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Balancing Local & Global with a Hybrid Approach to Shared Services
 

Balancing Local & Global with a Hybrid Approach to Shared Services

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The business drivers for a Shared Service Centre and Outsourcing combined approach

The business drivers for a Shared Service Centre and Outsourcing combined approach

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    Balancing Local & Global with a Hybrid Approach to Shared Services Balancing Local & Global with a Hybrid Approach to Shared Services Presentation Transcript

    • Balancing Local & Global With aHybrid Approach to Shared Services IQPC SSO Week - May 10th, 2011 Michele Gray, Sr. Director, Global Consulting, ADP ©2011 Global HR studio, Inc. Proprietary and Confidential
    • A little bit about Michele28 years in HR - Industry and ConsultingADP Global Consulting for 11 yearsInvolved in setting up Avaya (Convergys) Hybrid Model EMEA90% of time spent on advising multi-national companies on how ADP’soutsourcing services can support their HR & Payroll SSC models atdesign & pre-contract stage ■ HR ■ HR + Payroll ■ Payroll Only ©2011 Global HR studio, Inc. Proprietary and Confidential 2
    • And now a bit about you?Do you: ■ A) Have an HR SSC and already outsource Payroll ■ B) Have HR SSC + in-house Payroll ■ C) Planning to move to model A ■ D) Planning to move to model B ■ E) Other ©2011 Global HR studio, Inc. Proprietary and Confidential 3
    • Growing Demand for Global HR and PayrollMultinational companies’ HR Depts. strategic stakes: ■ Aligning with the organization’s business objectives and adopting common HR policies; ■ Focusing on core business and end-users satisfaction and free local operations from administrative tasks; ■ Reducing day-to-day operating costs related to the management and maintenance of various platforms and vendors; ■ Increasing reporting capabilities through process standardization; ■ Reducing risks related to compliance obligations with local legislation and international finance standards (Sarbanes-Oxley). ©2011 Global HR studio, Inc. Proprietary and Confidential 4
    • Business Drivers for SSC and Outsourcing Combined Approach GrowthGlobalization ComplianceMergers and acquisitionEmerging businessShared Service Centers Corporate Governance Sarbanes OxleyCost effectiveness & value to business Payroll complexity and rate of changeIncrease flexibility and scalability Standardization, efficient processes Service Level Agreement, KPIs Company Risk management Technology Decrease interfaces maintenance/ payroll platforms Increase use of ESS/MSS Decrease risks on system availability, systems upgrades Develop controls (disaster recovery plans, data protection) Increase flexibility ©2011 Global HR studio, Inc. Proprietary and Confidential 5
    • What’s driving you most?What is your primary driver for shared servicesa. Reduced Costb. Compliance Assurancec. Improved Data Visibilityd. Spend Controle. Functional Controlf. Leveraging suppliers technologyg. Other ©2011 Global HR studio, Inc. Proprietary and Confidential 6
    • Benefits Executives are wanting from Outsourcing (Source: NelsonHall 2010) Mid-market / National Large / Multi-national1) Cost reduction and control 1) Cost reduction and control2) Become strategic partner / Stop doing 2) Global / multi-country service using single vendor transactional work and platform3) Compliance / Risk management 3) Improved payroll data and service4) Improved technology 4) Process improvement5) Lack of resources 5) Improved technology6) Reduced risk 6) Become strategic partner7) Better payroll data and service 7) Compliance / Risk management8) Process improvement 8) Bad experience with internal payroll9) Dissatisfied current provider 9) Lack of resources10) Bad experience with internal payroll ©2011 Global HR studio, Inc. Proprietary and Confidential 7
    • Why Could a Hybrid Model be attractive?CostControlComplianceService Improvement ©2011 Global HR studio, Inc. Proprietary and Confidential 8
    • Client Example: Cost Driven1 - Situation Initial scope Europe only Big supplier to Automotive sector – hit by recession 6,259 employees in 10 European Countries –14 payroll engines “Payroll” included Time Management & HR (OM/PA) Current TCO €342 PEPY2 - Objectives Identify $300 - $500 of ongoing savings part of global cost savings initiative Move fixed cost to variable • Expanded scope to Americas & China • Increased HR functionality3 - Challenges & ResultsOpen in-house team with lots of base dataExtrapolated for smaller countries - but key base data availableProjected 18% saving( $547K) on As-IsReduced fixed costs from 93% of TCO down to 38%Projected 23% ($705K) if leverage SSC in lower cost countryRegional To Be TCO €264-€282Increased future TCO to €336 & reduced savings to $150KCorporately used saving from one region to offset investment in otherregions ©2011 Global HR studio, Inc. Proprietary and Confidential 9
    • Electronics Co. Consider SSC in Low cost Country Electronics Co ‐ MS   with SSC Comparison Current Vs Future Costs Future  Future Europe Current In Country SSC  in Low Cost Total Headcount/employees 6,259 6,259 6,259 Total FTEs involved in Payroll processes 17.92 7.84 7.84 Total Transactions per annum 120,876 120,876 120,876 Future  Future Europe Current In Country SSC  in Low CostPayroll Staff Compensation & Social costs € 1,065,163 € 490,930 € 381,975Outsourced Services € 159,967 € 1,092,625 € 1,092,625Payroll IT Costs [Payroll Systems Related costs plus IT Staff Expense] € 333,123 € 64,000 € 64,000Time Costs € 250,046 € 91,366 € 91,366Additional Company Payroll Costs ( SOX) € 308,000 €0 €0Postage Costs € 24,266 € 24,266 € 24,266 Total Cost of Ownership € 2,140,564 € 1,763,187 € 1,654,231 Euro Saving  € 377,377 € 486,333 % 18% 23% USD Saving ( at 1:1.45) $ 547,197 $705,183 Future  Future TCO Metrics Current In Country SSC  in Low Cost Payroll:FTE Ratio 349 799 799 Cost per Employee € 342 € 282 € 264 ©2010 Global HR studio, Inc. Proprietary and Confidential 10 Cost per transaction € 17.71 € 14.59 € 13.69
    • Organize and Synchronize an SSC with theDeployment of an International HR Project ©2011 Global HR studio, Inc. Proprietary and Confidential 11
    • Carefully Defined Roles for the SSC & Supplier ©2011 Global HR studio, Inc. Proprietary and Confidential 12
    • Ensure Process Workflow is clear and agreed ©2011 Global HR studio, Inc. Proprietary and Confidential 13
    • Defining Future Positions within the SSC and atthe Local Level ©2011 Global HR studio, Inc. Proprietary and Confidential 14
    • Don’t forget to…Be clear on your business drivers – why are you doing this?Start measuring now so that you can estimate benefits and measureachievement laterSeek Stakeholder buy in – resistance costs, time, money and careers!!Take time to understand what is available from the supplier marketNetwork with others and dig out the truthPlan after Go-Live …SSC is for life not just a projectCome back and tell us how you get on ©2011 Global HR studio, Inc. Proprietary and Confidential 15