Maximizing Shared Services Wins
   With Minimal Investment

  Rick Arpin, SVP Corporate Controller
             March 24, ...
Contents

•   Keys to Quick Wins
•   MGM MIRAGE Background
•   Focus on Finance Improvement
•   Finance Shared Services Ce...
KEYS TO QUICK WINS
Keys to Quick Wins


Find Your Inspiration,
  Create Your Vision
        and ACT…
 "We will either find a way, or
    make...
MGM MIRAGE BACKGROUND
MGM MIRAGE Background
   Company overview
• 15 operating resorts; five
  joint venture investments                   LAS V...
MGM MIRAGE Background (cont.)
     •   Elements Unique to Hotel/Casino Businesses




                                    ...
FOCUS ON FINANCE IMPROVEMENT
Focus on Finance Improvement
• Internal staff and PwC performed assessment in 2007
   Finance Maturity Model        Financ...
Focus on Finance Improvement (cont.)
             Accounts Payable                                              Payroll
Co...
FINANCE SHARED SERVICES CENTER
Finance Shared Services Center




                                 12
Finance Shared Services Center (cont.)
New Shared Services Leadership – 8/09                 Scope
                       ...
Finance Shared Services Center (cont.)
           MISSION STATEMENT

“MGM MIRAGE’s Finance Shared Services
Center seeks to...
Finance Shared Services Center (cont.)

                           CORE VALUES
• Governance and accountability
   – “Opera...
Finance Shared Services Center (cont.)

• Governance and accountability
  – Measurement focus - Key Performance Indicators...
Finance Shared Services Center (cont.)
• Staff development
  – Dedicated training & recruiting/hiring
    resource        ...
Finance Shared Services Center (cont.)
• Systems optimization
   – Finance Data Repository
      • Aggregate data from sou...
PAST SUCCESSES
Past Successes
• Accounts Payable (AP) background
      – Key element is a scanning and workflow system
      – Began impl...
Past Successes (cont.)
• Scalability
   – No FTE’s added to handle City Center invoices (18% increase)

     Before City C...
Past Successes (cont.)
• Key AP Statistics
   – Cost per invoice down to $3.23 from $6.94 in 2005
   – Invoices processed ...
Past Successes (cont.)
• Payroll background
      – Three phases – lift-and-shift, consolidation, standardization
      – ...
Past Successes (cont.)
• Key Payroll Statistics
   – 40+% decline in staff with incrased number of payments
   – Payments ...
Past Successes (cont.)
• Non-Gaming Audit and Accounting
   – Consolidated Q4 2008
   – Additional opportunity for efficie...
Past Successes (cont.)
• Future additions to the FSSC
  – Non-gaming accts. receivable & gaming revenue accounting
     • ...
KEYS TO QUICK WINS
Keys to Quick Wins


Find Your Inspiration,
  Create Your Vision
       and ACT…
 "We will either find a way, or
    make ...
QUESTIONS AND DISCUSSION
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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

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

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Rick Arpin, MGM Mirage - Maximizing SS Wins Minimal Investment

  1. 1. Maximizing Shared Services Wins With Minimal Investment Rick Arpin, SVP Corporate Controller March 24, 2010
  2. 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. 3. KEYS TO QUICK WINS
  4. 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. 5. MGM MIRAGE BACKGROUND
  6. 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. 7. MGM MIRAGE Background (cont.) • Elements Unique to Hotel/Casino Businesses 7
  8. 8. FOCUS ON FINANCE IMPROVEMENT
  9. 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. 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. 11. FINANCE SHARED SERVICES CENTER
  12. 12. Finance Shared Services Center 12
  13. 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. 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. 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. 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. 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. 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. 19. PAST SUCCESSES
  20. 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. 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. 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. 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. 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. 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. 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. 27. KEYS TO QUICK WINS
  28. 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. 29. QUESTIONS AND DISCUSSION
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