1 | APRIL 2014 SHARED SERVICES OPTIMIZATION
2014
APRIL
Shared Services Optimization
2 | APRIL 2014 SHARED SERVICES OPTIMIZATION
IntroductionYour Shared Services is stabilized, the technology is fully implem...
3 | APRIL 2014 SHARED SERVICES OPTIMIZATION
THE ROAD MAP
There are four basic stages to Shared Services Optimization, as s...
4 | APRIL 2014 SHARED SERVICES OPTIMIZATION
GET BETTER
The foundation for Shared Services Optimization is to
really “delig...
5 | APRIL 2014 SHARED SERVICES OPTIMIZATION
GET CHEAPER
Once your SSO is better, you can move to the next step
on the road...
6 | APRIL 2014 SHARED SERVICES OPTIMIZATION
An SSO that is freer is one that removes constraints on
its clients, and indee...
7 | APRIL 2014 SHARED SERVICES OPTIMIZATION
significantly in the early stages from the key strategies
of Shared Services t...
8 | APRIL 2014 SHARED SERVICES OPTIMIZATION
All rights reserved. Neither this publication nor any part of it may be reprod...
9 | APRIL 2014 SHARED SERVICES OPTIMIZATION
AbouttheAuthor
Chas Moore
Managing Director, Canada
Chazey Partners
Background...
10 | APRIL 2014 SHARED SERVICES OPTIMIZATION
ChazeyPartnersChazey Partners is a practitioners-led global management adviso...
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Shared Services Optimization

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Optimizing your SSO is not about making it bigger. It’s about making it better. This article guides you through the “better-cheaper-freer-bigger” roadmap to deliver the best service you can to support your customers, improve service, and continuously add more value.

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Shared Services Optimization

  1. 1. 1 | APRIL 2014 SHARED SERVICES OPTIMIZATION 2014 APRIL Shared Services Optimization
  2. 2. 2 | APRIL 2014 SHARED SERVICES OPTIMIZATION IntroductionYour Shared Services is stabilized, the technology is fully implemented, and the post-transition support teams have returned to their home departments or moved onto other projects, but your work is just beginning. Shared Services is about striving to serve your internal customer, finding new ways to add value and continuously improve. Whether you have just implemented Shared Services or have an existing organization that is performing sub-optimally, the next step is Shared Services Optimization. “Shared Services Optimization is about much more than just getting bigger; if you simply increase volume and scope, you risk making any current issues of your SSO larger and actually increase your risk of failure” Chas Moore Managing Director, Canada Chazey Partners
  3. 3. 3 | APRIL 2014 SHARED SERVICES OPTIMIZATION THE ROAD MAP There are four basic stages to Shared Services Optimization, as shown in the figure above It is not strictly necessary to follow these steps in sequence as an organization may decide to complete several of these steps at the same time. Although we caution against skipping a step, as this may result in your Shared Services optimization initiative running up against barriers later in the project. For example, a specific service issue may be relatively minor today, but if not addressed and your organization’s scale is increased, this minor issue could grow into a significant hindrance.
  4. 4. 4 | APRIL 2014 SHARED SERVICES OPTIMIZATION GET BETTER The foundation for Shared Services Optimization is to really “delight” your clients and stakeholders by delivering on your promises and providing consistently high quality serviceinfullcompliancewithagreementsandregulations. This word “delight” is often misused and rarely really delivered in practice, but it should be the ultimate goal of any SSO. Deliver on your Promises The first step is to review the goals, targets and promises that you committed to at the start of your Shared Services journey. Ideally you have a business case to refer to and this business case was refreshed and re-confirmed though the design/build/deploy phases of the project. If you do not have a business case, refer back to your project charter, meeting minutes, performance plans or other documentation that gave you a mandate to establish Shared Services. Clarify the commitments you made at the start of the project and conduct an honest assessment on how you did. Before you start making new promises, it is critical to be honest about the journey so far. Once you have delivered on your promises, you need to focus on exceeding them: the next step is continuous improvement. Listen to your Clients and People The world is continuously moving and this includes your clients and your people (staff of SSO). Their expectations as to what Shared Services can and should achieve will likewise continue to increase. Functionality that seemed exotic a few years ago is a basic standard today, whether we are considering anti-lock braking, smart phone technology or cloud computing. Shared Services Organizations (SSOs) need to be proactive, continuously improve, and set those new targets before you are assessed against standards that you didn’t even realize existed. Leading practice SSOs have a continuous improvement culture. At its most basic level, this is simply about listening to your clients and the people who provide the service. Support them with a team that is dedicated to continuous improvement rather than expecting that your managers will get to optimization somewhere in betweentheirday-to-daymeetingsandemails. Leverage a formal process that includes phases for planning, implementing and evaluating the improvement. The goal is to achieve continuous improvement that is described by clients and providers as being transparent, effective and accountable. Assess the Client Interaction Framework Without client engagement, there is no Shared Services. The Client Interaction Framework (CIF) provides the structure for a client-focused organization, which is outward looking and proactive. If the needs of the client are not adequately considered, the service will not be fair or sustainable. One of the best ways to ensure that the customer is fully considered, is to adopt a rigorous CIF. A comprehensive and robust framework distinguishes a leading practices SSO from a simple act of centralization. It also promotes a spirit of partnership between the SSO, its clients and its key stakeholders. (Chazey Partners offers a free online tool where you can self-assess CIF for your organization and optionally receive a report that compares your result to the average of assessments from across the industry. Go to www. chazeypartners.com/CIF for more information.) The nine key components of a comprehensive and robust CIF in support of Shared Services
  5. 5. 5 | APRIL 2014 SHARED SERVICES OPTIMIZATION GET CHEAPER Once your SSO is better, you can move to the next step on the roadmap, getting cheaper. You are not optimizing your Shared Services if you move to cheaper without also ensuringthatyouaregettingbetter. Itispossibletoachieve short term success with a focus on cost containment, but your Shared Services will not be sustainable without the foundation of better service. Standardize Multiple standards are expensive. Now may be the time to re-evaluate the compromises made in design/build regarding end-to-end process standardization. Now that your SSO is stabilized, has delivered on promises and is focused on improving, your clients and people may be willing to further standardize processes in order to achieve cost savings. At the same time, look at driving down the number of exceptions and deviations against your existing approved standards, but remember that ultimately you must meet client needs (even where this may involve some sort of “exception” to the approved standard). This will also require working closely and in partnership with your internal clients, who in turn will need to engage with you. Automate Technology investments can lead to improved services, but after go-live and the achievement of the initial targets, it can be more difficult to build a business case to fund new technology investments. In addition, initial investments in automation can fail to meet the anticipated benefits, sometimes due to inadequate business engagement or due to poor training. At the same time, technology becomes cheaper over time, so what wasn’t funded in the initial phase may become affordable later in your journey. Now is an excellent time to refresh those assumptions, re-engage with business users, update and commit to training, update cost estimates and determine whether a new technology investment might pay for itself within a few years, generating ongoing savings into the future. Improve Processes Improving processes works together with standardization and automation to optimize not just yourserviceoffering,butalsothecostofyourprocesses. The focus needs to be on the required outcome rather than how clients (or your people) want the process to work. Review the decisions made in establishing your SSO and confirm/refresh end-to-end process redesign, silo breakdown, and clear accountabilities. Eliminate duplication and unnecessary steps, minimize repeat or non-value add authorizations, and identify constraints and bottlenecks. Benchmark Efficiency Benchmarks for the cost of service are readily available. It is important to choose the right comparator. Start first with the overall cost of the function, such as the overall cost of financial services, human resources and information technology as a percentage of total revenue; it is readily understandable, relatively easy to measure and requires less precision in choosing which services to include. With experience, you will be able to move to more refined benchmarking by focusing on specific processes and confidently compare to external standards. MakingsurethatyourSSOisbetterandcheaperenables the next two steps of Shared Services optimization: becoming freer and bigger. Benchmark Effectiveness The first and easiest benchmark is your own current performance. Many organizations do not know what their current service and quality levels are today. This needs to cover the full Performance Measurement framework of input, operational and output Key Performance Indicators (KPIs) that link to the goals and values of your organization. Once you are on track to improving on past performance, it is time to compare your performance to relevant external comparators. Keep in mind that the choice of comparators is critical in order that they are considered realistic to your people, relevant to clients and real to your executive.
  6. 6. 6 | APRIL 2014 SHARED SERVICES OPTIMIZATION An SSO that is freer is one that removes constraints on its clients, and indeed itself, and operates with more free- market principles. Where possible, a key enabling factor for Shared Services success is to initially establish your SSO with a strong mandate and non-voluntary participation. This allows your SSO to achieve initial economies of scale, stabilize, and work through transition issues before facing an existential crisis. Once you have moved to optimization, it is time to consider giving your clients more freedom of choice. This could include the client choosing which services to keep within the SSO, repatriating the service or potentially outsourcing the service to a third party; however, the timing for doing this and the extent of opening up options will depend on a range of factors. For some SSOs, this will be a de-stabilizing proposition. For others, they always had the voluntary participation of their clients and operated in a competitive environment. Regardless, freeing your client to choose to use your service will remove a mental barrier that may have been restricting service partnership. This will enable greater engagement of the client and allow further optimization of processes. For example, a client that is forced to participate in a SSO may be more reluctant to standardize, because they might feel the need to assert their independence with the few levers available to them. Whereas a client that chooses to engage in service partnership may embrace the concept more fully. In order to adopt more commercial principles, your SSO needs to review its recharging methodology (service pricing). Ideally you are able to compare the SSO chargeback to the cost of other providers, including third partyoutsourcers. Thisallows youtodemonstrate your value against third-party benchmarks. Using a chargeback also puts the budget in control of your clients, so under the concept of making your SSO freer, clients can choose how they use that budget. GET BIGGER Now that your SSO is better, cheaper and freer, you have an exciting value proposition that will enable your SSO to be bigger. Attempting to market your service is difficult if your service is sub-optimal, expensive and your existing clients are forced to use you. Expand Scope During the establishment of your SSO, there would have been other services or priorities that were deferred due to capacity, technology or other reasons. Now that your SSO is stabilized, it may be time to see if these opportunities are prime for implementation. For example, your human resources Shared Services may have initially focused on payroll services and is now in a position to expand to other transactional services within human resources such as onboarding new staff, compensation management and/or staff scheduling. Move up the Value-Chain The initial focus for Shared Services is typically the provision of “back office” services that tend to be more transactional and administrative in nature. This is logical astheseservicestendtobethemostappropriateforthe initial adoption of Shared Services and tend to benefit GET FREER
  7. 7. 7 | APRIL 2014 SHARED SERVICES OPTIMIZATION significantly in the early stages from the key strategies of Shared Services that include standardization, centralization and technology enablement. Even more importantly, well functioning transactional and administrative services are the foundation for moving up to professional and technical services. It is hard to ask your people to provide value-added services when they are absorbed following up issues related to transaction processing. Once Shared Services has delivered on the initial promise of cost savings, improved visibility, control, and process improvements, what is possible – indeed expected, today – is a greater scope and depth of services, including more professional and technical services, that move higher up the “value chain”. Go Multifunctional SomeSSOsareprovidersofasinglefunction,forexample they only provide financial Shared Services. The original rationale may have been to prove the Shared Services concept, other functions not being ready or capacity limitations. Once your single function SSO is stabilized, becoming multifunctional is an easy way to spread the triple benefit of Shared Services (better service, increased control and lower costs) deeper into your organization. A multifunctional SSO can leverage the Shared Services enabling functions such as continuous improvement, change management, communications, project management and governance across functions, achieving the benefits much more efficiently and effectively than could be done by multiple, stand alone, single function SSOs. Become Borderless YourSSOmaynowbesuchacompellingserviceoffering that it is time to think beyond your initial boundaries, whether these were departmental, geographic or legal entity based. Leading practice SSOs offer services much as a commercial enterprise would, not limited to a single client group, but to multiple third parties beyond their original origin. FINAL THOUGHTS SomeorganizationsequateSharedServiceOptimization with simply getting bigger and increasing economies of scale – they do not follow the roadmap outlined in this article. This makes any current issues of your SSO larger and actually increases the chance of failure. Follow the roadmap and optimize your Shared Services by getting better, cheaper, freer, and then bigger, and you will offer your clients and stakeholders a compelling value proposition that is fair and sustainable well into the future.
  8. 8. 8 | APRIL 2014 SHARED SERVICES OPTIMIZATION All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, by photocopy, recording or otherwise, without the prior permission of Chazey Partners. For more articles from Chazey Partners Please visit www.ChazeyPartners.com/Resources or subscribe to our newsletters www.ChazeyPartners.com/Subscribe How to Reassess Your KPIs to Measure the Shared Services Performance that Counts While most operators prioritize Key Performance Indicators and SLAS when launching Shared Services, a year into service delivery results are often disappointing – and that, despite these KPIs being met. What’s the problem? Read the article to learn 5 Steps to Develop KPIs for Your Shared Services Beyond Traditional Shared Services: Global Business Services Over the past few years, as Shared Services management thinking as well as the awareness of the value of data analytics has evolved, there is now a more pronounced demand for better quality data insights; increasingly globalized support strategy; and more holistic, “enterprise-wide” decision- making that is leading many organizations to aspire to a more sophisticated Global Business Services model. Read the article in here to learn more about understanding and managing Global Business Services.
  9. 9. 9 | APRIL 2014 SHARED SERVICES OPTIMIZATION AbouttheAuthor Chas Moore Managing Director, Canada Chazey Partners Background: Chas has worked with Chazey Partners for two years and has 19 years of experience in business leadership, management and Shared Services implementations. He leverages his extensive experience in the public sector and industry to help teams innovate effective and realistic solutions for complex industries. As the Managing Director for Canada, Chas is provides leadership, management and expertise on our Canadian engagements as well as acting as a technical and subject matter expert for American clients. Prior to his recent assignments he was the Interior Health Business Support Director for Corporate Initiatives leading Shared Services implementations involving the Canadian healthcare sector. Prior to the formation of Interior Health, Chas was the Chief Financial Officer of one of its 18 predecessor organizations. Chas led integration and innovation initiatives for the five health authorities that operated in the Cariboo region. He has extensive experience in project management, business case development, mentoring & coaching, and public speaking. Chas is a Chartered Professional Accountant, Chartered Accountant and has a BSc Degree in Microbiology from the University of British Columbia. Specific Expertise: Experienced project manager specifically focussing on the set up and running of multi-organization Shared Service Centres Practiced in Shared Services, Business Transformation ERP and technology implementation experience Delivery of enhanced financial systems and controls Development of business cases that drive innovation & efficiencies Award winning public speaker Key Companies: United States Department of Health & Human Services, University of California Davis, National Research Council, Interior Health, Northern Health, Fraser Health, Vancouver Coastal Health, Vancouver Island Health, BC Ministry of Health, BC Ministry of Finance, Camosun College
  10. 10. 10 | APRIL 2014 SHARED SERVICES OPTIMIZATION ChazeyPartnersChazey Partners is a practitioners-led global management advisory business. We bring together a unique wealth of experience, empowering our clients to strive for world-class excellence through Business Transformation, Shared Services & Outsourcing, Technology Enablement, Process Enhancement and Corporate Strategy Optimization. We pride ourselves in having built, operated and turned around some of the world’s most highly commended and ground breaking Shared Services Organizations, and for implementing many highly successful multi-sourced (shared services and outsourced) delivery solutions. Over the last 20 years, we have delivered numerous programs globally, in the US, Canada, UK, Continental Europe, Ireland, India, Eastern Europe, South America, Singapore, Australia, China, Middle-East and Africa. Our experience covers both Private and Public Sectors, providing expertise in a wide spectrum of business functions, including Finance, HR, IT and Procurement. Learn more about us at www.ChazeyPartners.com. Follow us on LinkedIn, Twitter, Facebook and Google+ If you would like to speak to a partner about this article, please contact: Phil Searle CEO & Founder Chazey Partners philsearle@chazeypartners.com David O’Sullivan Co-Founder & Partner Chazey Partners davidosullivan@chazeypartners.com Grant Farrell Managing Director United States Chazey Partners grantfarrell@chazeypartners.com Esteban Carril Managing Director, Latin America Chazey Partners estebancarril@chazeypartners.com Chas Moore Managing Director, Canada Chazey Partners chasmoore@chazeypartners.com Anirvan Sen Managing Director, Asia, Middle East and Africa Chazey Partners anirvansen@chazeypartners.com Janey Jux Head of Public Sector Practice EMEA Chazey Partners janeyjux@chazeypartners.com Christina Exarchou Head of HR Practice EMEA Chazey Partners christinaexarchou@chazeypartners.com Emer O’Kelly Regional Director Europe Chazey Partners emerokelly@chazeypartners.com Robert Towle Regional Director, East Coast, United States Chazey Partners roberttowle@chazeypartners.com

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