We've been pestering Workday for a while about case studies of their financials solution and now they're coming through. This one is especially interesting to me because Schumacher Clinical Partners is not only an early financials customer, it is using Workday Worktags. This is super important stuff because when Workday was designing the financials, we talked at length about the potential value for Worktags as a way of providing flexible operational analysis.
In truth, it has been hard to find a customer willing to talk about this aspect of the solution but that is now being rectified. Strap yourselves in folks, this is a good one.
Schumacher Clinical Partners main business is to act as the medical services provider for hospital emergency rooms. From the blurbs about the company:
Physician-led, our team consists of motivated, personable, highly qualified people interested in putting the patient first. We’re committed to doing the right thing for the patients, physicians, and hospitals we serve.
In addition, Schumacher provides wellness services in some communities. These are designed to help build the relationship between community and the healthcare providers. The company also provides some consulting services
A few bare facts before diving into the financials conversation with Amber Trett, Director of Financial Systems at Schumacher Clinical Partners:
- 5,000 providers
- 1,700 staff
- 28 states served
- implemented Workday HR in 2009
- implemented Workday payroll 2010
- implemented Workday financials 2013
Solving for multiple issues
Trett explained that the original purpose of implementing Workday was to provide a better way to manage the whole HR operation at a time when the business was contemplating growth and had outgrown the combination of ADP services and manual labor required to keep on top of HR processes. As is often the case in these scenarios, the incumbent vendor for one major system has a good shot at winning other systems. In this case, there were specific attractions:
We did some due diligence just to see what was out there in the market, but everything that we found looked just like what we already had. Maybe it was posted and they said it was in the cloud, but really you were just posted on somebody else's server in somebody else's building. At the same time, as an organization, we were moving any system that we could into the cloud.
That might seem strange given that we're talking early days for Workday Financials but there were real practical issues as well:
We knew that going into it, the product was young, that we would be an early adopter but that we'd have some influence on the direction of the product. Also, bear in mind we're operating out of an area that is prone to hurricanes and natural disasters aplenty so disaster recovery and data recovery is always important to us. Having another company take care of all that for us is an important consideration so cloud just makes sense. Without a cloud provider we'd have to fully mirror the whole back office and that's just not an attractive idea for us.
And then there is the question of maintenance and upgrades:
Just from a maintenance and upgrades and updates standpoint, we had done it for 10 years with our previous financial system. We had almost given up on updates and upgrades and we were just running status quo probably for a good three or four years.
So all good reasons for moving the back office over to a cloud system. For me, it was intriguing that Schumacher saw this combination of cloud operation attributes as a value add but then comes the moment when you have to implement. This is where we find the greatest difficulty. Not so with Workday it seems.
The code block problem
We've talked extensively about the tyranny of the code block in the past. This is a situation where staff have to learn long code blocks, often in arcane alpha numeric formats. The code block worked well in a compute constrained world and fits well with a hierarchical system of accounting. But regardless of the operator's skills, they are prone to massive error. In turn, those errors are not always easy to find. Once the code block is created, often through a chart of accounts creation exercise, then it is pretty much set in stone and becomes inflexible. Schumacher wanted a fresh approach.
Every transaction you have, you have six fields and you know something has to go in every field every time and you only have these values to choose from and they all look like Greek, because it's all numbers, letters, combinations of codes. So what we did was to take our entire accounting staff, put them into the Workday system that's really user driven and manage the change from there. For example, there's words on the page, you want something to go to travel, you can out it to travel and if you want to add some more text into that transaction, you can put that in or you can not put them in or you can add an additional piece that contextualizes the transaction. It's very overwhelming for strict auditing of accounts.
That covers the number crunching element of the problem but here does this lead? Trett explained that using natural language descriptors means that data quality has improved dramatically. Beyond that, and the fact Workday is a single code line system, means the ability to analyze data in real time is inherent to the system and available to everyone in a readily understood manner. That changes the way work gets done:
The fact that my accounting team has access to that data, as well as the operational team having access into that data immediately means the analytics happen all the time. Analytics don't just happen at the end of the month after we've closed the books. On the old system, there's no ability to make corrections or adjustments along the way. Now, it is immediate and easy for line of business people to make any changes or course correct against budget during the accounting period.
I recognize this problem and its solution. You get to the end of the month, close the books, push through the known adjustments and then spit out the numbers. At that point you throw them over the wall to operational people but by that time it is too late for them to do anything meaningful if things are out of gauge. That inevitably means corrections have a jarring effect on the business. We've seen this when what seemed certainties were turned on their head because people could not react quickly enough to cost over-runs or stalled sales. Real time information changes that dynamic dramatically.
Worktags for the win
On to Worktags. How is Schumacher using them?
We have a standard set of Worktags that we use for cost center categories, revenue categories and project location. We have very few custom Worktags. We only have what's necessary to run the business.
So far so good but one of the immediate problems with Worktags is the need to exercise restraint because if they are not well managed, then they can easily run out of control.
Your exactly right. As soon as people see the possibilities then they want seven tags on every transaction because they're trying to think of every eventuality but that's not how things really work out. So the systems person in me says 'no' because it will get unwieldy. We reviewed the chart of accounts from a strategic view and went through every category and each Workbag to understand how we want to use them and what was both logical and necessary. This made a big difference because it relieved the burden from the transactional team.
Reconciling 500 bank accounts
But what about other challenges? Trett explained that at the time of the original financials implementation, the company had more than 200 bank accounts that need reconciling every day. Asked why so many bank accounts are needed, she explained that it is a function of the corporate structure and the way patient billing has to be undertaken.
There were functional gaps in the reconciliation process that meant the company had additional work to do once the accounts were reconciled. Workday resolved the problem and this has allowed Schumacher to grow the number of bank accounts reconciled up to 500 each day. This is mostly done automatically through bank feeds that Workday financials ingests as part of the daily routines. It is not a full 100% reconciliation but Trett says the routines run automatically for about 80%.
Sticking with automation, I wondered how Schumacher manages transaction and cost approvals:
Managers are actively approving transactions as they're coming through. Most of our financial transactions do route through the cost center manager for approval. They see those transactions on the front end and then they also see that in their reporting on the back end.
Winning the growth battle
As we closed out the conversation it was clear to me that Workday has provided Schumacher the opportunity to grow with relatively little disruption. That's unusual. Referencing a small consulting service acquisition in 2014, Trett said this was a brand new service for the group and that:
We integrated them directly into Workday for professional services. The automation tools that Workday pushed out last year meant we could report time, expenses, billable hours and bill for our consulting services. That was really nice. We also did a larger merger in August 2015. We took the easier route of only dealing with the opening balance sheet and opening items. We managed to get the enlarged organization onboarded inside three months.
Accounting people are notoriously risk averse when it comes to systems change. This in part explains why it is often said that enterprise back office systems won't move over to the cloud any time soon. Schumacher demonstrates that isn't necessarily the case and that a good business case for cloud operations is realistic today.
Schumacher had a clearly defined and obvious need that translates to operational efficiency and operational effectiveness. Without these expectations in place, it is almost certain that a transformation project of this magnitude will fail. It helps that Workday is offering an alternative way of working that not only keeps the debits and credits in the right place but also helps promote close cooperation between the finance office and line of business leaders. That's a massive win for any business.
I was struck by the apparent ease with which this project has unfolded but then buyers can expect a lot of hand holding when they're prepared to risk being one of the early adopters. My sense is that having a few years experience on Workday HR, Schumacher was confident about the prospects for project delivery. That confidence doesn't mitigate all risks but concentrates the mind on discovering the likely pain points, early in the project planning and execution stage.