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Rick Arpin, MGM Mirage - Maximizing SS Wins Minimal Investment

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Presentation from the 14th Annual North American Shared Services & Outsourcing Week, 2010 …

Presentation from the 14th Annual North American Shared Services & Outsourcing Week, 2010

To find out more about the 2011 event go to:
www.sharedservicesweek.com

Published in: Business

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  • 1. Maximizing Shared Services Wins With Minimal Investment Rick Arpin, SVP Corporate Controller March 24, 2010
  • 2. Contents • Keys to Quick Wins • MGM MIRAGE Background • Focus on Finance Improvement • Finance Shared Services Center • Past Successes • Keys to Quick Wins • Questions and Discussion 2
  • 3. KEYS TO QUICK WINS
  • 4. Keys to Quick Wins Find Your Inspiration, Create Your Vision and ACT… "We will either find a way, or make one." -Hannibal 4
  • 5. MGM MIRAGE BACKGROUND
  • 6. MGM MIRAGE Background Company overview • 15 operating resorts; five joint venture investments LAS VEGAS STRIP • Expansion with management agreements worldwide • $6 billion in annual revenue, 60,000 employees Company growth • Two large corporate mergers-Mirage Resorts in 2000 & Mandalay Resort Group in 2005 • Inconsistencies in accounting practices, system usage, & COA structure • Legacy systems, outdated processes, reporting not streamlined 6
  • 7. MGM MIRAGE Background (cont.) • Elements Unique to Hotel/Casino Businesses 7
  • 8. FOCUS ON FINANCE IMPROVEMENT
  • 9. Focus on Finance Improvement • Internal staff and PwC performed assessment in 2007 Finance Maturity Model Finance Cost as a % of Revenue 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 1 Benchmark group Your <<< optimal company ◊ average ∆ minimum median maximum 1.19% 0.64% 0.00% 0.25% 0.47% 0.91% 2.38% 9
  • 10. Focus on Finance Improvement (cont.) Accounts Payable Payroll Cost Per Invoice # of Vendors Cost Per Paycheck Error Rate $3.10 $3.00 60k 20k $2.11 $1.75 Benchmark Benchmark Benchmark Accounts Receivable General Accounting Time to Bill Chart of Accts. Auto Entries Manual 15 Days Benchmark 6 Days 2007 Today 10% 90% 10K 4k Manual Auto Entries 30% 70% 10
  • 11. FINANCE SHARED SERVICES CENTER
  • 12. Finance Shared Services Center 12
  • 13. Finance Shared Services Center (cont.) New Shared Services Leadership – 8/09 Scope 2010/2011 – Accounts Provide an identity to shared services at receivable, casino revenue MGM MIRAGE – the Finance Shared accounting Services Center “FSSC” Existing services – Create an infrastructure for future Accounts payable, payroll, shared services initiatives non-gaming accounting, Consolidate reporting lines general accounting 13
  • 14. Finance Shared Services Center (cont.) MISSION STATEMENT “MGM MIRAGE’s Finance Shared Services Center seeks to provide world-class finance and accounting services, including compliance with internal policies and regulatory requirements.” 14
  • 15. Finance Shared Services Center (cont.) CORE VALUES • Governance and accountability – “Operate like a business and be accountable to our customers” • Communication and measurement – “Share ideas with our customers and teams, let them know how we are doing” • People development – “Enhance our team members’ skills and develop their careers” • Process improvement – “Continually improve how we do our work” • Systems optimization – “Use existing systems better and find better systems for the future” 15
  • 16. Finance Shared Services Center (cont.) • Governance and accountability – Measurement focus - Key Performance Indicators (KPIs) & Service Level Indicators (SLIs) – Customer service focus - Service Level Agreements (SLAs) & customer feedback • Communication – Website/newsletter/etc. • for internal and external communications – Develop & cultivate relationships with peer departments (Purchasing, HR, IT) 16
  • 17. Finance Shared Services Center (cont.) • Staff development – Dedicated training & recruiting/hiring resource Effective talent – Robust performance evaluations process management – Training elements • process improvement, systems • mgmt/leadership, cross training • Process improvement Project management training for directors – Continuous improvement teams – Reward ideas for improvement 17
  • 18. Finance Shared Services Center (cont.) • Systems optimization – Finance Data Repository • Aggregate data from source systems • Auto-populate journal entry forms for GL and Daily Operating Report – Overall delivery framework – dashboards, etc. Processes Systems People •Process improvement •Finance Data Repository •Hiring the right people •Identify high-cost tasks •Utilize current systems better •Training and development •Push operational changes •Information delivery •Performance evaluations 18
  • 19. PAST SUCCESSES
  • 20. Past Successes • Accounts Payable (AP) background – Key element is a scanning and workflow system – Began implementation in 2003 IMPLEMENTED IN PHASED APPROACH PHASE I PHASE II PHASE III • Process & Payment of • Document Storage & • Process & Payment of PO Invoices Retrieval – Already Non-PO Invoices processed documents • Use of 3-Way Match & • Secondary Workflow Auto Approval • Basic Workflow • Advanced workflow 20
  • 21. Past Successes (cont.) • Scalability – No FTE’s added to handle City Center invoices (18% increase) Before City Center After City Center + • Accounts payable future opportunities – New business units – retail AP, construction, MGMM Hospitality, other new developments RETAIL INVOICES 2009 FTES 2009 72,824 – Process improvements • OCR • e-invoicing Retail, 24 • dynamic discounting Accts Pay., AP 45 812,000 21
  • 22. Past Successes (cont.) • Key AP Statistics – Cost per invoice down to $3.23 from $6.94 in 2005 – Invoices processed more than doubled since 2005 30,000 $7.00 25,000 $6.00 $5.00 20,000 $4.00 Invoices per FTE 15,000 $3.00 Cost per Invoice 10,000 $2.00 5,000 $1.00 - $- 2005 2006 2007 2008 2009 2010 (est) 22
  • 23. Past Successes (cont.) • Payroll background – Three phases – lift-and-shift, consolidation, standardization – Significant project to make operations process payroll consistently IMPLEMENTED IN PHASED APPROACH PHASE I PHASE II PHASE III • Lift and Shift • Consolidation • Standardization • Implemented • Move to single payroll • Physically moved to a efficiencies where system and single central location, with possible with 4 diff. instance of timekeeping no change to processes systems system 23
  • 24. Past Successes (cont.) • Key Payroll Statistics – 40+% decline in staff with incrased number of payments – Payments processed per FTE has nearly doubled 40,000 $4.00 2007 2008 2009 2010 (est) 65 63 63 45 30,000 $3.00 2007 2008 2009 2010 (est) 14.60 14.49 12.88 24.76 Payments per FTE 20,000 $2.00 Cost per FTE 10,000 $1.00 0 $0.00 2006 2007 2008 2009 2010 (est) 24
  • 25. Past Successes (cont.) • Non-Gaming Audit and Accounting – Consolidated Q4 2008 – Additional opportunity for efficiencies and growth as FDR is developed and more automated tools are implemented • General Accounting – Consolidated Q4 2009 – Began with standardization of Chart of Accounts – Additional efficiencies will be realized with the implementation of automated tools like credit card matching • Key statistics – Initial investment - $2+ million – Annual savings - $6+ million – ROI – > 200% 25
  • 26. Past Successes (cont.) • Future additions to the FSSC – Non-gaming accts. receivable & gaming revenue accounting • Likely to be consolidated in 2010 or 2011 • Challenges to address – Media handling – Scope (AR – credit; Casino acct. – compliance function) – Regulatory requirements in casino accounting – AR billing system • Future departments’ ROI (estimates) – Initial investment - $2+ million – Annual savings - $6+ million – ROI – > 200% 26
  • 27. KEYS TO QUICK WINS
  • 28. Keys to Quick Wins Find Your Inspiration, Create Your Vision and ACT… "We will either find a way, or make one." -Hannibal 28
  • 29. QUESTIONS AND DISCUSSION