Pwc Ssc Survey 2012 v1.0

7/24/2019 Pwc Ssc Survey 2012 v1.0

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Shared ServicesCentres 2012

PwC survey on how SSCs are currentlyperforming and their potential for the future

Czech Republic & Slovakia

www.pwc.cz www.pwc.com/sk

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Con t en t s

Preface 3

Management summary and key findings 4

About the SSC maturity model 6

Detailed analysis of the SSC evaluation 9

1. The company profiles and SSC profiles 10

.

3. Organization, governance and compliance in the SSC 17

4. Continuous improvement in the SSC 22

5. Business processes in the SSC 27

6. Customer relations 30

7. Performance management 34

8. Human resource management 38

9. Systems and technology 41

10. KPIs 43

Outlook 46

About us 51

Glossary 52

Contacts 53

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Pr ef ace

In the time of a financial crisis, most companies undergo increased pressure for cost efficiency andperformance excellence and therefore look for further sources of cost reduction and cost optimization.Outsourcing and shared service centres (SSC), a phenomena of the last 20 years, are seen andrecommended as a tool for increasing the cost efficiency of company processes. Shared service centres offera number of advantages – apart from cost savings, they offer standardized services while introducingcustomer-oriented organization and processes. SSCs are organizations that concentrate experts andexperience, thereby enabling the realization of economies of scale and desired synergies.

The current turmoil have impacted not only existing shared services centres, but also plans for building newones as well. Most companies are at the moment very vigilant regarding investments in any new process set-up and usually require very detailed business case preparation and modeling before they decide to opt forthe SSC.

The objective of the SSC Survey 2012 is to monitor the maturity of existing shared service centres in theCzech Republic and Slovakia, identify trends within these SSCs (including business processes and theircontinual improvement, strategy, etc.) and get the outlooks of SSC owners on the upcoming months. TheSSC Survey 2012 was prepared by PwC Czech Republic and PwC Slovakia with kind support by thegovernment agency for investment and business development CzechInvest and the Slovak investment andtrade development agency SARIO.

The SSC Study 2012 data collection started firstly in Slovakia in November 2011 and continued with Czechepu c ata co ect on n e ruary 2012. rom ovem er 2011 to arc 2012, t e quest onna re was sent

to companies we identified as relevant mainly in the area of finance SSCs and other related activities SSCs. Atotal of 18 companies in the Czech Republic and 8 companies in Slovakia participated in the survey, whichenables us to present corresponding findings and indicate specifics for both markets, where applicable. Thesurvey participants represent altogether six different industry areas with around one-third of participants

operating in manufacturing, followed by one-fifth of participants from the banking and insurance area andthe technology sector.

We would like to thank all of the organizations and individuals that took the time and effort to contribute toour unique survey and provided us with their valuable inputs.

We are happy to provide readers with interesting insights in this area.

On behalf of the SSC survey team.Prague, Bratislava April 2012

Chris Skirrow Alica PavúkováPartner PartnerCzech Republic Slovakia

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M an a em en t su m m a r a n d k e f i n d i n s

Management summary and key findings

Our objective was to determine the performance level of existingShared Service Centres (SSCs) in the Czech Republic (CZ) and Slovakia(SK) and classify them using the PwC SSC assessment model - SSClife cycle model developed by PwC. The results provide anexclusive overview of how SSCs are currently performing in the CzechRepublic and Slovakia.The performance of all SSCs has been evaluated against eightevaluation criteria. These criteria have been aggregated to an overallperformance score which is the basis for assigning each SSC one offour maturity levels (1 = the least developed, 4 = the most mature).The results show that the SSCs analyzed are quite balanced in terms ofmaturity stage; most of them were assigned the third developmentstage of the SSC lifecycle which proves that there is a rather mature

SSC environment in the Czech Republic and Slovakia.

Abou t t h e su r v ey :

• 26 participants from 2 countries, up to 4 000 employees,representing 6 industry sectors;

• 3/4 of them in the 3 main SSC hubs - Prague, Bratislava andBrno;

• Most SSCs were established 5-6 years ago, now reaching theirmatur ty;

• Most of the SSCs (85%) situated at Stage 3; only 1 SSC is themost mature at Stage 4.

Key findings from the respective sections of the survey:

St r a t egy f o r t he SSC

• Cost reduction is still the most important target for SSC projects‘ ’• ov ng up e va ue curve s a ey ren or mos s - qua yand speed of processing in particular

• Most SSCs have clearly defined strategies as expected accordingto the level of their maturity stage

Organ i z a t i o n / g o ve r n an ce/ c om p l i a n ce i n t h e SSC

• Most SSCs use the cost centre concept with costs allocated basedon services provided

• 70% of all SSCs use critical control systems• More than 90% of the SSCs use automatic controls to some

extent; however, only 8% consider that they already automatedthe control processes wherever possible and practical

Con t i n u ou s im p r o vem en t i n t h e SSC

• Six Sigma is the most popular tool employed (30% of SSCs have

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,tools for continuous improvements

• Customer relations are key and 70% use regular surveys toassess the SSC’s performance in this respect

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Management summary and key findings

Bu sin ess pr ocesses in t he SSC

• Only 15% of SSCs place a significant focus on the appointment ofa board to oversee the SSC

• There is still space for improving process management andgovernance by implementing clearly defined end-to-end processownership and finally arriving at a single corporate end-to-endprocess owner

Cust om er r el a t i ons i n t he SSC

• Half of all SSCs provide services to internal customers only• At least once a year, a satisfaction survey is performed in 69% of

SSCs• Highest quality of services provided is one of the key features of

the service culture in the SSCs

Per f o rm a n c e m an a g em en t a n d H R i n d i ca t o r s

• 77% use balanced scorecard approach and 90% have employeedevelopment plans in place

Sy s t em s and t echno l ogy i n t he SSC

• 40% of the companies indicate that the workflow tool is used ina most a re evant processes

KP I s

• Almost half of all SSCs claim to achieve operational cost savingshigher than 30%

• Around 15% of survey participants see greater than 70%improvement in productivity as a result of SSC implementation

• 73% of all SSCs receive a customer rating as “good” or “very”goo rom more an o e r cus omers

• Cost reduction targets have been exceeded in 27% of all surveyparticipants

Ou t l o o k

• 88% of SSCs will continue to operate and do not plan to scaledown the processes

• Only 42% confirmed that they would keep the current location if

• The most often cited areas for improvement which the SSCs plan

to work on included: ERP system implementation and its fulloperation, Automation of processes, Talent attraction andretention, Productivity growth, Enlarging the scope of servicesprovided while at the same time maintaining a good balance ofcosts and quality, Attracting new customers

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About the SSC maturity model

Evaluationcriteria

Phase I:Start-up

Phase II:Growth

Phase III:Expansion

Phase IV:2nd generation SSC

1. Strategy • no SSC-specific targets,strategies, measures orimplementation plans set

• some SSC-specific targets,strategies, measures orimplementation plans set

• SSC-specific targets,• strategies, measures or

implementation plans

• SSC-specific targets,strategies, measures orimplementation plans set

Over v i ew o f t h e SSSC m a t u r i t y m odel ph a ses

set • regular review ofimplementation andintroduction ofcountermeasures if required

2. Organization/Governance/Compliance

• SSC run on cost centre basis with no allocation ofSSC costs

• no SLAs in place• unclear process owner and

manual controls

• SSC run on cost centre basis with fixed allocation of costs

• some SLAs in place• multiple process owners

and many automatedcontrols

• SSC run on cost centre basis with costsallocated on servicesprovided

• comprehensive SLAs inplace

• sin le end-to-end

• SSC run on profit centre basis with services allocated based on market prices

• comprehensive SLAs inplace and regularly adjusted

• single corporate end-to endrocess owner and controls

process owner per business unit and manyautomated controls

automated whereverpossible

3. Continuousimprovement

• no improvements made inrelation to costs, qualityand time

• Six Sigma, TQM notdeployed

• slight improvements madein relation to costs, qualityand time

• Six Sigma, TQM in processof implementation

• some improvementsmade in relation tocosts, quality and time

• Six Sigma, TQM inprocess ofimplementation

• major improvements madein relation to costs, qualityand time

• Six Sigma, TQM incontinuous use

. Business • not standardized • mainl standardized and • o timization and • o timization across theprocesses

harmonized or automated

• simple mass transactions

harmonized

• simple mass transactionsand some expert services(centre of expertise)

automation of businessprocesses

• simple masstransactions and expertservices (centre ofexpertise)

organization

• total services in terms ofholistic processes

5. Customerrelations

• internal clients• non-standardized

structure and management• no implementation of

• mostly internal clients• standardized routine• processes and transactions• ongoing implementation of

• internal and externalcustomers

• focus on efficiency andeffectiveness within SSC

• mostly external customers• focus on contributing value

to the whole company • implemented and regularly

• implementation ofcustomer support tools

tools

6. Performancemanagement(PM)

• PM tools (BSC, benchmarking) notdeployed, usedinfrequently

• no ICS (internal controlsystem) implemented

• no quality/performancetargets

• PM tools (BSC, benchmarking) beingdeveloped

• ICS implemented• quality/performance targets

introduced

• PM tools (BSC, benchmarking) beingimplemented

• ICS in place• extensive

quality/performancetargets defined

• PM tools (BSC, benchmarking) incontinuous use

• comprehensive ICS andcontinuous optimization

• continuous adjustment ofquality/performance targets

7. Human

resourcemanagement

• non-standardized

structure and management• relation of employeedevelopment toperformance evaluationunsupported

• no training/advancedtraining system introduced

• combining existing

expertise and focus onprofessional expertise• relation of employee

development toperformance evaluation

• non-standardizedintroduction oftraining/advanced trainingsystem

• professional expertise

and managementdevelopment• relation of employee

development toperformance evaluationextensively designed

• comprehensive trainingand advanced trainingsystem

• service and leadership

culture established• relation of employeedevelopment toperformance evaluationcontinually reviewed

• continuous improvement totraining and advancedtraining system

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8. Systems andtechnology

• multiple systems, nostandardization of ERPplatform

• no workflow systemsintroduced

• no IT governance set up

• partially standardized ERPplatform

• workflow systemsimplemented

• low level of IT governance

• standardized ERPplatform

• extensive deployment of workflow systems

• average level of ITgovernance

• optimized, modular ERPsystems

• organization-wide workflowsystems

• high level of IT governance

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About the SSC maturity model

The performance of all SSCs has been evaluated against the eightevaluation criteria described previously: Strategy,Organization/governance/compliance, Continuous improvement,Business processes, Customer relations, Performance management,Human resource management, Systems and technology.

SSC m a t u r i t y m odel r esu l t s

Each answer provided by the participants in the questionnaire wastranslated into one numerical value and then weighted with apredetermined weight defined in the PwC SSC maturity model.

After all answers to all questions have been weighted, the overall score was calculated.Several SSCs scored the highest possible score in one or more areas,i.e., 100 points. Each overall score for the particular SSC then falls

into the range for one of the four maturity stages.

The results show that some of the SSCs analyzed varied significantly interms of their level of development. However, the majority ofparticipating SSCs (85%) were assigned to Stage 3; i.e., the secondhighest category which they could achieve. Only 11% were assigned toStage 2 and 4% were assigned to the highest level (Stage 4) in theoverall evaluation. Surprisingly, the results show that no SSC wasass gne to tage 1, w c n cates t at n ot countr es t e s

were set up rather recently and that the level of maturity is relativelyadvanced.

If we compare the overall scoring of SSCs between the Czech Republic

and Slovakia we come to a conclusion that the scoring results are verysimilar with the exception of only one SSC which achieved the highestscore and is located in Slovakia.

84%

Number of SSCs per maturity stage

0%

12%4%

Stage 1 Stage 2 Stage 3 Stage 4

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Det a i l ed a n a l si s o f t h e SSC ev a l u a t i o n

Detailed analysis of the SSC evaluation

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1. The company and SSC profiles

Industry

As far as the participants pool is concerned, we were able to collectdata from 26 companies in total; 18 have their seat of operation in theCzech Republic and 8 in Slovakia.

Participants from six industries, with manufacturing being themost represented industry

The participants in the survey represented a wide range of largeindustry sectors; nevertheless, the strongest participation was in thefollowing groups:

• Manufacturing (ranging from automotive to chemical andpharmaceutical companies; represented by 31% of participants)

• Retail and Consumer products (mostly FMCG retailers;represented by 19% of participants)

• Banking and Insurance (represented by 15% of participants)• Technology (ranging from IT to electrical engineering companies;

represented by 15% of participants).

The remaining participant population was divided between companiesoperating in Services (airline, medical and security, generaloutsourcing services) and Energy and Telecommunication.The industry sector division represents both countries – the CzechRepu c an ova a toget er.

15%

Participation by industry

Manufacturing

Services

12%

15%

19%

8% Technolog

Retail and Consumer

Energy andTelecommunication

Banking and Insurance

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Size

Considering size (i.e., the number of employees working in the SSC),more than 80% of the participating SSCs employ fewer than 500employees. If we look at the size of the SSCs in greater detail, we cometo the conclusion that the most common size of the surveyed SSCs iseven lower (approximately one-third of all participants employ fewer

The biggest SSC which took partin the survey employs around4 000 employees, while thesmallest one employs only 22.80% of the SSCs employ fewer

t an 100 emp oyees).Those SSCs that employ more than 500 employees come fromindustries such as banking and insurance or technology. Most of thesmaller-sized SSCs (fewer than 500 employees) operate in themanufacturing sector.The size of the SSCs varies from 22 to 4 000 employees; the median ofemployees working in SSCs in the Czech Republic is 113, and forSlovakia it is 486 employees. The reason for this difference is due to

than 500 people

t e s ze o t e ggest w c part c pate n survey, w c slocated in Slovakia. On the other side of the range, the smallest SSC with 22 employees is located in the Czech Republic. In general, we cansay that larger SSCs are more often located in Slovakia than in theCzech Republic.

Number of staff (FTEs) in the SSC

31%

23%

27%

4% 4%

12%

< 100 100-249 250-499 500-749 750-1 000 > 1 000

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Most of the SSCs are located in

large cities in the Czech Republicand Slovakia

Location

Regarding the location of the SSCs, we see that they are mostly located

in big cities such as Prague, Brno and Ostrava in the Czech Republicand Bratislava in Slovakia (these cities account for 82% of allparticipants). The location of the SSCs was determined mainly by thelocation of the parent company, the availability of skilled workforce

2 %

SSC location

an a goo n ras ruc ure.Other locations include mainly smaller cities evenly spread out in theregions of the Czech Republic and Slovakia.In Slovakia, all SSCs participating in the survey are located inBratislava, except for one which is located in a smaller Slovakian town.

21%

25%

7%

18%

Pra ue Brno Bratislava Ostrava Other

Economy development

influenced the time when SSCs were implemented

Year of establishment

As shown below, most of the SSCs surveyed were established in the

period from 2004 to 2009 (representing up to 80% of theparticipants). Only 8% of them were implemented in the last two years.The curve of SSC implementation over time corresponds with theoverall develo ment of the econom in the Czech Re ublic andSlovakia, given that it takes on average one year to implement an SSC.Most of the SSCs were implemented before the beginning of thefinancial crisis.

48%

Year the SSC started operations

8%4%

20%

12%8%

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2000-2001 2002-2003 2004-2005 200 -200 200 -2009 2010-2011

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Who processed the questionnaire

The majority of questionnaires representing overall 65% of all surveyed

companies were processed by the head of the particular SSC. Alternatively, the questionnaires were answered and processed also bythe head of accounting, the head of controlling and the chief financialofficer.

The survey was completed by

the head of the SSC for 65% ofthe companies

19%

69%

Head of accounting

Head of SSC

Position of the staff who processed thequestionnaires in the companies surveyed

4%

8%

Head of controlling

Chief Financial Officer

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2. Strategy

Based on the survey, the strategy and key objectives of SSCs havedeveloped significantly since the SSCs were established. While costreductions are still considered important to most of the SSCs, there areother strategic objectives emerging. Most notable is an increasingdemand for improving the quality of services provided by the SSC and

The current trend indicatesdemand for a significantincrease in the quality andefficiency of SSC services

the need to provide faster service. These are objectives requiring amore stable labor force and reliable processes and controlenvironment.

Transparency improvements (relating to data, processes, systems,costs and services) represent those objectives whose importance grewduring the SSC development cycle. The complexity and the ambiguityof processes may be a significant hindrance to the SSC’s performance.

Moreover, when it comes to cost allocations, the transparency of theprocesses and the costing methods is essential for acceptance of thecost charges for services and for proactive cost management.Other objectives that gained importance included language skills,training costs and end-to-end process management. We assume thatthese objectives are mentioned mainly due to the fact that theirimportance is rising and represent potential further indicators for theSSC implementation phase.

Overall in this assessment, the SSCs located in Slovakia indicatedslightly lower importance (0,1 to 0,3 less than average figures below) inthe majority of the criteria compared to those in the Czech Republic,

with the exception of Quality improvements (0,2 above average in

Slovakia).

Comparison of the importance given to

5,2

4,3

5,2

5,3

Cost reductions

Quality improvements

today

4,3

4,7

4,2

4,8

5,3

Faster service

Transparencyimprovements

Other

Importance of the objectives at the time the SSC was implemented

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Importance of the objectives from today’s perspective

The scale of answers: 1 - low importance; 6 - high importance.

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Defined strategy and objectives,and measures taken toimplement and control them,

indicate the developed stage ofthe SSCs

Most of the surveyed companies have stated that they have clearlydefined strategies and objectives for their SSCs. Clearly definedstrategies and objectives and the measures in place to keep the

implementation plans on track represent indicators of developedstages of the SSC lifecycle.

The majority of surveyed SSCs have specific measures to implemente s ra egy an use compre ens ve mp emen a on p ans. ver

of respondents also continuously review implementation planstogether with variance analysis and management.

The objectives and the strategies go hand in hand as most of the SSCsthat have well established objectives also have clear strategies to reachthem and specific measures to implement these strategies. One area

where the SSCs show a slight need for improvement is in defining a

implementation. Another development opportunity for SSCs is to design andimplement crucial control environment and mechanisms to ensure thesuccessful delivery of strategic objectives.SSCs located in Slovakia indicate that, compared to those in the CzechRepublic, the first and last statement is less applicable (0,3 to 0,6 lessthan below average). Other statements were assessed similarly.

5,2

4,8

Objectives for the SSC were clearlydefined

Strategy to reach the objectives of theSSC was clearly defined

Strategy for SSCs

4,5

4,3

4,6

strategy were defined

Detailed and comprehensiveimplementation plan (including

milestones) for all measures was defined

Status of the implementation plan isregularly reviewed

If the deviations from the4,3

implementation plan are detected, the

countermeasures are immediately took

The scale of answers: 1 - not at all applicable; 6 - fully applicable.

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3. Organization, governance andcompliance in the SSC

The majority of SSCs (81%) participating in the study operate as costcentres with costs allocated based on services provided. This is animportant development point in the SSC lifecycle, which leads to better

The cost centre concept withcosts allocated based onservices provided dominates the

.operational costs with transparent cost allocations based on actualservices consumed. This environment also creates pressure toeliminate non-value added activities.

There are still some SSCs in the Czech and Slovak region with either nocosts allocation (4%) or fixed costs allocation (12%). These are usuallySSCs with a limited scope and are not considered as strategic units

objectives and strategies.

Only one SSC that participated in the survey operates on the basis of aprofit centre. The advantages of this concept are that it changes thestrategic position of the SSC within the company and tends to lead tohigher productivity and comprehensive and market-based SLAs.Service charges based on the market price create a transparent

benchmark to the costs of rovisionin and create additional ressure

Service charges based on themarket price can provide atransparent benchmark to thecosts of providing the services

on the SSC to provide the services on the most efficient basis, as thecosts should be justified, the SSC should meet its profit targets.

SSC centre concept including the way in whichcosts are allocated

12%

4% os cen re, w cos s a oca e based on services provided

Cost centre, with fixed allocation ofcosts

Profit centre, with servicesallocated on a market price basis

80%

Cost centre, with no allocation ofcosts

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More than 70% of the SSCs in the survey reported that they havecomprehensive SLAs in place, with 46% of them regularly reviewingand updating for changes in scope. Comprehensive SLAs indicate high

ranking in the SSC’s life cycle classification and encourage strongcustomer orientation with close relationships with customersregarding service provision and the scope and quality of services.

More than 70% of SSCs havecomprehensive SLAs in place

, more an o e s ave serv ce- ase cos a oca ons nplace that are not accompanied with corresponding comprehensiveSLAs. This situation, where costs are charged based on the servicesprovided but the corresponding SLAs are missing, can negativelyaffect the relationship between the SSC and its internal customers.This holds back the development of the SSC into further stages.Moreover, it may have an adverse effect on pursuing cost savings andincreasing SSC operational effectiveness.

A developed set of comprehensive SLAs is often a prerequisite for theSSC to be considered as a more strategic standalone unit within thecompany. Such SSC usually has better governance processes at thestrategic and operational level, often carried out by the appointed SSC

board, and a defined set of operational procedures to resolve problems between the SSC and its customers.

Level of use of SLAs between the SSC and the

8%

19%

46%

retained organization

No SLAs

Some SLAs in place

27%

Comprehensive SLAs in place

Comprehensive SLAs in place thatare continually reviewed andupdated for changes in scope

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Although the strategic importance of the SSCs grew within theirorganization, there is still room to grow. While defined procedures toresolve operational issues between SSCs and their customers do exist

in most cases, a more strategic view on governance is often omitted, with only 15% of SSCs placing significant focus on the appointment ofa board to oversee the SSC’s governance. Appointment of a board wasconsidered by SSCs from Slovakia as more applicable than average

SSCs continually gain strategicimportance within theirorganizations, but there is still

room for improvement

, a ove e average .

3,0

4,0

We appoint a Board consisting of SSCofficers and SSC customers to govern the

We always solve operational problemsarising between SSC and customers usinga clearly defined formal set of procedures

SSC Governance

4,2The SSC acts as a stand-alone unit within

the company

SSC


multiple process ownership with discrete owners defined either byactivity or by business entity. This is an indication of a developmentalstage of the process management within the SSCs where thegovernance is organized functionally or on a regional/business unit

basis rather than by end-to-end processes. So there is still lots of roomfor improving process management and governance by implementingclearly defined end-to-end process ownership and finally arriving at asin le cor orate end-to-end rocess owner.

the environment of multipleprocess ownership with varyingdistribution of responsibilities

8%

48%

End-to-end process ownership is unclearin the organisation

Multiple process owners defined byactivity and business entity

Governance of end-to-end process in the SSCorganization

36%

8%

Single end-to-end process owner withineach function or business unit

Single corporate end-to-end processowner

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SSCs have strong controls fortheir financial, operational andcompliance needs

The vast majority of the SSCs claim that they have key financial,operational and compliance controls in place, which indicates a solidcontrol environment. However, these controls are not equally

reviewed for effectiveness and for the appropriateness to the risks theorganizations face.

69% of the SSCs review their controls for effectiveness, tailor them fore r s s an assurance ey prov e, an mon or em over an

established testing programme. Many of these SSCs have alreadyimplemented end-to-end process ownership and governance whichenables higher transparency and effective control measures which areeasy to test and track.

23% of the SSCs have the key controls determined but see them asexcessive compared to the relative risk, and of these, more than two-

which lack an end-to-end perspective. This may create ambiguityregarding the relevancy of the controls and can make revising thecontrols more difficult.

The SSCs with little or no assessments of the key controls are either inthe early phases that provide mostly transactional processes with alimited focus on more complex, value-added services, or operate in a

69%

Key controls critically reviewed foreffectiveness and tailored for risk and the

assurance they provide, monitoredthrough an established testing

programme

Current state of the SSCs regarding the keycontrols

.

23%

8%

,felt to be excessive when compared to

relative risk, and/or the controls not yetsubjected to any review

Little or no assessment as to what are thekey controls

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The majority of the SSCsintroduced automated controls,although many of them are

willing to extend their use

More than 90% of the SSCs use automatic controls to some extent, butonly 8% believe that they have already automated the control process

wherever possible and practical. All of the SSCs with the highest

development indicator are located in Slovakia.

That leaves the rest of the SSCs with an opportunity to review thecontrol processes that are not yet automated and where labour-

n ens ve manua n erven ons can e e m na e . s po en a ,realized, may quickly lead to cost savings and also relieve the

workforce time to value-added activities.

SSCs that use generally manual controls or that haven’t assessed thescope for development of automated controls do not have particularcommon characteristics in terms of scope, strategy or governance. Themajority of SSCs indicating this level of controls are located in the

. ,established only recently (in the period of 2007–2011), so they mightstill be in the building phase and haven’t yet been able to re-focus onstreamlining the processes and controls across the organization.

Current state of the SSCs regarding the controlautomation

73%

8%

Many automated controls designed,operating effectively

Controls automated only when possibleand practical

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4. Continuous improvement in the SSC

Continuous improvement reflects the optimization of the SSCs fromthe perspective of costs, quality and time. SSCs in the survey are strongin terms of the outlook for potential optimization in all the processes

which are under their responsibility. On the other hand, not too manyof them go beyond and look for opportunities to improve upstream and

The SSCs that employedcontinuous improvement methodscan benefit from them

downstream processes outside of their primary scope.

The SSCs place a generally lower emphasis on carrying out practical workshops on quality management. The workshops are far more oftencarried out by SSCs that already employed continuous improvementmethods such as Six Sigma or Total Quality Management (TQM),

which implies that the workshops are seen as common tools embedded with these methods. Also, most of the SSCs that placed a low emphasis

on carrying out such workshops don’t have continuous improvementmethods implemented.

The environment of continuous improvement was generally slightlymore favourable for SSCs located in Slovakia, which indicated higheragreement with the below statements (0,2 to 0,5 above the average).

SSC's approach to the costs and quality

3,4

4,5

Our SSC is always on the lookout for

Our SSC regularly runs workshops onquality management

Our SSC regularly reviews its customerservice for potential quality

improvements

4,5

5,2

4,5

Our SSC regularly carries out in-depthquality analyses (e.g. as part of

benchmark analyses)

Our SSC is always on the lookout forpotential optimisation in all processes

which are the SSC’s responsibility

downstream processes even where these

are not the SSC's responsibility

The value the SSCs contribute to the company as a whole is regularlyanalyzed by most of the companies. The companies also agree that the

’

SSCs make a significantcontribution to the optimization


4,6

Our SSC regularly carries out in-depth

cost analyses (e.g. as part of benchmarkanalyses)

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products and services provide substantial support to the success of thecompany as a whole.

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Value contribution to the entire organization is perceived as relativelyhigh by the majority of the SSCs. Practically, the value contribution isunderstood by most of the companies as cost savings or a form of

working capital improvement.

SSC's value contribution to the organization

4,5

4,7

4,0

SSC contribution to the company as a

SSC makes a significant contribution tothe optimisation of the organisation as a

whole

s nnova ons n pro uc s anservices provide substantial support tothe success of the company as a whole

The most common tool for continuous improvement employed by theSSCs is Six Sigma methodology (31%); fewer SSCs go further toimplement the more complex TQM philosophy. However, besides SixSigma, the vast majority of the SSCs do not employ any other tool


Six Sigma is the most populartool employed, but there is greatpotential to employ othermethodologies

.Other methods used by the SSCs included Lean and 5S.

54%

84%

81%

Not employed

Deployment of tools for continuousimprovement

15%

31%

8%

8%

15%

4%

Being implememented and developed

In continuous use

Six Sigma Total Quality Management Other

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Based on the survey results, 38% of the SSCs claim they made majorimprovements of in-scope functions and associated businessprocesses; of these, more than two-thirds have Six Sigma or Lean or

5S tools implemented.

The rest of the SSCs that report slight or some improvements aremostly in the phase of implementation of some continuous

SSCs that employ Six Sigma andLean tools claim majorimprovements more often

mprovemen oo s or o no emp oy any o em. o a y, e sthat only achieved slight improvements do not use any of themethodologies or tools.

Improvement of in-scope functions andassociated business processes in relation tocost, quality and time

38%

50%

Major improvements

Slight improvements

Some improvements

12%

The SSCs in the study mostly (60%) agree that they have clearsponsorship in place for their change projects. This statementconfirms that the SSCs understand the importance of clearly definedand assi ned res onsibilit and accountabilit for ma or chan e

Clear sponsorship andaccountability for major changeprojects are consideredim ortant

projects, which is proven by the fact that more than 50% of SSCs thatagreed with this statement achieved major improvements last year.

12%

There is clear sponsorship, responsibilityand accountability for all major changeprojects for activities in the SSC’s scope

60%

4%

24%

Agree

Disagree

Sometimes, this is true

Unsure

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The improvement projects often impact the way the processes andactivities are carried out and affect the communication flows andresponsibility distribution between different functions and

departments in the SSC or the company as a whole. Strongcommunication of the changes and clear definition of the changeobjectives and benefits are therefore essential for successfulimprovement plan implementation.

There is a strong correlation between clear definition andcommunication of the

objectives of the change projectand the subsequent quality ofco-operation betweendepartments on the changee or s

8%

Change projects impacting activities in theSSC’s scope have clearly defined andcommunicated objectives and benefits

A ree

48%

4%

40%

Disagree


Unsure

The study reveals that there is an important correlation between cleardefinition and communication of the objectives and benefits of thechange project on one side and the quality of communication and co-

operation between departments during the change efforts on the otherside.

Durin ast chan e efforts communication

40%

8%

and co-operation between departments acrossthe company have been strong

Agree

Disa ree

4%

48%


Unsure

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5. Business processes in the SSC

Focusing on the level of standardization, all surveyed SSCs achieve atleast some level of process standardization. While 42% of the surveyedpopulation has highly standardized processes (which means that 75%or more of the processes are standardized and follow the common coreprocess without exception), the medium level was claimed by 46% of

Only 12% of the SSCs considertheir level of standardization aslow

the SSCs. Only 12% of respondents said their level of standardization islower than 25%.

Extent to which processes are standardized andfollow a common core process withoutexception

42%

46%

12%

High (>75%)

Medium (25-75%)

Low (<25%)

The SSCs also generally agree that all dedicated processes and services

which are within their responsibility are standardized in relation to thecosts and benefits. On the other hand, upstream and downstreamprocesses, which are not the responsibility of the SSC, are often not

Processes and services under

the responsibility of the SSCsare usually standardized, while

both upstream and downstream

s an ar ze .The surveyed SSCs mostly agree that they see even greater potential foroptimization through the standardization of their processes andservices.

processes are o en nostandardized

6 We see even greater potential for

o timisation throu h standardization of

Standardization of processes in SSCs

4,7

3,2

All dedicated processes (services), whichare the SSC's res onsibilit are

All upstream and downstream processes(services), which are not theresponsibility of the SSC, are

standardized

our processes (services)

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standardized


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SSCs in Slovakia indicate slightly higher standardization of the SSCprocesses compared to the average (+0,2); SSCs in the Czech Republicsee significantly higher potential for further optimization (+0,7).

Analyzing the level of documentation, only 4% of surveyed SSCs claimno or little standard process of documentation. For some 40% of SSCs,documentation exists for all processes but is not regularly updated and

The standard process ofdocumentation exists in almostall the SSCs, while only 56% of

them update those processes

nee s some en ancemen .

The majority (56%) said that the level of documentation maintainedfor internal control and compliance purposes has been optimized andis reviewed on a regular basis.SSCs in Slovakia assessed the level of documentation as slightly higherthan the average level in the survey.

Level of rocess documentation

40%

56%

Documentation exist for allprocesses, not regularlyupdated, needs someenhancement

Little or no standard processdocumentation exists

A trend similar to the case of process standardization was observed inthe process automation. Nevertheless, based on the strength of

4%

Documentation exist forinternal control and compliancepurposes, optimised andreviewed on a regular basis

,is perceived as generally lower compared to the level ofstandardization.

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Generally, the upstream and downstream processes which are not within the responsibility of the SSCs are usually not automated.On the other hand, all dedicated processes and services which are

within the responsibility of the SSCs are often automated, but themajority of the surveyed SSCs agree that they see even greaterpotential for process optimization through deployment of the latestautomation technologies.

Automation follows a similartrend as standardization, butholds a lower level

2,9

4,9

All the SSCs upstream and downstreamprocesses (services) which are not the

We see even greater potential foroptimisation through deployment of the

latest automation technologies

Automation of processes in SSCs

3,5

Our SSC has automated (in relation tocost/benefit) all dedicated processes andprocedures (services) which are the SSC's

responsibility


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6. Customer relations

Customer relations is one of the key areas for any SSC. The satisfactionor dissatisfaction of its customers provides a clear picture of theperformance of the SSC and the quality of the services provided.Depending on the orientation of the SSC, it can serve internalcustomers, external customers or a combination of these two groups.

Half of all SSCs provide servicesto internal customers only

Based on the data received as part of this survey, half of all SSCsprovide services to internal customers and half serve both internal andexternal customers. Almost one-third of all SSCs provide servicesnearly equally to both groups. SSCs in the Czech Republic are moreoriented on internal customers compared to the overall survey average.

50%

Customer base for SSC services

12%

30%

8%

Periodical reviews of customer satisfaction are key elements ofascertaining whether the quality of services provided meets theexpectations of customers. A customer satisfaction survey is one of thetools used to get the “voice of the customer” about the SSC services.

At least once a year, asatisfaction survey is performedin 69% of all SSCs

Internal customers Mostly internalcustomers

Mixture of internaland external

customers

Mostly externalcustomers

The frequency of customer satisfaction surveys depends largely on thetotal number of customers and is most often done annually or evenmore frequently (69% of all participants perform the survey at leastonce a year). Only 4% of all participants do not perform any kind ofcustomer satisfaction survey.Customer surveys were identified as slightly more frequent for SSCs inSlovakia.

31%

38%

27%

%

Frequency o customer satis action surveys

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More than once a year

Annuall Occasionally (Lessthan once a year)

Never

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Tools to manage and retaincustomers are more often used forexternal customers

To fully benefit from the potential of the customer -supplierrelationship, the SSC can use several tools to manage and retain itscustomers, such as CRM (Customer Relationship Management). At the

moment, the usage of such tools is mostly limited (for almost 48% ofsurvey participants). Just less than one-third of all participants usesuch tools continuously. If we look at the customer base shownpreviously which consists of internal customers, in 50% of all cases, we

Usage of tools to manage and retain customersin the SSC

can see a e use o oo s o manage an re a n cus omerscorresponds with the spread of the internal and external customer

base.

28%

48%

24%Continues

Limited

None

20% 20%

Usage of tools to manage and retain customers in theSSC and the customer base

Continues

12%

8%

4% 4%

16%

4%

8%

4%

Limited

None

0 0

Internal customers Mixture of internaland external

customers

Mostly externalcustomers

Mostly internalcustomers

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Orientation on customers is one of the key features of a successful SSCand can be promoted by the use of several tools. Among the mostfrequently tools are customer satisfaction surveys (applied by 88% of

all SSCs participating in the survey), a helpdesk tool and automatedcomplaints management and tracking tools. Other tools used includedonline tools, service request tracking tools, regular site visits, regularinternal meetings, monitoring of escalated complaints and feedback

Customer satisfaction surveysare the most common tool forascertaining the proper

orientation on customers

ma oxes.

88%

50%

Customer satisfaction surveys

Helpdesk

Use of tools to support orientation oncustomers

27%

27%

Automated complaints managementand tracking tools

Other

Regarding the continuous improvement of the service culture, theThe highest quality of servicesg es qua y o serv ce prov e o cus omers y a s a s seen as

being almost always present, and the promotion of new ideas withinthe SSC team to improve the quality of services provided to customersis also applicable. The least frequent situation is regular proactivelisting of areas for improvement by the SSC staff; this area shows some

potential for improvement. When it comes to new ideas on providingcustomers with improved benefits, SSCs located in Slovakia indicateslightly higher scores compared to the survey average.

prov e s one o e eyfeatures of the service culture inthe SSCs

4,8

All SSC staff is continuously working toim rove the ualit of services from the

All SSC staff is always trying to provideservices that are of the highest quality

from the customer's perspective

Service culture applied in the SSC

4,7

3,8

New ideas on providing our customers with improved benefits are promoted

within the SSC team

All SSC staff regularly comes up withideas for improving the services provided

customer’s perspective

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Fully applied customer orientation means being able to quickly adaptto the individual needs of single customers, regularly ask for theiropinions on the quality of the services provided and implement their

suggestions. Overall, the SSCs feel these areas are rather developedand used within their organization; SSCs located in Slovakia indicate aslightly higher level of this customer orientation aspect than the surveyaverage.

SSCs see customer orientationas one of the key features oftheir working culture

4,4Our SSC can always respond flexibly toour customers’ requests (e.g. individual

services)

Orientation on customers in the SSC


4,4

4,8

Our SSC implements its customers’suggestions for improvement within

reasonable time

how satisfied they are with the quality ofthe services provided

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7. Performance management

According to our survey, balanced scorecards are the most usedperformance management tool by the SSCs, followed closely by benchmarking. The category “Other” included internal performancemanagement tools, SLA-based tools or other types of KPI managementtools.

Balanced scorecards are widelyused, but not many SSCsconsider their balancedscorecard as a matureperformance management tool

77%

69%

Balanced scorecards (KPIs)

Benchmarking

Management performance tools used in theSSC

38%

15%

Management Information Systems(MIS)

Other

As far as performance targets are concerned, the participants wereasked in the surve about three ossible areas for erformance

Performance targets are afavorite tool for monitorin and

targets: individuals, functions and processes. 88% of all SSCs have tosome extent set targets on the performance of concrete individuals.Moreover, more than half of all SSCs claim they have set theseperformance targets for individuals for more than 75% of cases. Only12% claim they have no performance targets for individuals at all. Thelack of proper target setting may be caused by the lower maturity ofthe SSCs which still need some time to finalize the basic processes.

managing the performance forindividuals, functions andprocesses.

12%

6%

Extent to which SSCs have performance targetsfor individuals

None

Low (< 25%)

-

29%

53%

High (>75%)

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Extent to which SSCs have performance targetsfor functions

All SSCs have performance targets for functions in place to someextent. The coverage of more than 75% of functions by performancetargets is claimed by 40% of the SSCs. The same portion of SSCs claim

to have coverage of 25-75% of functions.

0%

20%

0%

40%

None

Low (< 25%)

Medium (25-75%)

High (>75%)

As with performance targets for functions, all SSCs claim to haveperformance targets for processes to some extent. More than 75% ofprocesses are covered by performance targets at 64% of all SSCsproviding information about this performance management setup.

0%14%

Extent to which SSCs have performancetargets for processes

None

Low (< 25%)

21%

64%

Medium (25-75%)

High (>75%)

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Benchmarks are frequentlyused by 38% of the SSCs

46% of the SSCs say that their reports are prepared by using balancedscorecards but consider future development as necessary.Furthermore, 23% of organizations consider their balanced scorecard

already matured with both financial and non-financial metrics. Theremaining SSCs are in the earlier stages of the performancemanagement reporting, where 19% of SSCs are currently working ondevelopment or they are in the early stages of use, and 12% of

12%

Extent to which an integrated balancescorecard or a similar process which combinesoperational and financial measures has beendeveloped

No development

organ za ons sa a ere s no eve opmen n s area.

19%

46%

23%Currently being developed; earlystages of use

Reports are generated using balanced scorecard butrefinements required

Mature balanced scorecardprogramme with both financial

Benchmarks are used to evaluate the SSC frequently or on a regular basis for all services provided by 38% of SSCs, and a similar number of

respondents state that they use benchmarks to evaluate the SSCoccasionally when empirical data is required. The remaining SSCs use

benchmarking in their evaluation processes infrequently.

and non-financial metrics

23%

38%

Extent to which benchmarks are used toevaluate the SSC

Infrequently

Occasionally, when

38%

empirical data is required

Frequently, on a regular basis for all servicesprovided

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Key areas of the SSCs’ KPIsfocus on time, quality andcost/efficiency

The SSC’s performance targets seem to be quite advanced in most ofthe surveyed SSCs. However, the most applicable approach is a regularreview of SSC performance against targets, with the next most

applicable approach being SSC performance targets reviewed atregular intervals. When it comes to setting unambiguous performancegoals, SSCs in the Czech Republic indicated significantly highercompliance with this statement compared to the overall average.

4,6

5,1

Our SSC has set unambiguousperformance goals

In our SSC performance is reviewedregularly against targets

SSC's performance targets

As part of the performance management system, every SSC is using itsown set of defined KPIs. Those mentioned in the survey can be divided

5,0In our SSC performance targets are

reviewed on regular intervals


n o ree ey areas: me, ua y an os c ency.These three areas need to be balanced to meet the strategic criteria ofthe particular SSC, which should include definition of priorities foreach of them.

Within the survey, we observed mainly the following types of KPIs in

the three areas:

Time ,

submission on time, etc.)• Meeting project/implementation deadlines

Quality • Quality meeting SLA standards or measured by customer

satisfaction surveys• Other (No audit findings, Attrition rate)

Cost/Efficiency

• FTE productivity/performance (transactions processed per FTE,processing time per transaction, number of manual transactions,etc.)

• Cost (Meeting cost budget, Cost of SSC as % of sales or cost pertransactions, etc.)

• Process efficiency measures (Days for processing backlog, Dayssales outstandin as % of sales or other similar measure

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8. Human resource management

One of the key elements supporting a high performance culture in theSSCs is employee motivation and development, which should beaccompanied by a system of standardized development plans. Almostevery organization in the survey has to some degree such employeedevelopment plans in place. Almost 90% of SSCs involved in this

Nearly all of the SSCs usestandardized employeedevelopment plans

survey have standardized employee development plans, out of which62% have them linked to manager performance; the rest (26%) of theorganizations have them standardized but not linked to managerperformance. Only 12% of organizations have no standardizationinvolved in employee development plans.

Characterization of employee developmentplans as they relate to performance evaluations

12%

26%

n t e organ zat ons

Non-standardised

Standardised but not linked tomanager performance

Open communication in all SSCs is understood to be an importantmanagement tool, and the overall practice confirms that an open top-

Standardised and linked tomanager performance

Open top-down communicationis an important management

own commun ca on s e r g approac . s g y ower eve omaturity, compared to the top-down approach, is perceived in thepeers communication and an even lower maturity level for the bottom-up communication. Given that the survey was generally completed bysenior executives, we assume that the scores achieved especially by the

bottom-up and top-down communication approach might be partlyinfluenced by this fact.

Communication throughout the SSC

oo

4,2

4,7

In our SSC information is transmitted in

In our SSC, information is transmitted inan open and prompt manner by junior

staff throughout the organisationalhierarchy (bottom-up)

In our SSC, information is transmitted in

an open and prompt manner betweenstaff at the same level in the

organisational hierarchy

PwC 36

5,2an open and prompt manner by managers

to all junior staff throughout theorganisational hierarchy (top-down)


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Employee satisfaction surveys are performed at least annually in 80%of SSCs, bi-annually for 12% and quarterly for 4%. Only 20% of thesurvey participants indicate that employee satisfaction surveys are not

used as a regular tool.

Employee satisfaction surveys areused regularly by 80% of all SSCsas a tool to listen to the voice of

the staff

Frequency of employee satisfaction surveys

64%

12%

4%

20% Annually

Bi-annually

Quarterly

Rarel or Never

One of the key indicators of the maturity of the SSCs’ HR managementis the staff turnover indicator. For half of the SSCs, the staff turnoverrate over the last 3 years has been between 5 and 10%; for 86% of the

Only 14% of all SSCs participatingin the survey indicate a turnoverrate higher than 20% over the last

, ,indicate a turnover rate higher than 20%. Keeping in mind the fact thatthe majority of the SSCs were established between the years 2006-2007, we expect that the services were in a ramp-up phase and onlyrecently have become more stable, which in turn enabled the SSC

management to focus more on monitoring the staff turnover and otherpeople aspects.

Average level of staff turnover over the last 3

50%

14%

years

5-10%

11-20%

36% >20

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More than half of the staff of the participating SSCs hold a universitydegree, out of which 7% hold a postgraduate degree. The staff with auniversity degree represents 47% for SSCs in the Czech Republic (out

of which 5% hold a postgraduate degree) and 72% in Slovakia (out of which 10% hold a postgraduate degree).

Employment of university graduates in the SSCs is a very common

More than half of all SSC staffhold graduate or postgraduateuniversity degrees

p enomenon n e reg on g ven e spec c requ remen s o e s,such as a good level of multiple languages and specific technical or ITskills which can be found just with university graduates.

7%

Education ratio of the SSC staff

high school degree

45%

48%

bachelor/universitydegree

postgraduatedegree

Professional or technical certifications sponsored by the SSCs can beused as further motivating and developmental tools applied by theSSCs’ management. Among the most frequent ones, we can find such

certifications as ACCA, Lean Six Sigma and local chartered accountantprogrammes. Lean Six Sigma certifications correlate with 31% of theSSCs where Six Sigma methodology is used as a process improvementtool.

Sponsored professional andtechnical certifications arefrequent motivational tools

46%

46%

ACCA

Lean Six Sigma

Professional / Technical certificationsencouraged

27%

23%

15%

8%

1 %

Czech/Slovak Certified Accountant

Internally Developed ProfessionalProgramme

CIMA

CPA

IT certifications

PwC 38

12%Other

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9. Systems and technology

The use of electronic workflow is relevant to nearly all of the SSCs inthe survey, where more than 40% of the companies indicate that thistool is used in almost all relevant processes.

The regular review and identification of potential for improvement is

Electronic workflow is used inalmost all of the surveyed SSCs;however, large potential forimprovements is still inherentin the workflow systems

on the other hand less relevant to the SSCs in general, although for theSSCs located in Slovakia this approach is used more intensively (score0,7 above the overall average).

Further areas for improvement and optimization of the electronic workflow are seen as the most relevant for the SSCs, more so for SSCslocated in the Czech Republic. From the above statements, we derivethat the level of development of the workflow tool is relatively more

advanced in the SSCs in Slovakia, although further development andoptimization are planned in the Czech SSCs.

4,1Our SSC uses electronic workflow

systems for all processes and procedures where relevant

Extent to which electronic workflow systemsare used

3,9

4,5

We regularly review our electronic workflow systems to identify potential for

optimisation

We still see a large potential foroptimisation in our electronic workflow

systems


rom e perspec ve o sys ems, e ma or y o s n ca ethat systems are mostly standardized both within the SSC and front-end.

4,4 We have a standardised ERP

system/platform (same release and

Extent of optimization process regarding theERP system

SSCs see potential in furtherstandardization andoptimization of ERP systems

3,7

4,0

4,3

…

We use the same pre-systems (front-endsystems) for each function (same release

and customising systems)

We regularly review our ERP system toidentify potential for optimisation

We still see a large potential foroptimisation in our ERP system

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Areas for further standardization and further optimization areperceived as relevant, especially by the SSCs located in the CzechRepublic (score 0,5 above the overall average).

Most of the SSCs state that the IT governance structure and controlenvironment are at an advanced level. This level is also documented by

very strong confirmation of the ability to document conflicts that may

SSCs do not see large potentialin IT governance optimization,although regular review of IT

governance is performed by the vast majority of them

ar se w n e sys em.

It is not surprising that large potential for further optimization isgenerally not expected in this area, although it is still to some extentanticipated. In nearly all the SSCs, opportunities for optimization areconsistently identified and pursued by regular review of the ITgovernance structure.

Extent of IT Governance applied in the SSC

5,0

4,7

3,5

We can document conflicts within the ITsystem at all times (e.g. system

We regularly review our IT governancestructure to identify potential for

optimisation

We still see a large potential foroptimisation in our IT governance

structure

5,0

4,8

We have implemented a standardised ITgovernance structure in our SSC

We have implemented comprehensivecontrol processes within the IT system


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10. KPIs

The performance of the SSCs was measured by several qualitative andquantitative criteria regarding the operational costs savings, data aboutproductivity and customer satisfaction complimented by the evaluationmade by employees.In respect of the maturity evaluation and the operational savings, in

Almost half of all SSCparticipants claim to achieveoperational cost savingshigher than 30%

general, the higher the stage of the maturity model, the higher costsavings and higher customer and employee satisfaction rates.

Almost half of all SSCs claim that the savings on operational costsrealized after the implementation of the SSC reached more than 30%.On the other hand, it should be noted that almost 40% of allrespondents did not provide any information regarding the operationalcosts savings. The reasons for the lack of information might be the

early stage of some SSCs that lack relevant results or the fact that it isstill too early to measure particular cost savings.

42%38%

Savings of operational costs as a result of SSCimplementation

0%4%

8% 8%

< 15% 15-19% 20-24% 25-30% > 30% Noinformation

available

Information about productivity increase as a result of SSCimplementation was provided by only half of the SSCs as the other halfhas claimed lack of supporting data and evidence. Nevertheless,around 15% of all participants have seen an improvement inproductivity greater than 70%.

Around 15% of surveyparticipants see greater than70% improvement inproductivity as a result of SSCimplementation

Improvement of productivity as a result of SSCimplementation

12%

23%

0%

15%

50%

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< 49% 50–59% 60–70% > 70% No informationavailable

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The customer satisfaction section shows that the more mature the SSCis, the more satisfied the customers are, as more than 70% of SSCs

which were evaluated as being in Stage 3 of the evaluation model

achieved the customer ratings “good“ or “very good“ by more than 60%of customers. Overall, nearly 40% of all SSCs indicate that theirservices are at a “good” or “very good” level in the view of more than70% of their customers.

73% of all SSCs receive acustomer rating as “good” or“very good” from more than

60% of the customers

35%38%

19%

Percentage of customers who rate the SSC'sservices as 'very good' or 'good'

An alternative view addresses the overall quality of the SSC’s

8%

< 59% 60–70% > 70% No informationavailable

70% of SSC employees think

.survey participants claim that more than 70% of their employees thinkthat the working conditions are good or very good. Again, we can see acorrelation between the SSC maturity and the satisfaction of itsemployees with the working conditions. 45% of all SSCs rated in the

maturity model as being in Stage 3 achieved the highest rating of staffsatisfaction among the SSCs surveyed.

Percentage of SSC staff who rate the SSC's

good or very good

23%27%

42%

working conditions 'very good' or 'good'

0%

<49% 50–59% 60–70% > 70% No informationavailable

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On average, initially set targets were met to a relatively high extent inall cases in the following categories: Cost reductions as the leading one,Quality improvements, Faster service, Transparency improvements

and Other objectives, where the survey participants included mainlyend-to-end process management, but the extent to which this target

was met is relatively lower compared to the others.

All initial targets have beenmet to a certain extent in allSSCs

4,8

4,5

4,3

Cost reductions


Faster service

the initial targets

4,5

3,5

Transparency improvements

Other

The scale of answers: 1 - target not met; 6 - target exceeded.

of the SSCs. This is the case for 27% of SSCs as far as cost reduction isconcerned. Other targets were exceeded in 15% of cases.

27%Cost reductions

Percentage of SSCs which have exceeded theinitial targets

exceeded in 27% of all surveyparticipants

15%

15%

15%


Faster service

Transparency improvements

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Ou t l o o k

Outlook

The final part of our survey touches upon the future prospects of theSSCs in the region.

Based on the answers from our survey, we can clearly see that theexisting concept of the SSC is rather successful as 88% of our

88% of SSCs will continue tooperate and do not plan to scaledown processes. 92% of surveyparticipants are planning to orare already consolidating their

participants do not plan to reduce the extent of activities provided bythe SSCs and return them back to the business units. Almost half of theparticipating SSCs plan to consolidate the existing SSCs and more thana third of the participants (35%) have already done so.

What is rather optimistic is the number of new SSCs to beimplemented, as 46% of all participants plan to implement a new SSC.This confirms previous good experience with the local environment

SSC

and promises the future development of the SSC market in the region.

35%

15%

42%

8%

Consolidating existing SSCs

Degree on future sourcing strategies

35%

4%

46%

65%

15%

Implementing a new/additional SSC

4%

15%

0%

0%

8%

19%

88%Scaling down the SSC and returningactivities/processes to the business

units and/or to company headquaters

previously provided by the SSC to an

external provider

Not implemented neither plan to be implemented

To be implemented

In process of implementation

Already implemented

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Outlook

The outsourcing of services outside the SSC is seen as a relevantoption, although the survey participants do not see this as a currentissue which would be relevant to their situation as of today. Generally,the SSCs see it as more relevant to outsource to a low-cost country thanto a country within the region, but they find both options less relevant

Outsourcing of processes fromthe SSC is seen as a relevantoption, although is not seen ascompletely topical

than the idea of outsourcing some activities from the SSC in general.

3,6Selective outsourcing of processes

Selective outsourcing of processes to a

Selective outsourcing of processes

2,9

ow-cos coun ry ou s e o our reg on

Selective outsourcing of processes to acountry within our region


In looking for a new location for the SSC, the key criteria for selection A politically stable environmentnc u e ava a y o a ow cos an s e wor orce w g

language potential and operation under favorable legislation.Further criteria with a similar degree of preference were infrastructurepresent in the location or nearby, macroeconomic stability andavailability of any kind of grants. Proximity of other corporate

functions or of the core business as well as the attractiveness of thelocation were not seen as very decisive factors for location selection.

an a s e , e uca e , oyaand reliable workforce are seenas the main reasons in favour ofthe Czech Republic andSlovakia

27%

24%

Workforce availability, skill-sets, languagepotential

Labour costs and legislation

Preferred criteria to used when selecting thenew location for SSC

11%

10%

10%

6%

Location support infrastructure (Offices, facilities,IT, banking, etc)

Economic environment (Regulatory, tax, politics,economy)

Availability of Local or EU grants

Quality of life (Cost of living, attractiveness oflocation)

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6%

4%

Proximity to core business location(s)

Co-location with other corporate functions

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Outlook

The participants were asked whether they would choose a differentlocation if they had the opportunity to decide again. Only 42%confirmed that they would keep the current location. The rest did notspecify any preference or named some other destination. Among thenew destinations suggested were mainly those with even lower labourcosts located further to the east of the Czech Republic and Slovakia.

8%

Preferred location of the SSC if it were possibleto choose it again

50%

42%

No information available

The same location as now

New location

Based on the overall comments summoned in our survey, the CzechRepublic and Slovakia are seen in general as favourable destinations

for the SSC implementation. The main reasons stated by theparticipants can be divided into several categories:

• Workforce in the Czech Re ublic and Slovakia is assessed as

Czech Republic and Slovakiaare seen as favourable

destinations for the SSCimplementation

follows:• skilled• experienced• relatively available• reliable and motivated• loyal• with high university graduates ratio

• Global environment in the Czech Republic and Slovakia is

seen as follows:• macroeconomically stable• with low labour costs (“still good value for money”)• favourable labour legislation in terms of sick leave of the

employees• no extensive cultural or language barriers

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Outlook

Challenges lying ahead of theSSCs include balancing thecosts and quality andattracting and retaining keytalents

Attracting and retaining a skilled workforce also figured among the burning issues today’s SSCs are facing. Secondly, increasing customersatisfaction, cultural differences and cross-cultural communication

between the SSCs’ staff and core business units were put in secondplace as complicating the everyday operations of today’s SSCs.

As a general remark, it can be stated that the SSC concept is a success.SSCs are clearly not a one-time project but an ongoing journey withmany challenges. Achieving a sound balance of cost efficiency andquality and attracting and retaining key talents rise up among the mostimportant objectives for the SSCs for the future.

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Glossar

Accounts Payable Association of Chartered Certified AccountantsBalance ScorecardCustomer Relationship ManagementCzech Republic

AP ACCA BSCCRMCZ

Enterprise Resource PlanningFast Moving Consumer GoodsFull time employeeHuman resourcesKey Performance IndicatorPerformance managementSlovakiaService Level Agreement

ERPFMCGFTEHR KPIPMSK SLA

Shared Service CentreTotal Quality Management

SSCTQM

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Con t a c t s

Czech Republic

Chris Skirrow

Slovakia

Alica Pavúková PartnerTel: +420 251 151 840E-mail: [email protected]

V ěra Výtvarová PartnerTel: +420 251 152 099

PartnerTel: +421 259 350 419E-mail: [email protected]

Monika Smižanská DirectorTel: +421 259 350 421

E-mail: [email protected]

Aleš Fojtík ManagerTel: +420 251 151 674E-mail: [email protected]

E-mail: monika.smizanska@ sk.pwc.com

Martin Kubiš Assistant ManagerTel: +421 259 350 424E-mail: [email protected]

Jonathan Appleton Director - Academy LeaderTel:+420 251 152 015E-mail: [email protected]

Eva Hupková Director - Academy LeaderTel: +421 259 350 414E-mail: [email protected]

The commitment of these experts reflects the highest quality criteria in terms of theirprofessionalism. Integrity, impartiality and objectivity are also part of the corporate philosophy.For this reason, great care is taken to offer clients only those all-in-one services that areconsistent with the law. The most modern approaches are taken towards auditing, consultingand evaluation, thus supporting the companies in meeting the high demands of a competitive

market.

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www.pwc.cz www.pwc.com/sk

Documents

Pwc Ssc Survey 2012 v1.0