rick arpin, mgm mirage - maximizing ss wins minimal investment
DESCRIPTION
Presentation from the 14th Annual North American Shared Services & Outsourcing Week, 2010 To find out more about the 2011 event go to: www.sharedservicesweek.comTRANSCRIPT
Maximizing Shared Services WinsWith Minimal Investment
Rick Arpin, SVP Corporate ControllerMarch 24, 2010
2
Contents
• Keys to Quick Wins
• MGM MIRAGE Background
• Focus on Finance Improvement
• Finance Shared Services Center
• Past Successes
• Keys to Quick Wins
• Questions and Discussion
KEYS TO QUICK WINS
4
Keys to Quick Wins
Find Your Inspiration,
Create Your Vision
and ACT…"We will either find a way, or
make one." -Hannibal
Find Your Inspiration,
Create Your Vision
and ACT…"We will either find a way, or
make one." -Hannibal
MGM MIRAGE BACKGROUND
6
MGM MIRAGE Background
Company overview• 15 operating resorts; five
joint venture investments• Expansion with management
agreements worldwide• $6 billion in annual revenue,
60,000 employees
LAS VEGAS STRIPLAS VEGAS STRIP
Company growth• Two large corporate mergers-Mirage Resorts in 2000 & Mandalay
Resort Group in 2005• Inconsistencies in accounting practices, system usage, & COA structure• Legacy systems, outdated processes, reporting not streamlined
7
MGM MIRAGE Background (cont.)
• Elements Unique to Hotel/Casino Businesses
FOCUS ON FINANCE IMPROVEMENT
9
Focus on Finance Improvement
• Internal staff and PwC performed assessment in 2007
Benchmark group<<< optimal
average ∆ minimum median maximum1.19% 0.64% 0.00% 0.25% 0.47% 0.91% 2.38%
Yourcompany ◊
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
1
Finance Cost as a % of RevenueFinance Maturity Model
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Focus on Finance Improvement (cont.)
Accounts Payable Payroll
Accounts ReceivableTime to Bill
15 Days 6 DaysBenchmark
General Accounting
BenchmarkBenchmark
Cost Per Invoice$3.10 $3.00
# of Vendors60k 20k
Chart of Accts.2007 Today10K 4k
Auto Entries Manual10% 90%
Manual Auto Entries30% 70%
Error Rate
Benchmark
Cost Per Paycheck$2.11 $1.75
FINANCE SHARED SERVICES CENTER
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Finance Shared Services Center
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Finance Shared Services Center (cont.)
New Shared Services Leadership – 8/09
�Provide an identity to shared services at MGM MIRAGE – the Finance Shared Services Center “FSSC”
�Create an infrastructure for future shared services initiatives
�Consolidate reporting lines
Scope�2010/2011 – Accounts receivable, casino revenue accounting
�Existing services –Accounts payable, payroll, non-gaming accounting, general accounting
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Finance Shared Services Center (cont.)
“MGM MIRAGE ’s Finance Shared Services Center seeks to provide world-class finance and accounting services, including compliance with internal policies and regulatory requirements.”
MISSION STATEMENT
15
Finance Shared Services Center (cont.)
CORE VALUES
• Governance and accountability– “Operate like a business and be accountable to our customers”
• Communication and measurement– “Share ideas with our customers and teams, let them know how we are doing”
• People development– “Enhance our team members’ skills and develop their careers”
• Process improvement– “Continually improve how we do our work”
• Systems optimization– “Use existing systems better and find better systems for the future”
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Finance Shared Services Center (cont.)
• Governance and accountability– Measurement focus - Key Performance Indicators
(KPIs) & Service Level Indicators (SLIs)
– Customer service focus - Service Level Agreements (SLAs) & customer feedback
• Communication– Website/newsletter/etc.
• for internal and external communications
– Develop & cultivate relationships with peer departments (Purchasing, HR, IT)
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Finance Shared Services Center (cont.)
• Staff development– Dedicated training & recruiting/hiring
resource– Robust performance evaluations process– Training elements
• process improvement, systems• mgmt/leadership, cross training
• Process improvementProject management training for directors– Continuous improvement teams– Reward ideas for improvement
Effective talent
management
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Finance Shared Services Center (cont.)
• Systems optimization
– Finance Data Repository
• Aggregate data from source systems
• Auto-populate journal entry forms for
GL and Daily Operating Report
– Overall delivery framework – dashboards, etc.
Processes•Process improvement
•Identify high-cost tasks
•Push operational changes
Systems•Finance Data Repository
•Utilize current systems better
•Information delivery
People•Hiring the right people
•Training and development
•Performance evaluations
PAST SUCCESSES
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Past Successes
• Accounts Payable (AP) background– Key element is a scanning and workflow system– Began implementation in 2003
PHASE I
• Document Storage & Retrieval – Already processed documents
• Basic Workflow
PHASE II
• Process & Payment of Non-PO Invoices
• Secondary Workflow
PHASE III• Process & Payment of
PO Invoices
• Use of 3-Way Match & Auto Approval
• Advanced workflow
IMPLEMENTED IN PHASED APPROACH
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Past Successes (cont.)
• Scalability– No FTE’s added to handle City Center invoices (18% increase)
Before City Center After City Center
• Accounts payable future opportunities– New business units – retail AP, construction, MGMM Hospitality, other
new developments– Process improvements
• OCR• e-invoicing• dynamic discounting
INVOICES 2009RETAIL 72,824
AP812,000
+
FTES 2009
Retail, 24
Accts Pay.,
45
22
Past Successes (cont.)
• Key AP Statistics– Cost per invoice down to $3.23 from $6.94 in 2005– Invoices processed more than doubled since 2005
-
5,000
10,000
15,000
20,000
25,000
30,000
2005 2006 2007 2008 2009 2010 (est)
$-
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
Invoices per FTE
Cost per Invoice
23
Past Successes (cont.)
• Payroll background– Three phases – lift-and-shift, consolidation, standardization– Significant project to make operations process payroll consistently
PHASE I
• Lift and Shift• Physically moved to a
central location, with no change to processes
PHASE II
• Consolidation• Implemented
efficiencies where possible with 4 diff. systems
PHASE III
• Standardization• Move to single payroll
system and single instance of timekeeping system
IMPLEMENTED IN PHASED APPROACH
24
Past Successes (cont.)
• Key Payroll Statistics– 40+% decline in staff with incrased number of payments
– Payments processed per FTE has nearly doubled
2007 2008 2009 2010 (est)65 63 63 45
2007 2008 2009 2010 (est)14.60 14.49 12.88 24.76
0
10,000
20,000
30,000
40,000
2006 2007 2008 2009 2010 (est)$0.00
$1.00
$2.00
$3.00
$4.00
Payments per FTE
Cost per FTE
25
Past Successes (cont.)
• Non-Gaming Audit and Accounting– Consolidated Q4 2008– Additional opportunity for efficiencies and growth as FDR is
developed and more automated tools are implemented
• General Accounting– Consolidated Q4 2009– Began with standardization of Chart of Accounts– Additional efficiencies will be realized with the
implementation of automated tools like credit card matching
• Key statistics– Initial investment -$2+ million– Annual savings -$6+ million– ROI –> 200%
26
Past Successes (cont.)
• Future additions to the FSSC– Non-gaming accts. receivable & gaming revenue accounting
• Likely to be consolidated in 2010 or 2011• Challenges to address
– Media handling– Scope (AR – credit; Casino acct. – compliance function)– Regulatory requirements in casino accounting– AR billing system
• Future departments’ ROI (estimates)– Initial investment -$2+ million– Annual savings -$6+ million– ROI –> 200%
KEYS TO QUICK WINS
28
Keys to Quick Wins
Find Your Inspiration,
Create Your Vision
and ACT…"We will either find a way, or
make one." -Hannibal
Find Your Inspiration,
Create Your Vision
and ACT…"We will either find a way, or
make one." -Hannibal
QUESTIONS AND DISCUSSION