The Current SSO Environment

Shared Services has Gone Mainstream

• There are now more than 5,000 delivery organizations worldwide
  • ¾ remain captive shared services operations
• In 2004, 24% of global executives thought shared services was strategic to their business
• In 2011, 89% think it is u
• Globally, there are now more multi-function shared services operations than single functions
  • 72% of all shared services operations incorporate more than one function
• Shared services is becoming a viable solution for smaller organizations
• Focus is shifting from cost savings to standardization, global flexibility, and better technology
  • 80% believe leading process standards are critical or important
  • 76% believe global flexibility is critical or important
  • 76% believe better technology is critical or important

“Global Service Centers” are beginning to replace traditional Shared Services.

Evolution of Service Models

1. Decentralized Service Model
   1. Redundant services
   2. High-cost delivery
   3. Minimal governance
   4. Informal business relationship
   5. Complex operating environment
   6. Scattered customer interface points
2. Shared Services Delivery Model
   1. Standard services
   2. Functional/regional shared services
   3. Transaction efficiency
   4. Functional contact
   5. Tech infrastructure (e.g., customer interface, process automation)
   6. Manual workarounds
   7. Continuous improvement
   8. Selective outsourcing
3. Enterprise (Global) Service Model
   1. Enterprise optimized
   2. Single delivery entity
   3. Process based
   4. Enterprise governed
   5. Rationalized IT environment
   6. Outsourcing of optimized services
   7. Mature vendor and change management

The Case for Transformational Change

Cost Savings are Achieved- Expectations Not Being Met

• Executive expectations for corporate and administrative services have changes
  • Standardization and managing complexity
  • Controlling costs and supporting profitable growth
  • Managing performance and risks
• Desired capabilities are still unmet
  • Data analytics and business insight
  • Subject matter expertise-based consulting support- delivered with an understanding of local knowledge
• Complexity has increased
  • Launches into new markets, geographies, or products
  • Multiple acquisitions integrations
  • Decentralized business operations

What Went Wrong? …The Usual Suspects

• Fragmented operations in multiple locations
• Non-standard processes
• Transactional focus
• Discretionary consumption of services throughout the businesses
• Manual workarounds (often supported by Excel)
• Limited or casual governance- weak change management
• Multiple outsourcer contracts- managed at arms length
• Multiple ERPs and supporting applications
• Minimal integration between tools
• Multiple points of contact between business partner and relationship
• High turnover driven by redundant work with limited career paths
• Functional focus- no cross functional collaboration

What is Now Required

1. Transform from SS to Global Business Service (GBS)
   1. A global enterprise vision and supporting governance
      1. Break down country oriented thought habits
   2. A focus on standardization and agility
2. Break down functional silos
   1. Enterprise end-to-end process standards, management, and ownership
   2. Process governance to manage exceptions
3. Move Beyond Transactions
   1. Necessary innovation (and investment) to develop new capabilities
      1. Move up the value chain
   2. Ability to adapt to changes in the marketplaces via business intelligence
   3. A career path to attract and retain high potential talent

Success Factor: You are continuously asked to take on more services?

Five Guiding Principles

1. Some Scale Strategies

Create an Enterprise Services Delivery Entity

• Create a holistic vision for corporate services and shared services organizations
• Consolidate shared service infrastructure
• Create a single, cross-functional service delivery entity

Consolidate Geographic Locations

• Deliver services across enterprise wide sites
• Consider labor arbitrage, economic incentives, geo-political factors, infrastructure, travel and time logistics

Use Technology to Build for Scale

• Rationalize and simplify the IT application environment
• Take advantage of cloud technology and 3^rd party providers

Gaining Scale Through Multi-Function SSO

Single-Function Shared Service: When a Business consolidates one support function (e.g. Finance) to serve the corporation and its business units, operating as a business within a business, utilizing a well-defined infrastructure to enable higher- value service delivery

• Characteristics
  • One leader for each function
  • Freedom to select customized platform
  • Support roles assist one function (e.g. reporting, continuous improvement)
  • Function specific skill sets
  • Processes are specific to one function

Multi-Function Shared Service: Integration of two or more major support functions (e.g. finance, HR, Procurement, IT, General Services, etc.) into a common organization characterized by a common leader, budget, and service management approach. Operations may or may not be located in a common facility

• Characteristics
  • One leader over multiple functions
  • Some common technology platforms
  • Support roles assist multiple functions
  • Cross-trained employees
  • End-to-end process may cross functions

…it’s a more robust SSO that shares its own infrastructure to deliver broader services to internal customers

2. Drive Optimization of Business Processes

Organizing Around End-to-End Processes

• Create a standard process vision
• Processes become the enterprise language
• Assign enterprise wide ownership

Create Process-Based Governance Rules

• Rules to assess and approve process variants
• Determine legitimate customization (e.g. regulatory, legal)

Create A Continuous Process Improvement Culture

• Create it or buy it with 3^rd party providers
• Automate and provide self service
• “rent” innovation with cloud technology

Typical Enterprise End-to-End Processes

• Order-to-cash
• Budget-to-report
• Concept-to-product
• Procure-to-pay
• Plan-to-stock
• Proposal-to-reward
• Hire-to-retire
• Acquire-to-retire
• Prospect-to-order
• Record-to-report
• Market-to-prospect
• Service-to-satisfaction

Drive standardization, leading processes, right skill sets, and automation!

Process Ownership-Responsibilities

Process owners are responsible for managing the SSO process framework.

• Create the process vision and supporting roadmap
• Develop processes and controls
• Communicate process framework to stakeholders
• Manage process policies
• Improve processes
• Create and report on process metrics
• Create and track process KPI’s
• Identify and prioritize process projects and investments- interface with IT organization
• Define and manage process master data
• Identify process roles and responsibilities
• Identify process sourcing opportunities and manage 3^rd party performance

3. Business Responsiveness & Flexibility

Implement Business Relationship Management

• Provide access to local knowledge
• Align service delivery with business objectives
• Support SSO change management
• Provide service escalation points

Determine Support Strategies for Smaller/Unique Businesses

• Sometimes one size does not fit all
• Evaluate the segmentation of lines of business and tailoring services to each segment

SSO Region/Country Manager

• Non-U.S. countries have similar challenges as small businesses…but more complexity
  • Language barriers
  • Political and legal challenges
  • Critical business units with heavy volume
  • Cultural differences
  • Technology barriers
• Distributed SSO ambassadors/managers can balance service levels and improve communications
  • Ambassador role (can be part-time)
    • No direct reports
  • Manager role (can be full-time)
    • Regional/country direct reports

Servicing the Smaller Business Units

Common characteristics of smaller business units

• Incubator businesses that need heavy focus on the core business
• Challenged businesses with heavy pressure to increase top line
• Employees trying to balance core work while wearing multiple back office hats

Need the most SS attention but receive the least!

• Little influence over service levels or process exceptions
• Last to be called back if behind big business unit problems
• Less attention to quality of service

The “Incubator Business Arm” for SSO

Mission:

• Provide standard and non-standard services to small internal clients
• Incubate best practices and help integrate into larger clients
• Grow cross-functional skills

Customer Survey Results-Example

Analyze and prioritize survey results- focus on increase or decrease in service favorability and pinpoint opportunities by customer segment

4. Foster Innovation

Foster Innovation Through Centers of Excellence (COE)

• Can provide an environment that fosters innovation-one of teamwork and creativity
• Connect virtually

Adopt Business Analytics Vs. Traditional Reporting &KPIs

• Shift from cost reduction to revenue generation
• Provide businesses with mission critical data

Expand to Smaller Higher Value Services

• Talent Acquisition: roll-up workforce planning data, assess, and develop corporate plan; manage corporate-wide use of data
• Benefits: determine benefits rates, and charge-backs; build models
• Compensation: conduct market analysis, including survey selection, data inputs, and analysis
• Diversity: roll-up company wide diversity metrics, analyze data, translate into corporate-wide programs and processes
• Employee relations: manage exit interviews for targeted population

Close coordination between COE and support center expedites innovation

Virtual Problem Solving

Distributed but connected

• Use of high definition video conferencing rooms for real time problem solving
• Connects distributed environment
• Higher touch with the internal customer
• Promotes team working environment
• Higher 1^st contact resolution

Expand from Metrics to Analytics

• Metrics measures performance while analytics enables decision making
• Metrics takes a historical look back while analytics forecasting looks forward
• Metrics results in data while analytics results in insights
• Metrics is scorekeeping while analytics is storytelling
• Metrics reports while analytics understands
• Metrics looks at volumes while analytics is selective
• Metrics is reactive while analytics is proactive

The Data is Already in Your SSO

Financial:

• Customer credit risk
• Customer banking patterns
• Cash position
• Investment performance
• Debt interest rates
• Asset depreciation

Purchasing:

• Vendor quality scores
• Product demand forecast
• Category spend trends
• Inventory turnover/cycle
• Material purchase patterns
• New vendors/diversity

Information Technology

• Web hits
• Hand held device patterns
• Laptop/desktop spend
• Application value/usage
• Portal usage patterns
• E-commerce success
• Social media hits
• Data center peaks/valleys

Human Resources:

• Working patterns
• New hire trends
• Reasons for leaves
• Disability insurance usage
• Retirement demographics
• Time-to-fill positions
• Departure reasons/trends
• Worker health patterns

Where Does the Market Stand with Business Analytics?

• Novice
  • Limited historical view of data, often through spreadsheets
  • Aware that they can do better
• Experiences
  • Show broader collaboration across teams, with both a historical and current view, as well as trending
• Leaders
  • Employ defined operational and financial metrics across more than one department
• Masters
  • Set top-down goals, allocating resources based on priorities and shifting dynamics
  • Everyone knows the objectives na dhow they can collaborate

There is enormous potential to capture value and gain a competitive advantage

5. Facilitate Coordination

Manage Business Expectations Through More Informal Reporting

• Providing performance transparency
• Develop common definition of success
• Evaluate the need for continued formal SLAs

Simplify Cost Structuring

• Demonstrate how line of business behavior influences SSO costs
• Provides lines of business with the opportunity to control their costs

Tie Chargebacks to Easy Logical Work Drivers

Cost Transparency is important to understand…

• Cost drivers so you can prioritize improvement initiatives
• Where you stand versus the market to make outsourcing decisions
• How to negotiate a contract when outsourcing decisions are made
• How certain behaviors influence overall delivery costs

The benefits of billing and enforcing penalties on BU’s do not outweigh the risks of creating non-productive internal work and tarnishing client relationships

Plan Your Visions for “Next Generation” SSC Operations!

The SSO environment is changing fast!

• Business unit demand for consultive services and business intelligence
• Diminishing focus on local/country SSO delivery and more on global/enterprise
• New emerging low cost markets
• More focus on process ownership
• Increased pace of multi-function design and build
• Demand for innovation in SSO services and delivery

To continue offering SSC value, define a vision, gather stakeholders, make the business case, layout detailed initiatives and move “step-by-step”