After the Go-Live - Ten Focus Areas for Effective Shared Service Delivery

8/7/2019 After the Go-Live - Ten Focus Areas for Effective Shared Service Delivery

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AFTER THE GO-LIVETEN FOCUS AREAS FOR EFFECTIVESHARED SERVICE DELIVERY

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GlobalFinance360

Creating and deploying a Shared Service Organization is a major initiative thatrequires substantial commitment from an organization. Yet the deployment of aShared Service Organization is only the beginning of the journey to create ahigh-performing service organization that partners with the Business Units andcontinuously creates value. True value creation occurs over time. As part of anon-going commitment, the following ten areas should receive managementsattention to drive value creation in the Shared Service Organization.

Engage in Regular and Consistent Governance

As part of the planning process for the Shared Service Organization, agovernance structure should be created to ensure appropriate oversight of theOrganization. If the Shared Service Organization has multiple service centersglobally, the governance program will guide the entire Organization as well as theindividual centers.

Governance committees should exist for the entire Shared Service Organizationand for the processes within the organization. The Steering Committee shouldbe comprised of senior level executives with overall responsibility for the SharedService Organization. They resolve issues that havent been resolved at lowerlevels, provide continued funding of the organization, and guide the expansionof the Organization to incorporate additional functions that will drive valuationcreation.

Process councils should be created to give oversight to each major processhandled by the Shared Service Organization. For example, the Procure-to-Payprocess would receive oversight from executives in Procurement and Finance toensure that global processes were as consistent and efficient as possible, to helpresolve any conflicts that arose between organizational units, and to continueevaluating additional improvements that will drive efficiency while delivering valueto the Business Units.

Monitor Compliance with the Service Level Agreement

In every shared services project there are those in the organization, particularlyin the business units, that doubt the promised benefits will materialize and thatthe service center is truly capable of providing the level of service the business

units enjoyed when they had their own support services. Dont prove them right.Once the service center goes live its time to hit the ground running and live up tothe promises made. This means living by the service level agreement andconstantly monitoring the Centers performance against the service level metrics.

Standardize and Optimize Processes

Processes should be standardized as they are transferred from the BusinessUnits to the Shared Service Organization. However, even under the best ofcircumstances there will still be more work to do. Once the processes areactually being serviced from the SSO, additional opportunities to standardize the

Ten areas of focus todrive performance in aShared ServiceOrganization:

1. Engage in regularand consistentgovernance

2. Monitorcompliance withthe Service LevelAgreement

3. Standardize andoptimizeprocesses

4. Standardize andoptimizetechnology

5. Invest in training6. Benchmark to

monitorperformance

7. Evaluateadditionalprocesses tomove to theShared ServiceOrganization

8. Reevaluate the

captive vs.outsourcingdecision

9. Monitoropportunities foradditionalsourcing centers

10. Foster a culture ofcontinuousimprovement

Author: Stephen G. Lync


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About Global Finance 360

Global Finance 360 covers the

world of corporate finance and

accounting and how these

activities are impacted by

globalization. Focus areas

include Finance Delivery

Strategy, Shared Services,Business Process Outsourcing,

Process Improvement and

Organizational Design.

Global Finance 360 is run by

Steve Lynch. Mr. Lynch is a

Principal in the Finance

Transformation practice of a

global consulting company. He

is responsible for the marketing,

sales and delivery of Finance

Transformation services in North

America and serves as a key

liaison for his companys global

Finance practice. He brings

more than 15 years of

experience advising global

companies on their service

delivery strategies and has

served over 60 clients in a

variety of industries including

consumer products and

industrial manufacturing,

aerospace & defense,

transportation, technology,

entertainment and financial

services. He has also served as

a Controller in private industryand as an auditor in public

accounting.

Mr. Lynch is an active content

contributor on the topics of

FinanceTransformation andglobalization and has presented

at various forums including the

IQPC Shared Services &

Outsourcing conference. He can

be found on the web at

www.globalfinance360.com.

Contact Information:

Steve Lynch

Toll-free: +1.800.216.2512

Office: +1.719.481.2599

1042 W. Baptist Road

Suite 194

Colorado Springs, CO 80921

[email protected]

www.globalfinance360.com

processes will be identified. Additionally, opportunities to optimize the processesto enhance service delivery and reduce costs through the elimination of non-value added activities should also be identified.

Standardize and Optimize Technology

Just as processes are not completely standardized during the transfer to theShared Service Organization, technology may sometimes not be standardized as

part of the move to Shared Services. While its true that a Shared ServiceOrganization is often created or enhanced as part of an ERP implementation orupgrade, there are times when the business case for shifting resourcesindependent of a technology implementation makes sense. This is particularlytrue when positions are moved to an offshore location. In that event, a plan torationalize the disparate technology platforms is needed.

In addition to the standardization of the core technology platforms, SharedService Centers often benefit by the implementation of bolt-on applications toenhance the effectiveness of the existing technology infrastructure. Examplesinclude specialized applications for Collections or Reporting.

Invest in Training

Training is one area that often gets short-changed as part of the Shared Servicesprocess. Personnel are often left to learn on-the-job or to be taught by anotherperson in the department without the benefit of a standardized trainingcurriculum.

A formal training program is always relevant, but particularly so when positionsare moved offshore and processes have been substantially transformed. In anoffshore move there is typically little to no continuity of personnel. Rememberthat the Shared Service Organization will be working to perform to the ServiceLevel Agreement and silence any remaining critics of the move to SharedServices. Its critical that employees understand not only their job but also thecommitments of the Shared Service Organization and the expectations of the

Business Units as codified in the governing documents. Equally important is anongoing commitment to training to bring new recruits up to speed and to keepexisting employees skills fresh.

Benchmark to Monitor Performance

When a Shared Service implementation is performed correctly, a benchmarkexercise will have been completed as part of the current state discovery process.At that point in the transformation effort, baseline performance metrics areestablished to understand the gap to high-performing companies and to helpprioritize the roadmap for the journey to high performance.

A benchmarking exercise should be conducted on a regular basis after the go-

live. A successful benchmarking program will have clearly defined metrics tomeasure both the effectiveness of service delivery (i.e. cycle time, defect rates)and the efficiency of the processes (i.e. the cost and organizational structurerequired to deliver the services). Additionally, there must be systems toautomate the majority of the data collected. Otherwise, the demands andassociated costs of collecting the information will soon outweigh the benefits ofthe benchmarking program and the program will eventually be dropped.


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About Global Finance 360

Global Finance 360 covers the

world of corporate finance and

accounting and how these

activities are impacted by

globalization. Focus areas

include Finance Delivery

Strategy, Shared Services,Business Process Outsourcing,

Process Improvement and

Organizational Design.

Global Finance 360 is run by

Steve Lynch. Mr. Lynch is a

Principal in the Finance

Transformation practice of a

global consulting company. He

is responsible for the marketing,

sales and delivery of Finance

Transformation services in North

America and serves as a key

liaison for his companys global

Finance practice. He brings

more than 15 years of

experience advising global

companies on their service

delivery strategies and has

served over 60 clients in a

variety of industries including

consumer products and

industrial manufacturing,

aerospace & defense,

transportation, technology,

entertainment and financial

services. He has also served as

a Controller in private industryand as an auditor in public

accounting.

Mr. Lynch is an active content

contributor on the topics of

FinanceTransformation andglobalization and has presented

at various forums including the

IQPC Shared Services &

Outsourcing conference. He can

be found on the web at

www.globalfinance360.com.

Contact Information:

Steve Lynch

Toll-free: +1.800.216.2512

Office: +1.719.481.2599

1042 W. Baptist Road

Suite 194

Colorado Springs, CO 80921

[email protected]

www.globalfinance360.com

Evaluate Additional Processes to Shift to the Shared ServiceOrganization

Once the Shared Service Organization is up and running, the governancecommittees responsible for oversight should regularly be engaged in identifyingadditional processes and activities that could be moved into the Shared ServiceOrganization. There will also be opportunities to bring additional Business Unitsinto the fold. The goal is to continuously evaluate new opportunities to leverage

the investment in Shared Services and to continue the value creation process.

Reevaluate the Captive vs. Outsourcing Decision

Despite the best efforts of the sourcing team to evaluate the overall deliverystrategy in the captive vs. outsourcing decision, the reality is that conditionschange and assumptions that were once thought reasonable are proved to beuntrue. As part of the ongoing effort to maximize the effectiveness of the deliverystructure, the Finance Management team should periodically reevaluate the needto outsource a process that was previously handled in-house. However, theprocess works both ways. Sometimes an outsourcing relationship isnt workingout as planned and it makes sense to Insource the process to provide betterservice.

Monitor Opportunities for Additional Sourcing Centers

In a world marked by globalization, new countries and cities are regularlydeveloping the maturity necessary to be seriously considered as a servicedelivery location. A balance is needed between the critical mass necessary toobtain economies of scale and the opportunity to move processes and activitiesglobally to refine the global delivery system and leverage lower labor rates.Additionally, it can make sense to grow the support processes in geographiesthat require additional support, such as an expansion of operations in Asia orLatin America.

Foster a Culture of Continuous Improvement

High-performing companies make a commitment to continuous improvement inevery area of their operations. This improvement focus is centered on both theeffectiveness of service delivery as well as the relentless pursuit of everincreasing efficiency. Senior management must be visible in their commitment tothe process, not only in word but in deed. Funds must be allocated to the effortand the Shared Service Organizations management team must be heldaccountable for delivering on promised and potential benefits. Formal qualityprograms such as Six Sigma can play an important role continuous improvement.

Conclusion

By committing to these ten principles, a Shared Service Organization will be focusedon delivering the value necessary to support strategy, optimize processes, reduce cost

and drive innovate practices over the Shared Services lifecycle.

After the Go-Live - Ten Focus Areas for Effective Shared Service Delivery

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