the common challenges of common practices: tips for effectively moving to a shared services center

© 2014 eprentise. All rights reserved.

The Common Challenges of Common Practices: Tips for Effectively Moving to a Shared Services Center Helene Abrams

CEO eprentise

[email protected]


Learning Objectives After completion of this program you will be able to:

Objective 1: Learn the mechanics of running a single global instance in a shared services center operation.

Objective 2: Understand common business processes and how they are implemented.

Objective 3: Explore real-world examples of and lessons learned from shared service center operations.

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Agenda Introduction

What is a Shared Services Center?

How Shared Services Centers Operate

Common Challenges

Critical Success Factors for Gaining Efficiencies and Streamlining Operations

Roadmap for Implementation

Case Studies

Conclusion

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eprentise Can… …So Our Customers Can: Consolidate Multiple EBS Instances Change Underlying Structures and

Configurations Chart of Accounts, Other Flexfields Inventory Organizations Operating Groups, Legal Entities,

Ledgers Calendars Costing Methods

Resolve Duplicates, Change Sequences, IDs

Separate Data

: Transformation Software for E-Business Suite

Reduce Operating Costs and Increase Efficiencies Shared Services Data Centers

Adapt to Change Align with New Business Initiatives Mergers, Acquisitions, Divestitures Pattern-Based Strategies

Make ERP an Adaptive Technology

Avoid a Reimplementation Reduce Complexity and Control Risk Improve Business Continuity, Service

Quality and Compliance Establish Data Quality Standards and a

Single Source of Truth

Company Overview: Incorporated 2007 Helene Abrams, CEO

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What is a Shared Services Center?

An operational entity which performs all of the non-core business processes for all of the divisions within an enterprise so that companies can:

• Focus on core business competencies

• Reduce costs and gain economies of scale

• Standardize business processes

• Implement better controls

Provisioning of services by one part of the organization and its shared use by the rest, who fund this service.

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Incentives & Drivers of Global Operations Consolidate repetitive data-centric processes to support migration to a shared services center or a centralized data center

Generate financial reports directly from the system of record

Reduce operating and maintenance costs to improve the bottom line

Create a single source of truth to improve business processes and business intelligence

Enable revenue optimization whenever and wherever possible to improve the top line

Capitalize on enterprise-wide synergies to leverage purchasing and to better understand customers

Obtain access to new markets and the opportunity to scale the business

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How Shared Services Centers Operate Select locations with lower labor costs, different time zones

Operates as a separate profit center Transaction processing is the main revenue generator, not a support

function.

Recognizes economies of scale High volume of transactions

Ability to transact across businesses

Accommodates local and statutory requirements

Centralizes expertise in various areas

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Example Shared Services Center Functions

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AP Invoicing Purchasing Credit Card Reconciliation Warranty Tracking

Procurement

General Accounting Billing Credit and Collections Taxes Statutory Reporting Travel & Expenses

Finance

Payroll Processing Benefit Management Time and Labor Reporting

HR and Payroll


R12 Was Designed for Shared Service Center Operations

Operating Units (OUs)

Responsibilities

Multiple Organizations Access Control

Subledger Accounting

Subledger Users are assigned responsibilities

Ledger Sets

Legal Entities

Customer and supplier bank accounts

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Common Challenges for Shared Service Center Operations Global Standardization Data

Common Definitions Redundancy

Business Processes

Localizations Alignment of business initiatives Governance, Controls Increasing Costs Global Support Downtime

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Global Standardization

Business and implementation differences exist among different installations and need to be maintained

Different calendars, currencies, and charts of accounts are difficult to reconcile

One-to one relationship between each set of subledgers (purchasing, payables) in Oracle Applications

No cross-instance functionality

MOAC functionality doesn’t enforce standards

Oracle Applications consolidate only at General Ledger Level

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Business Process Standardization Key components to successfully managing change on a global scale

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Critical Success Factors for Gaining Efficiencies and Streamlining Operations

Single Global Instance

Common Global Chart of Accounts

Standard Calendar

Shared Master Data

Common Configurations

Elimination of Silos Ledgers, Legal Entities, Operating Units, Inventory Orgs

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Things to Think About When Establishing a Vision for Shared Services

What is the governance model?

What type of functions, processes and services?

How many processes ?

What is our approach?

What are the economics?

How long will it take?

What type of culture and organization do we want?

How will it impact the rest of the organization?

How will it meet stakeholder’s requirements and be measured?

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© 2014 eprentise. All rights reserved. © 2013 eprentise. All rights reserved.

Three Traditional Shared Services Organization Models

Corporate Service Center

B.U. B.U. B.U.

Regional Service Center

B.U. B.U.

Regional Service Center

B.U. B.U.

Company

A/P “Center of Excellence”

B.U.

Corporate Accounting

“Center of Excellence”

Company

B.U.

Corporate

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Step 1: Determine what processes the SSC will cover Identify processes and data that can be shared across

the enterprise Standardize common business processes, workflows

Identify common data

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Step 2: Measure Current Operating Costs Benchmark existing processes

Identify metrics for best practices

Compare existing to best practices

Determine opportunities for saving

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Determine Current Practices and Costs

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Measure Against Best Industry Practices

Benchmark High Benchmark Median CCI w/o TGIF & CHG $1.81 Benchmark Low Best Practice

CHG $4.40 TGIF $4.12 CCI $2.39 CTG $1.74# CMG $1.69#

Accounts Payable Cost per Invoice Processed

$16.63

$3.93

$1.35

$0.80

Benchmark Low Benchmark Median CCI w/o TGIF & CHG 30,575 Benchmark High

CHG 11,303 TGIF 14,562 CCI 23,765 CMG 36,181**# CTG 53,148**#

Invoices Processed per Accounts Payable FTE

5,333

17,793

41,388

* Per 1991 Shared Service Study ** Invoices are processed by CCI FTEs which are not reflected in CTG and CMG headcounts # Business units receive a bill from CCI A/P in addition to performing some of their own A/P

Unit Cost and Productivity Comparison Accounts Payable

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Resource Distribution

Other (13%)

Personnel (64%)

Systems (23%)

Benchmark Low

Company ABC

Other (24%)

Personnel (64%)

Systems (19%)

Personnel

Systems

Other

TGIF

61%

22%

17%

CMG

61%

21%

18%

CHG

63%

1%

36%

CTG

48%

14%

38%

Headcount Distribution

Exempt (20%)

Non-Exempt (80%)

Benchmark Low

Company ABC

Exempt (29%)

Non-Exempt (66%)

Contract (5%)

Exempt

Non-Exempt

Contract

TGIF

10%

84%

6%

CMG

37%

54%

9%

CHG

41%

59%

0%

CTG

51%

49%

0%

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Measure Against Best Industry Practices Accounts Payable Supplemental Analysis Accounts Payable


Roadmap for Implementation Step 3: Set up a Service Level Agreement Identify resources

People Infrastructure

Determine operating costs What volume can you handle? Are there special requirements? Determine unit prices

Determine service levels and fees Timing (close cycle) Volume

Develop change management, issue resolution, and escalation processes

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Step 4: Initiate Preparation Project Set up infrastructure

Consolidate instances

Implement common chart of accounts

Implement common calendar

Merge ledgers, operating units, inventory orgs

Set up secondary ledgers and ledger sets

Regulatory and Statutory Reporting

Adjusting Ledgers

Set up MOAC

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Infrastructure Four main technology issues surrounding globalization:

Availability

Access/Security

Performance

Functionality

E-Business Suite Release 12 is designed to support a global enterprise within a single instance, and it has several features that enable sharing of data and facilitate the globalization effort.

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Technology - Availability Prearranged level of operational performance during a period of time Service level agreement or “three nines”/”five nines” To a user, it means the ability of the user community to access

the system Scheduled vs. Unscheduled downtime Maintenance Patches, configuration changes, etc. (reboot required) Hardware/software failure Environment anomaly

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Example of Silos Instance A B C D Distinct

Release 11.5.10.2 11.5.10 11.5.10.2 11.5.9 -

Size (GB) 1,425 548 61 96 -

Languages 4 2 1 1 4

Sets of Books 104 48 1 30 183

Calendars 10 7 1 1 19

Charts of Accounts 40 43 1 18 102

Legal Entities 120 48 0 47 215

Operating Units 121 49 0 47 217

Inv Orgs 137 50 1 48 236

Modules Installed 9 17 4 5 21

Security Rules on Value Set 13,012 300 15 153 13,480

Security Rules X Responsibilities 17,350 445 6 75 17,876

Cross Validation Rules 86,845 39,925 25 165 126,960

Currencies 56 28 1 28 64

EBS Users 43,986 30,494 247 3,023 N/A

Sets of Books, Legal Entities, OUs, and Inventory Orgs

Redundant and configured differently Charts of Accounts and Calendars

Disparate and misaligned

Sets of Books – Difficult to comply with local and statutory regulatory requirements

Legal Entities – Easy to over- or under-pay taxes and misstate financial information

Operating Units – Difficult to leverage supplier relationships (terms, discounts, etc.)

Inventory Orgs – Impossible to know if a product is actually in stock (or where it is on the shelf)

Charts of Accounts – Reports and data extracts must be done 40 times

Calendars – With 10 calendars, the company is depreciating assets in 10 different ways and closing periods at different times Redundant Objects

Redundant Objects


Why Consolidate Instances? Reduction in infrastructure costs (hardware, maintenance, licenses)

Reduction in personnel to support multiple systems

Provision of better customer service and the ability to operate globally

Agility to grow and to embrace new initiatives

Global Reporting/ Analytics

Facilitate efficient and effective decision making with timely and reliable fact based information

Access real-time information at consolidated level

Create Centralized Shared Services (maintenance, setup, centralized processing)

Eliminate duplicate integrations and interfaces

Lower license and support fees

Operation of a single business with consistent data, streamlined processing and the ability to leverage markets, suppliers of other parts of the business

Consistent Business Processes

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eprentise Consolidation Software

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Changes Made Automatically During Consolidation

Three Types of Changes:

Name Changes

ID Changes

Synchronization

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A Global Chart of Accounts Primary ledger is single source of truth

for all accounting, reconciliation, and analytical reporting

Consistency but flexibility to accommodate different requirements

External reporting without relying on a separate financial consolidation system

Drill down to individual transactions in the subledgers without translation

Transparency (3 - 5 years) to meet IFRS standards and international auditing requirements

Common metrics and reporting structures with common interpretation

Enterprise Visibility with Subledger Accounting and Secondary Ledgers

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Accounting policies are standardized across the entire enterprise Data remains consistent and

has full drill-down and roll-up capability, auditability, and visibility into all of the activity for the entire ledger set Conversions not required

for data warehouse queries Facilitates the movement to

a shared service center Increases the level of

enterprise governance and control of new code combinations


FlexField Software to Change your EBS Chart of Accounts

Map Segments and Values or Code Combinations

Segment Mapping Changes CCID everywhere

All setups All subledgers All history Looks as though the new chart of accounts was part of the original implementation Full audit trail, drill down, roll up Built in exception reporting

1 1 Mapping

M 1 Mapping

1 M Mapping

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Calendar Change

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Period Date Change - Impact on Journals

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Insert New Dates

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Merge Operating Units

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Move Legal Entities to New Set of Books

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Step 5: Roll out SSC Operations Establish standard business processes

Set up governance and compliance controls

Hire resources

Develop training program

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Process Standardization The backbone of a globalization effort is the understanding that business processes are intrinsically linked and not confined to departmental, geographic, or organizational boundaries.

Shared services center as a way to standardize on common “global” processes such as: Corporate treasury Invoice processing Receivables processing Sarbanes-Oxley Compliance Account maintenance Corporate reporting Expense processing HR maintenance

Costa Mesa Kolkata

Nottingham

São Paulo

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Governance Effective management of shared enterprise assets is necessary for an effective global strategy Collaboration

Implementation of effective controls

Idea of the “benevolent dictatorship” 1. There can be no wavering about where the finish line is placed

(a single global instance)

2. Anything less than success or short of completion is not acceptable (no special exceptions)

3. Obstructionism is not tolerated

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Training and Communication

Effective globalization training has to take a more personalized approach that seeks buy-in along with providing information New skills

New processes

New functionality

New regulations

A training manual alone is not enough to be effective

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Step 6: Measure Results Are you achieving the returns on investment?

How close are you to best practices?

What do you need to do to further reduce costs?

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Where Do You Fit?

Headcount and Costs

Headcount per $ Billion Sales

6.2-CTG 8.4

17.1

19.9

29.6

46.3

Cost as a Percent of Sales

Personnel .027 - CTG

.030%

0.61%

.073%

.118%

.219%

Systems

.026%

.038%

.046%

.062%

.011%

Other

.013%

.028%

.035%

.089%

.006%

.126%

.153%

.209%

.355%

First Quartile

Second Quartile

Third Quartile

Fourth Quartile

First Quartile

Second Quartile

Third Quartile

Fourth Quartile

56.5 – CMG 67.9 – TGIF 77.8 – CHG

.244% – CMG

.249% – TGIF .073% – CMG .090% – TGIF

.141% – CHG .387% – CHG .407% – TGIF

.002% - CHG

.008% - CTG

27.2 – CCI

.089% - CCI

.210% - CMG

.030% - CCI

.022% - CTG

.047%

.155% - CCI

.345% - CMG

.036% – CCI

.068% – TGIF

.062% – CHG

Accounts Payable Benchmark Results Accounts Payable

Total

.057% - CTG

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Determine Opportunities for Cost Reduction

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Company ABC Company ABC


A Case Study on Global Finance Transformation and Operations at Experian

Globalization Best-of-breed

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Experian – Global Finance Transformation

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

US

UK France Ireland

Oracle R12

Spain Hong Kong

Ireland Australia

N.Zealand* Italy

Denmark Norway

Sweden* Finland* Estonia*

India

France Japan China Korea

Malaysia Singapore

US UK

S.Africa Russia*

Morocco*

Netherlands Germany Austria

N.Zealand** Sweden** Estonia** Bulgaria Greece Monaco Belgium

Brazil Mexico

Argentina Turkey

UK Instance - Oracle 11i

US Instance - Oracle 11i

Oracle 11i "UNIFY" Instance Single Global Instance

Oracle R12.0.6

US & UK migrated to

"UNIFY" instance

* GL Module Only ** Additional modules

Canada Chile

Costa Rica

Gemstone

Start

Gemstone

Go-live

3 EBS instances converged into a Single Global Instance

Global COA / Processes

Regional Shared Service Centers processing

Ongoing global roll out

Single Global Instance of Oracle EBS R12

Global Chart of Accounts

Standard Finance Processes

Global Finance Shared Services Organisation

Three regional Finance Shared Service Centres

Global Hyperion EPM & OBIEE fully integrated with EBS

Global Finance Center of Excellence (COE)

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Project Gemstone Goals


Experian – Global Finance Transformation

Core Financials Other HR & Payroll Purchasing Order Management HRMS

I-Procurement Advanced Pricing Self Service HR Payables Service Contracts Passive Payroll

Receivables Project Billing Payroll Advanced Collections Time & Labour Advanced Benefits

General Ledger AME Absence Management Fixed Assets BRM Billing * I-Recruitment

Cash Management Oracle GRC AGIS

I-Expenses

Note: Not all modules used by all countries

Oracle EBS – Modules implemented and planned *

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GCS Support – Then and Now 3 Regional EBS instances. Two located in UK, one located in USA. 2 Regional support areas Functional / Development

teams in each location Break fix team in each

location Different support models in

place Knowledge base

decentralized 3 different EBS infrastructure footprints Duplicated DBA teams Strategy and Support leadership silo’d and duplicated

Consolidation project to move from 3 EBS to single global instance, infrastructure located in UK Outsourced Break/Fix support to support partner (TCS) Experian Development FTE’s

reduced Support presence included 3rd

shore (offshore center in Kolkata, India).of support to a 24x7 model Support management centralized,

global incident system implemented

Built out EBS Regression Test Bed platform Began formal Release Mgmt process to include instance and DBA resource utilization management

Outsourced Support Model transitions to Service Level Agreement (SLA) basis Formal Change Process put into effect – simple change < 10 days, Planned change > 10 days Release Management process furthered Instance refresh policy

established Configuration Mgmt

process furthered, began use of automation tool (i-setup)

EBS Support (Prior to Gemstone)

EBS Support (Gemstone Go Live)

EBS Support / Strategy (Gemstone 2yrs old)

(an Iterative Process)

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Process Collaboration – How Do We Work Together? Process Collaboration Matrix

Business Partners Global Corporate Systems Business Process Process Owner Process Sponsor GCS Process Partner /

SME GCS Technology

Partner

Business Intelligence:

Data Integration / Master Data M

anagement

/ Middlew

are:

Data Warehouse / Data Design Authority:

Order to Invoice NA: TBD NA: TBD GCS SME LATAM: TBD LATAM: TBD GCS SME UK&I / EMEA: TBD UK&I / EMEA: TBD GCS SME APAC: TBD APAC: TBD GCS SME

Invoice to Cash TBD TBD GCS SME

Recruit to Retire NA: TBD TBD GCS SME LATAM: TBD TBD GCS SME UK&I / EMEA: TBD TBD GCS SME APAC: TBD TBD GCS SME

Purchase to Pay TBD TBD GCS SME

Record to Report TBD TBD GCS SME

GRC TBD TBD GCS SME

Enterprise Performance Management TBD TBD TBD

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Customer-focused organization Establishes global processes and accessibility to data Hastens incorporation of new business units Improved access to consistent information Enhanced ability to refocus business units from transactional processing to analytical analysis Focuses on core competencies Eliminates silos, and assures that management everywhere is reading from the same page Number of control points in a process and the number of variations of a process are greatly reduced, mitigating the risk of process error. Drastic quality improvements Leverage technology Fewer customer contact points

Soft Benefits of Implementing Shared Service Centers

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Questions?

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© 2014 eprentise. All rights reserved. © 2013 eprentise. All rights reserved. | 50

Thank You!

- One World, One System, A Single Source of Truth -

Helene Abrams, CEO www.eprentise.com

[email protected] Visit eprentise at booth 1033!

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