The need for businesses to evolve is nonstop—and company leaders know the stakes are high. Nearly half of CEOs believe their company won’t be viable in 10 years if it stays on its current path, according to a 2024 survey by PwC. As such, many management accountants will find themselves involved in significant process transformation projects at some point in their career.
Those projects often—though not exclusively—focus on business staples such as order processing, order fulfillment, customer service, procurement, payroll, billing, customer onboarding, employee recruitment, and even accounting processes. Whether the outcome is a modest tweak to process activities or an entire overhaul involving new technology, teams must learn to adapt. The question is: Do they?
While management stays focused on implementing the process changes, the other teams involved in or affected by the changes learn the corresponding new rules. In some cases, teams plot to work around the process to return to the comfort of the status quo. Over time, it becomes apparent that sustainable process change is a hard-won endeavor. Why? Because adoption of a process improvement does not ensure successful implementation. Failures are common. Without ongoing monitoring and adaptation support, any benefits will eventually dissipate, driving the initiative into the dustbin of discarded “programs of the month.”
How can finance team leaders tell when their efforts to improve a process are at risk? Based on 30 years of survey research and consultative industry experience with process change, we have identified 12 telltale signs (see Table 1). Many of the symptoms relate to our experience with changes associated with payment technology, but the conclusions apply to all process transformation efforts, particularly those leveraging technology to improve common business processes.
Let’s dive deep into each red flag.
1. Management focus about the process is dominated by a risk-avoidance mindset.
In an increasingly compliance-oriented business environment, management at every level of the organization worry about what could go wrong with the new process. A process failure can call into question the knowledge, skills, and capabilities of those who terminated the old process (no matter how defective or error prone it might have been) in favor of a new model.
One way management tries to avoid a breakdown in the new process—or a misuse of it—is by limiting the scope of change. But incremental changes hurt the chances that the effort will deliver the expected impact. For example, a major defense contractor was spending nearly $1 billion per year on purchasing cards as part of its effort to transform their procurement processes. That effort yielded, among other benefits, a cash rebate of nearly $15 million per year. But an embarrassing high-profile incident of card misuse (to the tune of $20,000) caused the organization to reduce by half the number of employees with purchasing cards, which lowered the overall company card spending and cash rebate by 40%—or $6 million.
The tendency of management to avoid risk of failure is rarely overt and sometimes perceived as simply organizational resistance to change. Consequently, organizations must nurture their metamorphosis by having a well-organized communications plan in the event of a breakdown in the implementation of and control over the new process. Planned communications should include an enumeration of the benefits obtained or expected by virtue of the new process, which should be sufficient to withstand setbacks that might occur.
Lesson: Process change owners and users should feel empowered to take risks and withstand failures as process change unfolds.
2. The process is poorly integrated with other processes.
Organizations rarely comprehend the extent to which even a simple process change can ripple through a company, causing unintended consequences that cycle back to the new process. For example, purchasing cards can be tied to the accounting information system, vendor approval processes, supplier price negotiations, expense management software, inventory tracking and management, online buying portals, employee disciplinary policies, and human resources information needs (for proper vetting of employees requesting a card).
Organizations that have had the greatest success with process implementation use technology to tie processes together wherever possible. For instance, one Fortune 100 corporation integrated cards with mobile technology to quickly detect and correct noncompliant employee spending. Thus, if an employee used their card to pay for goods from a vendor in an unacceptable merchant category (e.g., a liquor store), a text message describing the purchase would automatically be sent to the employee’s supervisor. Then the supervisor could call the employee before they even left the vendor location to review company policy.
Lesson: Success requires ongoing adaptation and integration with existing technologies and processes.
3. The benefits being derived from the transformed process are not widely understood by key management personnel.
Management often over-emphasizes potential risks of process change and undervalues their positive impact on daily operations, creating a poor understanding of how new process activities can drive efficiencies. At one meeting we attended, a controller at a major U.S. government agency pleaded for assistance because her management team was planning to end a cost-savings process transformation effort.
The problem? “If they return to the old process, I do not have the budget needed to rehire the additional personnel required to process the paperwork blizzard that will return to my department,” she said.
Lesson: Process owners should regularly communicate performance metrics that identify the impact of process transformation on organizational costs and process efficiency, cycle time, and quality.
4. Supply chain partners affected by changes to the process don’t support the new process.
Supply chain management has never been more important—and most process changes affect supply chain partners. Many buyer organizations are living in the past, depending on their relative power to motivate suppliers to adapt to any changes requested.
For example, let’s look at payment technology. Changes in how goods are paid for can have significant ramifications for suppliers, including the need to acquire technology to process payments and activities related to the need to insert additional data into the transaction stream, change billing software and practices, and change chargeback procedures. Including input from suppliers can improve their pain points and increase the potential for a successful process transformation effort.
In some cases, market players can assist supply chain partners. For example, fintech start-ups have emerged to assist suppliers in processing virtual card payment instructions coming through email.
Lesson: Process change discussions (both initial and ongoing) should show supply chain partners how the change impacts them to develop win-win scenarios whenever possible.
5. The organization fails to monitor and integrate ongoing innovations in enabling and complementary technologies.
Change is constant. Yet, many organizations quickly calcify around their new process. For example, our survey research found that less than half of organizations using plastic purchase cards had updated their processes to incorporate newer virtual card options, and far fewer had adopted mobile payment or data-mining capabilities.
Organizations that monitor and exploit further technological advances related to a new process often see far greater success. For example, one large corporation with a need for highly detailed spend tracking related to government projects adopted mini-purchase order software. This allowed them to pay hundreds of millions of dollars for goods bought through an online portal with a single purchase card while capturing spend data as if the transaction were a regular purchase-order-driven event. In this manner, the cash-back incentives the company received more than adequately funded their entire accounts payable department.
Lesson: A process, once reimagined, is a natural space for continuous improvement. A stagnant process is one that is dying before your eyes.
6. Anticipated performance improvements aren’t materializing because of an incremental approach to process transformation.
By nature, management views change as incremental. But most transformation initiatives require bold action—and that means taking a plunge. In the case of commercial cards, for example, we found that many organizations opt to initially distribute cards to a small percentage of employees (typically managers). This cautious first step causes employees who need goods (but lack cards) to ask cardholders to make purchases on their behalf. This can result in a purchase request bottleneck that frustrates both cardholders and non-cardholders. More importantly, it can undermine management support and slow momentum for change.
Lesson: Avoid incremental steps that undermine potential large-scale improvement.
7. Responsibility for the process is ill-defined, poorly managed, or out of step with job description.
Management theory suggests that organizational performance is driven by the right mix of incentives, performance measures, and the decision rights of process managers. Our survey indicates that many organizations attach the responsibility for a reinvented process as an “other duty as assigned” to an employee’s current job description. Hence, incentives for outstanding process performance are rare or modest, with the most common being that the process owner gets to keep his or her job.
A better option is to design the transformed process to balance the assignment of authority, the measurement of performance, and the provision of incentives for outstanding process performance. This is a particularly important principle when one considers employee turnover in job assignments.
Lesson: Management should embed the basic elements of a management control system—including decision rights, performance measures, and incentives—within the transformed process.
8. Employees opt to continue use of the earlier version of the process.
Process change normally tests the old and new processes together to ensure the new process functions better or as well as the old one. However, organizations often leave the old process in place as a backup or contingency in case the new version fails or certain transactions are not well-suited to the new process.
When the old process remains, it creates a natural barrier to change, encouraging some to continue business as usual. In the case of purchase cards, organizations that had the greatest success at process transformation adopted a policy that mandated card use for any transactions below a certain threshold.
Lesson: Disconnect the old process. That way, employees will be forced to adapt to the new process—and won’t be tempted to revert to old processes.
9. Traditional process steps find their way back into reengineered process.
End users involved in process change often long for the comfort of the old process. Hence, process transformation minotaurs—half old process, half new—can emerge to undermine the promise of the new process. Givebacks in process reinvention are common and can be either a necessity for organizational buy-in or result in a return to a mindset that doesn’t distinguish between value- and non-value-adding activities.
We found a variety of givebacks in our survey data among organizations that experienced limited success at process transformation. For example, one organization required that its empowered-employee cardholders obtain approval from their manager to make purchases on their company card—a step that capsizes the value of enabling workers to make cost-efficient, self-directed, low-dollar purchase choices.
Lesson: When remnants of the old process find their way back into the transformed process, they can undermine chances for success.
10. Organizational leaders don’t measure or track the progress of the new process.
Process improvement initiatives are often undertaken because leaders within the organization have heard how a particular change has benefitted other companies. As such, little thought might be given to how outcomes are to be tracked or measured. Our survey research found that 12% of organizations that modified their procurement process didn’t evaluate the performance of the revised process, and 27% failed to compare performance to any fact-based metric that would enable them to objectively assess progress.
In part, this is understandable, because the performance metrics for the old process might be very different than those of its significantly altered incarnation. Yet, failure to measure process performance yields poor understanding of progress and potentially misguided decisions.
Lesson: Benchmark and evaluate new process performance metrics against the previous process and, when possible, against organizations of similar size and type.
11. Many dislike the new process.
Changes in business processes often entail a redistribution of work, altering roles and responsibilities within the organization. In the case of purchase cards, higher paid employees (such as engineers) might be tasked to do the work of lower skilled staff (e.g., ordering needed supplies). The fallout: higher paid staff might argue that the process isn’t generating promised savings for them.
With proper management, these issues can be resolved to further improve the process. For example, an organization could simply give one purchase card to an administrative assistant in the engineering group. More generally, organizations can fail to make needed adjustments to their reinvented process to reflect changes in employee assignment and new work roles within the organization.
Lesson: Expect to tweak processes over time to adapt to changes in and the realities of the employment relationship.
12. The administration of the new process is under-resourced.
The availability of financial resources to implement an innovation has long been a significant predictor of the effort’s success. Consistent with other research, our surveys indicated that organizations most successful at transforming their procure-to-pay process allotted 27% more time to card program management than firms that performed poorly at process transformation.
Lesson: Success requires adequate resources. Transformation efforts aren’t cheap.
The bottom line on process change
In a highly competitive global economy, reinvention is a business imperative. Recognizing the need for constant improvement, organizations engage in many efforts to significantly improve process performance. And most report successful outcomes initially. But many soon discover that sustainable process change is a complex endeavor, with failure all too common.
That’s why it’s critical to monitor process change projects for any of the 12 warning signs we’ve spelled out above. These red flags suggest that a successful reinvention is like a wheel within a wheel—a constantly changing process surrounded by other constantly changing processes, facts, and circumstances.
The lessons drawn indicate that organizations that excel at process transformation maintain positive momentum for change by continuously refreshing their understanding of process dynamics, adjusting to changing business realities and technological advances, and navigating ongoing barriers to change.
