trends and best practices in global shared services

June 25th 2014

Trends and Best Practices in Global Shared Services


PHIL SEARLE CEO & FounderGlobal/AmericasTel: (408) [email protected]

Phil has more than 20 years of experience in Finance, Shared Services, Technology and Outsourcing. Prior to his current role, he was Group VP and CFO of Cendant TDS International, which encompassed all areas of Finance across four continents, including Decision Support, Financial Planning & Analysis, Controllership and Financial plus certain HR Shared Services.

Phil was granted O1 visa status by the US government in 2008 which resulted in him gaining accelerated Green Card status in 2009 through the “Extraordinary Ability” classification. This classification is for “ability…demonstrated by sustained national or international acclaim” and was based on Phil’s unique experience in Shared Services and Outsourcing. Phil also was issued a C10 visa by the Canadian federal government in 2010; this visa is only granted where there is “significant benefit to Canada" [R205(a) CEC C10].

Phil is a Chartered Accountant and has a BA Honors Degree in Economics from the University of Exeter. He is a member of Financial Executives International (FEI).

CHAS MOOREManaging DirectorNorth America (West)Tel: (250) [email protected]

Chas has 19 years of experience in business leadership, management and Shared Services implementations. He leverages his extensive experience in healthcare and industry to help teams innovate effective and realistic solutions for complex industries. Prior to his recent assignments he was the Interior Health Business Support Director for Corporate Initiatives leading Shared Services implementations involving the Canadian healthcare sector. Prior to the formation of Interior Health, Chas was the CFO of one of the 18 predecessor organizations.

In addition to his Canadian assignments, Chas provides subject matter and technical expertise to American clients and holds a US work visa. He has extensive experience in project management, business case development, mentoring & coaching, and public speaking, including facilitation at several international Shared Services events.

Chas is a Chartered Professional Accountant, Chartered Accountant, and has a BSc Degree in Microbiology from the University of British Columbia.

Introductions

mailto:[email protected]







Agenda

Introductions


North America | Latin America | Europe | Middle East | Africa | Asia©Chazey Partners 2014 5

General Trends in Shared Services (i)

• Shared Services and Outsourcing initiatives typically result in "cost savings of 20%-50% on processes in scope” (Hfs-PWC report June 2012)

• "In today's business environment, nine out of every ten enterprises have shared services and 97 percent manage outsourcing relationships". (Hfs-PWC report June 2012)

• Multi-process Shared Services much more a reality today

• Captive vs Outsource, On-shore vs Near-shore vs Off-shore• Continued increase in scale and up the value chain in Shared Services (e.g. O2C, Reporting,

Policy)• Technology options continue to grow (e.g. document management, approvals, user self-

service, ERP, open architecture, software-as-a-service, “cloud computing”, etc)

• Now much more end-to-end “wing-to-wing” process focused


• Data privacy and security a big issue• Recession had the effect of bringing Shared Services to the Top Table. Less so

outsourcing which suffered significantly over this period. But what happens next?• Politics around offshoring jobs has been an issue for years, but has not stopped the trend

(captive and BPO), although slowed for a while• As well as need to manage costs and working capital, biggest concern in last couple of

years has been about needing visibility and control – the “classic” centralized vs decentralized dichotomy

• Multi-functional Shared Services now really starting to happen after years of this being in the textbooks

• Large scale, multi-tower outsourcing simply hasn’t happened, despite what many predicted. However, there is some movement back to try to achieve this again.

• Selective outsourcing (which actually never went away) is the trend

General Trends in Shared Services (ii)


• “Innovative outsourcing” has not happened? “Lift and Shift” did. Partly due to client requirements. However, there is a new emphasis on this.

• “Quick fixes” are not the solution. Right direction, adapted to each organization’s unique requirements

• Global Business Services growing and developing. Also more focused on being a key support for enablement and delivery of business strategic goals

• “Big data” and Data Analytics now a key “outut” from Shared Services/Business Services – feeding the business the data and information to support growth.

• Ultimately this is “all about the business”. This, despite its name sometimes, is not an “industry” but more of a service delivery option – a means to an end

General Trends in Shared Services (iii)


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• Innovation – really customer focussed, end-to-end, six sigma processes

• Automation – ERP, web-enabled, self-service,

• Value – really customer focussed. Supporting achievement of business strategic goals

• Scope – multi process/multi functional

• Further cost reduction - unlimited opportunity through paperless, virtual service centre, global low cost alternatives, strategic outsourcing

General Trends in Shared Services (iv)

Phases of Shared Services


General Trends in Shared Services (v)


• 100% of the top quartile companies worldwide use Shared Services • Hackett study found that Shared Services has proven to be a business strategy for controlling costs,

quality and risk.

• 90% of Fortune 500 companies use Shared Services • “In today's business environment, nine out of every ten enterprises have shared services and 97

percent manage outsourcing relationships". (HfS-PWC report June 2012)

• 60% of companies deliver Cost reduction greater than 35% • Savings range between 20% and 90%

• Shared Services is THE key enabler for world class functional performance • Supports business transformation across all functions and processes

General Trends in Shared Services (vi)


Shared Service Maturity: Country/Regional

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Agenda

Introductions




Scope Expansion & Value Creation

Multi-Functional Shared Services

Global Business Services Integrated Business Services

Technology Enablers BPO Trends

How Is Shared Services Evolving?


Shared Services Evolution - Scope Expansion


The Potential Scope of Shared Services

FINANCE

•Accounts Payable•Billing/Accounts Receivable

•General Ledger•Consolidations•External Reporting

•Planning and Budgeting

•Treasury/Cash Management

• Internal Audit•Tax •Foreign Exchange•Business Support Analysis

•Financial Reporting

•Project Accounting

•Cost Accounting•Lockbox Services•Records Management

• International Accounting

HR

•Payroll•Travel & Expense•Compensation Administration

•Benefits Administration

•Records Management

•Training & Development

•Relocation Services

•Evaluation Planning/Review

•Policies & Procedures

•Labor Relations•Recruiting/New Hire On-boarding

•Headcount Reporting

•Succession Planning

•Employee Recognition System

IT

•Desktop Support•Application Maintenance

•Telecommunications

•Hardware & Software

•Application Development

•Data Center Operations

•Standards•Technology Planning & Development

•Acquisition Support

• IT Security

CUSTOMER SERVICE

•Call Centers•Credit & Collections

•Order Management

•Returns Processing

LEGAL/CORPORATE

AFFAIRS•Travel Services•Real Estate•Facilities/Site Services

•Fleet Management

•Security•Communication Services

•Environment, Health & Safety

•Regulatory Compliance

•Public Affairs/Media Relations

•Litigation Support & Coordination

• Insurance•Mailroom•Grants Management

•Health Clinics/Day Care Centers

•Corporate Brand Compliance

•Engineering•Subsidiary Management

•Emergency Management

PROCUREMENT SUPPLY CHAIN

•Transportation & Logistics

•Strategic Sourcing•Warehousing• Inventory Management

•Vendor Management


Moving Up The Value Chain

Transactional/Administrative

• General Accounting

• Fixed Assets

• Accounts Payable

• Inter-company Accounting

• Billing

• Collections

• Accounts Receivable

• T&E Management

• Claims Processing

Professional/Technical

• Corporate Purchasing

• Revenue Accounting

• Statutory Accounting

• Credit

• Cash Management

• Trade Compliance

• Tax Compliance

• Month-end Close Reporting

Example for Finance


In the ‘Function’ sense.

For example, Finance, HR, IT, Procurement, Customer Support

What Does “Multifunctional” Shared Services Mean?

Multifunctional Shared Services

In the “Process” sense.

For example, multiple processes within Finance (including processes up the value chain), and across Functions from a truly “end-to-end” perspective

In the “Operational” sense

For example, supporting multiple Entities, Business Units or Departments

In the “Locational” sense.

For example, supporting multiple sites, regions, countries, continents, time zones

In the “Service Provider” sense.

For example, a hybrid of internal Shared Services and external BPO


What Are The Possible Routes to Multifunctional?

While “multifunctional” shared services has been recommended in the textbooks for decades, in reality the experience has often been single functional shared services that has been the initial way forward for many enterprises.

As shared services has proved its worth in practice enterprises have often then sought to expand scope and “bolt on” additional service lines (both up the value chain and into new functions). This has seen a more “evolutionary” move to multifunctional shared services than what might be called “big bang”, although more “big bang” examples today (e.g. in Public Sector).

But the pace has varied quite considerably, with some enterprises starting with a single function but then very quickly moving to a more multifunctional structure.

True Multifunctional has often been supported by/reflected in the establishment of a “Global Business Services” or “GBS” function or Business Unit


A KPMG/HfS Research survey last year indicated that 60% of organizations with “mature operational service frameworks” are planning to move to a Global Business Services (GBS) model, while the Shared Services & Outsourcing Network’s 2013 membership survey found that the single most important future potential of Shared Services was “shifting to a GBS model.”START WITH “BUSINESS SERVICES” - THEN GO “GLOBAL”

While the principles of “Global” services still have a lot in common with traditional Shared Services, GBS takes services delivery to another level by: 1. shifting to “business services”, which implies a more holistic support of the organization 2. leveraging “global” – as in capability, process ownership, delivery strategy, and footprint3. unleashing the power of analytics

Global Business Services (GBS)

MULTIFUNCTION OR SINGLE FUNCTION?

Hackett Group (2012 survey of SSON members) found that finance is the most common function in today’s GBS, with 84 percent of survey participants reporting that their GBS has finance services with Human Resources being the next at 45 percent of the companies surveyed.


Challenges to Moving Functions into a GBS Environment

Challenges Inconsistent approach to

customer service

Attracting and maintaining key

employee talent

Not having common cross

functional tools and approaches

Functional silos for processes

execution

Lack of a shared center

infrastructure across functions

No cross-functional

process management


SSOs are moving from the traditional shared service function based models to become

independent, end-to-end service businesses.

Integrated Business Services

• Putting processes into the context of overall business optimization

• End-to-end process ownership

• Capable of handling any “unique” customer requirements within a generally very standardized end-to-end process.

End-to-End Process Standardization

Operational Excellence

Strategic Business Support

End-to-End Process Standardization

Operational Excellence

Integrated Business Services

Traditional Shared Services Integrated Business Services


Technology Enablers

Today’s ERP systems can build a single business

platform that can leverage operational efficiency in an SSO

Technology has provided for process automation, with examples including

electronic invoicing, document management,

workflow, automatic matching and payment

allocation tools, automated

reconciliations and user self-service

Cloud Computing has been embraced by

consumers across the globe using email and

other IT services that are hosted on servers

globally

Social media may offer SSOs a way to increase

collaboration with customers, both

internally and externally

Leveraging new technologies to improve SSO operations and improve customer service


BPO Trends

“Lift & Shift” rather than “Shift & Lift”

Hybrid models are becoming more commonplace with a mixture of internal Shared Services supported by third party BPO provision

Re-mapping service delivery locations:• Many of the easily offshorable jobs have already gone.• Additionally the number of jobs that might have been offshored

has been reduced by productivity improvements.• Cost advantage to off-shoring is trending downwards. For

example, cost of employees in India was 80 percent less than USA, and it is now 30-40 percent and narrowing.

• Employee turnover in the off-shoring companies has historically been quite significant, in part due to some of the work being repetitious



Agenda

Introductions





Client• Service orientation in place• Structured way of dealing with customers• Customer satisfaction levels understood• SPAs in place • Reality versus perception• Account management

Process• Processes documented• Standardized, controlled & repeatable activity• Recharging methodology• Benchmarking – internal/external• Metrics: Control Based; (ii) Efficiency &

Effectiveness

Technology• ERP implemented• Document Scanning Solution• Workflow• Automated Payments• Elimination of Side Systems• Self services tools• Automated Score Cards

People• Skilled Leadership in place – do not compromise on

competencies• Team shape & stability – process shaped/spans of

control/staff – perm v temps• Team members – culture, values & behavioral competencies

assessed • Team morale, reward & retention• Working environment conducive to team working

CRITICAL SUCCESS FACTORS

Typical Transformation Focus: Technology & Process,sometimes on the People…but Client-focus is missing


Corporatization/Centralization:• Users of service must accept corporate

direction• Cost containment is prioritized over

performance

Transformed Shared Services:• If consumers of service are unhappy, they’ll

leave• Performance is prioritized over cost

containment

No Customer, No Transformation

Scenario: “Management decides to reduce the hours of their help desk for their information technology services.” What are the key drivers behind the decision?

If your organization is not focused on the client, you either:Do not have Will nottransformed or have transformation

Shared Services for long (it will fail)


The same service characterisic can be seen as an improvement or loss, It depends on your perspective

To shape and influence this perspective, you need to a structured way tomanage your client relationships: the Client Interaction Framework

Intangibles are as Important as Tangibles

What is potentially better:• Cost savings• Standardized processes• Controllership• Common system• Consistent process metrics• Accessibility and quality of information• Customer service management• Quality in the process

What is potentially worse:• Slow response and recovery• Inflexibility• Risk of client working for SSO• Lost decision rights• Additional bureaucracy• Disconnection from the business• Lack of local personal support• Local desire to “touch everything”


Agenda

Introductions






Client Interaction Framework (CIF)

Account Management• SSO to client; via reporting,

interaction, escalation & communication

Client Contact Management• Client to SSO; to manage

and resolve queries and drive learning/improvement

Service Partnership Agreements• SPAs are 2-way agreements

clarifying both SSO services and client inputs

Client Feedback• Client satisfaction

continuously monitored both informally and formally

Continuous Improvement• Mechanisms to identify the

areas for improvement and to develop solutions

Process Control Database• Documents end-to-end SSO

processes; highlights activity of both SSO & client

Performance Measurement• Comprehensive KPIs,

measures and metrics framework, SSO & client

Performance Reporting• Process performance will be

reviewed monthly by SSO and client

Recharging Methodology• Define basis for charging for

SSO services to turn consumers into clients


About Chazey Partners…


Chazey Partners is a practitioners-led global management advisory business. We bring together a unique wealth of experience, empowering our clients to strive for world class excellence through

Business Transformation, Shared Services & Outsourcing, Technology Enablement, Process

Enhancement and Corporate Strategy Optimization

We have operationally delivered and consulted numerous programs globally, over the last 20 years, in the US, Canada, Latin America, UK, Ireland, Continental Europe, India, Singapore, Australia, China, Middle East and Africa

Our end-to-end capability offers advice, guidance and implementation expertise, covering strategy setting and business case production, to programs management, implementation and process optimization

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FINANCE & ACCOUNTING●

HUMAN RESOURCES●

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●PROCUREMENT

● TRAVEL & EXPENSES

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Having “lived and breathed“ a great number of projects, we understand what it takes to be successful. Our hands-on approach forms the cornerstone of our practice

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Blending more than two decades of experience to create a unique diagnostic based methodology. This allows us to identify critical gaps, strength quotient, and materialize feasible opportunities

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