AFTER THE GO-LIVE TEN FOCUS AREAS FOR EFFECTIVE SHARED SERVICE DELIVERY

Global Finance 360 | Copyright 2010 | All Rights Reserved 1

Global Finance 360

Creating and deploying a Shared Service Organization is a major initiative that requires substantial commitment from an organization. Yet the deployment of a Shared Service Organization is only the beginning of the journey to create a high-performing service organization that partners with the Business Units and continuously creates value. True value creation occurs over time. As part of an on-going commitment, the following ten areas should receive management’s attention 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, a governance structure should be created to ensure appropriate oversight of the Organization. If the Shared Service Organization has multiple service centers globally, the governance program will guide the entire Organization as well as the individual centers.

Governance committees should exist for the entire Shared Service Organization and for the processes within the organization. The Steering Committee should be comprised of senior level executives with overall responsibility for the Shared Service Organization. They resolve issues that haven’t been resolved at lower levels, provide continued funding of the organization, and guide the expansion of the Organization to incorporate additional functions that will drive valuation creation.

Process councils should be created to give oversight to each major process handled by the Shared Service Organization. For example, the Procure-to-Pay process would receive oversight from executives in Procurement and Finance to ensure that global processes were as consistent and efficient as possible, to help resolve any conflicts that arose between organizational units, and to continue evaluating additional improvements that will drive efficiency while delivering value to the Business Units.

Monitor Compliance with the Service Level Agreement

In every shared services project there are those in the organization, particularly in the business units, that doubt the promised benefits will materialize and that the service center is truly capable of providing the level of service the business units enjoyed when they had their own support services. Don’t prove them right. Once the service center goes live it’s time to hit the ground running and live up to the promises made. This means living by the service level agreement and constantly monitoring the Center’s performance against the service level metrics.

Standardize and Optimize Processes

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

Ten areas of focus to drive performance in a Shared Service Organization:

1. Engage in regular and consistent governance

2. Monitor compliance with the Service Level Agreement

3. Standardize and optimize processes

4. Standardize and optimize technology

5. Invest in training

6. Benchmark to monitor performance

7. Evaluate additional processes to move to the Shared Service Organization

8. Reevaluate the captive vs. outsourcing decision

9. Monitor opportunities for additional sourcing centers

10. Foster a culture of continuous improvement

Author: Stephen G. Lynch

Global Finance 360 | Copyright 2010 | All Rights Reserved 2

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 company’s 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 industry and as an auditor in public accounting.

Mr. Lynch is an active content contributor on the topics of Finance Transformation and globalization 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

slynch@globalfinance360.com www.globalfinance360.com

processes will be identified. Additionally, opportunities to optimize the processes to 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 the Shared Service Organization, technology may sometimes not be standardized as part of the move to Shared Services. While it’s true that a Shared Service Organization is often created or enhanced as part of an ERP implementation or upgrade, there are times when the business case for shifting resources independent of a technology implementation makes sense. This is particularly true when positions are moved to an offshore location. In that event, a plan to rationalize the disparate technology platforms is needed. In addition to the standardization of the core technology platforms, Shared Service Centers often benefit by the implementation of bolt-on applications to enhance the effectiveness of the existing technology infrastructure. Examples include specialized applications for Collections or Reporting.

Invest in Training

Training is one area that often gets short-changed as part of the Shared Services process. Personnel are often left to learn on-the-job or to be taught by another person in the department without the benefit of a standardized training curriculum.

A formal training program is always relevant, but particularly so when positions are moved offshore and processes have been substantially transformed. In an offshore move there is typically little to no continuity of personnel. Remember that the Shared Service Organization will be working to perform to the Service Level Agreement and silence any remaining critics of the move to Shared Services. It’s critical that employees understand not only their job but also the commitments of the Shared Service Organization and the expectations of the Business Units as codified in the governing documents. Equally important is an ongoing commitment to training to bring new recruits up to speed and to keep existing employees’ skills fresh.

Benchmark to Monitor Performance

When a Shared Service implementation is performed correctly, a benchmark exercise will have been completed as part of the current state discovery process. At that point in the transformation effort, baseline performance metrics are established to understand the gap to high-performing companies and to help prioritize 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 to measure both the effectiveness of service delivery (i.e. cycle time, defect rates) and the efficiency of the processes (i.e. the cost and organizational structure required to deliver the services). Additionally, there must be systems to automate the majority of the data collected. Otherwise, the demands and associated costs of collecting the information will soon outweigh the benefits of the benchmarking program and the program will eventually be dropped.

Global Finance 360 | Copyright 2010 | All Rights Reserved 3

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 company’s 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 industry and as an auditor in public accounting.

Mr. Lynch is an active content contributor on the topics of Finance Transformation and globalization 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

slynch@globalfinance360.com www.globalfinance360.com

Evaluate Additional Processes to Shift to the Shared Service Organization

Once the Shared Service Organization is up and running, the governance committees responsible for oversight should regularly be engaged in identifying additional processes and activities that could be moved into the Shared Service Organization. There will also be opportunities to bring additional Business Units into 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 delivery strategy in the captive vs. outsourcing decision, the reality is that conditions change and assumptions that were once thought reasonable are proved to be untrue. As part of the ongoing effort to maximize the effectiveness of the delivery structure, the Finance Management team should periodically reevaluate the need to outsource a process that was previously handled in-house. However, the process works both ways. Sometimes an outsourcing relationship isn’t working out as planned and it makes sense to Insource the process to provide better service.

Monitor Opportunities for Additional Sourcing Centers

In a world marked by globalization, new countries and cities are regularly developing the maturity necessary to be seriously considered as a service delivery location. A balance is needed between the critical mass necessary to obtain economies of scale and the opportunity to move processes and activities globally to refine the global delivery system and leverage lower labor rates. Additionally, it can make sense to grow the support processes in geographies that require additional support, such as an expansion of operations in Asia or Latin America.

Foster a Culture of Continuous Improvement

High-performing companies make a commitment to continuous improvement in every area of their operations. This improvement focus is centered on both the effectiveness of service delivery as well as the relentless pursuit of ever increasing efficiency. Senior management must be visible in their commitment to the process, not only in word but in deed. Funds must be allocated to the effort and the Shared Service Organization’s management team must be held accountable for delivering on promised and potential benefits. Formal quality programs such as Six Sigma can play an important role continuous improvement.

Conclusion

By committing to these ten principles, a Shared Service Organization will be focused on delivering the value necessary to support strategy, optimize processes, reduce cost and drive innovate practices over the Shared Services lifecycle.