New Technology revolutionizes Medtronic’s collections
SSON: Justin can you give our readers an overview of the work you are currently doing at Medtronic?
Justin Wagner: I’ve been working at Medtronic for nearly 10 years now. For the first 9 years I supported the credit and collection organization in the United States. I worked within the unit as an IT representative. My primary role was actually installing, supporting and training the SunGard’s AvantGard GETPAID application globally. We actually implemented AvantGard GETPAID in 1999. Since then we’ve grown considerably.
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SSON: How many finance and accounting shared service centers does Medtronic have? Where are these located and how did these centers come to be established?
JW: Most of our collection teams around the world are shared services within the individual countries, with the exception of the US. We are taking on some additional credit and collections in some of the smaller areas within the United States and other parts of the world.
SSON: What challenges were you experiencing in finance before bringing SunGard AvantGard’s receivables solution on board?
JW: When we looked at the individual regions, for the most part they managed their credit and collections directly from their own ERP systems. Before we initiated a global directive to implement one common ERP system, we had over 22 instances of our ERP system. We also had a lot of homegrown ERP systems... There were many challenges, for example, they weren’t able to contact all of the customers in a month. The DSOs and the disputes were considerably higher. About eight years ago, we implemented SAP. However, we opted to also keep using AvantGard GETPAID which interfaces with it. Since implementing AvantGard GETPAID in 1999 in our United States office has grown considerably (again we rolled out the AvantGard GETPAID application globally about six years ago.) The users are a lot more efficient now with their credit and collections decisions, collecting their money and managing disputes.
SSON: How did you manage this implementation across the global offices? What were the key challenges?
JW: You have your standard key challenges when you are rolling out anything globally. One of the biggest challenges when implementing such a program in a large organization is the effort and coordination it requires internally. For example, Medtronic is such a large organization and a lot of different parts of the organization were involved. But once we had the initial design built it was much easier from a hardware and application standpoint. So the biggest challenges here inside Medtronic were due to the large volume and size that we have.
SSON: Did you benchmark against similar organizations before implementing the program?
JW: We did. We went out and talked about some of the other Order-to-Cash processes with other companies around the world. We discussed some of the successes and failures they experienced, but the majority of our benchmarking was done before and after we implemented AvantGard GETPAID. We measured what our numbers, DSOs and past-due A/R was before introducing the solution and then measured the improvement on an annual basis. Just this past fiscal year, which ended at the end of April, we had our lowest documented DSO to date, so AvantGard GetPaid has definitely helped us manage our collections, our disputes and our DSO very well.
SSON: Following the implementation of this technology - what have the main benefits been? How has productivity increased?
JW: There are two major benefits. We were able to lower our DSO and reduce our past-due A/R. We have a fully functional system that has allowed us to be much more efficient and has enabled us to reduce our resources and headcount as well as increase our cash flow.
When we implemented the solution into a new country - we saw a 15 % reduction in DSO. In addition to that, based on the number of users, each region reduced 1 - 3 resources depending on how many people they had working there and on how many dollars and transactions they had.
SSON: What technical challenges did you experience?
JW: The biggest challenge at Medtronic was the amount of effort and coordination involved when implementing the solution with such a large internal IT organization. The actual implementation for AvantGard GETPAID itself was very straight forward. When we first introduced the solution our internal IT infrastructure was very complicated. But since then we’ve redesigned the infrastructure to make it more efficient and less complicated. But as far as the actual application goes and the installation, it’s very straight forward. It boils down to how your IT organization is built and how you design the architecture around it – whether you have clustered environments, numerous databases, schemes or web servers.
SSON: What advice would you give to organizations who are looking to implement a similar application into their finance and accounting shared service center?
JW: From an AvantGard GETPAID standpoint, I would say it is the best product on the market by far. SunGard understands credit and collections. If you do not have any kind of application that manages your collections, credit disputes or cash and you would like to introduce some sort of application – then AvantGard GETPAID is definitely the best one out there. Using a standard ERP system just doesn’t allow for all the benefits we’ve experienced in our credit, collections and cash departments. Thus having an application such as AvantGard GETPAID you can manage those efficiently and increase your cash flow, lower your DSO and lower you disputes.
SSON: We are seeing the back-end of a recession - how has your industry been hit and how did your shared service centers adapt to these changes - thus helping the organization?
JW: We had our lowest DSO ever just this last April. But we have seen the effects the recession has had within the medical device industry. Our primary customers are hospitals and the recession has hit them quite hard. A lot of the times we don’t get paid as soon or as much as we should be. Having the ability to have a professional collections staff and a technology solution in place has allowed us to weather the storm very well.