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Doug Groves Shell S O A Symposium
This document discusses Shell's efforts to link service-oriented architecture (SOA) concepts with process standardization across its finance functions. It provides an overview of Shell's finance operations and processes, and describes how SOA can help drive process standardization by establishing governance, design, organization, skills/tools, data management and change management. The document also presents models for evolving IT and business models to support standardized processes delivered through shared services and standardized IT systems and services.
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Doug Groves Shell S O A Symposium
- 1. 1 1 Founding Sponsors This PresentationCourtesy of the International SOA Symposium October 7-8, 2008 Amsterdam Arena www.soasymposium.com info@soasymposium.com Gold Sponsors Platinum Sponsors Silver Sponsors 2 Linking SOA and Process Standardisation at Shell Doug Groves – VP Finance Process Integration
- 2. 2 3 Theory Should SOA fallshort of expectations, it will be for the same reasons ERP and CRM have fallen short of expectations. 4 Theory Should SOA fall short of expectations, it will be for the same reasons ERP and CRM have fallen short of expectations: Insufficient Enterprise and Process Maturity
- 3. 3 5 6 Royal Dutch ShellPLC • GLOBAL ENERGY COMPANY – World’s 2nd largest private energy & petrochemicals company by market cap – Operating in more than 110 countries – Serving millions of retail customers every day – 104,000 staff – A leader in clean natural gas and technology – Leading on alternative energies • 2007 HIGHLIGHTS – Income ~ $31 billion – Revenue ~ $356 billion – Net capital spending ~ $24 billion – Production ~ 3.3 mln barrels of oil equivalent per day
- 4. 4 7 Overview of ShellFinance • Significant migration of jobs to shared service locations – from 2,750 today to 5,000 in 2010. • Process improvement and standardisation activities in progress in 17 process areas • Significant rationalisation of IT also in progress • Over 12,000 staff operating in over 110 countries • Six captive shared service centre sites – Glasgow, Krakow, Chennai, Kuala Lumpur, Manila and Guatemala City 8 Requisition to Pay Shell Finance Process Hierarchy Group Finance A: Management of Financial Activities B: Manage Equity and Finance Manage Intra-Group Funding C: Record & Execute Transactions Liquidity & FX Risk Mgt Local Statutory Reporting Cash Management Manage Direct Taxes Payroll & Benefits Manage Close Group Reporting Manage Indirect Taxes Controls Assessment Assurance Travel & Entertaining Expense Claims Budgeting, Planning & Internal Rep Offer to Cash Manage Hydrocarbon Inventory Capital & Assets D: Manage Reporting & Analysis E: Specialist/Other F: Reserves Commodity Trading Support Acquisitions & Divestments Parent Companies Capital Manage supporting records IT Controls End user computing Static data management Manage Insurance Pensions accounting & support Support JVs & PSCs Hydrocarbon Allocation Reserves Reporting Intra Group Services, Fees & Billing In scope for standard global process design Not in scope for standard global process design KEY
- 5. 5 9 Linking SOA withProcess Standardisation Deploying services drives process standardisation, which requires: – Process governance and leadership – Process design and integration – Organisation design – Skills, tools and methodologies – Data management – Change management Process SOA 10 Evolution of Services in Shell Finance (simplified model) As-Is Level 1 Level 2 Level 3 Business model and organization Organization and process specific per business. Single organization, business process variants. Single organization, standardized process. Single organization, standardized process. IT model IT support specific per business. IT support specific per business. IT support specific per business, implementations are alike. Standard services run on a shared IT system. Example Accounts Payable in the UK Finance operations in 2008 Finance operations after process harmonization Treasury, Group Reporting, Business process IT support Organization Target levels and development roadmaps of the business and IT models must be aligned
- 6. 6 11 Applying SOA Conceptsin the Application Architecture Moving Beyond Traditional ERP • Core finance processes require loose coupling to non-financial processes. • Integrated finance processes are tightly coupled with other processes. • Working with SAP to explore new approaches to decouple logistics from financials Finance Applications Business ERP Business DW Business ERP Business DW Business ERP Business DW Finance Services Finance Finance Finance 12 External ServicesFinance Functions Applications Business Finance Applications Finance Operations Applications Group Reporting Local Statutory reporting Group Planning Tax Compliance Group Services Business Process Management JV & PSC Business Performance Analysis Finance Process Performance Analysis Payment handling Credit Rating Finance Master Data Management Accounts Receivable Accounts PayableManage Close Dispute management Invoicing Business Finance Reporting Audit Defense Provide Routine MI Controls, Assurance & Assessment Cash Allocation Indirect Tax Calculation Pension Decision Support Equity and Financing Management Cash Management Master Data distribution Asset Accounting Financial Reporting Support Manage Finance Data Warehouse Manage Hydrocarbon Inventory Business Planning Manage Insurance Liquidity & FX Risk Management Tax Provisioning Financial Market Rates Investor Relations Hydrocarbon Allocation Credit Management Internal Audit Budgeting Project Accounting Intra Group Funding Tax Planning Forecasting Direct Tax Calculation Performance Analysis Document Management Travel& Entertaining Expenses Claims Financial Market Dealing Transaction Banking Cash Management Capital Planning Banking Infrastructure B2B Communication General Ledger Management Accounting Forecasting KEY Target Competency Level of coupling with Business ERP Base Core Differentiated Decoupled Partially decoupled Coupled High Level Services in the Target Finance IT Architecture
- 7. 7 13 Get the GovernanceRight LocalGlobal StrategicOperational Process Executive Process Manager Process Performer PP – Operate processes PE – Define process improvement strategy; lead improvement activities; authority for design and changes PO – Drive design and improvement activities; plan and support implementation; monitor and assess performancePM – Manage process operations in accordance with standards; drive implementation within own organisation; support continuous improvement; participate on PAC Process Owner 14 Get the Data Right Governance defined for key processes Measuring data accuracy Measuring process performance Initial system investment Undefined governance Poor data quality Fragmented processes Perceived as a systems problem Governance effective across the business Effective continuous improvement applied to data accuracy & process performance. Introduced use of state of the art tools Data managed as a business critical asset First quartile process cost performance and data quality Effective use of state of the art tools Operationally Efficient BESTPRACTICE TIME Commercially Capable Fragmented World Class
- 8. 8 15 Data Quality -Meeting Defined Standards for Good Business Reasons; Not About Being Perfect Data Quality Standards Cost/Benefit How much is it worth spending on data? Relevance Are we maintaining data we do not need? Security/Accessibility Do we need to restrict access to the data? Timeliness Is the data up to date? Is it available when required? Completeness Do we have all data to the right level of detail? Clarity/Uniqueness Can we clearly select the right data? Consistency Is there more than one version of the data? Accuracy/Precision Is the data accurate within tolerance? 16 Process and Enterprise Maturity Model Process Design Process Metrics Process Ownership Process Performers Process Infrastructure Enterprise Leadership Enterprise Governance Enterprise Culture Enterprise Expertise P – Ad-hoc, Designed, Integrated to Extended E – From Process Tolerant to Process Centric A way to evaluate the primary elements required to manage and execute processes Five Maturity Levels
- 9. 9 17 Enterprise Maturity Extract- Leadership Requisite Indicators Requisite Indicators Leadership Awareness The enterprise's senior executive team recognizes the need to improve operational performance but has only a limited understanding of the power of business processes. Operational improvement is a frequent discussion topic at executive meetings. Executives attend seminars or perform site visits regarding performance improvement techniques. Process terminology is often used but not always precisely. At least one senior executive deeply understands the business process concept, how the enterprise can use it to improve performance, and what is involved in implementing it. A member of the seniormost executive group relates enterprise performance problems to specific fragmentation and design flaws in particular processes. Alignment The leadership of the process program lies in the middle management ranks. A mid-level manager has developed a passion for process and is lobbying with executives to adopt the process approach. A senior executive has taken leadership of, and responsibility for, the process program A senior executive had made a personal commitment of time and resources to process transformation, and is visibly promoting the process concept. Behavior A senor executive endorses and invests in operational improvement. Budget has been allocated for process improvement training and initiatives, and improvement projects have been mandated. A senior executive has publicly set stretch performance goals in customer terms and is prepared to commit resources, make deep changes, and remove roadblocks in order to achieve those goals. Resources (financial and human) have been assigned to a process transformation program in pursuit of explicit stretch goals; managers who attempt to impede the program are appropriately disciplined. Style The senior executive team has started shifting from a top-down, hierarchical style to an open, collaborative style. Senior managers actively solicit ideas from lower levels of the organization; some diagonal task forces are in operation and executives are following some of their recommendations. The senior executive team leading the process program is passionate about the need to change and about process as the key tool for change. The senior executive leading the process program spends significant personal time communicating and promoting the program, and weaves process concepts and goals into all business discussions. E-1 E-2 18 Process Maturity Model – Process Infrastructure Information Systems P1 P2 P3 P4 Fragmented legacy support the An IT system from functional supports the An integrated IT designed with the mind and adhering enterprise the process. An IT system with architecture that industry standards enterprise supports the
- 10. 10 19 PEMM Use inShell • Assess maturity before new deployment and adjust plans as appropriate • Define annual maturity improvement plans by process and organisation • Tool for understanding keys to success • Annual survey to assess progress Methodology & Tools Leadership & Goals Execution & Governance Training & Communications Measurement People & Culture Technology 20 Questions?
- 11. 11 21 Process Re-engineering inPractice? How the Process Owner explained it How the Process Designers understood it What the consultants suggested … How Onshore IT designed it How Offshore IT built it How it was documented What the Deployment Team did How it Worked at Go-live How IT supports it What the Business really needed … 22 Analysis of “loose” coupling in processes Process decomposition to identify rough boundaries Approach to Define the Business Services L1 L2 L3 L3 Process centric governance structure Process driven data ownership i i i The Business Services definition is iterative with Application Services definition
- 12. 12 23 Applying SOA Conceptsto Organisation Design • Financial (sub)-processes are delivered through global delivery centres. • The delivery centres expose a limited number of services to other departments. These are stable for a longer period of time. • Business process improvement is focused in the delivery centres (tactical cycle) and across the delivery centres and organization (strategic cycle). 24 Shell Enterprise Process Model