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The Common Challenges of Common Practices

Prepared by: Helene Abrams CEO eprentise

Tips for Effectively Moving to a Shared Services Center

Session ID#: 10427

@eprentise

Learning Objectives

Objective 1: Learn the mechanics of running a single global instance in a shared services center operation. Objective 2: Understand common business processes and how they are implemented. Objective 3: Explore real-world examples of and lessons learned from shared service center operations.

Agenda

■ Introduction ■ What is a Shared Services Center? ■ How Shared Services Centers Operate ■ Common Challenges ■ Critical Success Factors for Gaining Efficiencies and

Streamlining Operations ■ Roadmap for Implementation ■ Case Studies ■ Conclusion

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eprentise Can… …So Our Customers Can: Consolidate Multiple EBS Instances Change Underlying Structures and

Configurations Chart of Accounts, Other Flexfields Inventory Organizations Operating Groups, Legal Entities,

Ledgers Calendars Costing Methods

Resolve Duplicates, Change Sequences, IDs

Separate Data

: Transformation Software for E-Business Suite

Reduce Operating Costs and Increase Efficiencies Shared Services Data Centers

Adapt to Change Align with New Business Initiatives Mergers, Acquisitions, Divestitures Pattern-Based Strategies

Make ERP an Adaptive Technology

Avoid a Reimplementation Reduce Complexity and Control Risk Improve Business Continuity, Service

Quality and Compliance Establish Data Quality Standards and a

Single Source of Truth

Company Overview: Incorporated 2007 Helene Abrams, CEO

What is a Shared Services Center?

What is a Shared Services Center? ■ An operational entity which performs all of the non-core

business processes for all of the divisions within an enterprise so that companies can: • Focus on core business competencies

• Reduce costs and gain economies of scale

• Standardize business processes

• Implement better controls

■ Provisioning of services by one part of the organization and its shared use by the rest, who fund this service.

Incentives & Drivers of Global Operations ■ Consolidate repetitive data-centric processes to

support migration to a shared services center or a centralized data center

■ Generate financial reports directly from the system of record

■ Reduce operating and maintenance costs to improve the bottom line

■ Create a single source of truth to improve business processes and business intelligence

■ Enable revenue optimization whenever and wherever possible to improve the top line

■ Capitalize on enterprise-wide synergies to leverage purchasing and to better understand customers

■ Obtain access to new markets and the opportunity to scale the business

How Shared Services Center Operate

How Shared Services Centers Operate ■ Select locations with lower labor costs, different time zones ■ Operates as a separate profit center

▪ Transaction processing is the main revenue generator, not a support function.

■ Recognizes economies of scale ▪ High volume of transactions

▪ Ability to transact across businesses

▪ Accommodates local and statutory requirements

▪ Centralizes expertise in various areas

AP Invoicing Purchasing Credit Card Reconciliation Warranty Tracking

Procurement

General Accounting Billing Credit and Collections Taxes Statutory Reporting Travel & Expenses

Finance

Payroll Processing Benefit Management Time and Labor Reporting

HR and Payroll

Example Shared Services Center Functions

■ Operating Units (OUs) ■ Responsibilities ■ Multiple Organizations Access Control ■ Subledger accounting ■ Subledger users are assigned responsibilities ■ Ledger Sets ■ Legal Entities ■ Customer and supplier bank accounts

R12 Was Designed for Shared Service Center Operations

Common Challenges

■ Global Standardization ▪ Data

— Common Definitions

— Redundancy

▪ Business Processes

■ Localizations ■ Alignment of business initiatives ■ Governance, Controls ■ Increasing Costs ■ Global Support ■ Downtime

Common Challenges for Shared Service Center Operations

■ Business and implementation differences exist among different installations and need to be maintained

■ Different calendars, currencies, and charts of accounts are difficult to reconcile

■ One-to one relationship between each set of subledgers (purchasing, payables) in Oracle Applications

■ No cross-instance functionality ■ MOAC functionality doesn’t enforce standards ■ Oracle Applications consolidate only at General Ledger

Level

Global Standardization

Business Process Standardization

Key components to successfully managing change on a global scale

Critical Success Factors for Gaining Efficiencies and Streamlining Operations

■ Single Global Instance ■ Common Global Chart of Accounts ■ Standard Calendar ■ Shared Master Data ■ Common Configurations ■ Elimination of Silos

▪ Ledgers, Legal Entities, Operating Units, Inventory Orgs

Critical Success Factors for Gaining Efficiencies and Streamlining Operations

■ What is the governance model?

■ What type of functions, processes and services?

■ How many processes ?

■ What is our approach?

■ What are the economics?

■ How long will it take?

■ What type of culture and organization do we want?

■ How will it impact the rest of the organization?

■ How will it meet stakeholder’s requirements and be measured?

Things to Think About When Establishing a Vision for Shared Services

Corporate Service Center

B.U. B.U. B.U.

Regional Service Center

B.U. B.U.

Regional Service Center

B.U. B.U.

Company

A/P “Center of

Excellence”

B.U.

Corporate Accounting

“Center of Excellence”

Company

B.U.

Corporate

Three Traditional Shared Services Organization Models

Roadmap for Implementation

Roadmap for Implementation

■ Step 1: Determine what processes the SSC will cover ■ Step 2: Measure Current Operating Costs ■ Step 3: Set up a Service Level Agreement ■ Step 4: Initiate Preparation Project ■ Step 5: Roll out SSC Operations ■ Step 6: Measure Results

Roadmap for Implementation

Step 1: Determine what processes the SSC will cover ■ Identify processes and data that can be shared across the

enterprise ▪ Standardize common business processes, workflows ▪ Identify common data

Roadmap for Implementation

Step 2: Measure Current Operating Costs ■ Benchmark existing processes ■ Identify metrics for best practices ■ Compare existing to best practices ■ Determine opportunities for saving

Determine Current Practices and Costs

Benchmark High Benchmark Median CCI w/o TGIF & CHG $1.81 Benchmark Low Best Practice

CHG $4.40 TGIF $4.12 CCI $2.39 CTG $1.74# CMG $1.69#

Accounts Payable Cost per Invoice Processed

$16.63

$3.93

$1.35

$0.80

Benchmark Low Benchmark Median CCI w/o TGIF & CHG 30,575 Benchmark High

CHG 11,303 TGIF 14,562 CCI 23,765 CMG 36,181**# CTG 53,148**#

Invoices Processed per Accounts Payable FTE

5,333

17,793

41,388

* Per 1991 Shared Service Study ** Invoices are processed by CCI FTEs which are not reflected in CTG and CMG headcounts # Business units receive a bill from CCI A/P in addition to performing some of their own A/P

Unit Cost and Productivity Comparison Accounts Payable

Measure Against Best Industry Practices

Resource Distribution

Other (13%)

Personnel (64%)

Systems (23%)

Benchmark Low

Company ABC

Other (24%)

Personnel (64%)

Systems (19%)

Personnel

Systems

Other

TGIF

61%

22%

17%

CMG

61%

21%

18%

CHG

63%

1%

36%

CTG

48%

14%

38%

Headcount Distribution

Exempt (20%)

Non-Exempt (80%)

Benchmark Low

Company ABC

Exempt (29%)

Non-Exempt (66%)

Contract (5%)

Exempt

Non-Exempt

Contract

TGIF

10%

84%

6%

CMG

37%

54%

9%

CHG

41%

59%

0%

CTG

51%

49%

0%

Accounts Payable Supplemental Analysis Accounts Payable

Measure Against Best Industry Practices

Roadmap for Implementation Step 3: Set up a Service Level Agreement ■ Identify resources

▪ People ▪ Infrastructure

■ Determine operating costs ▪ What volume can you handle? ▪ Are there special requirements? ▪ Determine unit prices

■ Determine service levels and fees ▪ Timing (close cycle) ▪ Volume

■ Develop change management, issue resolution, and escalation processes

Roadmap for Implementation

Step 4: Initiate Preparation Project ■ Set up infrastructure ■ Consolidate instances ■ Implement common chart of accounts ■ Implement common calendar ■ Merge ledgers, operating units, inventory orgs ■ Set up secondary ledgers and ledger sets

▪ Regulatory and Statutory Reporting ▪ Adjusting Ledgers

■ Set up MOAC

■ Four main technology issues surrounding globalization: 1. Availability

2. Access/Security

3. Performance

4. Functionality

■ E-Business Suite Release 12 is designed to support a global enterprise within a single instance, and it has several features that enable sharing of data and facilitate the globalization effort.

Infrastructure

Prearranged level of operational performance during a period of time ■ Service level agreement or “three nines”/”five nines” ■ To a user, it means the ability of the user community to

access the system ■ Scheduled vs. Unscheduled downtime

▪ Maintenance

▪ Patches, configuration changes, etc. (reboot required)

▪ Hardware/software failure

▪ Environment anomaly

Technology – Availability

Example of Silos Instance A B C D Distinct

Release 11.5.10.2 11.5.10 11.5.10.2 11.5.9 -

Size (GB) 1,425 548 61 96 -

Languages 4 2 1 1 4

Sets of Books 104 48 1 30 183

Calendars 10 7 1 1 19

Charts of Accounts 40 43 1 18 102

Legal Entities 120 48 0 47 215

Operating Units 121 49 0 47 217

Inv Orgs 137 50 1 48 236

Modules Installed 9 17 4 5 21

Security Rules on Value Set 13,012 300 15 153 13,480

Security Rules X Responsibilities 17,350 445 6 75 17,876

Cross Validation Rules 86,845 39,925 25 165 126,960

Currencies 56 28 1 28 64

EBS Users 43,986 30,494 247 3,023 N/A

Example of Silos Instance A B C D Distinct

Release 11.5.10.2 11.5.10 11.5.10.2 11.5.9 -

Size (GB) 1,425 548 61 96 -

Languages 4 2 1 1 4

Sets of Books 104 48 1 30 183

Calendars 10 7 1 1 19

Charts of Accounts 40 43 1 18 102

Legal Entities 120 48 0 47 215

Operating Units 121 49 0 47 217

Inv Orgs 137 50 1 48 236

Modules Installed 9 17 4 5 21

Security Rules on Value Set 13,012 300 15 153 13,480

Security Rules X Responsibilities 17,350 445 6 75 17,876

Cross Validation Rules 86,845 39,925 25 165 126,960

Currencies 56 28 1 28 64

EBS Users 43,986 30,494 247 3,023 N/A

Sets of Books, Legal Entities, OUs, and Inventory Orgs Redundant and configured differently

Sets of Books – Difficult to comply with local and statutory regulatory requirements

Legal Entities – Easy to over- or under-pay taxes and misstate financial information

Operating Units – Difficult to leverage supplier relationships (terms, discounts, etc.)

Inventory Orgs – Impossible to know if a product is actually in stock (or where it is on the shelf)

Redundant Objects

Example of Silos Instance A B C D Distinct

Release 11.5.10.2 11.5.10 11.5.10.2 11.5.9 -

Size (GB) 1,425 548 61 96 -

Languages 4 2 1 1 4

Sets of Books 104 48 1 30 183

Calendars 10 7 1 1 19

Charts of Accounts 40 43 1 18 102

Legal Entities 120 48 0 47 215

Operating Units 121 49 0 47 217

Inv Orgs 137 50 1 48 236

Modules Installed 9 17 4 5 21

Security Rules on Value Set 13,012 300 15 153 13,480

Security Rules X Responsibilities 17,350 445 6 75 17,876

Cross Validation Rules 86,845 39,925 25 165 126,960

Currencies 56 28 1 28 64

EBS Users 43,986 30,494 247 3,023 N/A

Charts of Accounts and Calendars Disparate and misaligned

Redundant Objects

Charts of Accounts – Reports and data extracts must be done 40 times

Calendars – With 10 calendars, the company is depreciating assets in 10 different ways and closing periods at different times

Reduction in infrastructure costs (hardware, maintenance, licenses)

Reduction in personnel to support multiple systems

Provision of better customer service and the ability to operate globally

Agility to grow and to embrace new initiatives

Global Reporting/ Analytics

Facilitate efficient and effective decision making with timely and reliable fact based information

Access real-time information at consolidated level

Create Centralized Shared Services (maintenance, setup, centralized processing)

Eliminate duplicate integrations and interfaces

Lower license and support fees

Operation of a single business with consistent data, streamlined processing and the ability to leverage markets, suppliers of other parts of the business

Consistent Business Processes

Why Consolidate Instances?

Three Types of Changes:

Name Changes

ID Changes

Synchronization

Changes Made Automatically During Consolidation

■ Primary ledger is single source of truth for all accounting, reconciliation, and analytical reporting

■ Consistency but flexibility to accommodate different requirements

■ External reporting without relying on a separate financial consolidation system

■ Drill down to individual transactions in the subledgers without translation

■ Transparency (3 - 5 years) to meet IFRS standards and international auditing requirements

■ Common metrics and reporting structures with common interpretation

Enterprise Visibility with Subledger Accounting and Secondary Ledgers

Accounting policies are standardized across the entire enterprise Data remains consistent

and has full drill-down and roll-up capability, auditability, and visibility into all of the activity for the entire ledger set Conversions not required for

data warehouse queries Facilitates the movement to

a shared service center Increases the level of

enterprise governance and control of new code combinations

A Global Chart of Accounts

Roadmap for Implementation

Step 5: Roll out SSC Operations ■ Establish standard business processes ■ Set up governance and compliance controls ■ Hire resources ■ Develop training program

Process Standardization The backbone of a globalization effort is the understanding that business processes are intrinsically linked and not confined to departmental, geographic, or organizational boundaries. Shared services center as a way to standardize on common “global” processes such as: Corporate treasury

Invoice processing

Receivables processing

Sarbanes-Oxley Compliance

Account maintenance

Corporate reporting

Expense processing

HR maintenance

Costa Mesa Kolkata

Nottingham

São Paulo

Governance

■ Effective management of shared enterprise assets is necessary for an effective global strategy ▪ Collaboration

▪ Implementation of effective controls

■ Idea of the “benevolent dictatorship” 1. There can be no wavering about where the finish line is placed (a

single global instance)

2. Anything less than success or short of completion is not acceptable (no special exceptions)

3. Obstructionism is not tolerated

Training and Communication

■ Effective globalization training has to take a more personalized approach that seeks buy-in along with providing information ▪ New skills

▪ New processes

▪ New functionality

▪ New regulations

■ A training manual alone is not enough to be effective

Roadmap for Implementation

Step 6: Measure Results ■ Are you achieving the returns on investment? ■ How close are you to best practices? ■ What do you need to do to further reduce costs?

Where Do You Fit?

Headcount and Costs

Headcount per $ Billion Sales

6.2-CTG 8.4

17.1

19.9

29.6

46.3

Cost as a Percent of Sales

Personnel .027 - CTG

.030%

0.61%

.073%

.118%

.219%

Systems

.026%

.038%

.046%

.062%

.011%

Other

.013%

.028%

.035%

.089%

.006%

.126%

.153%

.209%

.355%

First Quartile

Second Quartile

Third Quartile

Fourth Quartile

First Quartile

Second Quartile

Third Quartile

Fourth Quartile

56.5 – CMG 67.9 – TGIF 77.8 – CHG

.244% – CMG

.249% – TGIF .073% – CMG .090% – TGIF

.141% – CHG .387% – CHG .407% – TGIF

.002% - CHG

.008% - CTG

27.2 – CCI

.089% - CCI

.210% - CMG

.030% - CCI

.022% - CTG

.047%

.155% - CCI

.345% - CMG

.036% – CCI

.068% – TGIF

.062% – CHG

Accounts Payable Benchmark Results Accounts Payable

Total

.057% - CTG

Determine Opportunities for Cost Reduction

Company ABC Company ABC

A Case Study on Global Finance Transformation and Operations at Experian Globalization Best-of-Breed

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

US

UK France Ireland

Oracle R12

Spain Hong Kong

Ireland Australia

N.Zealand* Italy

Denmark Norway

Sweden* Finland* Estonia*

India

France Japan China Korea

Malaysia Singapore

US UK

S.Africa Russia*

Morocco*

Netherlands Germany Austria

N.Zealand** Sweden** Estonia** Bulgaria Greece Monaco Belgium

Brazil Mexico

Argentina Turkey

UK Instance - Oracle 11i

US Instance - Oracle 11i

Oracle 11i "UNIFY" Instance Single Global Instance

Oracle R12.0.6

US & UK migrated to

"UNIFY" instance

* GL Module Only ** Additional modules

Canada Chile

Costa Rica

Gemstone

Start

Gemstone

Go-live

3 EBS instances converged into a Single Global Instance

Global COA / Processes

Regional Shared Service Centers processing

Ongoing global roll out

Single Global Instance of Oracle EBS R12

Global Chart of Accounts

Standard Finance Processes

Global Finance Shared Services Organisation

Three regional Finance Shared Service Centres

Global Hyperion EPM & OBIEE fully integrated with EBS

Global Finance Center of Excellence (COE)

Project Gemstone Goals

Experian – Global Finance Transformation

Core Financials Other HR & Payroll Purchasing Order Management HRMS

I-Procurement Advanced Pricing Self Service HR Payables Service Contracts Passive Payroll

Receivables Project Billing Payroll

Advanced Collections Time & Labour Advanced Benefits General Ledger AME Absence Management

Fixed Assets BRM Billing* I-Recruitment Cash Management Oracle GRC

AGIS I-Expenses

Note: Not all modules used by all countries

Oracle EBS – Modules implemented and planned* Experian – Global Finance Transformation

GCS Support – Then and Now

3 Regional EBS instances. Two located in UK, one located in USA.

2 Regional support areas Functional /

Development teams in each location

Break fix team in each location

Different support models in place

Knowledge base decentralized

3 different EBS infrastructure footprints

Duplicated DBA teams Strategy and Support

leadership silo’d and duplicated

Consolidation project to move from 3 EBS to single global instance, infrastructure located in UK

Outsourced Break/Fix support to support partner (TCS) Experian Development FTE’s

reduced Support presence included 3rd

shore (offshore center in Kolkata, India). Of support to a 24x7 model

Support management centralized, global incident system implemented

Built out EBS Regression Test Bed platform

Began formal Release Mgmt process to include instance and DBA resource utilization management

Outsourced Support Model transitions to Service Level Agreement (SLA) basis

Formal Change Process put into effect – simple change < 10 days, Planned change > 10 days

Release Management process furthered Instance refresh

policy established Configuration Mgmt

process furthered, began use of automation tool (i-setup)

EBS Support (Prior to Gemstone)

EBS Support (Gemstone Go Live)

EBS Support / Strategy (Gemstone 2yrs old)

(an Iterative Process)

Process Collaboration Matrix Business Partners Global Corporate Systems

Business Process Process Owner Process Sponsor GCS Process Partner / SME

GCS Technology Partner

Business Intelligence:

Data Integration / M

aster Data M

anagement /

Middlew

are:

Data W

arehouse / Data D

esign Authority:

Order to Invoice NA: TBD NA: TBD GCS SME LATAM: TBD LATAM: TBD GCS SME UK&I / EMEA: TBD UK&I / EMEA: TBD GCS SME APAC: TBD APAC: TBD GCS SME

Invoice to Cash TBD TBD GCS SME

Recruit to Retire NA: TBD TBD GCS SME LATAM: TBD TBD GCS SME UK&I / EMEA: TBD TBD GCS SME APAC: TBD TBD GCS SME

Purchase to Pay TBD TBD GCS SME

Record to Report TBD TBD GCS SME

GRC TBD TBD GCS SME

Enterprise Performance Management TBD TBD TBD

Process Collaboration – How Do We Work Together?

■ Customer-focused organization ■ Establishes global processes and accessibility to data ■ Hastens incorporation of new business units ■ Improved access to consistent information ■ Enhanced ability to refocus business units from transactional

processing to analytical analysis ■ Focuses on core competencies ■ Eliminates silos, and assures that management everywhere is reading

from the same page ■ Number of control points in a process and the number of variations of

a process are greatly reduced, mitigating the risk of process error. ■ Drastic quality improvements ■ Leverage technology ■ Fewer customer contact points

Soft Benefits of Implementing Shared Service Centers

Questions? Comments?

THANK YOU

Helene Abrams habrams@eprentise.com

eprentise www.eprentise.com

Accelerating the time for change in Oracle E-Business Suite

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