-five days.

At the time I saw this, there was no discretion to pay earlier than this limit: the company has (as of yet) not sought to capitalize on discounts offered, as the value of the funds’ interest income for the forty-five days typically has exceeded offered discounts. Today, they have changed policies: they now make more money by seizing offered discounts than they can make by holding funds in their treasury.

The gatekeeper system, however, has allowed the company to judge this on a case-by-case basis in the future to optimize its payables further. No new use cases had to be added to the software to do this.

From an IT point of view, the one process of “invoiced to paid” has been split in two, joined by the gatekeepers: “invoiced to approved for payment” and “received approval to paid”. This has created the opportunity for far more flexibility in the future, while keeping the complexity involved out of the system itself.

The conclusion I draw from this is that in many cases organizations have lost their ability to adjust and adapt on the fly by over-engineering their processes.

The ability to support prices and compete successfully turns on flexible responses to changing conditions: learning, as in this enterprise’s case, to do so with fairly basic business processes opens the door to replicating this throughout the operations of the firm.

A rigid approach to “operational excellence”, in other words, is likely to a company-breaker, not a company-maker.

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About passionateobserver

I am a passionate observer of our society, the economy, and politics. Mostly I don't like much of what I see, so I write as a concerned citizen. To the fray, I bring a background in the philosophy of history, a lifetime's reading, a work history in information technology management, consulting and education.
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