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Shared services - A Strategic Cost Management Platform

  1. 1 An Introduction  What are Shared Services?  Why Organizations Adopt Shared Services?  How are Shared Services Implemented & Optimized?  How does Oracle Enable Shared Services?  What’s Next/Trends? Sanjay Chaudhuri Director Asia Pacific Strategic Sourcing Aug’ 2016
  2.  Reduce Cost  Improve Productivity  Promote Timely execution  Enable better Decision making  Leverage existing and exploit emerging Technologies  Ensure acceptable level of control and risk management  Optimize skills/capabilities of the organization  Promote collaboration across the extended enterprise 2 It is a service model designed to gain efficiency in routine processing by leveraging common practices and enabling Technology KeyBenefits Objectives…. The Key here is the idea of 'sharing' within an organization or group or providing as 3rd party services.
  4. 4 SalesMarketingDistributionManufacturingPurchasing LOB1 SalesMarketingDistributionManufacturingPurchasing LOB2 SalesMarketingDistributionManufacturingPurchasing LOB3 Independent LOBs with Common Model Support FINANCE HUMAN RESOURCES INFORMATION TECHNOLOGYShared Services Common Platform ADMIN & FACILITY SUPPORT CORPORATE TRAVEL LOGISTICS & DISTRIBUTION SUPPLY CHAIN & PROCUREMENT
  5. 5 • Service delivery models for Shared Services are proven – Ranging from sharing only technology and / or processes and/or people – Varying strongly in scope • Technology is mature – Core are global ERP/HRMS systems – Wide range of tools in use – Data Collection, BSC, Workday, etc. • Best-practices available in abundance – From numerous successful implementations in all industries Shared Services Are Highly Mature… …And Have a High Success Rate Yes, however, had few issues. Do not Agree. Yes, Agree Highly Matured And Successful Source: Hackett “The Future of Shared Services” 2015
  6. 6 HighLow Medium TACTICAL HighLowMedium STRATEGIC • ← Improve Service Levels • ← Process More with Same/Less • ← Process Standardization • ← Process Improvements • ← Increase Control • ← Capture Acquisition Synergies • ← Data Visibility • ← Coordinate IT • ← Accelerate ERP Implementation • ← Headcount Reduction Increasing Sustainable Value and Continuous Improvement as f(x) of Time Tactical versus Strategic Business Drivers
  7. 7 Source: Deloitte Research “The Future of Shared Services” Business drivers for adoption of SSC (% of respondents) 0 10 20 30 40 50 60 70 80 90 Capture acquisition synergies Cross-division/location comparability Coordinate IT Data visibility and comparability improvements Accelerate ERP implementation Increase control Improve service levels Headcount reduction Facilitate process improvements Process standardization Headcount reduction is NOT #1 priority, although important Other business drivers Process standardization and improvements Process Standardization and Improvements
  8.  Average ROI for shared services implementation is about 20 percent ◦ Average payback period approximately three years ◦ 74 percent meet or exceed their financial targets  Measurable direct bottom-line impact, e.g. up to 45% reduction of finance cost through shared services  Sizeable benefits achievable in payroll administration - the early adopter in HR shared services ◦ Top performers beat the average payroll cost per employee by 47%  Shared services also deliver on intangible benefits ◦ Such as productivity, quality and customer service 8 Overwhelming Evidence of proven financial benefits from SSCs
  9. 9 Finance • Cash disbursements • Revenue cycle • Accounting & External reporting • Tax management • Manage Treasury • Compliance management • Manage Planning and Performance • Business analysis • Manage Function HR • Rewards administration • Payroll services • Data management, reporting/compliance • Staffing services • Workforce development service • Organizational effectiveness • Total rewards planning • Strategic workforce planning • Manage Function Procurement • Supply data management • PR & PO processing • Supplier scheduling • Receipt processing • Compliance management • Customer management • Sourcing execution • Supplier management & development • Sourcing & Supply base Strategy • Manage Function Services • Order and contract management • Service execution • Service operation • Planning & strategy • Manage Function Functional Areas And Key Processes Covered By SSC….1
  10. 10 Info Tech (IT) • Infrastructure development & management • End user support • Application development & maintenance • Quality assurance • Risk management • IT business planning • Enterprise architecture planning • Emerging Technology • Manage Function Marketing & Sales • Marketing communications • Brand and product management • Planning & strategy • Market research & analytics • Sales execution • Sales operation • Sales planning • Function management Manufacturing • Production planning • Inventory management • Shop floor scheduling • Capacity management • Function management Corporate Services • Gen. Administration • Travel, Transport, Logistics • RE & FM Mgmt • Government affairs • Legal & Compliance • QTY management • Risk & security management • Corporate communications • Planning & strategy • Executive office Functional Areas And Key Processes Covered By SSC….2
  11.  Clearly define the Shared Services vision ◦ Senior executive driven process with operating unit leader participation ◦ Clear alignment of Shared Services vision with overall organizational goals  Develop a detailed business case for change ◦ Develop “case for change”; include both hard benefits (e.g. labor cost reduction) and soft benefits (e.g. service improvement, better visibility, etc.) ◦ Do not under-estimate the implementation and transition costs  Define scope for economies of scale and skill ◦ Scope includes “scale” based processes (e.g. Payables, invoices, etc.)…. ◦ …and “skill” based processes (e.g. legal, marketing, tax, etc)  Establish appropriate executive leadership ◦ Steering committee includes HQ and operating unit executives ◦ Use distinct leadership for SSC development vs. operations  Select the right people for the project ◦ Select the “right” resources, not the “available” resources for the project ◦ Release SSC project resources from their day-to-day responsibilities 11 1 2 3 4 5 Source: “Ensuring Successful Shared Service Implementations: From Vision To Operation”, Accenture Best Practices
  12.  Communicate extensively ◦ Establish a clear communication plan (message outline, timing, audience, communicator) ◦ Communicate to potentially affected employees early-on  Start transition planning early ◦ Start transition activities up to 180 days prior to SSC implementation ◦ Focus on knowledge transfer, data conversion, and training activities  Use technology as a strategic enabler ◦ Streamline/consolidate core transaction processing systems (ERP, HRMS, etc.) ◦ Invest in workflow capabilities, case management solutions, and self-service tools  Recruit and train the “right” team for the Shared Service Center ◦ Use a mix of internal and external hires to develop the SSC team ◦ Develop and implement an enduring training plan  Over support each implementation ◦ Over staff the organization during the transition and stabilization periods ◦ On-site project representatives for support & issue resolution during stabilization phase 12 6 7 8 9 10 Best Practices … contd.
  13. 13 Success Factor Deemed Most Important by Surveyors is Executive Sponsorship Strong planning and Process Standardization are not enough on their own Source: The Johnson Group’s Survey of 40 global organizations, workshops, and client engagements. 87 Respondents
  14. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Increase automation tools Streamline processes Expand scope of services Improve customer service levels Improve controls Expand the number of internal customers Improve overall governance structure Improve performance management Develop/improve formal training programs 14 Top Initiatives: Percentage (%) of Respondents Source: Deloitte Research
  15. 15 100 54 19 17 10 0 20 40 60 80 100 a b c d sumONE common ERP system. Legacy System Multiple ERP systems Total 1. ERP 2. Data Analysis and Reporting Tools 3. Workflow 4. Document Imaging 5. Data Warehouse 6. E-Payment 7. Employee Self-Service 8. EDI 9. Manager Self-Service 10. Financial Consolidation Tool % of respon- dents Top 10 Technology Enablers ERP Standardization Is A Given Multiple ERP instances Source: Accenture Homogeneity of IT landscape: It’s best to identify and have one single integrated ERP system as the single most important best-practice for SSC performance
  16.  Outsourcing and Off-shoring ◦ Once an organization feels comfortable with internal Shared Services it may decide to outsource and/or offshore operations ◦ Mature offerings in Finance/IT available, HR/procurement/etc. taking up speed  More automation ◦ Most important objective of most SSCs: single global ERP/HRMS system ◦ Top 2-4 priorities are: Vendor self-service, Employee self-service, e-procurement and Continuous Improvement are the Key Drivers.  Global reach - movement to global shared service models – Pressure to move to lower labor markets − Increased efficiency with lesser SSCs  Scope expansion along all Corporate Functions 16 Outsourcing, Automation, Global Reach and Scope Expansion
  17. 17 68% 62% 56% 49% 44% 44% 40% 32% 32% 0% 10% 20% 30% 40% 50% 60% 70% KPI SLA Continuous Improvement Model Employee Self-Service Imaging Workflow Call Centre Balanced Scorecard Governance Board Employee Development Programme Source: The Johnson Group SLAs that do not promote simplicity, transparency and accountability. They are likely to cause more administrative burden than benefit. Continuous Improvement and Self Service are also Key Drivers
  18. 18 Simplicity • Short (1-3 pages) and simple to understand • Bundle services by BU to enable tradeoffs across functions • Enable straightforward, ongoing communication Key Success Factors What You Need Transparency and Choice • Invoicing clear and understandable • Insight to service cost drivers & encourage desired behavior • Base level “lights-on” operation other than optional services • Flexible, scalable service levels, up or down Metrics and Accountability • Track performance against internal targets and external benchmarks (without adding excessive infrastructure) • Link business and service management (SBU Model) What Makes SLA’s Successful?
  19. 1919 82% 71% 48% 45% 42% 40% 40% 39% 34% 31% 28% 25% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Service Level Agreements Key Performance Indicators Imaging/Workflow Employee Development Programs Account Managers Continuous Improvement Model Call Center Balanced Scorecards Employee Self-Service Communications Model Customer Self-Service Manager Self-Service Best Practices adopted by Leading Shared Services Operators Source: Johnson Group Governance related Performance related Technology related % of Centers
  20. 20 • Unifying Technology – Developed Applications to support multiple organizations in one instance • Workflow – The key link between SSC and the divisions being served is built into the Application • Interfaces – Management tools can interface & integrate with comprehensive application seamlessly • Self Service – Integrated applications is used by the LOB being served, driving Operating Efficiency • Business Intelligence – Powerful means to monitor and manage performance by both the SSC and LOB’s • System Enabled Metric Application – Activity Based Costing or BSC can be used to manage performance against SLA • Integrated Customer Relationship Management (CRM) – CRM Modules are pre-integrated into the E CRM Application
  21. Thanks You Q & A