The Common Challenges of Common Practices: Tips for Effectively Moving to a Shared Services Center

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Moving to a shared services model reduces costs and optimizes performance, but taking the right steps is necessary for a successful outcome. Explore the initiatives and challenges of a common chart of …

Moving to a shared services model reduces costs and optimizes performance, but taking the right steps is necessary for a successful outcome. Explore the initiatives and challenges of a common chart of accounts and calendar for companies moving toward enterprise-wide shared service center operations. We will focus on how standardizing the data streamlines business processes, eliminates silos and facilitates the new functionality of Release 12. Case studies that discuss best practices and impact will be shared.

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  • 1. © 2014 eprentise. All rights reserved. The Common Challenges of Common Practices: Tips for Effectively Moving to a Shared Services Center Helene Abrams CEO eprentise habrams@eprentise.com
  • 2. © 2014 eprentise. All rights reserved. Learning Objectives After completion of this program you will be able to:  Objective 1: Learn the mechanics of running a single global instance in a shared services center operation.  Objective 2: Understand common business processes and how they are implemented.  Objective 3: Explore real-world examples of and lessons learned from shared service center operations. | 2
  • 3. © 2014 eprentise. All rights reserved. Agenda  Introduction  What is a Shared Services Center?  How Shared Services Centers Operate  Common Challenges  Critical Success Factors for Gaining Efficiencies and Streamlining Operations  Roadmap for Implementation  Case Studies  Conclusion | 3
  • 4. © 2014 eprentise. All rights reserved. eprentise Can… …So Our Customers Can:  Consolidate Multiple EBS Instances  Change Underlying Structures and Configurations  Chart of Accounts, Other Flexfields  Inventory Organizations  Operating Groups, Legal Entities, Ledgers  Calendars  Costing Methods  Resolve Duplicates, Change Sequences, IDs  Separate Data : Transformation Software for E-Business Suite  Reduce Operating Costs and Increase Efficiencies  Shared Services  Data Centers  Adapt to Change  Align with New Business Initiatives  Mergers, Acquisitions, Divestitures  Pattern-Based Strategies  Make ERP an Adaptive Technology  Avoid a Reimplementation  Reduce Complexity and Control Risk  Improve Business Continuity, Service Quality and Compliance  Establish Data Quality Standards and a Single Source of Truth Company Overview: Incorporated 2007  Helene Abrams, CEO | 4
  • 5. © 2014 eprentise. All rights reserved. What is a Shared Services Center? An operational entity which performs all of the non-core business processes for all of the divisions within an enterprise so that companies can: • Focus on core business competencies • Reduce costs and gain economies of scale • Standardize business processes • Implement better controls Provisioning of services by one part of the organization and its shared use by the rest, who fund this service. | 5
  • 6. © 2014 eprentise. All rights reserved. Incentives & Drivers of Global Operations Consolidate repetitive data-centric processes to support migration to a shared services center or a centralized data center Generate financial reports directly from the system of record Reduce operating and maintenance costs to improve the bottom line Create a single source of truth to improve business processes and business intelligence Enable revenue optimization whenever and wherever possible to improve the top line Capitalize on enterprise-wide synergies to leverage purchasing and to better understand customers Obtain access to new markets and the opportunity to scale the business | 6
  • 7. © 2014 eprentise. All rights reserved. How Shared Services Centers Operate Select locations with lower labor costs, different time zones Operates as a separate profit center  Transaction processing is the main revenue generator, not a support function. Recognizes economies of scale  High volume of transactions  Ability to transact across businesses  Accommodates local and statutory requirements  Centralizes expertise in various areas | 7
  • 8. © 2014 eprentise. All rights reserved. Example Shared Services Center Functions | 8 AP Invoicing Purchasing Credit Card Reconciliation Warranty Tracking Procurement General Accounting Billing Credit and Collections Taxes Statutory Reporting Travel & Expenses Finance Payroll Processing Benefit Management Time and Labor Reporting HR and Payroll
  • 9. © 2014 eprentise. All rights reserved. R12 Was Designed for Shared Service Center Operations Operating Units (OUs) Responsibilities Multiple Organizations Access Control Subledger Accounting Subledger Users are assigned responsibilities Ledger Sets Legal Entities Customer and supplier bank accounts | 9
  • 10. © 2014 eprentise. All rights reserved. Common Challenges for Shared Service Center Operations Global Standardization  Data  Common Definitions  Redundancy  Business Processes Localizations Alignment of business initiatives Governance, Controls Increasing Costs Global Support Downtime | 10
  • 11. © 2014 eprentise. All rights reserved. Global Standardization Business and implementation differences exist among different installations and need to be maintained Different calendars, currencies, and charts of accounts are difficult to reconcile One-to one relationship between each set of subledgers (purchasing, payables) in Oracle Applications No cross-instance functionality MOAC functionality doesn’t enforce standards Oracle Applications consolidate only at General Ledger Level | 11
  • 12. © 2014 eprentise. All rights reserved. Business Process Standardization Key components to successfully managing change on a global scale | 12
  • 13. © 2014 eprentise. All rights reserved. Critical Success Factors for Gaining Efficiencies and Streamlining Operations Single Global Instance Common Global Chart of Accounts Standard Calendar Shared Master Data Common Configurations Elimination of Silos  Ledgers, Legal Entities, Operating Units, Inventory Orgs | 13
  • 14. © 2014 eprentise. All rights reserved. Things to Think About When Establishing a Vision for Shared Services What is the governance model? What type of functions, processes and services? How many processes ? What is our approach? What are the economics? How long will it take? What type of culture and organization do we want? How will it impact the rest of the organization? How will it meet stakeholder’s requirements and be measured? | 14
  • 15. © 2014 eprentise. All rights reserved.© 2013 eprentise. All rights reserved. Three Traditional Shared Services Organization Models Corporate Service Center B.U.B.U.B.U. Regional Service Center B.U.B.U. Regional Service Center B.U.B.U. Company A/P “Center of Excellence” B.U. Corporate Accounting “Center of Excellence” Company B.U. Corporate | 15
  • 16. © 2014 eprentise. All rights reserved. Roadmap for Implementation Step 1: Determine what processes the SSC will cover  Identify processes and data that can be shared across the enterprise  Standardize common business processes, workflows  Identify common data | 16
  • 17. © 2014 eprentise. All rights reserved. Roadmap for Implementation Step 2: Measure Current Operating Costs  Benchmark existing processes  Identify metrics for best practices  Compare existing to best practices  Determine opportunities for saving | 17
  • 18. © 2014 eprentise. All rights reserved. Determine Current Practices and Costs | 18
  • 19. © 2014 eprentise. All rights reserved. Measure Against Best Industry Practices Benchmark High Benchmark Median CCI w/o TGIF & CHG $1.81 Benchmark Low Best Practice CHG $4.40 TGIF $4.12 CCI $2.39 CTG $1.74# CMG $1.69# Accounts Payable Cost per Invoice Processed $16.63 $3.93 $1.35 $0.80 Benchmark Low Benchmark Median CCI w/o TGIF & CHG 30,575 Benchmark High CHG 11,303 TGIF 14,562 CCI 23,765 CMG 36,181**# CTG 53,148**# Invoices Processed per Accounts Payable FTE 5,333 17,793 41,388 * Per 1991 Shared Service Study ** Invoices are processed by CCI FTEs which are not reflected in CTG and CMG headcounts # Business units receive a bill from CCI A/P in addition to performing some of their own A/P Unit Cost and Productivity Comparison Accounts Payable | 19
  • 20. © 2014 eprentise. All rights reserved. Resource Distribution Other (13%) Personnel (64%) Systems (23%) Benchmark Low Company ABC Other (24%) Personnel (64%) Systems (19%) Personnel Systems Other TGIF 61% 22% 17% CMG 61% 21% 18% CHG 63% 1% 36% CTG 48% 14% 38% Headcount Distribution Exempt (20%) Non-Exempt (80%) Benchmark Low Company ABC Exempt (29%) Non-Exempt (66%) Contract (5%) Exempt Non-Exempt Contract TGIF 10% 84% 6% CMG 37% 54% 9% CHG 41% 59% 0% CTG 51% 49% 0% | 20 Measure Against Best Industry Practices Accounts Payable Supplemental Analysis Accounts Payable
  • 21. © 2014 eprentise. All rights reserved. Roadmap for Implementation Step 3: Set up a Service Level Agreement  Identify resources  People  Infrastructure  Determine operating costs  What volume can you handle?  Are there special requirements?  Determine unit prices  Determine service levels and fees  Timing (close cycle)  Volume  Develop change management, issue resolution, and escalation processes | 21
  • 22. © 2014 eprentise. All rights reserved. Roadmap for Implementation Step 4: Initiate Preparation Project  Set up infrastructure  Consolidate instances  Implement common chart of accounts  Implement common calendar  Merge ledgers, operating units, inventory orgs  Set up secondary ledgers and ledger sets  Regulatory and Statutory Reporting  Adjusting Ledgers  Set up MOAC | 22
  • 23. © 2014 eprentise. All rights reserved. Infrastructure Four main technology issues surrounding globalization:  Availability  Access/Security  Performance  Functionality E-Business Suite Release 12 is designed to support a global enterprise within a single instance, and it has several features that enable sharing of data and facilitate the globalization effort. | 23
  • 24. © 2014 eprentise. All rights reserved. Technology - Availability Prearranged level of operational performance during a period of time  Service level agreement or “three nines”/”five nines”  To a user, it means the ability of the user community to access the system  Scheduled vs. Unscheduled downtime  Maintenance  Patches, configuration changes, etc. (reboot required)  Hardware/software failure  Environment anomaly | 24
  • 25. © 2014 eprentise. All rights reserved.© 2013 eprentise. All rights reserved. Example of Silos Instance A B C D Distinct Release 11.5.10.2 11.5.10 11.5.10.2 11.5.9 - Size (GB) 1,425 548 61 96 - Languages 4 2 1 1 4 Sets of Books 104 48 1 30 183 Calendars 10 7 1 1 19 Charts of Accounts 40 43 1 18 102 Legal Entities 120 48 0 47 215 Operating Units 121 49 0 47 217 Inv Orgs 137 50 1 48 236 Modules Installed 9 17 4 5 21 Security Rules on Value Set 13,012 300 15 153 13,480 Security Rules X Responsibilities 17,350 445 6 75 17,876 Cross Validation Rules 86,845 39,925 25 165 126,960 Currencies 56 28 1 28 64 EBS Users 43,986 30,494 247 3,023 N/A Sets of Books, Legal Entities, OUs, and Inventory Orgs Redundant and configured differently Charts of Accounts and Calendars Disparate and misaligned Sets of Books – Difficult to comply with local and statutory regulatory requirements Legal Entities – Easy to over- or under-pay taxes and misstate financial information Operating Units – Difficult to leverage supplier relationships (terms, discounts, etc.) Inventory Orgs – Impossible to know if a product is actually in stock (or where it is on the shelf) Charts of Accounts – Reports and data extracts must be done 40 times Calendars – With 10 calendars, the company is depreciating assets in 10 different ways and closing periods at different times Redundant Objects Redundant Objects
  • 26. © 2014 eprentise. All rights reserved.© 2013 eprentise. All rights reserved. Why Consolidate Instances? Reduction in infrastructure costs (hardware, maintenance, licenses) Reduction in personnel to support multiple systems Provision of better customer service and the ability to operate globally Agility to grow and to embrace new initiatives Global Reporting/ Analytics Facilitate efficient and effective decision making with timely and reliable fact based information Access real-time information at consolidated level Create Centralized Shared Services (maintenance, setup, centralized processing) Eliminate duplicate integrations and interfaces Lower license and support fees Operation of a single business with consistent data, streamlined processing and the ability to leverage markets, suppliers of other parts of the business Consistent Business Processes | 26
  • 27. © 2014 eprentise. All rights reserved. eprentise Consolidation Software | 27
  • 28. © 2014 eprentise. All rights reserved.© 2013 eprentise. All rights reserved. Changes Made Automatically During Consolidation Three Types of Changes: Name Changes ID Changes Synchronization | 28
  • 29. © 2014 eprentise. All rights reserved. A Global Chart of Accounts  Primary ledger is single source of truth for all accounting, reconciliation, and analytical reporting  Consistency but flexibility to accommodate different requirements  External reporting without relying on a separate financial consolidation system  Drill down to individual transactions in the subledgers without translation  Transparency (3 - 5 years) to meet IFRS standards and international auditing requirements  Common metrics and reporting structures with common interpretation Enterprise Visibility with Subledger Accounting and Secondary Ledgers | 29  Accounting policies are standardized across the entire enterprise  Data remains consistent and has full drill-down and roll- up capability, auditability, and visibility into all of the activity for the entire ledger set  Conversions not required for data warehouse queries  Facilitates the movement to a shared service center  Increases the level of enterprise governance and control of new code combinations
  • 30. © 2014 eprentise. All rights reserved. FlexField Software to Change your EBS Chart of Accounts Map Segments and Values or Code Combinations Segment Mapping Changes CCID everywhere All setups All subledgers All history Looks as though the new chart of accounts was part of the original implementation Full audit trail, drill down, roll up Built in exception reporting 1 1 Mapping M 1 Mapping 1 M Mapping | 30
  • 31. © 2014 eprentise. All rights reserved. Calendar Change | 31
  • 32. © 2014 eprentise. All rights reserved. Period Date Change - Impact on Journals | 32
  • 33. © 2014 eprentise. All rights reserved. Insert New Dates | 33
  • 34. © 2014 eprentise. All rights reserved.© 2013 eprentise. All rights reserved. Merge Operating Units | 34
  • 35. © 2014 eprentise. All rights reserved.© 2013 eprentise. All rights reserved. Move Legal Entities to New Set of Books | 35
  • 36. © 2014 eprentise. All rights reserved. Roadmap for Implementation Step 5: Roll out SSC Operations  Establish standard business processes  Set up governance and compliance controls  Hire resources  Develop training program | 36
  • 37. © 2014 eprentise. All rights reserved. Process Standardization The backbone of a globalization effort is the understanding that business processes are intrinsically linked and not confined to departmental, geographic, or organizational boundaries. Shared services center as a way to standardize on common “global” processes such as:  Corporate treasury  Invoice processing  Receivables processing  Sarbanes-Oxley Compliance  Account maintenance  Corporate reporting  Expense processing  HR maintenance Costa Mesa Kolkata Nottingham São Paulo | 37
  • 38. © 2014 eprentise. All rights reserved. Governance Effective management of shared enterprise assets is necessary for an effective global strategy  Collaboration  Implementation of effective controls Idea of the “benevolent dictatorship” 1. There can be no wavering about where the finish line is placed (a single global instance) 2. Anything less than success or short of completion is not acceptable (no special exceptions) 3. Obstructionism is not tolerated | 38
  • 39. © 2014 eprentise. All rights reserved. Training and Communication Effective globalization training has to take a more personalized approach that seeks buy-in along with providing information  New skills  New processes  New functionality  New regulations A training manual alone is not enough to be effective | 39
  • 40. © 2014 eprentise. All rights reserved. Roadmap for Implementation Step 6: Measure Results  Are you achieving the returns on investment?  How close are you to best practices?  What do you need to do to further reduce costs? | 40
  • 41. © 2014 eprentise. All rights reserved. Where Do You Fit? Headcount and Costs Headcount per $ Billion Sales 6.2-CTG 8.4 17.1 19.9 29.6 46.3 Cost as a Percent of Sales Personnel .027 - CTG .030% 0.61% .073% .118% .219% Systems .026% .038% .046% .062% .011% Other .013% .028% .035% .089% .006% .126% .153% .209% .355% First Quartile Second Quartile Third Quartile Fourth Quartile First Quartile Second Quartile Third Quartile Fourth Quartile 56.5 – CMG 67.9 – TGIF 77.8 – CHG .244% – CMG .249% – TGIF .073% – CMG .090% – TGIF .141% – CHG .387% – CHG .407% – TGIF .002% - CHG .008% - CTG 27.2 – CCI .089% - CCI .210% - CMG .030% - CCI .022% - CTG .047% .155% - CCI .345% - CMG .036% – CCI .068% – TGIF .062% – CHG Accounts Payable Benchmark Results Accounts Payable Total .057% - CTG | 41
  • 42. © 2014 eprentise. All rights reserved. Determine Opportunities for Cost Reduction | 42 Company ABC Company ABC
  • 43. © 2014 eprentise. All rights reserved. A Case Study on Global Finance Transformation and Operations at Experian Globalization Best-of-breed | 43
  • 44. © 2014 eprentise. All rights reserved. Experian – Global Finance Transformation 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 US UK France Ireland Oracle R12 Spain Hong Kong Ireland Australia N.Zealand* Italy Denmark Norway Sweden* Finland* Estonia* India France Japan China Korea Malaysia Singapore US UK S.Africa Russia* Morocco* Netherlands Germany Austria N.Zealand** Sweden** Estonia** Bulgaria Greece Monaco Belgium Brazil Mexico Argentina Turkey UK Instance - Oracle 11i US Instance - Oracle 11i Oracle 11i "UNIFY" Instance Single Global Instance Oracle R12.0.6 US & UK migrated to "UNIFY" instance * GL Module Only ** Additional modules Canada Chile Costa Rica Gemstone Start Gemstone Go-live 3 EBS instances converged into a Single Global Instance Global COA / Processes Regional Shared Service Centers processing Ongoing global roll out  Single Global Instance of Oracle EBS R12  Global Chart of Accounts  Standard Finance Processes  Global Finance Shared Services Organisation  Three regional Finance Shared Service Centres  Global Hyperion EPM & OBIEE fully integrated with EBS  Global Finance Center of Excellence (COE) | 44 Project Gemstone Goals
  • 45. © 2014 eprentise. All rights reserved. Experian – Global Finance Transformation Core Financials Other HR & Payroll Purchasing Order Management HRMS I-Procurement Advanced Pricing Self Service HR Payables Service Contracts Passive Payroll Receivables Project Billing Payroll Advanced Collections Time & Labour Advanced Benefits General Ledger AME Absence Management Fixed Assets BRM Billing * I-Recruitment Cash Management Oracle GRC AGIS I-Expenses Note: Not all modules used by all countries Oracle EBS – Modules implemented and planned * | 45
  • 46. © 2014 eprentise. All rights reserved. GCS Support – Then and Now 3 Regional EBS instances. Two located in UK, one located in USA. 2 Regional support areas  Functional / Development teams in each location  Break fix team in each location  Different support models in place  Knowledge base decentralized 3 different EBS infrastructure footprints Duplicated DBA teams Strategy and Support leadership silo’d and duplicated Consolidation project to move from 3 EBS to single global instance, infrastructure located in UK Outsourced Break/Fix support to support partner (TCS)  Experian Development FTE’s reduced  Support presence included 3rd shore (offshore center in Kolkata, India).of support to a 24x7 model  Support management centralized, global incident system implemented Built out EBS Regression Test Bed platform Began formal Release Mgmt process to include instance and DBA resource utilization management Outsourced Support Model transitions to Service Level Agreement (SLA) basis Formal Change Process put into effect – simple change < 10 days, Planned change > 10 days Release Management process furthered  Instance refresh policy established  Configuration Mgmt process furthered, began use of automation tool (i- setup) EBS Support (Prior to Gemstone) EBS Support (Gemstone Go Live) EBS Support / Strategy (Gemstone 2yrs old) (an Iterative Process) | 46
  • 47. © 2014 eprentise. All rights reserved. Process Collaboration – How Do We Work Together? Process Collaboration Matrix Business Partners Global Corporate Systems Business Process Process Owner Process Sponsor GCS Process Partner / SME GCS Technology Partner BusinessIntelligence: DataIntegration/MasterDataManagement /Middleware: DataWarehouse/DataDesignAuthority: Order to Invoice NA: TBD NA: TBD GCS SME LATAM: TBD LATAM: TBD GCS SME UK&I / EMEA: TBD UK&I / EMEA: TBD GCS SME APAC: TBD APAC: TBD GCS SME Invoice to Cash TBD TBD GCS SME Recruit to Retire NA: TBD TBD GCS SME LATAM: TBD TBD GCS SME UK&I / EMEA: TBD TBD GCS SME APAC: TBD TBD GCS SME Purchase to Pay TBD TBD GCS SME Record to Report TBD TBD GCS SME GRC TBD TBD GCS SME Enterprise Performance Management TBD TBD TBD | 47
  • 48. © 2014 eprentise. All rights reserved. Customer-focused organization Establishes global processes and accessibility to data Hastens incorporation of new business units Improved access to consistent information Enhanced ability to refocus business units from transactional processing to analytical analysis Focuses on core competencies Eliminates silos, and assures that management everywhere is reading from the same page Number of control points in a process and the number of variations of a process are greatly reduced, mitigating the risk of process error. Drastic quality improvements Leverage technology Fewer customer contact points Soft Benefits of Implementing Shared Service Centers | 48
  • 49. © 2014 eprentise. All rights reserved. Questions? | 49
  • 50. © 2014 eprentise. All rights reserved.© 2013 eprentise. All rights reserved.| 50 Thank You! - One World, One System, A Single Source of Truth - Helene Abrams, CEO www.eprentise.com habrams@eprentise.com Visit eprentise at booth 1033!