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Shared Services is the organization that…
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Strategic
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Structure
• Independence is Important
• Governance Mat...
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Implementation
• Get control of the budget
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Balanced
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Grant Farrell, Managing Director of Chazey Partners US - Consolidating Back Office Functions Across A Univerysity System

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For the conference organised by Association of Academic Health Centers Senior Administrative Officers/Fiscal Officers 2013 Annual Meeting | July 26, 2013 | Santa Fe, NM

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Grant Farrell, Managing Director of Chazey Partners US - Consolidating Back Office Functions Across A Univerysity System

  1. 1. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific Association of Academic Health Centers Senior Administrative Officers/Fiscal Officers 2013 Annual Meeting | July 26, 2013 | Santa Fe, NM
  2. 2. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific 2 Who We Are Definitions & Trends Lessons Learned
  3. 3. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific 3 Global Offices Flexible Resource Model Presentation handout is appended with more information on Chazey Partners
  4. 4. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific 4
  5. 5. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific 5 What is the back office?
  6. 6. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific  Remote from business  Unresponsive and inflexible  No Business/ Operational control over costs  Viewed as central overhead  Prevalence of shadow operations Centralized Challenges  Disparate processes  Multiple standards  Duplication of effort  Different control environments  High cost and costs unclear across the business  Not scalable Decentralized Challenges  Responsive to Business and Operational needs  Business/ Operations control decisions  Customized solutions to meet Business/ Operational requirements Benefits Shared  Highly client focused  Commercially driven  Service Partnership Agreements  Clear unit costs  Flexible delivery  Clear understanding of drivers and activities  Common systems and support  Consistent standards and controls  Tight control environment  Economies of scale Benefits 6
  7. 7. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific Attribute Shared Services Centralization Accountability Business Unit Corporate Key Performance Target Service excellence and continuous improvement Cost reduction and central control Service Partnership Agreements Widespread Rare Classification An independent unit Another corporate function Responsibility Partnership Demarcation 7
  8. 8. North America | Latin America | Europe | Middle East | Asia-Pacific Shared Services is the organization that… Providing services that are… Achieve by leveraging… Employs a specialist team Geographically unconstrained Client- focused High quality Non-core Mission critical Repetitive or professionalLower costHigh efficiency Organizational realignment Technology Standardization Best Practices 8
  9. 9. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific 9 Higher Quality Lower Costs Improved Control
  10. 10. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific Recession’s impact on funding Increasing student fees not enough Efficient/Effective back office is prerequisite Several Shared Services examples in higher education sector Next wave of Shared Services: broader scope, moving up value chain 10
  11. 11. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific 11
  12. 12. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific 12
  13. 13. North America | Latin America | Europe | Middle East | Asia-Pacific Strategic • No longer a radical idea in the public sector • Moving from an opportunity to a necessity • Make It Mandatory and High Profile • Can Work Across a Large Geography and Multiple Jurisdictions • Opportunities are “Borderless” • Core Challenges Unchanged • Not Just Transactional • End-to-End, Not Functional 13
  14. 14. North America | Latin America | Europe | Middle East | Asia-Pacific Structure • Independence is Important • Governance Matters • Create Durable Structures Business Cases • Prepare Business Cases • Recognize Need for Funding • Infrastructure can be Enabler and Barrier • Taxes Matter 14
  15. 15. North America | Latin America | Europe | Middle East | Asia-Pacific Implementation • Get control of the budget • Identify quick wins & strategic opportunities • Co-Locate Staff • Client-focused operating model • Adapt rather than Adopt • Changing Culture is challenging • Multifunctional Enabled by New Technologies • Outsourcing a Mess Doesn’t Clean It Up • Delivery of Shared Services is Not a Core Government Skill 15
  16. 16. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific Grant Farrell Managing Director, Chazey Partners United States grantfarrell@chazeypartners.com Mobile: 408-767-1285 Toll-Free: 1-855-5-SHARED Chas Moore Managing Director, Chazey Partners Canada chasmoore@chazeypartners.com Mobile: 250-469-4168 Toll-Free: 1-855-5-SHARED 16
  17. 17. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific 17
  18. 18. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific
  19. 19. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific Spring 2008: Mandate to transform the back office to provide 21 Common Services to general government, healthcare & education Characteristics of Common Services before transformation: Antiquated payroll system on brink of failure Significant reduction in workforce through demographics in 5 years Conservative 25% inefficiency rate in accounts payable and payroll Decentralized Multiple information technology data sites Manual processes Lack of self service options Intersol and Chazey Partners hired to provide specialist expertise
  20. 20. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific In 2008, undertook prioritization exercise to determine which of initial 21 services were best candidates for transformation In 2011 undertook second round of strategic prioritization to assess the next round of opportunities to prioritize 2 new functions 4 new services that were extensions of existing functions 3 out-of-scope opportunities that could be supported by NBISA Engaged broad cross-section of stakeholders 11 weighted criteria in four categories (financial, strategic, implementation, impact) were assessed & scored Tools used included workshops, Activity Based Analysis, interviews, and benchmarking
  21. 21. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific Developed initial scenarios for conceptual design Based on moving towards leading practices Considering suitability and do-ability for NBISA Models considered: Shared Services agency, crown corporation, special agency, new department, distributed, clusters, status quo Key tools and activities: Leading practices diagnostics End-to-end process design workshops High level organizational design Service delivery framework High-level KPIs & metrics
  22. 22. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific Savings of $8.8m annually ($32.1m over six years) net of investments Other budgets $6.5m IT Service Desk $2.0m (50%) Accounts Payable and Payroll $2.3m (30%) New support structure $2.0m Net Ongoing Savings $8.8m Savings Investment Net
  23. 23. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific KPIs continue to be monitored to drive continuous improvement Volume of transactions processed Performance against targets Quality measures (eg. time to answer calls, abandonment rates) Customer satisfaction rates Sample observations Backlogs in payables measured, explained, and addressed; resulting in 2x proportion paid within terms (average Nov-11 to Jan-12 vs Feb-12) Working with departments/supplies to address delay between invoice date and receipt of invoice by NBISA Client satisfaction trending upwards
  24. 24. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific Consistent standards of service delivery Economies of scale, including group purchasing Sector-wide strategies, enhanced decision making Organizational improvement and innovation Opportunities for staff development and career advancement Improved staff retention and recruitment Better access to a pool of scarce or specialist skills & resources * Adapted from Government of New Brunswick document, Government Renewal – NBISA Workplan, Spring 2011
  25. 25. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific New Brunswick is one of Canada’s three Maritime Provinces with a population of 750,000, supported by a provincial government annual budget of $8 billion. The Government of New Brunswick engaged Chazey Partners to develop the business case and implement shared services for several of their administrative functions. The result was the creation of the New Brunswick Internal Services Agency (NBISA), which initially included four service lines: Accounts Payable, Payroll and Benefits, IT Services Desk, and IT Operations. The project started in 2009, lasting three years. Testimonial from Andrea Seymour, Vice President and COO, GNB “Phil Searle and the Chazey team has been helping is with our Shared Services program for the last two years and their support continues today. Chazey Partners initially validated the approach that we were taking in the summer of 2009, as we embarked on this exciting change and value-adding program for Government. They have since been actively and directly involved in planning, design, testing and implementation. The initial 4 services deployed were Accounts Payable, Payroll and Benefits, IT Services Desk and IT Operations. The Chazey team (including Phil, John Martin, Grant Farrell and others) has brought process and domain expertise, as well as some level of passion for our success. The expert advice and support from Phil has been a major contributor to our success and the team from Chazey has really become part of our team and has performed a number of critical support and deployment roles, including comprehensive knowledge transfer. Phil has also been involved with advising us with our Enterprise Resource Planning initiative and his advice and counsel has been very important to us. I would personally highly recommend Chazey Partners from my own experience with their team. Indeed, we still actively use their support today in a number of areas, and as we look to expand the scope of our New Brunswick Internal Services Agency.” 25
  26. 26. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific 26
  27. 27. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific We provide advice, guidance, support and implementation expertise, covering strategy setting, business case production, program management, outsourcing assessment, process optimization, technology enablement, training and change management. Our functional breadth of experience includes the “big four” of HR, Finance, IT and Procurement, plus other support services such as Facilities, Real Estate, Legal, Communications, etc. Example clients include Coca Cola Hellenic, Coca Cola Enterprises, Government of New Brunswick, Agrium, May Gurney, Gilead Sciences, Interior Health, Northern Health, Lawrence Berkeley Laboratory, FormFactor, National University of Ireland, Bridgestone, Gerdau, and many others. Because we are passionate business people and Shared Service practitioners, we care about your success and deliver solutions relevant to your organization. 27
  28. 28. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific We have serviced a great variety of clients across many industries and countries, covering Shared Services and Outsourcing, Business Transformation and Technology Enablement. Due to the unique nature of working within the Public Sector and with Non-Profits, we wanted to specifically highlight the following organizations and experience below: New Brunswick Internal Services Agency, New Brunswick, Canada Lawrence Berkeley National Laboratory, Berkeley, California Interior Health and Northern Health, British Columbia, Canada Stanford University University College Galway in Ireland, Ireland The World Wildlife Fund The International Baccalaureate National Health Services (NHS), UK Health Service Executive (Ireland) Non-Departmental Public Bodies (NDPBs) Ministry of Defense (MOD) South Yuba River Citizens League Outsourced Services to Local Authorities 28
  29. 29. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific Phil Searle, Grant Farrell, Chas Moore and Janey Jux have chaired, arranged, presented at and facilitated workshops at a number of Public Sector Shared Services events, including the following: • Shared Services in the Public Sector at the Queen Elizabeth II Conference Centre in London • Chaired, presented at and help organize the Shared Services and Outsourcing Network‘s first North American Public Sector shared Services Conference, held in Chicago in November 2011 • Presented at and helped organize the Shared Services and Outsourcing Network’s second North American Public Sector Shared Services Conference, held in Chicago in November 2012 • Delivered a master class at the “Managing Change – Transforming the Public Sector” conference at the Barbican Centre, London 2011 • Chaired and presented at the 2012 “Power of Collaboration” conference for financial professionals in BC Healthcare at Vancouver, Canada 29
  30. 30. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific Public Sector Shared Services and “Collaboration vs. Sharing”. Phil Searle, CEO Chazey Partners What might be the Impact of the 2012 Presidential Election on Shared Services and Outsourcing in the US Public Sector? Phil Searle, CEO Chazey Partners Are you getting the SPA treatment? Chas Moore, Managing Director, Canada From front to back office. Grant Farrell, Managing Director, United States Proactively managing your stakeholders. Janey Jux, Head of EMEA Public Sector Practice Make or Buy Decision. Phil Searle, CEO Chazey Partners What are Shared Services Best Practices? Phil Searle, CEO Chazey Partners When is Shared Services not really Shared Services? Janey Jux, Head EMEA Public Sector Practice Business Continuity Planning. Grant Farrell, Managing Director, United States Client Relationship Management Framework. Grant Farrell, Managing Director, United States Deploying Shared Services. Grant Farrell, Managing Director, United States Developing the Business Case. Chas Moore, Managing Director, Canada Shared Services Optimization. Phil Searle, CEO Chazey Partners Technology Enablement. Grant Farrell, Managing Director, United States 30
  31. 31. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific Business Transformation We help clients to transform their support functions to realise significant benefits (lower costs, optimised working capital and improved performance) through best practice process development and roll out of optimal organisation, support and delivery structures. Functional scope covering Finance, HR, IT and Procurement Identify and target opportunities, and produce powerful business cases to reflect the opportunity and gain organisational buy in Implement and support approved transformation initiatives rapidly to drive maximum ROI Effective acquisition integration and business divestitures Powerful project and change management, focussing on delivery and outcomes Chazey Partners’ Profile • What We Do Shared Services Planning for, resourcing and implementing global and regional Shared Service Organisations (SSOs) covering a wide ranges of functions and processes including offshore solutions Turning round sub optimal or failing SSOs Statutory and Fiscal compliance delivered by SSOs for multiple countries and legal jurisdictions Independent of any outsourcing providers, we offer impartial sourcing advice and support covering both internal and external options, to ensure that the best solutions for your business are found Training and development for Shared Service practitioners and Shared Service customers Technology Enablement Implement and optimise ERP and other technology enablement solutions to maximise return on investment and in quick time. Focussing on needs and value to the business, we view technology as an enabler and not an end in itself. Resource technology projects to enhance chance of success through an optimal mix of IT, Business Systems Analysts, Business Process Integration, Business Process Owners, and Users State of the art additional technology enablement where required Effective training and support Experience includes SAP, Oracle, JD Edwards, BAAN, Siebel, Peoplesoft, COINS and many others 31
  32. 32. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific 32
  33. 33. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific 33 AS-IS Carry out multiple site visits and workshops Review and catalogue any existing process & sub processes Review a catalogue technology landscape Complete Activity based Analysis Finalise stakeholders interviews Review existing reporting tools and mechanisms 2 to 4 weeks Current State Analysis: Summary of Key Findings & Gap Analysis Proposed Complete best Practice diagnostics High level process design High level org design Service delivery framework Define high level KPIs and Metrics Develop high level operating model Finalise Technology assessment 4 to 5 weeks Operating Model : To Be Processes & Organisational Design DESIGN, BUSINESS CASE, RECOMMENDATION 5 to 6 weeks Opportunity Matrix Business Case Evaluation Location Recommendations(s) Recommend Governance Framework Implementation Plan Change management Plan Identification of next steps Recommendation, Business Case & Implementation Plan Checkpoints with key stakeholders:  Project Board  Steering Group Key Deliverables BASELINE & BENCHMARK Project kick off & mobilisation Establish detailed plan, timelines, key deliverables etc. for this stage Review output from work to date Initial Communications Review and update baseline Calculations Complete Further Stakeholder interviews KeyActivitiesWorkstep 0 to 2 weeks
  34. 34. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific As-Is (4.0) Considered finance function, not part of procurement Manual invoices All payments in through single SAP ERP Accounts payable responsibility centralized Weekly cheque runs plus ad hoc No statistical review of small invoices Manual cheques infrequent Achieve 50% of available vendor discounts EFT not used To-Be (8.0) Achieve leading practices except: Continue with manual invoices (initially no funding for document management/scanning solution) EFT only possible for 30% of vendors Is part of an end-to-end purchase-to-pay process with front end transactional processes designed to minimize own stream error correction Scan and route 100% of invoices when received by accounts payable processing center Process all payments through a single system. Centralized accounts payable responsibilities across the organization Optimize number of check runs each month. Review 100% of large dollar invoices and statistically sample the remainder Eliminate manual cheque request generation. Maximize vendor discounts Utilize EFT for payment to eliminate use of paper cheques 0 4 102 6 8 Diagnostic Rating Scale: • 1 = Leading Practice is not adopted • 10 = Leading Practice is adopted in full Score in Range 1-4 Score in Range 5-7 Score in Range 8-10 Current Future Leading PracticeObservations
  35. 35. North America | Latin America | Europe | Middle East | Asia-Pacific Balanced Scorecard Creation of Service Partnership Agreements Delineation of roles and responsibilities between SSO and other functions / local regions / businesses Standardised processes and sub-processes across all functions 35
  36. 36. North America | Latin America | Europe | Middle East | Asia-PacificNorth America | Latin America | Europe | Middle East | Asia-Pacific Beliefs Behaviours Customer Focus “By understanding the needs of my customers, I can improve the service I offer them’’ · Know who our customers are and what they need · See things through our customers eyes · Go out of our way to deliver what our customers want Accountability “My actions and performance directly impact the performance of others” · Gives and receives feedback openly · Performs tasks effectively, even under time pressure · Understands, and acts to support, wider business objectives Team Commitment “Everyone in the team has something valuable to contribute” · Takes collective responsibility rather than attributes individual blame · Supports those who surface problems Innovation “Everything we do is open to challenge and improvement” · Demonstrates ability to identify opportunities for process improvements · Provides solutions, not just issues Flexible ‘’My way is not the only way’’ · Sees change as an opportunity and not a threat · Open to alternative approaches and working styles · Openly shares knowledge within the group Organised “Prioritisation ensures that I deliver my workload and still get involved in other activities” · Sees each job through to completion · Completes processing in an efficient and effective manner · Recognises the cost implications of all actions Learning “My proficiency directly impacts the ability of the SS to deliver" · Is motivated to take on new challenges and develop new skills · Shares skills and experience to build team capacity 36

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