ASSA Benchmarking - Studies Conducted, Cost and Benefits and Methodology

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Benchmarking Mr Neil Padley Vice President, ASSA

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Transcript of ASSA Benchmarking - Studies Conducted, Cost and Benefits and Methodology

Page 1: ASSA Benchmarking - Studies Conducted, Cost and Benefits and Methodology

Benchmarking

Mr Neil Padley

Vice President, ASSA

Page 2: ASSA Benchmarking - Studies Conducted, Cost and Benefits and Methodology

What is benchmarking?

• Definition:– The process of comparing performance against the practices of other leading

companies for the purpose of improving performance

• Quotes– “Benchmarking is the practice of being humble enough to admit that

someone else has a better process and wise enough to learn how to match or even surpass them.“Ron Webb, APQC

– " I think it is an immutable law in business that words are words, explanations are explanations, promises are promises ‐ but only performance is reality.“Harold Geneen (former CEO International Telephone and Telegraph company.)

– " A race horse that can run a mile a few seconds faster is worth twice as much. That little extra proves to be the greatest value.“John D Hess

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Who has been involved in ASSA benchmarking

W.A. Office of Shared Services

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What ASSA benchmark studies are undertaken?

• The three most popular benchmark studies, run on a regular basis are:– Accounts Receivable

• Process customer credit, Invoice customer, Accounts receivable, Manage and process collections and adjustments/deductions.

– Accounts Payable• Payments, Remittances, Expense Management, Purchase cards, Credit cards,

Vendor masterfile maintenance.

– Payroll• Time and attendance, Award Interpretation, Payroll and benefits processing, Payroll enquiries,

Payroll technology.

• Other benchmark studies are run when there is sufficient demand from the membership, for example:

– Procurement & Supply Chain; Information and Communications Technology; HR; Employee Services; Finance; Travel; Call Centre; Records/Document/Knowledge Management.

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2001• Accounts Payable 2001 (7 participants)• Employee Services 2001 (9 participants)

2002• Accounts Receivable 2002 (8 participants)• Financial Accounting 2002 (6 participants)

2003• Accounts Payable 2003 (11 participants)• Employee Services 2003 (8 participants)

2004• Accounts Payable 2004 (8 participants)• Accounts Receivable 2004 (6 participants)• Procurement 2004 (6 participants)

2005• Accounts Payable 2005 (7 participants)• Financial Accounting 2005 (6 participants)

Studies conducted2006• Payroll 2006 (12 participants)• ICT 2006 (5 participants)• Procure to Pay 2006 (14 participants)

2007• Accounts Receivable 2007 (11 participants)

2008• Payroll 2008 (9 participants)• Accounts Payable 2008 (12 participants)

2009• Payroll Mini Study 2009 (15 participants)

2010• Accounts Payable Mini Study 2010 (10

participants)

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Costs and Benefits of studies

• Costs– For mini‐studies

• approximately $3,000 per participant• Time commitment from your organisation is 20‐30 hours spread over 2 months

– For full studies• approximately $15,000 per participant• Time commitment from your organisation is 60‐80 hours spread over 5 months

– The exact cost varies depending on number of participants (more participants leads to lower cost per participant)

• Benefits– Establishment of a performance baseline against which you can measure your future

performance– A comparison of performance to others in the study– Insight into how other organisations achieve their performance levels– A solid, fact‐based understanding of your own improvement opportunities– Strong networking benefits– Access to follow‐up forums for sharing of best practice

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What is the specific deliverable from a study?

• Full study – a detailed report (typically 80‐100 pages) with:– Detailed analysis of 25* performance metrics and 15* context areas, each with graphical

representation and detailed supporting commentary

– Key Conclusions section which summarises the overall results of the study

– Individual company summaries (a one page summary per participant)

– Appendices with full data submissions from all participants

– Full study concludes with a ½ day better practice forum for participants to share best practice

• Mini study – a summary report (typically 15‐18 pages) with:– 12 performance metrics each with graphs and light commentary

• Looking to incorporate international standards as a comparison.

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What are the features of the ASSAbenchmark studies?

• Benchmark studies are delivered using a trusted service provider – Ernst & Young – who have been running ASSA benchmark studies since 2006.

• Ernst & Young have developed a benchmarking program and methodology focused on the specific needs of the Association:

– Process benchmarking of business support functions

– Metrics and questionnaires developed by the members

– Members commit their own resources for key phases (reduces costs)

– Open sharing of data and best practices amongst members (with appropriate confidentiality agreements in place)

– Follow‐up forums for sharing best practice

• A Benchmark report provides a comprehensive analysis of your business compared to its peers

– It identifies the drivers of high performance, not just the result

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Benchmarking methodology

The Ernst & Young benchmark methodology is built around a classic benchmarking process. However, it is enhanced by a number of key differentiators, including increased engagement with participants, the quality and depth of the reporting including the high level of contextual feedback which is applied to each metric

ProjectInitiation

KPIBuild

DataCollection

DataAnalysis Reporting

Better PracticeForums

Scoping of benchmark study

Development ofStatement of workthat details costs,Timeframes, roles& responsibilities

Agreement of performanceindicators & datadefinitions

Design of surveyinstruments to beused in datacollection

Participants usesurvey instrumentto collect datawithin their org.

Ernst & Young provide ongoing support to data teams

Data hygiene review providesanalysis of the quality and relevance of the benchmarkingdata

High quality reporting provides:graphical interpretation, averages,rankings and explanations for lowor high performance

These provideparticipants with the opportunity todiscuss the resultsin more detail if they wish to

Strict confidentialityis maintained

Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Ongoing

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Sample Output ‐ PayrollCost per Pay

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17

10

17

810

5

14 1413

39

20

129

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0

5

10

15

20

25

30

35

40

Coy A Coy B Coy C Coy D Coy E Coy F Coy G Coy H Coy I

2008 Result 2006 Result

Cost of the full end-to-end payroll process includes all costs relating to the payroll process, no matter where they occur in the organisation.

Coy G achieved the lowest cost per pay for the end-to-end payroll process ($5), which was achieved through low average salaries and weekly pay runs.

This is in contrast to Coy B and Coy D that have the highest cost per pay for the end-to-end payroll process ($17). At Coy D, this result is driven by18 FTEs who perform payroll processing outside the payroll group. They also make a small number of pay runs (130). Coy B has higher total salary costs ($556,410) for employees outside the payroll group compared to other participants.

Coy A and Coy E achieved the next lowest cost per pay for the end-to-end payroll process ($8). At Coy E, this result was achieved through low systems and enhancement costs, and low wages paid fortnightly to payroll staff comprised of mixed full-time, part-time and casual employees (see Context Item 2). At Coy A, while payroll processing occurs at 3 locations outside payroll, low cost is achieved via low salaries and a fortnightly pay frequency.

1.Insight

METRICS MEASUREDCOST Metric 1 – Cost per pay (payroll group) Metric 2 – Cost per pay (end-to-end payroll process) Metric 3 – Cost per employee supported (payroll group) Metric 4 – Cost per employee supported (end-to-end payroll process) PAYROLL PROCESS Metric 5 - Percent of documentation received that contains unclean data Metric 6 – Number of pays processed per payroll processor FTE Metric 7 - Number of pays processed automatically Metric 8 - Percent of transactions that require unplanned manual intervention Metric 9 – Percent of pays that are special pays Metric 10 – Cost per pay of special pays Metric 11 – Percent of pays that are retrospective Metric 12 – Method of payslips distribution Metric 13 – Percent of pays that have errors Metric 14 – Overpayments as a percent of total payroll value Metric 15 – Leave applications processed via ESS as a percent of total leave applications Metric 16 – Average turnaround time for processing of leave forms (days) ENQUIRIES Metric 17 – Number of payroll enquiries received and resolved by the payroll group per

employee supported Metric 18 - Number of payroll enquiries received and resolved by the payroll group

per 1000 pays Metric 19 – Number of payroll enquiries per payroll enquiry FTE Metric 20 – Speed of resolution of payroll enquiries OVERALL Metric 21 – Number of employees supported per payroll FTE PAYROLL PERSONNEL Metric 22 – Percent turnover of payroll staff Metric 23 – Average salary/ wages cost and on-cost of payroll personnel

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Examples of benchmarking driving change

PayrollCompany A has participated in three benchmark studies since 2006

Initiatives:• Automated T&A recording• Increase use of auto pay • ESS/MSS• Standardisation of all forms• Consolidation of payroll systems

Initiatives:• Automated query tracking tool• Consolidation of pay cycles• Significant investment in technology• Automation of all forms• Inclusion of offshore payrolls

2006 2008 2010 2010Payroll MEAN

Cost per Pay 13$ 8$ 10$ 17$

Pays per Payroll FTE 11,381 17,673 15,299 14,500

% Pays with Errors 3.80% 0.60% 0.48% 0.80%

Payroll Queries per 1000 pays 81 84 39 80

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#

# Baseline in 2004 was $17 per person per pay

Savings• $7 per pay• 15,000 employees• Fortnightly pay• $2.7m per annum

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Examples of benchmarking driving changeAccounts Payable

Company B has participated in three benchmark studies since 2003

2003 2005 2010 2010Accounts Payable MEAN

Cost per Invoice processed 12$ 11$ 7$ 7$

Invoices processed per AP FTE 4,828 5,284 7,592 12,000

% Payments made via EFT 39% 39% 68% 85%

Initiatives:• Invoice Scanning implemented • Business Services established• Processing location consolidation• Introduction of PCards

Initiatives:• OCR implemented• “Competent” employee program• Increased EFT payments• Matching of low value transactions

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For more information

• For more information, please visit the ASSA website:

www.assa.net.au

• Charles Reis (President) and I are available at this conference to discuss any details with you

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