What is Shared Services?

A Definition

Shared Services is a business model that enables resources to be leveraged across an entire organization resulting in lower costs with agreed upon customer-service levels. In many instances, Shared Services is a separate business unit created within a company or agency accountable for delivering a suite of services to both the operating business units and the corporate functions.

What Differentiates Shared Services from Centralization?

Shared Services has the mindset of a business and views the rest of the organization as their customers. As a service organization, their accountabilities are delivering value (balancing cost and service levels), as well as identifying ways of further leveraging their operating model. The operating model is built on three primary capability levers: People, Process, and Technology. While centralizing the services may be a component of Shared Services, the broader objective is to gain efficiencies beyond consolidation through a methodology of continuous improvement that results in more efficient and standardized processes, with much of the activity automated through enabling technology.

Generally, Centralized Services tend to be heavily focused on compliance and control while Shared Services have added accountable of value creation through a leveraged model as well as managing to agreed service levels.

What are some of the Primary Benefits of a Shared Services Model?

  • Economies of Scale – Lower costs
  • Agreed-Upon Service Levels – Value decisions on what and how much to provide
  • Standardization of Processes – Best practices
  • Common Technology Platform – Enables coordinated transformation of front, middle, and back-offices
  • Culture – People with the skill and mindset to optimize the model beyond the back-office
  • Operating units free to focus on their operations and external customers – Rely on Shared Services for support
  • Corporate free to focus on strategy – Rely on Shared Services for statutory compliance, controls  and information
  • Decision Support – Data analyzed and delivered as reliable and actionable information
  • Flexibility – Shared Services can be sourced through multiple delivery channels and/or geographic  locations
  • Scalability – The Shared Services delivery model can be scaled for both acquisition/geographic and service scope expansion with relatively low incremental costs.

What has been the Evolution of Shared Services?

The typical evolution of a Shared Services organization  has followed a track similar to the one below:

  • Single function Shared Services for Accounting and Finance – Initially transactional services (e.g. Accounts Payable, Accounts Receivable, General Accounting).
  • Multi-Functional Shared Services – With the success of single-function, Shared Services silos by function emerged replicating the initial success (e.g. Human Resources, Procurement, Information Technology).
  • Integrated Shared Services – As many of the underlying elements and enablers are similar (e.g. Service and Project Management, Service Levels, Sourcing Methodology, Technology Enablement, Business Process Management, Knowledge Management) organizations created a Shared Services Operating Unit, usually distinct from any particular functional area.

Is there a Difference between Shared Services and Business Services?

As Shared Services organizations matured and continued to integrate broader services that crossed front, middle, and back office, as well as included decision support services, many integrated Shared Services organizations re-branded themselves as Business Services. Much of this re-branding was a result of overcoming existing impressions that Shared Services related primarily to transactional activities as it did in its earlier stages.

Today, many Shared Services organizations are providing higher-level services that would be considered by some as Business Services and there are many Business Services organizations that provide only transactional services.

Where Does Outsourcing Fit in to the Equation?

Outsourcing spans from a large strategic company initiative to a purely tactical sourcing decision for selected activities.

Companies that would like to move to a model that brings the benefits of Shared Services quickly but lack adequate internal resources (some combination of human, technology, capital) may choose a strategic  “lift and shift” strategy. This can bring large immediate and guaranteed benefits to the company. Outsourcing providers are usually located in low-cost regions so benefits come primarily through labor arbitrage, as well as through gaining greater scale from the provider. Companies that opt for a “Lift and Shift” solution may have a Shared or Business Services organization that will oversee the provider and continue to work on process standardization and optimization in conjunction with their outsourcing partner.

Companies that generally have had initial success with a captive Shared Services organization tend to view outsourcing as a selective tactical sourcing decision. These are usually more mature Shared Services organizations or those that have the resources and scale to improve their current model internally through the capability levers of People, Process, and Technology. The timeline for benefits realization is usually slower, but provides greater value creation over time as activities can be “improved and moved” when the optimal time is determined, if moved at all. Detailed methodologies for end-to-end process improvement are critical for these Shared Services organizations, as well as one or more outsourcing business partners who are ready and willing to integrate the activities while the Shared Services organization shifts the sourcing seamlessly from internal resources to an external provider.

With the proliferation of excellent outsourcing providers, it is critical that a company and their Shared Services organization choose their sourcing strategy wisely depending primarily on an assessment of their current state of capability levers as well as their economic needs (immediate short-term return versus longer-term residual benefits). The best-case scenario is to have the option of multiple delivery models using both internal and external resources and choosing what is best for a given set of circumstances and objectives.

What do the terms Captive, On-Shore, Near-Shore, and Offshore refer to?

  • Captive refers to a Shared Services organization that is primarily sourced by company employees. “Shore” type refers to the location of the people doing the work.
  • On-Shore generally means that the work is performed in the same country or region, as the Shared Services customers are located. (For example, work for European countries done in Hungary).
  • Near-Shore means that the work is performed in a lower cost location in a time zone close to where the core of the Shared Services customer base is. (For example, work for US based operations done in Mexico).
  • Offshore refers to work performed usually in another continent from where the Shared Services customers are located. (For example, work for US based operations done in India).

One of the benefits of Shared Services is the flexibility of being able to move work where it can be best sourced based on a combination of variables (cost, service levels, and skills required, etc.).

Regardless of where the work is located and who the resources are employed by, it is critical that Shared Services maintain accountability for service delivery, cost, and overall process ownership and be the operating unit responsible for overall coordination and results.

What are some of the Biggest Issues Faced When Implementing Shared Services?

  • Resistance to Change – Effective change management must be a component of any implementation regardless of sourcing.
  • Legacy Systems – While not always possible, Shared Services and system integrations as part of a business transformation project can yield excellent results. Limitations of legacy systems can sub-optimize results.
  • Leadership – There will be tough times, everyone has to be on board and visibly and vocally supportive.
  • Shared Services Team – The attitude and skill set of a service-oriented team looking to use enabling technology to optimize processes may not exist in the organization today. Find and pre-qualify the right people before you start.

What are the Key Success Factors for Shared Services Organizations?

  • The Attitude and Approach to Service of the Leadership and People in the Organization
  • Governance Model and Decision Rights Well Defined, Communicated and Understood
  • Key Performance Metrics (Balanced Scorecard: Cost, Productivity, Quality, Service, Controls, Employee Value Proposition)
  • Executive Support
  • Operational Business Knowledge
  • Embedded Culture of Continuous Improvement (Preferably formalized program)
  • End-to-End Process Orientation (Ownership or Influence)
  • Enabling Technology Platform (Preferably single-instance ERP)
  • Part of Shared Services Research Community – Contributing and Receiving Best Practice Insights


Evaluating Electronic Invoicing Service Providers

Achieving low cost per transaction in Accounts Payable (AP) requires effort on many fronts, including getting low dollar non-inventory items onto a purchasing card, increasing the first pass match rate, and perhaps of greatest importance, high rates of processing using either a form of Evaluated Receipts Settlement or the electronic receipt of invoices.  In fact, benchmarking performance for AP suggests that about half of the first quartile performers have a first pass match rate of over 95%, with more than 90% of their invoices received electronically. 

Using iPollingTM, a Peeriosity member was able to quickly discover the wide range of third-party options being used by other members for electronic invoice processing, with many members providing detailed and candid comments about their current solution and their plans for the future.  As illustrated in the chart below, 52% of member companies are using a third-party provider for their electronic invoicing solution in AP, with the remaining 48% either not using electronic invoicing, or using a solution that was developed internally. What’s remarkable is that respondents identified 10 different providers as their current solution for electronic invoicing. 

The follow up iPolling question asked the 53% of companies that are using a third-party provider to rate their level of satisfaction with the provider.  The results indicate that 47% are either satisfied or very satisfied, with 24% unsatisfied with performance and 29% reporting that it is too early to tell.

Because Peeriosity members are participating as a part of a private research community where consultants and vendors are not eligible, iPolling participants can be completely candid with their responses.  Additionally, because Peeriosity members have full visibility of respondents and their responses, it is easy to correlate satisfactions levels associated with specific vendors.  Here are some of the added comments that provide insight to member experiences with the various options available: 

·         We use SPS that feeds into an OCR called Captiva, which is not really meeting our needs.

·         We are using HP’s Business Exchange Service as our B2B Hub/third-party partner. They in turn are heavily partnered with OB10 and have interconnections with 32 other vans/networks. We have started up in 16 countries for 6 months now. Current program is evaluated as “fair progress”.

·         We are currently using both Xign and Coupa, but Xign is being decommissioning later this year so we will be migrating completely to Coupa.  We are satisfied.

·         We have partnered with Ariba in North America and OB10 in Europe. Ariba is responsive and supportive, although there are opportunities to improve innovation and the cost structure/value proposition.  We are satisfied.

·         In Europe, we have been using the Readsoft application since 2006. There are plans and projects to roll this out to other regions (Asia, South America).  For the U.S., we use an in-house developed e-invoice application.  We are satisfied.

·         We use Direct Commerce Inc. as our e-invoicing partner. With their help, we’ve achieved greater than 90% electronic enrollment in the US. We have an EDI connection with them to received invoice files and are extremely satisfied with them overall.

·         We have a single instance of SAP. We selected Taulia for e-commerce/vendor portal and Dolphin for our Invoice Management Tool. We are in process of implementing now with go live starting next month. So far, we are very satisfied with what we see. Taulia/Dolphin is a common pairing and they were rated better than SAP/Ariba by our internal assessment team.

·         We use Oracle Imaging and Process Management in our North America and Asia shared service centers.  We are satisfied.

·         We do not have an electronic invoicing solution.

·         We implemented Taulia last year and have been very pleased with their support and results to date.

·         We do not have an e-invoicing solution at this time, however we are exploring the Ariba Solution.

·         OB10 is expensive for both the supplier and the company, and it is expensive to change your configuration. We are looking into other solutions (EDI, Elemica, e-mail invoices).

·         A decision was recently made to build all e-invoicing capabilities in-house using SAP core solutions vs. third-party provided solutions.

·         We will be using Basware. Having attended the EXPP Summit in Warsaw, Poland last fall, I found them to be global in nature (North America, EMEA, Asia & South America), well regarded after talking with the Gartner expert, and with great solution options that fit for Payables processes and systems.

·         We are an SAP shop. We don’t have an e-invoicing solution yet, but the three under consideration now are Ariba, OB10 and TradeShift.

 

Does your company use a third-party provider as an electronic invoicing solution for AP?  If yes, how satisfied are you with their performance?

Who are your peers and how are you collaborating with them?

 

 

 “iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated e-mail system, Peer MailTM, members can easily communicate at any time with others who participate in iPolling.

Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers.   Membership is for practitioners only, with no consultants or vendors permitted.  To learn more about Peeriosity, click here.


 

 

 


Processing Termination Pay for US-Based Employees

 While reducing the number of pay cycles typically has the greatest impact on overall Payroll processing costs, eliminating special handing exceptions that require manual processing and physical checks can have a big impact on total processing costs.  The HR department’s assumption that there needs to be a manual check in hand at the exit interview, particularly when the termination is involuntary, isn’t always the best option.

To better understand the issue, a Payroll Manager at a member company used iPollingTM to find out how companies process termination pay for US-based employees, including a question to understand the scope of states where the respondents have employees.  The first question asked, “In what form do you typically process final pay for employees?”, with response options selected including direct deposit, paper check, and pay cards.  While paper checks were typically used at 17% of the companies, direct deposit was the most prevalent method, with 74% of companies using this approach.  Here are the details:

 

The second iPolling question asked about the number of US states where a member company has employees.  This response is helpful to understand the context of responses, since internal policies are often set based on local requirements that can vary from state to state.   Interestingly, the number of states covered by member companies is extensive, with 87% of companies having employees in more that 20 states and 61% having employees in more than 40 of the 50 US states.

 

As suggested in the comments below, the best approach is to limit as many special handing requirements as possible, and create a manual paper check only when absolutely necessary.  Below is a selection of member comments:

·         Terminated employees are paid their final wages on the next payroll run.

·         Primarily direct deposit, although we also use pay cards in some circumstances.

·         We process final pay in one of three ways depending on the state and the type of termination.  If possible, it goes on direct deposit or pay cards.  When and where the timing or state does not allow for a pay card or direct deposit, then a paper check is used.

·         We process according to their normal method of pay (direct deposit, check or pay card). However, most of our employees use direct deposit.

·         Primarily direct deposit; however, pay for involuntary termination is governed by state laws which typically requires same-day settlement or payment within 24-hours. In these involuntary cases, the majority of final payments are processed by check.

·         Primarily direct deposit, although it depends on whether the employee works in a state requiring us to pay immediately or next day for involuntary terminations. In these cases, a check is issued. Direct deposits can often show up in an employee’s bank account prior to the exit interview that HR has with the employee.

·         Most often final pay is processed on the next scheduled payroll, although some states (for example, California) require payment by paper check on the last day of work.

·         Typical method of payment is direct deposit. Checks are issued on occasion where timing and state requirements make it necessary. We use pay cards for remote locations in state requiring check in hand.

·         We will create a direct deposit if requested. We have just begun using pay cards in 2 of our locations, with plans to roll out pay cards to more areas later in the year. Pay cards will be another way of paying terminating employees if the employee already has a pay card.

How does you company process final termination pay for employees?  Do you have an opportunity to reduce the number of checks issued when employees terminate?

Who are your peers and how are you collaborating with them?

 

 

 “iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated e-mail system, Peer MailTM, members can easily communicate at any time with others who participate in iPolling.

 

Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers.   Membership is for practitioners only, with no consultants or vendors permitted.  To learn more about Peeriosity, click here.


Finding Opportunities in the Utility Invoice Process

Energy costs are one of the largest expense categories a company has, which makes it a priority to understand and manage utility-related data.  Yes, if the lights were out last month at one of your company locations, you probably need to pay the electric bill; however, the process of managing utility payments is more complicated than simply keying in the invoice total.   With multiple locations there are ongoing issues with opening and closing accounts and tracking related deposits and refunds, issues with ensuring that proper rate schedules are applied, and, finally, issues with bill processing and the analysis of expenses to identify inefficiencies across your portfolio.

As part of a redesign of their Purchase-to-Pay process, a Peeriosity member used iPollingTM to quickly get responses for how companies process utility payments.  The first question asked, “How does your company primarily pay for utility (electric, natural gas, etc.) invoices?”  While in 63% of the cases processing takes place internally in Accounts Payable, in 37% of the companies a third-party firm is involved.  Here are the details:

 

The second iPolling question asked about the timing of payments to the utility vendor.   The results were mixed across all categories, with 70% paying in 15 days or less. 

The iPolling questions on the topic of Utility Invoice Payments generated a lot of discussion, with many companies providing additional comments about their process, and with some providing details for the vendor they are using to perform utility audits.  Here are some of the comments:

·         The payment terms are different by market. Most utility vendors are on immediate terms, but, for the majority of markets in Europe, they are on direct debit and charge the company bank account directly and invoices are accounted for and cleared on the direct debit date in the system.

·         We use a third-party firm (ECOVA).

·         The utility invoices for two of our business lines currently go through a third-party vendor, and we’re in the process of adding our third business line to that provider. We currently process and pay those invoices in our AP department.

·         We currently pay utility invoices in-house, but are looking at outsourcing to a third-party for audit and bill pay.

·         Payment terms vary from immediate to 30 days. We monitor all utility vendor accounts to ensure timely receipt and payment of invoices. Utility invoices receive prioritized processing from a dedicated resource.

·         All utility companies are paid in the next payment run after being posted, usually less than 10 days.

·         We use a combination, with some invoices going directly to a third-party firm for audit, and they instruct us to pay, with other invoices being processed entirely by our own Accounts Payable Department. It depends on the country.

·         The invoices go directly to a third-party for audit and data collection and they provide an electronic invoice file for payment.

·         Our payment terms are set to immediately pay for utilities.

·         Amesco is our third-party who audits the utility invoice and then instructs us to pay.

·         The payment terms are different by market. Most utility vendors are on immediate terms, but, for the majority of markets in Europe, they are on direct debit and charge the company bank account directly (incl. down payments) and invoices are accounted for and cleared on the direct debit date in the system.

·         NISC receives, reviews and provides a payment file for utilities.

·         We have utility bills to be paid in 3 days. We had to map these vendors and prioritize invoices from them. With some, we managed to get EDI connection, which helps a lot.

·         We pay the utility invoices out of our AP system, and then send a copy of the invoice to our third party for audit.

·         The company that pays our utilities (CASS) is on net zero terms.

·         We have a third-party that captures most of our utility invoices (for usage/tracking purposes – no auditing) then transmits them to us via EDI for processing.

·         We have a ‘hybrid’ in North America where a third-party manages the relationships, approves bills, and then sends to AP to disburse the funds. In the other regions, it is typically handled directly by AP and not managed by a third-party firm.

What process do you follow at your company for utility invoices?  If you are processing in-house, does your process include auditing invoices, in addition to scheduling them for payment?

Who are your peers and how are you collaborating with them?

 

 

 “iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participate in iPolling.

 

Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers.   Membership is for practitioners only, with no consultants or vendors permitted.  To learn more about Peeriosity, click here.


The Role of Shared Services in Sarbanes-Oxley Testing

The Sarbanes-Oxley Act of 2002 added new requirements for public companies doing business in the United States to ensure the accuracy and integrity of financial information.  Since the implementation of Sarbanes-Oxley (SOX), many other countries passed similar reforms, with each company determining the optimal structure for meeting compliance requirements.  With Shared Services often being the major processing hub for a company’s financial transactions, it is not a surprise that it often takes on an important role when it comes to Sarbanes-Oxley compliance.

A Peeriosity member representing a $15B+ global food processing company was considering options for centralizing Sarbanes-Oxley testing in Shared Services and wanted to know how the activity was managed at other companies.  Within 24 hours, member companies responded to his iPollingTM questions, with many providing additional comments to explain their responses.  The member was then able to follow up directly with each company, as needed, to further discuss approaches.

According to the iPolling results, approximately one in five companies have SOX testing being managed by Shared Services.  Other public companies are fairly evenly split between each process area being responsible for testing in their area and having a separate internal controls team (often Internal Audit) that is outside of Shared Services with overall responsibility for testing. 

When reviewing the many poll response comments (a summary is below) it becomes clear that, even when Shared Services doesn’t have overall responsibility, because much of the activity is within Shared Services, the organization plays an important role in ensuring compliance with Sarbanes-Oxley requirements.  And, with self-assessment techniques being a very common approach, Shared Services often plays a critical compliance role for much of the activity in scope for review, even when another area has overall responsibility.

 

Regarding the question of SOX testing frequency, 40% perform testing annually and 29% perform testing twice a year, with 23% testing quarterly and only 8% testing on a monthly basis.

 

As mentioned above, additional comments included with poll responses help to clarify the approaches at member companies.  Here are some of the comments:

·         Internal Audit performs Sarbanes-Oxley testing.

·         To create proportional ownership, people in each process area are responsible for self-testing.

·         Internal Audit Department handles.

·         We have an independent team within Shared Services that performs self-testing throughout the year for any processes already handed over. Individuals in the process areas cover activities that are not handled by Shared Services. Corporate Internal Audit and audit firm perform independent testing once a year from October to November.

·         Sarbanes-Oxley controls are tiered into multiple levels. Certain tiers are tested in certain quarters by the process owners and documented in the self-assessment application. We have a Financial Controls team that is our Sarbanes-Oxley team, which is part of an Audit Services & Controls (not Shared Services) team that owns the testing process, the self-assessment application, and has reporting responsibilities.

·         All Sarbanes-Oxley related testing is performed by Internal Audit to maximize our external auditor’s reliance upon our work. All in-scope areas are tested annually, with the more financially material testing being done in Q4 to minimize roll-forward testing.

·         We have a mixed approach — individuals in the various process areas throughout the company are responsible for testing for Sarbanes-Oxley compliance annually (and a large percentage of this is within our Shared Services operations because we are responsible for most of the Sarbanes-Oxley-relevant processes.) But we also have an Internal Controls team (outside of Shared Services) that audits the testing. Within our Shared Services groups, we usually have Sarbanes-Oxley focused internal audits about every other year.

·         We use a small team for Sarbanes-Oxley testing that is comprised of Shared Services individuals, Corporate individuals, and 3rd party for certain controls.

·         We have a Sarbanes-Oxley team, so testing mainly done by them. The frequency is typically one interim testing period and one final testing period in a calendar year.

 

How is Sarbanes-Oxley testing managed at your company?  What is the testing frequency and what role does Shared Services play to ensure compliance?

Who are your peers and how are you collaborating with them?

 

 

 “iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participate in iPolling.

 

Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers.   Membership is for practitioners only, with no consultants or vendors permitted.  To learn more about Peeriosity, click here.


Automating the Order-to-Cash Process

When you consider the types of processes that are most commonly found in Shared Services, it is only within the past decade that companies seriously considered moving external customer-facing processes to a Shared Services model. In fact, today Accounts Payable is still twice as likely to be in Shared Services than the Order-to-Cash processes of Order Processing, Billing, Cash Application, or Credit.  While being closely aligned to separate businesses does help ensure customer focus, the downside is the difficulty that exists for individual improvement projects to reach the scale required to be viable.   As a result, automation in Order-to-Cash often lags behind automation in other areas, including Purchase-to-Pay, Record-to-Report, and Hire-to-Retire, that have been historically more likely to be in Shared Services.

A PeercastTM featured a $20B+ global company in the Consumer Products industry that created a separate Customer Financial Services organization, allowing them to include many of the components of Order-to-Cash in a single organization.  The mission of the organization is to “deliver superior order settlement performance, optimized working capital and insightful reporting so the businesses served can focus on driving sales and other strategic opportunities”. 

For our feature company, automation opportunities in Order-to-Cash were largely in the Order Settlement processes and, specifically, in the areas of Collections Management, Dispute & Claims Management, and Cash Application.   The project selected was in the Collections Management area, with the implementation of the “Advanced Correspondence Automation for SAP” developed by HighRadius.  The solution supports the automation of all credit, collections, and dispute correspondence using data from multiple SAP modules and a rules engine to manage the correspondence process, including collating backup documentation that can be sent by email, fax, or mail.  The new processes have eliminated large volumes of paperwork, with over a 90% efficiency improvement in the correspondence process and a 30% reduction in the volume of past due invoices.

A related iPollingTM question asked member companies to identify where the most significant opportunities existed for increased automation in the Order-to-Cash process.  The two top picks, “All Areas” and “Cash Application”, were both selected by 29% of the respondents, followed by “Order Management” at 18%.  Collections was next at 6% and no one selected the Credit or Billing processes.  Finally, 18% indicated that there were limited opportunities for additional automation. 

 

The biggest challenge cited by members to automation is the lack of standardization that exists within processes (36% of responses), followed closely by a lack of resources (29%).  As illustrated below, the problems are largely within the company, with no one citing difficulty with getting customer buy-in as a significant challenge.  Here are the details:

 

 

The following are a few of the comments from iPolling participants:

·         We have already automated the Collection process and are in the process of automating our Billing and Cash Application, with Cash Application as our biggest opportunity. Our biggest obstacle is the ability to standardize globally.

·         For the most part, Cash Application is automated. It is the deduction transaction posting that occurs during cash application and the follow-up on those deductions that could benefit from further automation.

·         All areas offer opportunities, but we are currently focusing on Cash Application and reducing paper across all areas.

 

What parts of the Order-to-Cash process does your company include in Shared Services?  What are your priorities for automation in Order-to-Cash?

 

Who are your peers and how are you collaborating with them?

 

 

 

“PeercastsTM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion.  Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content.  Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member.  Using Peeriosity’s integrated email system, Peer MailTM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees. 

 “iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPolling.

 

Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers.   Membership is for practitioners only, with no consultants or vendors permitted.  To learn more about Peeriosity, click here.


Formalizing Program Management in Shared Services

The world’s leading Shared Services organizations have a clear understanding that ongoing success requires an embedded culture where operational excellence is pursued aggressively at all levels of the organization.  It is no coincidence that the top performers are the most likely to be active participants in best practice research communities.  “Being the best” is a moving target, and unless you are keenly aware of your performance and the opportunities available (by being clearly aware of the performance of others), you won’t be able to efficiently take advantage of new opportunities.

A PeercastTM featuring a $50B+ global company in the Pharmaceutical and Health Care Services industry explored how having a dedicated Program Management Office (PMO) can be a key success factor for achieving high performance.   Following are the company’s mission, vision, and strategy statement for PMO in Shared Services:

·         Mission – To provide program leadership an execution management to key initiatives and to establish repeatable best practices.

·         Vision – To be the preferred program management provider by establishing a proven record of delivery success, and to become an extension of the business team.

·         Strategy – To drive key strategic, integration, process improvement and transition projects.  To approach projects with key principles of collaboration, communication and leadership.  To partner with Information Technology and to support Shared Services Information Technology projects.  And finally, to continually refine best practices for program management and apply lessons learned across all types of projects.

Since implementing in 2012 with a staff of four, the team has doubled to eight, using a combination of full-time company employees and external contractors.  Listed below are some of the benefits achieved:

·         Creating an environment of transparency and openness between all levels on a project.

·         Facilitating all project participants to work effectively as a team to come up with the best possible solutions.

·         Providing a structure and developing a plan that carefully considers each project step and the impact on employees.

·         Maintaining oversight of project financials throughout the lifecycle of the project.

Per a supporting iPolling1 question, 63% of companies have implemented a PMO structure within Shared Services, with another 12% evaluating the opportunity.  Only 22% have either not considered the opportunity, or have decided against it.

When evaluating the potential benefit, 78% report that significant benefits are possible, with only 22% indicating that having a formal PMO structure in Shared Services would have a limited or neutral benefit. 

Here are some additional comments from iPolling participants:

·         A formal PMO was implemented about two years ago, and it has been very beneficial.

·         We have a Business Optimization organization at a sector level and a PMO at a Corporate level which serve similar functions.  The benefit is significant.

·         We have a combined PMO and Continuous Improvement (CI) function. This structure helps us maintain flexibility with resourcing both smaller CI initiatives and larger projects that require more dedicated resourcing.

·         The benefit depends on scope of operations and the team size. We leverage existing staff for project work and do not have a dedicated PMO office.

·         We have implemented and see very significant benefits.  We have a several resources fully dedicated to projects, with others who support projects who are getting their green belt certification.

·         We established a PMO as part of an overall global Shared Services initiative. It’s been a critical part of the success of the project thus far.

As reported by an experienced member, the results are the most important factor, whether or not a Program Management Office is formalized as a part of your design.  She comments:

In my experience having a PMO does provide significant benefit to an organization. However, the level of formality must be tailored to suit the organization to avoid stifling creativity and agility. We have taken an informal approach to project management so far by training our team in Lean & Six Sigma methodologies, and by holding Managers and Team Leads responsible for driving continuous improvement and project execution.

At the Senior Management level, I see a potential gap in this approach as functional leaders often lack training in project management skills (particularly across global boundaries) and have many competing priorities. As a result, we are re-evaluating whether to formalize the PMO function to create more successful project outcomes. Another approach we are considering is to provide training to key leaders and work to free up time for them to focus more on projects.

·        

What is your approach to driving continuous improvement in Shared Services?  Have you created a formal Program Management Office staffed with full-time resources to support Shared Service projects?

Who are your peers and how are you collaborating with them?

 

 

“PeercastsTM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion.  Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content.  Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member.  Using Peeriosity’s integrated email system, Peer MailTM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees. 

 “iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPolling.

 

Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers.   Membership is for practitioners only, with no consultants or vendors permitted.  To learn more about Peeriosity, click here.


Implementing Global Business Services Using a Regional Center Model

Peeriosity benchmarking data suggests that, while many companies embrace the idea of moving towards a Global Business Services model with a broad scope of services and a large geographic footprint, less than 20% of companies have ambitions to deliver global services from a single location.  The model most likely to be embraced is to implement on a regional basis, with multiple regional centers that support many countries in a region, and with only a limited number of processes or sub-processes delivered on a global basis from one of the regional centers (thus making it a global hub for that process or sub-process). 

A recent PeercastTM featured a global $10B product distributor with 20,000+ employees, 500+ branch locations and millions of customers.   After completing a multi-step process to get consensus on what processes to target, the next step was to determine the optimal location for the first regional hub.  Twenty locations were evaluated using sixty attributes in their selection criteria. A location in Central America was the selected site for the regional center. Below are five examples of the more heavily weighted location selection attributes used:

1.      Quality of the workforce

2.      Language capabilities

3.      Cost and financial benefit

4.      Telecommunications infrastructure

5.      A stable political climate

Following are examples of lessons learned during the implementation:

People

·         A comprehensive training plan is required

·         Be out in front of redeployment issues

·         Understand cultural differences and similarities

·         Address performance issues quickly

·         Evaluations of language proficiency must include both speaking and writing

·         Develop a strong bond between center personnel and business partners

Process

·         Documentation must be validated and complete

·         Identify non-standard work

·         Run in parallel before go-live

·         Involve business partners at every step

·         Develop detail plans for knowledge transfer

Technology

·         Create and document business continuity and disaster recovery plans

·         Technology changes need to be implemented and thoroughly tested before go-live

As shown below, per a supporting iPolling1 question, 64% of companies have implemented regional hubs, with another 21% with plans to do so.

 

Perhaps more interesting are the results from the second iPollingTM question that asks about the member company’s outlook on further consolidation.  The results indicate that 52% expect to consolidate with regional hubs playing an important role, with only 14% reporting that they either are already operating processes on a global basis or have long-term ambitions to do so.  An additional 24% are either pausing for the moment or they have completed the transition, with their response indicating that “standardization across locations is more a driver for us than further consolidation”.   Here are the details:

 

 Here are some additional comments from iPolling participants:

·         Our HR Shared Services model is currently operating with regional hubs, and primarily in the US, Canada, Mexico and Brazil. At this time, there are no plans to consolidate into one.

·         While our talent is located regionally, our goal is to support global business processes by optimally leveraging location and talent.

·         We continue to identify additional services to consolidate into our two regional hubs to gain greater efficiencies.

·         We are still standardizing processes and have started consolidation, but will need a few more years before we could say we are mainly operating from regional hubs.

·         Our belief is that a regional hub might be the best solution to deal with time zone differences and language barriers.

Do regional Shared Service centers fit with your company’s plans for global Shared Services? 

Have you fully implemented, or are their additional processes to include or more countries to transition?

Who are your peers and how are you collaborating with them?

 

 

“PeercastsTM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion.  Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content.  Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member.  Using Peeriosity’s integrated email system, Peer MailTM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees. 

 “iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPolling.

 

Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers.   Membership is for practitioners only, with no consultants or vendors permitted.  To learn more about Peeriosity, click here.


Continuous Improvement and Evolution of Accounts Payable

A recent PeercastTM featured a $5B manufacturing company with global operations and over 10,000 employees.  While they have a global Shared Services organization in place, there remain challenges to standardizing processes due, in part, to systems differences.  While SAP is used globally, there are three SAP instances, with one for the US, a second for Europe, and third used for AMEA (Africa, Middle East, and Asia).

The company has made steady progress to improve their Purchase-to-Pay processes in North America with the move to Shared Services in 2000.  Ten years later, the effort increased dramatically in scale, with the implementation of a global organization for Shared Services.   Even though much progress had been made, the “hard truth” was that, even in North America where the largest investments had been made and large gains realized, the Accounts Payable process still had some highly manual activities, requiring temporary staff support and with “paper everywhere”.

In 2010, after evaluating multiple vendors, the company selected ReadSoft as a front-end imaging solution, with a US go-live date in early 2011 and Europe implementing six months later.

Listed below is a summary of some of the lessons learned from the project:

·         When implementing globally, ensure as much process standardization prior to implementation as possible.  Exceptions can be difficult to manage.

·         Build metrics into your stabilization phase quickly to allow you to see deviations.

·         Make sure the project team includes everyone in the Purchase-to-Pay process, even if the project doesn’t appear to directly impact all parties.

·         Having a robust plan for testing is an absolute must.

·         Make sure to clean up any invoice backlog before the go-live date.

·         Be sure to include end-users in the training.

·         Use workflow tools when possible, and be aware that OCR isn’t a perfect process, so be prepared to handle exceptions.

·         Most importantly, don’t implement new technologies around a broken process.  Fix the process!

Results from supporting iPolling1 questions confirm that pursuing ongoing improvement in Purchase-to-Pay process is a priority for most companies, with 86% with projects within the past year and many pursuing related projects on an annual basis.  Here are the details:

 

Results of the follow-up question were interesting, with 48% citing “competing priorities” as the greatest obstacle to re-engineering projects for Accounts Payable, with 21% primarily concerned that the current technology options are not ideal for the projects they would like to pursue. Only 7% cited a lack of funding as being the biggest obstacle.

 

Comments from iPolling participants provide additional insight:

·         Each year we put significant effort into continuous improvement. We utilize metrics both to set goals and measure progress in this area.

·         Improvement projects in A/P are more difficult for us because we do not own the entire Procure-to-Pay cycle so we struggle with making changes in our Procurement processes because there are different stakeholders and priorities.

·         This is an ongoing effort for us as well, with several projects focused on specific processes within AP. We have not had any major re-engineering efforts across all of AP since upgrading our ERP system. This was a significant effort that forced us to re-engineer across nearly every process we manage.

·         The greatest obstacles for us is a combination of competing priorities due to IT and Project resource availability, combined with legacy business complexities.

·         We do not own the ERP or the entire process, so re-engineering the process is very challenging.

 

How recently has your company pursued an improvement effort for the Purchase-to-Pay process?  What is next on your list of improvement initiatives for this process?

Who are your peers and how are you collaborating with them?

 

 

“PeercastsTM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion.  Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content.  Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member.  Using Peeriosity’s integrated email system, Peer MailTM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees. 

 “iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPolling.

 

Peeriosity members are invited to log into www.peeriosity.com/shared-services/ to join the discussion and connect with Peers.   Membership is for practitioners only, with no consultants or vendors permitted.  To learn more about Peeriosity, click here.


Shared Services and the Corporate Travel Function Reporting Relationship

For the end-to-end Travel Process, Shared Services often has responsibility for the Expense Reporting portion.  The Corporate Travel function, where activities such as travel bookings and negotiating travel discounts take place, doesn’t necessarily align with the Expense Reporting process, and often does not report into Shared Services.

Recently, a Peeriosity member representing a $50B+ global company with 30,000+ employees was exploring opportunities for moving the Corporate Travel function from Human Resources to Shared Services, and was challenged by their HR leadership team, who was confident that alignment with HR was a consistent model at peer companies.  To find out, the member worked with Peeriosity to create iPollingTM questions to discover where the Corporate Travel function typically reports, and the level of satisfaction with the reporting relationship.

Within 24 hours, 45 member companies responded, providing the member with direct insight to the approaches followed, with the ability to follow up directly with peers to discuss their experiences.  The results were compelling, with the Corporate Travel function reporting to Shared Services for 38% of the companies and to Procurement for 29%.  Reporting into Finance or HR was less likely, at 16% and 13% respectively.

Based on the iPollingTM results and supporting follow up discussions, the member company has received approval of their business case to change the alignment from Human Resources to Shared Services to obtain the associated synergies.

 

When asked, “Does the placement work well?” for 51% the response was “Yes”, with an additional 21% responding “Yes – but it could be better placed”, and with only one company reporting that the current alignment didn’t work.  26% of member companies were neutral on the question. Peeriosity members have full visibility to the data that correlates satisfaction levels associated with organizational placement.

As is true for almost every iPollingTM question, additional comments included with poll responses help to clarify the approaches at member companies.  Here are some of the comments:

·         Our program is in Shared Services and rolls up under our Finance department. Being in Shared Services, we’re able to standardize our processes and use our access to each of our divisions to better monitor travel related purchases to ensure compliance to our Corporate policies.

·         We’ve recently switched our travel provider to American Express travel and we utilize a Concur platform. Our Treasury function manages the relationship with American Express.

·         We are consolidating and centralizing our corporate Travel program within our Shared Service center. Travel Expense, Credit Card and Travel Booking are being centralized within our Shared Service Operation, in partnership with banking and travel vendors.

·         I believe Travel can fit well in any of the functions listed. In our Company, HR has responsibility for Travel; however, accounting for expenses through expense reporting resides within Finance.

·         As part of Shared Services we consistently focus on standardizing our processes and are in the process of rolling out a Global Travel Policy and Procedures.

·         We just recently moved the Travel team to Procurement from Financial Shared Services to better align the negotiations and procurement of our services. The corporate travel card and travel expense management remain in Financial Shared Services.

·         Our Global Travel team is part of our Shared Services Group under Finance. Travel is a unique group regardless of which group it is part of, but the link to the Global Expense/Travel policy makes it the best fit for Shared Services.

·         Our Corporate Travel function is currently not part of Shared Services. This would be a better placement.

·         Corporate Travel reports into Procurement.  There would be synergies to align the Corporate Travel function with the Travel Expense process in Shared Services.

Where does Corporate Travel function report at your company?  Is this an area where a modest investment could yield significant results?

Who are your peers and how are you collaborating with them?

 

 

 “iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participate in iPolling.

 

Peeriosity members are invited to log into www.peeriosity.com/shared-services/ to join the discussion and connect with Peers.   Membership is for practitioners only, with no consultants or vendors permitted.  To learn more about Peeriosity, click here.