Considerations of Process Harmonization and Automation

In this section we will dig deeper into determining what should be standardized and what should be automated. We propose considering two key dimensions for this assessment. The first is the frequency and occurrence rate of the task, while the second is its level of importance and strategic value. Tasks that happen frequently and hold significant importance should be standardized efficiently. Conversely, tasks that are deemed unimportant or occur infrequently should be managed manually offline. The challenge lies in determining how to address tasks that fall within this middle ground.

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It's not always necessary to automate tasks related to these five customers, even if they account for 50% of your business. Some tasks can be effectively managed using manual processes or Excel without the need for full automation. The focus should be on automating tasks that have a significant impact due to their scale.

Unlocking Harmonization

Think of pricing software applications as the dark side of the 80/20 rule. The majority, the 80%, receives significant attention, while the remaining 20% often goes unnoticed because it is perceived as less important. This phenomenon leads to a scenario where the focus is not evenly distributed. Normally, one would anticipate that when considering factors like customer size and discounts, the margins would flatten out. High-margin, large customers typically wield more pricing power, resulting in better prices for them compared to smaller customers. However, in reality, this balance is rarely achieved; instead, it tends to resemble a funnel shape. This skewed attention is often due to the emphasis placed on significant customers, while smaller ones are somewhat neglected. It is crucial to identify and address deals with low margins and a high risk of price erosion to ensure profitability.

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Therefore, prioritizing tasks that are repetitive and low in value for automation can yield significant benefits by allowing resources to focus on more critical matters. Establishing a common framework for foundational elements such as pricing structures, product hierarchies, pricing metrics, and approval processes is essential for achieving harmonization. While achieving uniformity across areas like discounts and rebates may present challenges, striving for consistency in processes and gradually increasing harmonization levels can be the most effective approach in the long run.