Case Study on Optimal Finance Service Delivery Model


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Optimal Mix of a Global Captive Shared Services and Outsourcing Solution

Smart companies are including outsourcing as part of their global delivery strategy, but the problem remains of what and how to transition. Lift & Shift, a strategy beloved by many, has significant shortfalls as this case study points out. Get tips on how to avoid making expensive mistakes.

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Case Study on Optimal Finance Service Delivery Model

  2. 2. Chazey Partners Case Study Series | 2Chazey Partners Case Study Series | 2 Robert has over 20 years of experience in Finance, Shared Services and Technology implementations. He has managed multiple shared services transformation projects and has held multiple roles managing shared services operations in the U.S., U.K. and in multiple locations in India. Prior to his recent assignments, he was the Vice President of Finance for Pinkerton Consulting. Prior to Pinkerton, Robert was the Vice President of Global Operations Finance for Travelport Limited, with responsibilities including the management of company’s Indian Shared Service Center, global corporate travel and North American payroll operations. He is well suited to developing transformation activities, but is comfortable focusing on daily operational issues, managing staff at all levels and ensuring a high level of customer service. Robert holds an MBA with dual concentrations in Finance and Information Technology from Auburn University. Robert Towle Regional Director, East Coast, US Chazey Partners “This company learned the hard way that Lift & Shift is not an optimal strategy. For its Americas transition, we were able to offer support, both in optimizing processes pre-offshoring, and in smoothing the transition to an outsourcing partner. It was gratifying to compare the improved results to previous transitions” Robert Towle - Project Leader
  3. 3. Chazey Partners Case Study Series | 3 This company is a recognized leader in the field of education. Chazey Partners conducted an appraisal of sourcing options for the company to help identify an optimal services delivery model for the Finance function. The resulting solution was a mix of global captive Shared Services as well as Outsourcing. Thecompany’sFinanceorganizationengagedChazey Partners to provide project management for the transition of the Americas Order-to-Cash (O2C) and Procure-to-Pay (P2P) processes as part of the second phase of a Finance restructuring project. The vision for this restructuring was not just to relocate existing activities, but also to identify, integrate and optimize entire end-to-end processes, improving service and performance, and reducing cost. The goal was to make processes more consistent globally, to continue to replace manual work with automation, and to effectively manage the outsourcing contract. The business requirement was to assure that the project was successfully delivered to the agreed schedule, with minimal disruption to key stakeholders. Today, the company delivers the transactional elements of the O2C P2P processes from an outsourced center in Asia, while maintaining decision support and high-level accounting within the company. Outsourcing Evaluated The outsourcing relationship began several years ago, as part of an evaluation that Chazey performed to ascertain the possible options to maintain financial control, yet lower costs, to support and enable the company to grow in its key areas of focus. Once outsourcing was identified as a positive solution, potential outsourcers were evaluated. The company waslookingforaworld-class,experiencedpartnerbut wanted to benefit from the labor arbitrage available in a less expensive, developing location. The decision was made to rollout the new service delivery model in three main regions of the world: EMEA, Asia-Pacific and the Americas. Challenges Change Management proved far more significant than the company had expected. The strong backlash from staff, when they found they were no longer able to “go upstairs” and work with their accounting colleagues, was unexpected. In addition, there were issues with maintaining reconciliations in the same formatthatstaffhadbeenusedto.Anotherfactorwas that some positions were eliminated when the work transitioned, and as a result there was only minimal overlap between the new service provider and the previous staff. This caused some problems in terms of transitioning knowledge, among other things. Chazey Partners Case Study Series | 3
  4. 4. Chazey Partners Case Study Series | 4 Another significant challenge involved staffing levels. Because the transition for the Americas marked the third phase, it became very clear to staff that their positions would be eliminated. As a result, the majority of the staff left the company before the transition, and were replaced by temporary workers. This negatively impacted the transition. The company should have been more proactive in informing workers of plans, and providing “stay bonuses”orseverancepackagestoencouragestaffto stay on through the transition. The lack of proactive communication was a core problem, resulting in costly delays. Transition Roadmap and Processes The transition road map involved developing the project plan, building the processes (including on-site training and off-site), deployment (which included several weeks of “shadow production”) and stabilizing of the new processes. In the first two rollout phases (EMEA and Asia- Pacific), the company elected for “lift and shift” despite the recommendation of Chazey to evaluate and improve processes before outsourcing to a third- party. For the third phase (the Americas), in response to learnings from earlier rollouts, several discrete process improvements were made in parallel during the transition, which resulted in better processes being performed by the third-party outsourcer. Leveraging Skilled Third Party Resources When Chazey joined the project in June of 2009, we The company chose to bring in a third party consultant for the third transition phase, because the first two phases has been issue-prone. In addition, the negative reputation of the transition meant that there was strong resistance from the Americas. The company was looking for supportive resources with experience in Shared Services transition as the primary skill. It was crucially important that the partnering firm had staff with strong operational experience. Chazey provided value from day one, because they offered a standard transition model for Shared Services that was immediately put into place. Additionally, given that the majority of the remaining inhouse staff were temporary, Chazey was able to deploy their operational experience to provide day-to-day management duties, where and when necessary.
  5. 5. Chazey Partners Case Study Series | 5 Lessons Learned The primary advice we were able to offer was to not necessarily go with the lowest priced model. There is usually a reason for the price being lower, whether due to a lower cost location or inexperienced management. Instead, explore the options and look for experience, not just in the outsourced provider, but also within that particular location. An important step we advise is to capture early cost savings and efficiencies by performing process improvement before shifting locations. This will improve the outsourcing experience and allow a company to capture the cost savings themselves. Results: Successes & Challenges The new service delivery model is now working more efficiently than was the case in the past. The biggest successes have included the transition of processes from three regions into one; and the harmonization and best practice processes that are now being implemented. On the other hand, some ongoing concerns include the distance between the company and the provider, as well as occasional communication issues. One unexpected challenge is the fact that it has been more difficult than anticipated to maintain a fully staffed shift to work Americas time, as the outsourced location works on an opposite time zone.
  6. 6. Chazey Partners Case Study Series | 6 For more case studies Please visit our website at, or subscribe to our newsletter at Phil Searle CEO & Founder Chazey Partners +1 408 402 3008 David O’Sullivan Co-Founder & Partner Chazey Partners +353 (0)86 384 8573 Grant Farrell Managing Director United States Chazey Partners +1 862 812 7851 Esteban Carril Managing Director, Latin America Chazey Partners +54(911) 3085 5140 Chas Moore Managing Director, Canada Chazey Partners +1 855 692 6229 Ext 201 Anirvan Sen Managing Director, Asia, Middle East and Africa Chazey Partners +31 649133170 / +65 85143766 Janey Jux Head of Public Sector Practice EMEA Chazey Partners + 44 (0)800 6440649 Christina Exarchou Head of HR Practice EMEA Chazey Partners +30 6944 525622 Emer O’Kelly Regional Director Europe Chazey Partners +44 (0) 7703 647 360 Robert Towle Regional Director East Coast USA Chazey Partners +1 862 812 7851 Learn more about us at Follow us on: About Chazey Partners Chazey Partners is a professional management advisory business that is committed to adding significant value to our clients through a partnership approach. We bring together a unique wealth of expertise and real life experience in Business Transformation, Shared Services & Outsourcing, and Technology Enablement. We pride ourselves in having built, operated and turned around some of the world’s most highly commended and ground-breaking Shared Services Organizations, and for implementing many highly successful multi-sourced (shared services and outsourced) delivery solutions. Over the last 20 years, we have delivered numerous programmes globally, in the US, Canada, UK, Continental Europe, Ireland, India, Eastern Europe, South America, Singapore, Australia, China, Middle-East and Africa. Our experience covers both Private and Public Sectors, providing expertise in a wide spectrum of business functions, including Finance, HR, IT, and Procurement. Meet Our Practitioners