Downloaded 547 times
Uploaded byChazey Partners
The 7 Lessons Learned of Highly Effective Shared Services
The document discusses the evolution and significance of shared services in various sectors, particularly in the public sector, highlighting the transition from traditional functions to more integrated and cost-efficient models. It outlines the benefits of centralization, technology enablement, and the importance of service partnership agreements in enhancing service quality while managing costs. The insights are backed by historical context, emerging trends, and recommendations for optimizing shared services to improve organizational performance.
More Related Content
Similar to The 7 Lessons Learned of Highly Effective Shared Services
The 7 Lessons Learned of Highly Effective Shared Services
- 1. (with apologies toStephen R. Covey) BC Financial Healthcare Professionals Society 2013 Conference| October 1, 2013 | Vancouver, BC North America | Latin America | Europe | Middle East | Asia-Pacific
- 2. Who We Are Definitions& Trends Lessons Learned 2 North America | Latin America | Europe | Middle East | Asia-Pacific
- 3. Global Offices Flexible ResourceModel Presentation handout is appended with more information on Chazey Partners 3 North America | Latin America | Europe | Middle East | Asia-Pacific
- 4. 4 North America |Latin America | Europe | Middle East | Asia-Pacific
- 5. What is the backoffice? 5 North America | Latin America | Europe | Middle East | Asia-Pacific
- 6. Decentralized Challenges Disparate processes Duplication of effort Different control environments High costand costs unclear across the business Not scalable Shared Benefits Multiple standards Centralized Responsive to Business and Operational needs Business/ Operations control decisions Customized solutions to meet Business/ Operational requirements Highly client focused Commercially driven Service Partnership Agreements Flexible delivery Clear understanding of drivers and activities Common systems and support Consistent standards and controls Economies of scale Challenges Remote from business Unresponsive and inflexible No Business/ Operational control over costs Viewed as central overhead Prevalence of shadow operations Tight control environment Clear unit costs Benefits 6 North America | Latin America | Europe | Middle East | Asia-Pacific
- 7. Attribute Shared Services Centralization Accountability Business Unit Corporate KeyPerformance 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 North America | Latin America | Europe | Middle East | Asia-Pacific
- 8. Shared Services isthe organization that… Employs a specialist team Geographically unconstrained Clientfocused Providing services that are… High quality Non-core High efficiency Lower cost Mission critical Repetitive or professional Achieve by leveraging… Organizational realignment Technology Best Practices Standardization 8 North America | Latin America | Europe | Middle East | Asia-Pacific
- 9. Higher Quality Lower Costs ImprovedControl 9 North America | Latin America | Europe | Middle East | Asia-Pacific
- 10. Shared Services Conceptstarted in mid 1980’s. Concept initially driven by private sector multinationals Shared Services and Outsourcing initiatives typically result in "cost savings of 20%-50% on processes in scope” (Hfs-PWC report June 2011) "In today's business environment, nine out of every ten enterprises have shared services and 97 percent manage outsourcing relationships". (HfsPWC report June 2011) Mainly Finance driven early on in Europe/HR driven in North America Captive vs Outsource, On-shore vs Near-shore vs Off-shore Now much more end-to-end process focused Continued increase in scale and up the value chain in Shared Services (e.g. O2C, Reporting, Policy Very important now in the Public Sector – how to reduce deficits while not impacting front line services. Economic recession of 2008 has led to austerity agenda today in public sector: Shared Services is moving from opportunity to necessity 10 North America | Latin America | Europe | Middle East | Asia-Pacific
- 11. Technology options continueto grow (e.g. document management, approvals, user self service, ERP, “cloud computing”, etc) Politics around offshoring jobs has been an issue for years, but has not stopped the trend (captive and BPO), although slowed for a while Multi-functional Shared Services now really starting to happen after years of this being in the textbooks Large scale, multi-tower outsourcing not very common, despite what many predicted. Selective outsourcing (which actually never went away) is more the trend “Innovative outsourcing” has not yet happened. Lift and shift did. Partly due to client requirements. Across all industry sectors the trend is towards shared services, hybrid shared services organizations with some outsourcing, and multifunctional shared services 11 North America | Latin America | Europe | Middle East | Asia-Pacific
- 12. 12 North America |Latin America | Europe | Middle East | Asia-Pacific
- 13. 13 North America |Latin America | Europe | Middle East | Asia-Pacific
- 14. 14 North America |Latin America | Europe | Middle East | Asia-Pacific
- 15. 15 North America |Latin America | Europe | Middle East | Asia-Pacific
- 16. Work step BASELINE & BENCHMARK AS-IS DESIGN,BUSINESS CASE, RECOMMENDATION Proposed Complete best Practice diagnostics Establish detailed plan, timelines, key deliverables etc. for this stage Review and catalogue any existing process & sub processes High level process design Review output from work to date Review a catalogue technology landscape Initial Communications Key Activities Carry out multiple site visits and workshops Complete Activity based Analysis Project kick off & mobilisation Review and update baseline Calculations Opportunity Matrix Business Case Evaluation High level org design Location Recommendations(s) Service delivery framework Recommend Governance Framework Define high level KPIs and Metrics Implementation Plan Finalise stakeholders interviews Develop high level operating model Change management Plan Identification of next steps Key Deliverables Review existing reporting tools Complete Further Finalise Technology and mechanisms Stakeholder interviews assessment 0 to 2 weeks 2 to 4 weeks 4 to 5 weeks Checkpoints with key stakeholders: Project Board Steering Group Current State Analysis: Summary of Key Findings & Gap Analysis North America | Latin America | Europe | Middle East | Asia-Pacific Operating Model : To Be Processes & Organisational Design 5 to 6 weeks Recommendation, Business Case & Implementation 16 Plan
- 17. Observations Leading Practice As-Is (4.0) Consideredfinance 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 Current 0 2 Future 4 6 Diagnostic Rating Scale: North America | Latin • | Leading Practice is not adopted America 1 =Europe | Middle East • 8 10 Score in Range 1-4 | Asia-Pacific 10 = Leading Practice is adopted in full Score in Range 5-7 Score in Range 8-10 17
- 18. 18 North America |Latin America | Europe | Middle East | Asia-Pacific
- 19. Account Management Client Contact Management Service Partnership Agreements •CSO to client; via reporting, interaction, escalation & communication • Client to CSO; to manage and resolve queries and drive learning/improvement • SPAs are 2-way agreements clarifying both CSO services and client inputs Client Feedback Continuous Improvement Process Control Database • Client satisfaction continuously monitored both informally and formally • Mechanisms to identify the areas for improvement and to develop solutions • Documents end-to-end CSO processes; highlights activity of both CSO & client Performance Measurement Performance Reporting Recharging Methodology • Comprehensive KPIs, measures and metrics framework, CSO & client • Process performance will be reviewed monthly by CSO and client • Define basis for charging for CSO services to turn consumers into clients North America | Latin America | Europe | Middle East | Asia-Pacific 19
- 20. 20 North America |Latin America | Europe | Middle East | Asia-Pacific
- 21. 21 North America |Latin America | Europe | Middle East | Asia-Pacific
- 22. Type of Activity Characteristics Transactional& • Results more quantifiable Administrative • Processes benefit greatly from standardization, • • Professional & Technical • • • • Policy & Strategic • • • Examples automation and technology Clear linkage between effort and results (outputs generally experienced in short-term) Generally not client-facing • • • • • • Accounts payable Payroll IT service desk Fleet management Facilities management Mailroom Results are more qualitative Standardization, automation and technology have less of an impact Relationship between effort and results is not as clear (medium-term perspective) Generally requires interaction with client • • • • • • Procurement advisory Recruiting/staffing IT applications Health & safety Space planning End user training Distant relationship between effort and results (long-term perspective) Standardization, automation and technology are not significant factors Clear linkage to strategic goals of organization • • Signing authority policy Business & strategic planning 22 North America | Latin America | Europe | Middle East | Asia-Pacific
- 23. 23 North America |Latin America | Europe | Middle East | Asia-Pacific
- 24. 24 North America |Latin America | Europe | Middle East | Asia-Pacific
- 25. 25 North America |Latin America | Europe | Middle East | Asia-Pacific
- 26. 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. 26 North America | Latin America | Europe | Middle East | Asia-Pacific
- 27. We have serviceda 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 North America | Latin America | Europe | Middle East | Asia-Pacific 27
- 28. Phil Searle, GrantFarrell, 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 North America | Latin America | Europe | Middle East | Asia-Pacific 28
- 29. Public Sector SharedServices 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 North America | Latin America | Europe | Middle East | Asia-Pacific 29
- 30. Chazey Partners’ Profile• What We Do 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 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 30 North America | Latin America | Europe | Middle East | Asia-Pacific
- 31. Chas Moore Managing Director,Chazey Partners Canada chasmoore@chazeypartners.com Mobile: 250-469-4168 Toll-Free: 1-855-5-SHARED Janet Garland Associate, Chazey Partners Canada janetgarland@chazeypartners.com Mobile: 250-762-2501 Toll-Free: 1-855-5-SHARED North America | Latin America | Europe | Middle East | Asia-Pacific
Editor's Notes
- #4 Established 8 years ago in early 2006Global consulting firm based out of the United KingdomOffices in Canada, US, Mexico, Argentina, UK, Ireland, Cyprus and SingaporeDynamic firm made of people who have “lived and breathed” shared services, business transformation and technology implementationsFor a significant number of years and range of industriesWe use a flexible resource model, matching external resources with internal team membersBoth full-time and staff and sub-contractorsFacilitates buy-in and knowledge transferEnables a sustainable solutionKeeps consulting costs lowApproach is uniqueIndependent of any outsourcing providers, so can offer impartial sourcing advice and support
- #6 Questions for discussion:What are the functions?How does it differ from “Front Office”Different Types of Public Sector EntitiesAre there significant differences in Back Office functions?Centralization or Shared Services?Mission Critical, non-core activities
- #13 In the United States the President’s Management Agenda directs federal agencies to fulfill goals with maximum efficiency. The US office of Management and Budget (OMB) issued directives advised turning to shared services to meet these directives. Australia and New Zealand have Shared Services operating at the federal and local government levels. For example, Auckland Health Board consolidated back-office function that supports major hospitals.In Mexico, the Ministries of Public Service, Agrarian Reform and of Agriculture, Livestock, Rural Development, Fisheries and Food joined in a program in mid-2009 for the implementation of a Shared Service Centre that included the redesign of processes and the development a GRP (Government Resource Planning - ERP for Government) that will support all in scope processes. UK Home Office and the UK Ministry of Justice are saving budget through their Shared Service Programs. The Home Office has reported savings of £13m per annum and Ministry of Justice reports £20m per annum. In the UK up to 40% of local authorities (in 2011) were bringing forward their plans to move to a shared model. At the end of 2011, 219 councils across the country were engaged in 143 shared service arrangements resulting in £156.5 million of efficiency savings.US large Federal Agencies that have either completed or are in the process of creating shared services include the United States Post Office and the National Aeronautics and Space Administration (NASA). NASA is saving more than $12 million per year in back office services in order to move funding to mission-critical space exploration.The US Department of Heath and Human Services (DHHS) Shared Services “Program Support Center” (PSC) provides support services to all components of the U.S. Department of Health and Human Services (HHS) and other Federal government agencies worldwide. PSC has a broad range of nearly 60 services and products, which include: administrative operations, health resources, information technology support, financial management, and strategic acquisitionsThe National Business Center of the Department of Transportation (DOT) is providing IT services to the DOT and other federal agencies. The U.S. Department of Agriculture’s National Finance Center (NFC) in New Orleans, La., has implemented shared services to streamline the provision of payroll and human resources for 60,000 government employees in 174 civilian agencies.The Government of Ontario launched its IT transformation initiative in 1998. It reports that at maturity it saves $100 million annually, representing 10% of the total IT spending, and between 20–25% of IT infrastructure spending. The Government of British Columbia began its IT consolidation in 2002 and has reduced its data centers from over 100 to 2 in 2011. It further reports that energy costs are expected to be 50% lower.The Government of Australia has developed a data centre strategy to consolidate data centers, which support over a hundred agencies, from 2010 to 2025. Anticipates avoiding $1 billion in future costsThe Government in Ireland is actively pursuing Shared Services for the Public Sector, as outlined in its Public Sector Reform White Paper, November 2011
- #15 10 years ago needed to explain what Shared Services isThere have been several good, bad and ugly examples in the meantimeSome of the best examples of Shared Services do not have Shared Services in their name – eg. New Brunswick Internal Services Agency, BC Public Service AgencySome high profile initiatives with Shared Services in their name have nothing shared about them (rebranding of centralization initiatives)The term Shared Services now comes with baggageSeeing other terms: Common Services, Business Services, Internal Services
- #16 If you are on a personal journey of discovery, you may decide to take a random trip and see where it leaves youThis is not a recipe for a success transformation in businessYou need a flight plan, or in other words, a business caseThe business caseProvides the economic justification and overall change rationaleDescribes the recommended future state and high-level implementation plan Has two key purposes:1) Achieve executive buy-in and program sign-off to advance to Design, Build and Deploy phases2) Act as an essential control mechanism for the entire project upon which its success will be measured and evaluatedThe activities and deliverables in a leading practices business case are provided on the next slide
- #19 No Customer, No Shared ServicesNeed to identify your customer, both internal and externalWant customers, not consumersNeed to define and measure customer satisfactionThe way the customer interacts with the process will transform as wellAdapt rather than adoptSelf-serviceTechnology and automationNeed to measure both input and output KPIs to drive continuous improvementGarbage in, garbage outIf there is a problem with the process, need to understand input/customer roleImplement 9 elements of Customer Interaction Framework
- #21 We have all heard about the importance of Change Management and Communications for a projectOne doesn’t fully appreciate the importance until it isn’t there when you need itA powerful analogy I heard was about providing air cover for your team that is on the groundGood change management and communications allows your team to get on with the transformation and detailed workWithout it, the stakeholders will be putting up barriers, disengaging, and causing problems for the teamThe team will spend time explaining themselves, justifying methodology and otherwise doing change management on an ad hoc basisYou need to invest in change management and start it before the teams arrive onsiteCommunications is a critical part of change managementEmail is a necessary evil, but email is not communicationNothing replaces face-to-face discussion, whether one-on-one with key stakeholders or in larger workshop sessionsYou need a clear purposeIf it takes multiple slides to explain your purpose, you do not have oneAll team members need to have the standardized elevator speech ready
- #22 Need a manageable scope to reduce risk and complexityThe standard approach is to look at services in three categories:Transactional & AdministrativeProfessional & TechnicalPolicy & StrategyCategories share similar characteristics in terms of job classifications, interaction with client, and the impact of standardization, automation and technologyThe lowest risk approach is to start with Transactional & Administrative servicesFoundation for the business; if not working business stops: cannot pay staff, no cash flow, unable to pay vendorsUntil optimized, cannot properly assess professional & technical as these value-added services are caught up in transactional issuesEasier to manage the downstream impact while stabilizing, providing time to prove new modelTrack record of success in public and private sector based on starting with transactional & administrativeBenefits most from automation, standardization & technologyOnce stabilize Transactional & Administrative: consider moving up the value chain into Professional & Technical Services
- #24 Structure can be an enabler or barrierImportant to put transformation in organization that can operate independently with its own budget authoritySeparate transformation from ongoing operations until new CSO is ready to take overClean start that doesn’t weigh down CSO with existing structural issues (eg. non-standardized job descriptions)More control on who goes into new organizationClear baseline to enable reporting on results of transformationClear accountabilities to enable transformationEnable culture changeProvides more permanence and resilience to subsequent structural changesGovernance and structure can be designed to accommodate changes in scopeOther structure considerationsCo-locate staffMake initiative high profile and mandatoryDesign on end-to-end processes and break down silosGet control of the budgetWe’ll talk about the GNB Case Study, as it is a good example on how structure was an enabler
- #25 We are often put into a situation where we are assigned to a project and told to get on with itYou do not have to do it alone, in fact you are making your life a lot hard if you doFind the internal change agents in your organizationLiaise with those with institutional knowledgeConsider bringing in outside helpShared Services is not a core public sector skillRisk that will do more of the sameLeverage of experience, capacity and independence of consultantsIf you do use consultants, ensure that they are focused on knowledge transferExternal consultants should be matched with internal teamWorking together on the deliverablesImproved buy-inEnsure that solution reflects your environment and is not simply their standard, prescribed approachSustainable solution that lasts after consultants have left