Annual Shared Services and BPO Conference 2013

Shared services from feasibility

through to implementation

Tibor Nagy & Jeppe Larsen

Key considerations

• Will the corporate vision and goals be reached by implementing a shared services

strategy?

• What functional activities can be transferred to a SSC?

• What would be the impacts on the current structure?

• Captive vs. Outsourcing?

• Standardisation first and then shared services?

• What is a realistic timetable to have the program implemented?

• What will be the implementation costs and ROI?

Deloitte utilises a proven five-phase methodology with all critical work streams

necessary to plan, design and implement shared services organisations and

optimise the performance of existing SSC operations.

Themes to be considered

Security and controls How will we ensure policy and procedures are followed?

Information Technology What applications and IT infrastructure changes must be made?

Processes How must processes change?

People How do we minimise the negative impact on colleagues?

Organisation How must the structure of the organisation change?

Real Estate Management Where will we locate the facilities and how do we optimise our portfolio?

Tax How will we optimise the tax structure?

Change management How will we make change happen?

Vendor management How will we effectively engage and manage 3rd party vendors?

Project management How will we manage the effort?

Value How will we create vision and strategy for the organisation?

Prepare

Assess

Evaluate Confirm Contract

Transition Optimise

Detailed Design Implementation

BPO

Shared Services

Will the corporate vision and goals be reached by implementing a

shared services strategy?

What functions/activities can be transferred to a SSC?

Financial Procurement HR Sales Other admin. Information

systems

Hig

h-v

olu

me

• Accounts

payable

• Accounts

receivable

• Travel and

expense

• Fixed assets

• General ledger

• Financial

controlling

• Reporting

• Transactional

procurement

• Order tracking

• E-catalogue

• Compliance

management

• Contract

management

• Payroll

• Benefits

• Employee

records

• Pension admin.

• HR Master

data

• Customer

service

• Call centre

• Order

management

• Complaint

management

• Claims admin.

• Document

services

• Tele-

communication

s

• PC/desktop

support

• Help desks

• Data centre

Hig

h-v

alu

e

• Cost

accounting

• Treasury

• Tax

• Internal audit

• Budgeting

• Material

specification

• Inventory

management

• Category

management

• Training design

and delivery

• Recruiting

• Relocation

• Nielsen

analytics

• Sales force

efficiency

• Competitor

monitoring

• Social media

analytics

• Legal

• Corporate

affairs

• Security

• Facilities

• Application

development

• Infrastructure

development

and

maintenance

Functional Shared Services vs Global Business Services (GBS)?

Business 1

Region 1 Region n

HR

SSC

F&A

OS

F&A

SSC

Business n

Region 1 Region n

HR

OS

F&A

O/S

F&A

OS

F&A

O/S

HR

OS

Business 1

Region 1 Region n

Business n

Region 1 Region n

Global Business Services

Outsourcing relationships Shared Services Centres

Most common situation Global business services

What would be the impacts on the current structure?

Governance

People

development

Process

ownership

Customer

interaction

Service

management

Culture

Little sharing Full integration

Sharing of

locations

Sharing of tools

and processes

Consistent service

management framework

Single over-arching governance with

one GBS lead, often C-level

GBS competency model and

training curriculum

End-to-end global process owners

Strong GBS culture

and brand

Universal customer interface supported

by standard toolset

Different models per function/BU

Governance by/in function

Specific to centre and/or function

Informal process networks

Different culture at each centre

Myriad of customer interaction tools

Leadership Global leadership across functions Functional leaders per location

Degree of

functional

integration

Systems and

master data

Sourcing

One integrated platform,

centralised master data management

Managed Services blending captive

and outsourcing solutions

Multiple systems and decentralised

master data

In-house and outsourcing, not aligned

Location Integrated global footprint best placed for

labour, cost and expertise Many sites not integrated

Continuous

improvement

Enterprise-wide CI with common

budget and tools CI specific to function/BU

The culture aspect and why it is difficult to get right?

Shared

culture

Company

SSC Location

Outsourcing vs Shared Services

Supplier

maturity

Competition for

talent

Access to best

practice

Focus on core

competence

Economies

of scale

Flexibility

Management of

risk

Breadth of

services

Managing

attrition

Competitive

advantage

Pro Con

Captive vs Outsourcing The reality: More and more organisations are adopting hybrid models using both options

Segmentation

Rationale Model Example

• Desire to hold complex or high-end or

sensitive activities in-house

• Sometimes, inability to get business buy-

in to outsource

• Commonly, IT is outsourced

Competition

Management

Description

• Usage of both in-house

as well as outsourced

models – each in a

clearly defined area

• Axa

• Prudential

• BP

• Create competitive tension to improve

performance

• Reducing risk

• Cater to variable demand

• Usage of both in-house

as well as outsourced

models – in overlapping

areas

• American Express

• Dell

• Leverage local knowledge and local

presence to best manage outsourcers

• In-house entity manages

relationship with

outsourcers

• Ameriprise Financial

Standardisation first and then shared services?

Goal

Now

What is a realistic timetable to have the program implemented?

Step 1

(6-8 weeks) Step 2

(10-12 weeks) Step 3

(2-3 month) Step 4

(2-3 month) Step 5

(2-3 month)*

Step 6

Vision and business

drivers

Functional scope

Design principles

Sourcing strategy

High level benefit

case

Determine baseline

Agree local/central

process split

Governance and

leadership model

Prepare high level

road map

Business case

Location

determination

Organisational

structure

Organisational

design

Governance

framework

Process definition

and documentation

Design enabling

technologies

Site selection

and fit out

Change &

communication

Implementation

planning

Detailed process

and activity design

Testing and cut-over

planning

Training programme

and material

Implement people

plans

Knowledge transfer

Manage transition

and relationships

Solutions go-live

Re-engineering

opportunities

Post go-live

stabilisation

Continuous

improvement

Opportunity

assessment Strategy

(feasibility)

Design

Build

Implementation

Transition

Optimisation

Degree of GBS

integration

Process

documentation

Enabling technology

implementation

* Per unit/cluster

What will be the implementation costs and ROI?

Annual savings

“One time” and

annual costs

Experience tells us:

• Payback time of 2.5-3.5 years

• Single biggest cost is the

organisational transformation

Experience tells us:

• Labour arbitrage is the key driver

• Do not include more then 5% efficiency YoY when

implemented

• Multiple functions adds complexity but drives additional

benefit

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© 2013 Deloitte LLP. All rights reserved.

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Annual Shared Services & BPO Conference 2013 14