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Driving Process Excellence in Shared Services
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Driving Process Excellence in Shared Services

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The range of available cost efficiency benchmarks are as wide for organisations using a Shared Services model as for those that do not. There is a major focus on performance measures and continuous ...

The range of available cost efficiency benchmarks are as wide for organisations using a Shared Services model as for those that do not. There is a major focus on performance measures and continuous improvement, but these have still not delivered the goods. We need an effective approach and experiences for driving process performance gains through understanding the nature of exceptions in business, recognising them in the continuous improvement cycle and using smart analytics to manage the Key Exception Indicators.

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Driving Process Excellence in Shared Services Driving Process Excellence in Shared Services Presentation Transcript

  • © 2013 Consider Solutions All rights reserved.solutions for world class financeDriving Process Excellence in Shared Services“More than just KPIs”April 24, 2013Dan FrenchCEO, Consider Solutions
  • solutions for world class financeWho is this?2 © 2013 Consider Solutions All rights reserved
  • solutions for world class finance3 © 2013 Consider Solutions All rights reservedThe Aggregation of Marginal Gains . . . .
  • solutions for world class financeToday’s DiscussionIntroductionShared Services & World Class FinanceStandardisation & SimplificationContinuous Improvement & KPIsException Monitoring & KEIsQ & A© 2013 Consider Solutions All rights reserved4
  • solutions for world class financeWorldClassFinanceBusiness ResultsCost of FinanceCash flowRisk ManagementWorld Class Finance© 2013 Consider Solutions All rights reserved5
  • solutions for world class financePillars of Success for World Class FinanceEfficiency Effectiveness Relevance InfluenceContinuallyimproveprocessefficiency,speed, andqualityDeliverexpertise infinancialstewardshipand riskmanagementProvideanalyticalsupport thatdecision-makersneedBusinesspartneringfor superioroutcomes© 2013 Consider Solutions All rights reserved6
  • solutions for world class financeShared Services: the status todayThe foundation is built‐ Centralisation‐ Common systems‐ StandardisationThe results of the First and Second Wave‐ Financial savings‐ Predictable results‐ Compliance‐ Organisations with a mission© 2013 Consider Solutions All rights reserved7
  • solutions for world class financeSSOs: Benchmarks© 2013 Consider Solutions All rights reserved8
  • solutions for world class financeShared Services: tomorrow’s charterBusiness demands‐ Increased customer satisfaction‐ Continue drive for cost efficiencies‐ Expand scope of Shared ServicesProcess responses‐ Better business partnering‐ Enhanced simplification & standardisation‐ Continuous improvementShared Services as a component of World ClassFinance strategy© 2013 Consider Solutions All rights reserved9
  • solutions for world class financeSimplification & Standardisation© 2013 Consider Solutions All rights reserved10
  • solutions for world class financeThe Standardisation MythWe invest heavily in ERP implementation to drive:‐ Process standardisation‐ Business efficiency‐ Economies of scaleHowever, only some of the value gets released . . .‐ Businesses implement standard systems and achieveA standard data input processNOTA standard business process© 2013 Consider Solutions All rights reserved11
  • solutions for world class financeGR is createdagainst POPurchasingcreatesPO forShipmentTruck drops offshipment,but no POexistsWarehousecalls upPurchasing tocreate a POERP is configured to only allow GR if PO exists, however…ERP enabled standardisation example© 2013 Consider Solutions All rights reserved12‘First time match’ KPI looks good despite process breakdown!
  • solutions for world class financeStandardisation & Exceptions© 2013 Consider Solutions All rights reserved13
  • solutions for world class financeExample 1: Invoice ProcessingDesired process‐ Purchase Order to initiate and approve purchase‐ Touch-less Invoice/Payment approval on matchKPIs‐ First time match rate‐ Invoice processing cost/effortWhat can go wrong (Key Exception Indicator)‐ Duplicate Invoices, duplicate vendors, duplicate POsDiscovery‐ 3% duplicate invoices causing re-work and cash lossRoot Cause‐ Duplicate vendor data, Imprecise PO data© 2013 Consider Solutions All rights reserved14
  • solutions for world class financeKPIs – Measures & BarriersLagging & Leading IndicatorsExceptions are Leading Indicatorsof Performance Risk‐ Performance KPI (Measure)DSO‐ A/R Risks & Exceptions (Barriers)Credit checkPayment termsDelivery quantity & qualityUnintended Consequences‐ Managing by KPI can drivesuboptimal business results© 2013 Consider Solutions All rights reserved15
  • solutions for world class financeExceptions© 2013 Consider Solutions All rights reserved16
  • solutions for world class financeWhat are Exceptions?An exception is‐ A mismatch between expected vs actual performance‐ Something that generally should not happen but doese.g. duplicated effort, multi-touch invoices, paymentterm changes, duplicate payments‐ Something that should happen but doesn’te.g. 3-way match, customer credit check, supplierdiscount claim‐ Happening on purpose or by accidente.g. fraud, ignorance, system flaw, history, humannature‐ Occurring in single digit percentage-wise but with anasymmetric impact on effort and efficiency‐ Often influenced by KPIs!© 2013 Consider Solutions All rights reserved17
  • solutions for world class financeImprovement by ExceptionLook at the processes and KPIsDefine ‘what can go wrong’ (KEIs)Identify any exception from standardIdentify root causesManage & resolve root causesContinuously improve processesNon-disruptive performance improvement . . .© 2013 Consider Solutions All rights reserved18
  • solutions for world class financeThe Gearbox of World Class Finance© 2013 Consider Solutions All rights reserved19
  • solutions for world class financeExample 2: Purchase Order ProcessingDesired process‐ Purchase Request to approve expenditure‐ Purchase Order to initiate and approve purchaseKPIs‐ Spend under PO‐ PO processing costWhat can go wrong (Key Exception Indicator)‐ Multiple touch POs, changes to PO Pricing & TermsDiscovery‐ 11% POs change activityRoot Cause‐ Pro-forma POs, Master Data inaccuracy© 2013 Consider Solutions All rights reserved20
  • solutions for world class financeClassic Process Improvement CycleDefineMeasureAnalyseImproveControlA MiracleOccurs !© 2013 Consider Solutions All rights reserved21
  • solutions for world class financeThe Myth of Measures© 2013 Consider Solutions All rights reserved22
  • solutions for world class financeExample 3: Accounts ReceivableDesired process‐ Sales Invoicing‐ Accounts ReceivableKPIs‐ Days Sales Outstanding (DSO)What can go wrong (Key Exception Indicator)‐ Sales Order to Delivery to Invoice delayDiscovery‐ Excellent cash collection metric undermined by use ofPro-forma invoices to confirm customer paymentRoot Cause‐ DSO KPI, Invoicing errors© 2013 Consider Solutions All rights reserved23
  • solutions for world class financeProcess Improvement Cycle . . .24 © 2013 Consider Solutions All rights reserved
  • solutions for world class financeWorld Class FinanceContinuous Improvement© 2013 Consider Solutions All rights reserved25
  • solutions for world class financeExample 4: Accounts PayableDesired process‐ Purchase Orders‐ Goods Receipt & Invoice ProcessingKPIs‐ Cost per Invoice – Touch-less invoicesWhat can go wrong (Key Exception Indicator)‐ Over-payment – GR > PO, IR > GRDiscovery‐ 4.5% over payment in certain areasRoot Cause‐ Vendor ‘enthusiasm’ with payment tolerances, vendorperformance issues, system controls© 2013 Consider Solutions All rights reserved26
  • solutions for world class financeQuickScan - Exception AnalyticsScoped process & organisation targetAgreed risk and/or performance themesAgreed ownership to manage andresolve exceptionsOngoing analysis of all relevant systemdata and transactionsMatching 100% of transactions and dataagainst exception rulesWork flow for addressing and resolvingexceptionsProcess for continuous improvementRapid Execution, Rapid Return© 2013 Consider Solutions All rights reserved27
  • solutions for world class financeShared Services & World Class FinancePrinciples‐ Continually improve process efficiency, speed, andquality‐ Deliver expertise in financial stewardship and riskmanagement‐ Provide analytical support that decision-makers needUse Exception Analytics‐ To support these principles‐ Start with an assessment/benchmark‐ Evolutionary & Iterative approach© 2013 Consider Solutions All rights reserved28
  • solutions for world class financeHits & Myths1. The Standardisation MythWill give economy of scaleWill lead to uniform dataWill not automatically lead to standard process execution2. The Measures MythLagging KPIs are not enough to drive actionOne-dimensional indicators risk unintended consequencesExceptions to expectation expose the real process3. The Miracle MythAnalysis of exceptions drives Continuous ImprovementContinuous Improvement drives World Class FinanceConsider benchmarking/assessing a process ‘slice’© 2013 Consider Solutions All rights reserved29
  • solutions for world class financeAggregation of Marginal Gains – Results30 © 2013 Consider Solutions All rights reserved
  • solutions for world class financeReviewIntroductionShared Services & World Class FinanceStandardisation & SimplificationContinuous Improvement & KPIsException Monitoring & KEIs© 2013 Consider Solutions All rights reserved31
  • solutions for world class financeThe pessimist complains about the wind. The optimist expects it to change.The leader adjusts the sails.”32
  • solutions for world class financeQuestions?dfrench@consider.bizEnjoy the journey!Blogerati can visit . . .consider-ations.blogspot.co.uk33 © 2013 Consider Solutions All rights reserved
  • © 2013 Consider Solutions All rights reserved.solutions for world class financeDriving Process Excellence in Shared ServicesTHANK YOU!April 24, 2013Dan FrenchCEO, Consider Solutions