Value-Added Invoice Processing: A Re-Engineering Case Study

By McCrindell, James Q. | CMA - the Management Accounting Magazine, February 1994 | Go to article overview
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Value-Added Invoice Processing: A Re-Engineering Case Study


McCrindell, James Q., CMA - the Management Accounting Magazine


The old "chicken-or-the-egg" argument is increasingly being raised with respect to information technology and administrative improvements: which comes first, the technology to enable better administration or the changes to some of the inherent process steps in the administrative operation that, once implemented, can be enhanced through technology? I would say that, while the business process review must always be a prerequisite to any investment in new technology, it is quite often the case, these days, that the new technology provides the initial stimulus to act.

A good example of this is the current federal government initiative to overhaul all of its administrative processes. Although this exercise has the label of "administrative re-engineering" it is being closely linked to a program designed to make better use of information technology. This article provides a synopsis of an actual re-engineering study which illustrates the symbiotic relationship between technology and process improvement; symbiotic in the sense that while gains are possible if each is done separately, much bigger gains -- of the re-engineering variety -- are possible if they are done in unison.

In searching for ways to respond to ever-increasing demands to cut budgets and do more with less, an enterprising department questioned the value of the heavy overhead and demands on the time of busy managers in approving telephone bills. The point was made that most of these bills were for recurring items like monthly telephone rental charges and that the risk of error or fraud was minimal. In other words, the cost of processing these invoices for payment seemed to far outweigh any evident benefits.

By happy coincidence, the financial policy officers in the Treasury Board (TB) to whom this problem was addressed, had just been informed of an innovative EDP audit of telephone charges in another department. This had been successfully carried out as a result of the Government Telecommunications Agency (GTA), an organization that manages much of the government's telephone service, agreeing to provide historical billing information in electronic format. This led the TB policy officers to conclude that, if an audit software program could be used as a much more powerful, speedy and comprehensive way of assessing the validity and value of past telephone services on a departmental-wide basis, why could it not be used to do the same for new billings?

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