Shared Services 2.0 Massachusetts Digital Summit October 19 th, 2009.
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Transcript of Shared Services 2.0 Massachusetts Digital Summit October 19 th, 2009.
Shared Services 2.0 Massachusetts Digital Summit
October 19th, 2009
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 2
• What are Shared Services?
• Why Do Organizations Adopt Shared Services?
• How are Shared Services Implemented and Optimized?
• How does Oracle Enable Shared Services?
• What’s Next/Trends?
Program Agenda
Theory
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 3
What Are Shared Services and What Are the Benefits?
• Reduces costs
• Improves productivity
• Promotes timely execution
• Enables better decision making
• Leverages existing and exploits emerging technologies
• Ensures acceptable levels of control and risk management
• Optimizes skills/capabilities of the organization
• Promotes collaboration across the extended enterprise
Shared Services is a service model designed to gain efficiencies in routine processing by leveraging
common practices and enabling technology
Key
Ben
efit
s
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 4
Pre-Shared ServicesSilos of Resources/Data
SalesMarketingDistributionManufacturingPurchasing
FINANCE
HUMAN RESOURCES
INFORMATION TECHNOLOGY
LO
B 1
SalesMarketingDistributionManufacturingPurchasing
FINANCE
HUMAN RESOURCES
INFORMATION TECHNOLOGY
LO
B 2
SalesMarketingDistributionManufacturingPurchasing
FINANCE
HUMAN RESOURCES
INFORMATION TECHNOLOGY
LO
B 3
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 5
Post-Shared ServicesIndependent LOBs with Common Model Support
SalesMarketingDistributionManufacturingPurchasingLOB 1
SalesMarketingDistributionManufacturingPurchasingLOB 2
SalesMarketingDistributionManufacturingPurchasing
FINANCE
HUMAN RESOURCES
INFORMATION TECHNOLOGY
LOB 3
SSC
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 6
Shared Service Models Are Highly Mature And Successful
95% of SSC implementations
rated “successful”
67
28 5 100
0
10
20
30
40
50
60
70
80
90
100
a b c sumYes, definitely a
full success.
Yes, however, we had some
issues.
No, we have major
problems.
Total
• Service delivery models for Shared Services are proven
– Ranging from sharing only technology and/or processes and/or people
– Varying strongly in scope
• Technology is mature– Core are global ERP/HRMS systems
– Wide range of tools in use
• Best-practices available in abundance
– From numerous successful implementations in all industries
Source: Hackett “The Future of Shared Services” 2005
% of respon-dents
Shared Services Are Highly Mature… …And Have a High Success Rate
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 7
Why Implement a Shared Service Center?Tactical vs. Strategic Business Drivers
HighLow Medium
TACTICAL
Hig
hL
ow
Me
diu
m
ST
RA
TE
GIC
Improve Service Levels
Process Morewith Same/Less
ProcessStandardization
ProcessImprovements
Increase Control
Capture Acquisition Synergies
Data Visibility
Coordinate IT
Accelerate ERPImplementation
HeadcountReduction
Increasing (sustainable) value/continuous improvement as f(x) of time
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 8
Top Business Drivers for Shared Services Are Process Standardization and Improvements
Source: Deloitte Research “The Future of Shared Services” 2003; Oracle analysis
Business drivers for adoption of SSC (% of respondents)
0 10 20 30 40 50 60 70 80 90
Capture acquisition synergies
Cross-division/location comparability
Coordinate IT
Data visibility and comparability improvements
Accelerate ERP implementation
Increase control
Improve service levels
Headcount reduction
Facilitate process improvements
Process standardization
Headcount reduction is not #1 priority, although important
Other business drivers
Process standardization and improvements
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 9
Overwhelming Evidence of Proven Financial Benefits From SSCs
• Average ROI for shared services implementation is about 20 percent– Average payback period approximately three years
– 74 percent meet or exceed their financial targets
• Measurable direct bottom-line impact, e.g. up to 45% reduction of finance cost through shared services
• Sizeable benefits achievable in payroll administration - the early adopter in HR shared services
– Top performers beat the average payroll cost per employee by 47%
• Shared services also deliver on intangible benefits– Such as productivity, quality and customer service
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 10
Shared Services Cover A Wide Variety Of Processes Across Multiple Functional Areas (1 Of 2)
Finance
• Cash disbursements
• Revenue cycle
• Accounting & External reporting
• Tax management
• Treasury management
• Compliance management
• Planning and performance management
• Business analysis
• Function management
HR
• Rewards administration
• Payroll services
• Data management, reporting and compliance
• Staffing services
• Workforce development service
• Organizational effectiveness
• Total rewards planning
• Strategic workforce planning
• Function management
Procurement
• Supply data management
• Requisition and PO processing
• Supplier scheduling
• Receipt processing
• Compliance management
• Customer management
• Sourcing execution
• Supplier management & development
• Sourcing & supply base strategy
• Function management
Services
• Order and contract management
• Service execution
• Service operation
• Planning & strategy
• Function management
Functional Areas And Key Processes Covered By SSCs
Source: Hackett; Oracle Insight analysis
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 11
Shared Services Cover A Wide Variety Of Processes Across Multiple Functional Areas (2 Of 2)
Information Technology
• Infrastructure development & management
• End user support
• Application development & maintenance
• Quality assurance
• Risk management
• IT business planning
• Enterprise architecture planning
• Emerging technologies
• Function management
Marketing & Sales
• Marketing communications
• Brand and product management
• Planning & strategy
• Market research & analytics
• Sales execution
• Sales operation
• Sales planning
• Function management
Manufacturing
• Production planning
• Inventory management
• Shop floor scheduling
• Capacity management
• Function management
Corporate Services
• General administration
• Travel & transportation
• Real estate & facilities mgmt
• Government affairs
• Legal
• Quality management
• Risk & security management
• Corporate communications
• Planning & strategy
• Executive office
Functional Areas And Key Processes Covered By SSCs
Source: Hackett; Oracle Insight analysis
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 12
Ensuring Successful Shared Services Implementation: Best Practices (1/2)
• Clearly define the Shared Services vision– Senior executive driven process with operating unit leader participation
– Clear alignment of Shared Services vision with overall organizational goals
• Develop a detailed business case for change– Develop “case for change”; include both hard benefits (e.g. labor cost reduction) and soft
benefits (e.g. service improvement, better visibility, etc.)
– Do not under-estimate the implementation and transition costs
• Define scope for economies of scale and skill– Scope includes “scale” based processes (e.g. Payables, invoices, etc.)….
– …and “skill” based processes (e.g. legal, marketing, tax, etc)
• Establish appropriate executive leadership– Steering committee includes HQ and operating unit executives
– Use distinct leadership for SSC development vs. operations
• Select the right people for the project– Select the “right” resources, not the “available” resources for the project
– Release SSC project resources from their day-to-day responsibilities
1
2
3
4
5
Source: “Ensuring Successful Shared Service Implementations: From Vision To Operation”, Accenture
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 13
Ensuring Successful Shared Services Implementation: Best Practices (2/2)
• Communicate extensively– Establish a clear communication plan (message outline, timing, audience, communicator)
– Communicate to potentially affected employees early-on
• Start transition planning early– Start transition activities up to 180 days prior to SSC implementation
– Focus on knowledge transfer, data conversion, and training activities
• Use technology as a strategic enabler– Streamline/consolidate core transaction processing systems (ERP, HRMS, etc.)
– Invest in workflow capabilities, case management solutions, and self-service tools
• Recruit and train the “right” team for the Shared Service Center– Use a mix of internal and external hires to develop the SSC team
– Develop and implement an enduring training plan
• Over support each implementation– Over staff the organization during the transition and stabilization periods
– On-site project representatives for support & issue resolution during stabilization phase
6
7
8
9
10
Source: “Ensuring Successful Shared Service Implementations: From Vision To Operation”, Accenture
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 14
Example Governance Structure for Shared Service Centers
COO
SSC Leadership
SSC Management
SSC Operations User Committee
Steering Committee
Advisory Board
• SLA approval
• Process & strategy review
• Issue resolution
• Operation unit behavior influence
• Continuous improvement feedback
• Service delivery strategy
• Scope expansion
• Significant issue resolution
• Funding review
• Resolve service performance issues
• Continuous improvement ideas
• New requirementsSource: “Optimizing Shared Service Performance through Better Service Management”, Accenture
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 15
Hindsight Reveals to Experienced Shared Service Organizations that Executive Sponsorship is Critical
Success Factors Deemed Most Important by Surveyed Executives
Strong planning and process standardisation are not enough on their own.
0% 10% 20% 30% 40%
Executive Support
Change Mgt /Communication
Standard Processes
Employee Engagement
Customer Buy-in
Planning
Source: Shared Services: A Benchmark Study, March 28 2005, Arthur D. Little / The Johnsson Group; based on a survey of 40 global organisations, workshops, and client engagements.
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 16
Best Practices Adopted By Shared Service Center Leaders
82%
71%
48%
45%
42%
40%
40%
39%
34%
31%
28%
25%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Service Level Agreements
Key Performance Indicators
Imaging/Workflow
Employee Development Programs
Account Managers
Continuous Improvement Model
Call Center
Balanced Scorecards
Employee Self-Service
Communications Model
Customer Self-Service
Manager Self-Service
Best Practices Employed In Shared Services OperationsPercentage of Centers
Source: “Shared Services: The Evolution of Higher Performance”, Accenture 2004
Governance related
Performance related
Technology related
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 17
Shared Services: Top Optimization Initiatives
Top InitiativesPercentage of Respondents
Source: Deloitte Research
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Increase automation tools
Streamline processes
Expand scope of services
Improve customer service levels
Improve controls
Expand the number of internal customers
Improve overall governance structure
Improve performance management
Develop/improve formal training programs
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 18
Most SSC Organizations Move Beyond Simple KPI Measurement to Form SLAs with Internal Customers Continuous Improvement and Self Service are also Key Drivers
68%62%
56%
49%44% 44%
40%
32% 32%
0%
10%
20%
30%
40%
50%
60%
70%
KPI SLA ContinuousImprovement
Model
EmployeeSelf-Service
ImagingWorkflow
Call Centre BalancedScorecard
GovernanceBoard
EmployeeDevelopmentProgramme
Source: Shared Services: A Benchmark Study, March 28 2005, Arthur D. Little / The Johnsson Group; based on a survey of 40 global organisations, workshops, and client engagements.
SLAs that do not promote simplicity, transparency, and accountability are likely to cause more administrative burden than benefit.
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 19
What Makes a Service Level Agreement (SLA) Successful?
Source: Booz-Allen & Hamilton 2000, “Getting Shared Services Right: Capturing the Promise”
Simplicity
• Short (1-3 pages) and simple to understand• Bundle services by business units to enable tradeoffs across
functions• Enable straightforward, ongoing communication
Critical Success Factors What You Need
Transparency and Choice
• Invoicing clear and understandable• Pricing provides insight into service cost drivers and encourages
desired behavior• Base level “lights-on” operations separated from optional services• Flexible, scalable service levels, up or down
Metrics and Accountability
• Track performance against internal targets and external benchmarks (without adding excessive infrastructure)
• Link business and service management
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 20
Integrated Technology Is a Key Enabler For Shared ServicesIT standardization in SSCs continues
Homogeneity of IT landscape in SSC
35%46% 53%
65%54% 47%
0%
20%
40%
60%
80%
100%
2003 2004 2005
UniformHeterogeneous
“One single integrated ERP system” identified as the single most important best-practice for SSC performance (Hackett 2004)
Source: Hackett “The Future of Shared Services” 2005
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 21
Technology Enablers For Shared Services
100
54
19
17
10
0
20
40
60
80
100
a b c d sumONE common
ERP system.
Legacy System
Multiple ERP
systems
Total
1. ERP
2. Data Analysis and Reporting Tools
3. Workflow
4. Document Imaging
5. Data Warehouse
6. ePayment
7. Employee Self-Service
8. EDI
9. Manager Self-Service
10. Financial Consolidation Tool
% of respon-dents
Top 10 Technology Enablers ERP Standardization Is A Given
Multiple ERP
instances
Source: “Shared Services: The Evolution of Higher Performance”, Accenture 2004
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential
Oracle E-Business Suite Offers Rich Functionality For Shared ServicesKey Differentiators
Enable continuous
improvement
Enable continuous
improvement
Integrated processes across
HC and SSC
Integrated processes across
HC and SSC
Reduced workload for SSC staff
Reduced workload for SSC staff
Reduce IT integration and
maintenance costs
Reduce IT integration and
maintenance costs
• Single, comprehensive suite of applications covering all key functional areas for SSCs (Finance, HR, Supply chain, Procurement, etc.)
• Rich functionality for a variety of self-service tasks
• Pre-built, workflow across various functional areas
• Delivers complete process solution (e.g. Procure to Pay, Order to Cash, etc.)
• Daily business intelligence
• Pre-built reports and dashboards by user roles and responsibility
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 23
• Unifying Technology– Oracle Applications are designed to support multiple organizations in one instance
• Workflow– The key link between SSC and the divisions being served is built into Oracle’s
applications
• Interfaces– Management tools for open interfaces to legacy systems, and a comprehensive
application integration framework to enable seamless integration
• Self Service– Integrated applications to be used by the division being served, driving strong operating
efficiencies
• Business Intelligence– Powerful means to monitor and manage performance by both the SSC and the divisions
being served
• SEM Products– Activity Based Costing or Balanced Scorecard can be used to manage performance
against service level agreements
• Integrated Customer Relationship Management (CRM)– Oracle CRM Modules are pre-integrated into the E Business Suite application family
Key Oracle Differentiators for Shared Services
Source: Oracle Global Implementation Guide
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential 24
Four Important Trends in SSCs: Outsourcing, Automation, Global Reach and Scope Expansion
• Outsourcing and offshoring– Once an organization feels comfortable with internal Shared Services it may decide
to outsource and/or offshore operations
– Mature offerings in Finance/IT available, HR/procurement/etc. taking up speed
• More automation– Most important objective of most SSCs: single global ERP/HRMS system
– Top 2-4 priorites are: vendor self-service, e-procurement, employee self-service
• Global reach - movement to global shared service models– Pressure to move to lower labor markets− Increased efficiency with lesser SSCs
• Scope expansion along all corporate functions
Copyright ©2009, Oracle. All rights reserved. Oracle Confidential