Peter Barta, Everest - When is Shared Services not Shared Services

Embed Size (px)

Text of Peter Barta, Everest - When is Shared Services not Shared Services

  • 1. When is Shared Services not Shared ServicesAustralasia S Shared SServices & O Outsourcing Week Sydney10 12 May 2010

2. IndexThe issue of Shared Services Value Leakage Approaches to maximise Shared Services ROITransitionService Improvement 2Proprietary & Confidential. 2010, Everest Global, Inc. 3. The importance of improving value from services The evolving business landscape emphasizes the importance of capturing service value Market developments Unprecedented economicpressures permeate themarketCompanies face enormouspressure to achieve more with morelessSSO users SSO developmentsdevelopmentsSSOs must mature Cost pressure is moremost low-hangingt lhi intense th ever, and i tthan dfruit has already beenSSOs are seeking topicked further consolidateExpectations fromImportance of work among fewerSSOs are moreimproving valuecentres / processespsophisticated from SSO servicesAdvanced technologycomplexity of scopehas become tablehas increasedstakes, whileSSO users are focusedinnovation hason ensuring valueemerged as a keycapturevalue add3Proprietary & Confidential. 2010, Everest Global, Inc. 4. The Shared Services strategy typically creates key expectations around cost savings, quality of service, and risk control Expected benefitsDescriptionThe SSO business case sets specificCost savingsexpectations regarding cost savings and how/ when it will achieve those savings Quality ofQuality of service expectations are typicallydefined in the form of SLAs, however a SSO obligationsservicecollaborative approach between users and theSSO is best to ensure business goals are metRisk allocation is determined by factors withinRisk controlthe SSOs accountabilities, SLAs, andassociated responsibilities It is important toresponsibilities.embed oversight into the quality and efficiencyof the services being delivered4Proprietary & Confidential. 2010, Everest Global, Inc. 5. however, common pitfalls often limit the ability of SSOs to realise expected benefits from the strategy ILLUSTRATIVE Shadow organizations gcreate duplicate effort and costsReduced Inadequate systemqyA fragmented workbenefits from b fit fand tools to enableenvironment leads tosuboptimal utilisation the SSOsthe to-be processesmay result in savingsof resources effortsleakage5 Proprietary & Confidential. 2010, Everest Global, Inc. 6. IndexThe problem of Shared Services Value Leakage Approaches to maximise Shared Services ROITransitionService Improvement 6Proprietary & Confidential. 2010, Everest Global, Inc. 7. Enterprises typically seek ~20-30% cost savings through their SS strategy ILLUSTRATIVE Benefits from SS strategy Percentage of cost5 51555 100957060BeforeBusinessSSO case7 Proprietary & Confidential. 2010, Everest Global, Inc. 8. Shadow organisations create duplicate effort, reducing the savings benefitILLUSTRATIVE Benefits from SS strategy Percentage of cost 55Example: A stakeholder community that was receiving local customised reports from the 15affected organisation. To ensure they continue to5 5 receive these reports, they hire an additional FTE to continue this effort100 9570 60BeforeBusiness ShadowSSO case organis- ation 8Proprietary & Confidential. 2010, Everest Global, Inc. 9. A fragmented work environment creates duplication of effort, further eroding savings ILLUSTRATIVE Benefits from SS strategy Percentage of costExample: In a specific country (wave) where processes are redundant across multiple 5 divisions, with multiple people in each 5 division performing a small part of the in- scope processes. To achieve savings, some divisions ill di isions will need to red ce staff whilereducehile 155 others hold constant. How to rationalise the5 effort across divisions become a difficult problem to solve 100957060BeforeBusiness Shadow Fragmen-SSO case organis- ted work ationenviron-ment 9 Proprietary & Confidential. 2010, Everest Global, Inc. 10. Lack of systems and tools to enable the to-be processes may result in savings leakage ILLUSTRATIVE Benefits from SS strategy Percentage of costExample: Technology is not available in5 some locations to enable automated 5payments requests from the financialsystem to the local bank. As a result,the buyer retains an organisation to 15 5 perform this task5 100 957060BeforeBusiness Shadow Fragmen- SystemsSSO case organis- ted work and tools ationenviron-ment 10Proprietary & Confidential. 2010, Everest Global, Inc. 11. These common pitfalls, if not controlled, can undermine the cost savings identified in the SSO business caseILLUSTRATIVE Benefits from SS strategy Percentage of cost 5 515 5 5 100 9570 60BeforeBusiness Shadow Fragmen- Systems CostSSO case organis- ted work and tools without ationenviron- managedment transition 11Proprietary & Confidential. 2010, Everest Global, Inc. 12. Furthermore, a rigorously managed transition can help target additional savings opportunities such as process improvementsILLUSTRATIVE Benefits from SS strategy Percentage of cost Example: When headering invoices in an AP process, it was no longer5required to capture date of invoice 5 because of the timeliness of the invoice scanning p g process 15 5 5 100 957060BeforeBusiness Shadow Fragmen- Systems Cost ProcessSSO case organis- ted work and tools without improv- ationenviron- managed ementsment transition12Proprietary & Confidential. 2010, Everest Global, Inc. 13. Tools and experience also can be leveraged to increase savings through additional SSO scope ILLUSTRATIVE Benefits from SS strategy Percentage of costExample: SSO brings centralscanning and electronic invoicetechnology to the solution, enablingtransfer of a larger portion of the 5 5process and additional savings 1555 100957060BeforeBusiness Shadow Fragmen- Systems Cost Process SSOSSO case organis- ted work and tools without improv- improve- ationenviron- managed ements mentsment transition 13 Proprietary & Confidential. 2010, Everest Global, Inc. 14. By actively managing the transition, SSOs can expect to meet or exceed the benefits identified in the business caseILLUSTRATIVE Benefits from SS strategy Percentage of cost 5 515 5 5 100 9570 60BeforeBusiness Shadow Fragmen- Systems Cost Process SSO Cost withSSO case organis- ted work and tools without improv- improve- managed ationenviron- managed ements ments transitionment transition 14Proprietary & Confidential. 2010, Everest Global, Inc. 15. The transition plan should strengthen the alignment to the business plan and key business needs by improving process effectiveness while driving out costsFormulate TransitionMigrate to TargetManage Continuous StrategyOperating ModelImprovement Ethic1. Map to-be environment 1. Validate Target Operating1. Establish continuous Process Model in local contextimprovement infrastructure People 2. Assess delivery readiness and programs Technology 3. Transfer knowledge 2. Execute core programs 2. Identify improvement 2 Id tif it4. Implement migration4 I lt i ti 3. Monitor d3 M it and communicatei topportunities vs. current stateresults 3. Prioritise and sequenceopportunities (business case) Drive Process with Active Program Management Manage Stakeholder Expectations and Organisational Change Drive out unnecessary costs Ensure quality of service Ensure appropriate controlsDefine most efficient process while Rationalise processes to meet Foster collaborative team maintaining compliance integritystakeholder needs approach between users and Rationalise roles to ensure Work with stakeholders to SSO to share and manage risks appropriate skill sets and training maximise process effectiveness Define scope to minimize shadow within construct of Target Operating organisations Model 15 Proprietary & Confidential. 2010, Everest Global, Inc. 16. IndexThe problem of Shared Services Value Leakage Approaches to maximise Shared Services ROITransitionService Improvement 16Proprietary & Confidential. 2010, Everest Global, Inc. 17. Service Improvement Challenges Substantial improvement can be achieved by pulling four key performance levers but several barriers must be addressed levers,Performance Levers Barriers to Success 1 Minimize value leakage Disjointed functions and processes across SSO portfolio lead to shadow organisations that are (including transferred and created to account for perceived gaps retained in-house work)in operations 2 Create a culture ofUsers and SSOs have divergent innovation and continuousagendas users request increased improvementinvestments in innovation, while SSOsImproving seek funding to investvalue from 3 SSO servicesEnsure consistency and Lack of end-to-end service visibility quality across service causes parties to be unaware of the delivery repercussions of service changes andreduces ability to make positive impacty p p 4 Build a collaborativeUsers and SSOs become occupied relationship between users with adhering to the contract (rules) and SSOand are not able to focus on achievinga greater overall valuet ll l17Proprietary & Confidential. 2010, Everest Global, Inc. 18. An effective Service Improvement process involves distinct phases to identify opportunities, capture benefits, and sustain value over time Phase 0Phase 1 Phase 2 Phase 3 EstablishAssessAssess Implement ServiceLock in CollaborationOpportunitiesOpportunitiesImprovementsustainability Framework Objectives Set ground rules forAssess and identify Ensure quality of services Support ongoing collaboration improvement areas & optimal service modelinnovation & continuousimprovementpKey activities Determine improvement Identify comprehensive list Define the to-be operating Identify expectations & opportunities evaluationof service improvementenvironmentimplement programs that criteria to ensureinitiatives Implement serviceembed innovation & comprehensive valuehilCreate C t preliminary li iimprovement i iti ti i t initiatives th t that conti