Eleventh Annual Accenture Global Shared Services Conference

Trends in Shared Services: Unlocking the Full PotentialPaul Boulanger Managing Director, Finance and Enterprise Performance

Presentation

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Trends in Shared Services: Unlocking the Full Potential

Presentation:

Now I’m going to talk about unlocking the full potential of shared services and speak a little bit to the research program that we ran this year and the results that we found1; but what does that mean unlocking the full potential? Well, of course, it means capturing cost advantage through consolidation, through arbitrage. It means creating a platform for standardizing, processes and support services, providing a platform to standardize systems but it means going beyond those types of things. It means shared services supporting a corporate strategy, enabling things like mergers and acquisitions and geographic growth. It means helping your organizations create focus in your line management teams on your core business. It means expanding the service model to its logical conclusions, illustrations of which you will see this week to create as much value as possible out of the model available in supply chain areas, customer areas; now we are seeing integrated business services organizations providing analytic services. It’s taking the model and expanding the value that it provides. That’s what we mean by unlocking the value.

Gary mentioned that we executed our shared services research program, we do this every year, but what we did this year is we had a specific goal. There were a variety of characteristics that came out in our 2010 research program, Lessons from the Masters2 that we wanted to explore more deeply and that’s exactly what we did. So we collected data from over 100 companies spanning a variety of geographies. We focused on the leaders of shared services organizations. So we weren’t going out and polling, you know, general corporate organization leaders. We specifically

focused on operators of shared services and then we conducted a series of in-depth interviews to augment the data survey collection and things like that.

There’s a series of competencies that build upon one another and are deeply connected and so what we’re going to do is kind of take a little time on each of these and show you some of the results and what we learned in our most recent survey.

So let’s start with process excellence. And I’ll give you four points on process management. Point number one would be engineering focus. Point two would be religious zeal. Three would be process standardization and four would be process ownership.

So, on the first point—leading shared services organizations are taking an engineering focus in how they dissect and analyze their processes. They’re breaking them apart, they’re systemically finding and searching for and exploiting opportunities to remove variability and process exceptions eliminate process steps and process waste in the same way that they would on the manufacturing shop floor; applying lean Six Sigma techniques, holding Kaizen events.

Now religious zeal, to create that kind of mindset in an organization requires a deep conviction that this is the way you need to and want to operate and then you have to convince your organization to do so. So as a shared services leader to get this mindset imbedded of process excellence in the organization, you have to have a certain amount of religious zeal. A little bit of a preacher.

Now one way to think about or measure process excellence is the degree to which processes are standardized and a little bit of our survey results here. But why is process standardization so important? I mean, it should be obvious. Process variability by very definition is more expensive to deliver and more complex to deliver in terms of service management. Now what our survey results told us is that only 49% of our respondents reported having the three platforms for process standardization in place; policies, the processes themselves and the supporting systems. That’s actually sort of surprising. That says that shared services organizations or at least the ones that we talk to have a fairly long way to go in terms of addressing what is a fundamental tenet in process excellence that is delivering processes in a standardized fashion. Now one of the challenges that some organizations may have in standardizing processes, or in governing them is global process ownership. It’s difficult to standardize processes and drive process improvement if you don’t have the appropriate governance structure. Process ownership is on the rise, interestingly.

The second concept we examined was that of service excellence. What is the method by which you systemically drive service excellence? The system around the system. Our argument is that that structure needs to be in place. We call it; Accenture calls it, the service management framework. And what is the goal of the service management framework? The goal is discipline. Discipline and how you manage customer expectations. Discipline in how you manage the roles and responsibilities of the service operation versus the roles and responsibilities of the service center. Ultimately what you’re trying to do with the service management framework and certainly how we think about it is to create that seller-buyer relationship; that commercial focus of an enterprise within an enterprise.

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Trends in Shared Services: Unlocking the Full Potential

Continuous improvement. It’s great if you get your processes and your shared services operation. You make a lot of improvements up front, you’re harvesting value from consolidation and make some process changes, standardize and that was last year. What are you doing this year? Having a continuous improvement competency is critical to the ongoing evolution of the shared services operation within a company because you’ll be asked that question. Again you’re trying to convince your business leadership that the shared services model delivers value not just one time but over time. And so we believe it to be a critical competency.

So, how do you convince the organization of all this value that you’re creating? There’s the concept of value marketing and again we’re trying to convince line leadership in our businesses that the shared services model and shared services leadership is actually driving value. So we view value marketing as a critical and emerging competence and it’s a learned behavior especially for support services organizations. Talking frequently about the value we’re delivering to the organization and thinking about it in those terms.

Now in our survey over 15% of the respondents reported that they have aspirations, intentions that the services they provide are going to expand dramatically in the next five years into new areas, into supply chain operations, into customer operations. Well those intentions will be bounded by the confidence that they

create in their organization’s leadership teams and value marketing is a big part of creating that confidence.

Now you’re managing the processes you own very well. Your service model is flawless. You’re delivering a very high service. You’re producing a continuous stream of improvement opportunities that the organization sees value in. You’re effectively marketing the value. Where are you? You’re in a position to elevate the shared services organization to a place we call integrated business services. You’re in a position to expand services—place the shared services organization in a different reporting role, providing even more value. Be treated as a business unit, an internal business. That’s sort of how we think about integrated business services.

Let me give you some specific characteristics that we look for and think about referent to integrated business services. First, it’s an independent entity. It tends to be treated like a business unit and it tends to be reporting to a C-level leader. What you see over here in our survey results was that 59% of the shared services operations that we queried reported as reporting to the CEO, COO or President, actually 17% reporting to the CEO. That’s up from 8% three years ago. That’s a material change in three years. Shared services as an influential entity, internal to most companies, is on the rise. So think independent entity, business authority, reporting to the C-level or reporting to an officer. So that’s one characteristic.

Another characteristic is that they provide a wide array of services, multi-function. But the types of areas that we see integrated business services playing reflect the fact that they have created the confidence in

their business leadership that they’re not only managing the traditional services well but that the model and business services leadership is equipped to take on new areas, closer to the front office and drive significant value. That they have strategic ownership and management of end-to-end processes, they actually play a strong role and in some cases own governing the architecture of end-to-end process, and as or more important compliance with the end-to-end process and then lastly accountability. Accountability is sort of an ethereal concept, isn’t it? But at the end of the day they are run like a business. They are accountable for a broad set of business results and we’ve even seen integrated business services organizations that, as part of their accountability model in their annual planning cycle the organization, is holding them accountable for growth of their business i.e. the assimilation of other parts of the organization into their service model. That’s confidence. When you have convinced the business leadership, that shared services is such an effective concept, shared services has the competent leadership to deliver value that they’re saying I want to hold you accountable for taking on more each year into your business, you’ve achieved something. This is the future. This is the future for shared services and for some companies it’s the reality today with the result being competitive advantage.

Notes1 Trends in Shared Services: Unlocking the Full Potential,

Accenture 20112 Achieving High Performance through Shared Services:

Lessons from the Masters, Accenture 2009

About Accenture Accenture is a global management consulting, technology services and outsourcing company, with more than 244,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$25.5 billion for the fiscal year ended Aug. 31, 2011. Its home page is www.accenture.com.

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