The Common Challenges of Common Practices: Tips for Effectively Moving to a Shared Services Center

Transcription

1 The Common Challenges of Common Practices: Tips for Effectively Moving to a Shared Services Center Helene Abrams CEO eprentise habrams@eprentise.com

2 Learning Objectives After completion of this program you will be able to: Objective 1: Learn the mechanics of running a single global instance in a shared services center operation. Objective 2: Understand common business processes and how they are implemented. Objective 3: Explore real-world examples of and lessons learned from shared service center operations. 2

3 Agenda Introduction What is a Shared Services Center? How Shared Services Centers Operate Common Challenges Critical Success Factors for Gaining Efficiencies and Streamlining Operations Roadmap for Implementation Case Studies Conclusion 3

4 : Transformation Software for E-Business Suite Company Overview: Incorporated 2007 Helene Abrams, CEO eprentise Can Consolidate Multiple EBS Instances Change Underlying Structures and Configurations Chart of Accounts, Other Flexfields Inventory Organizations Operating Groups, Legal Entities, Ledgers Calendars Costing Methods Resolve Duplicates, Change Sequences, IDs Separate Data So Our Customers Can: Reduce Operating Costs and Increase Efficiencies Shared Services Data Centers Adapt to Change Align with New Business Initiatives Mergers, Acquisitions, Divestitures Pattern-Based Strategies Make ERP an Adaptive Technology Avoid a Reimplementation Reduce Complexity and Control Risk Improve Business Continuity, Service Quality and Compliance Establish Data Quality Standards and a Single Source of Truth 4

5 What is a Shared Services Center? An operational entity which performs all of the non-core business processes for all of the divisions within an enterprise so that companies can: Focus on core business competencies Reduce costs and gain economies of scale Standardize business processes Implement better controls Provisioning of services by one part of the organization and its shared use by the rest, who fund this service. 5

6 Incentives & Drivers of Global Operations Consolidate repetitive data-centric processes to support migration to a shared services center or a centralized data center Generate financial reports directly from the system of record Reduce operating and maintenance costs to improve the bottom line Create a single source of truth to improve business processes and business intelligence Enable revenue optimization whenever and wherever possible to improve the top line Capitalize on enterprise-wide synergies to leverage purchasing and to better understand customers Obtain access to new markets and the opportunity to scale the business 6

7 How Shared Services Centers Operate Select locations with lower labor costs, different time zones Operates as a separate profit center Transaction processing is the main revenue generator, not a support function. Recognizes economies of scale High volume of transactions Ability to transact across businesses Accommodates local and statutory requirements Centralizes expertise in various areas 7

8 Example Shared Services Center Functions HR and Payroll Payroll Processing Benefit Management Time and Labor Reporting Finance General Accounting Billing Credit and Collections Taxes Statutory Reporting Travel & Expenses Procurement AP Invoicing Purchasing Credit Card Reconciliation Warranty Tracking 8

9 R12 Was Designed for Shared Service Center Operations Operating Units (OUs) Responsibilities Multiple Organizations Access Control Subledger Accounting Subledger Users are assigned responsibilities Ledger Sets Legal Entities Customer and supplier bank accounts 9

10 Common Challenges for Shared Service Center Operations Global Standardization Data Common Definitions Redundancy Business Processes Localizations Alignment of business initiatives Governance, Controls Increasing Costs Global Support Downtime 10

11 Global Standardization Business and implementation differences exist among different installations and need to be maintained Different calendars, currencies, and charts of accounts are difficult to reconcile One-to one relationship between each set of subledgers (purchasing, payables) in Oracle Applications No cross-instance functionality MOAC functionality doesn t enforce standards Oracle Applications consolidate only at General Ledger Level 11

12 Business Process Standardization Key components to successfully managing change on a global scale 12

13 Critical Success Factors for Gaining Efficiencies and Streamlining Operations Single Global Instance Common Global Chart of Accounts Standard Calendar Shared Master Data Common Configurations Elimination of Silos Ledgers, Legal Entities, Operating Units, Inventory Orgs 13

14 Things to Think About When Establishing a Vision for Shared Services What is the governance model? What type of functions, processes and services? How many processes? What is our approach? What are the economics? How long will it take? What type of culture and organization do we want? How will it impact the rest of the organization? How will it meet stakeholder s requirements and be measured? 14

15 Three Traditional Shared Services Organization Models Company Company Regional Service Center Corporate Regional Service Center A/P Center of Excellence Corporate Accounting Center of Excellence B.U. B.U. B.U. B.U. B.U. B.U. Corporate Service Center B.U. B.U. B.U eprentise. All rights reserved.

16 Roadmap for Implementation Step 1: Determine what processes the SSC will cover Identify processes and data that can be shared across the enterprise Standardize common business processes, workflows Identify common data 16

17 Roadmap for Implementation Step 2: Measure Current Operating Costs Benchmark existing processes Identify metrics for best practices Compare existing to best practices Determine opportunities for saving 17

18 Determine Current Practices and Costs 18

19 Measure Against Best Industry Practices Unit Cost and Productivity Comparison Accounts Payable Accounts Payable Cost per Invoice Processed Invoices Processed per Accounts Payable FTE Benchmark High $16.63 Benchmark Low 5,333 Benchmark Median $3.93 CHG $4.40 TGIF $4.12 Benchmark Median 17,793 CHG 11,303 TGIF 14,562 CCI w/o TGIF & CHG $1.81 CCI $2.39 CTG $1.74# CMG $1.69# CCI w/o TGIF & CHG 30,575 CCI 23,765 Benchmark Low Best Practice $1.35 $0.80 Benchmark High 41,388 CMG 36,181**# CTG 53,148**# * Per 1991 Shared Service Study ** Invoices are processed by CCI FTEs which are not reflected in CTG and CMG headcounts # Business units receive a bill from CCI A/P in addition to performing some of their own A/P 19

20 Measure Against Best Industry Practices Accounts Payable Supplemental Analysis Accounts Payable Resource Distribution Other (13%) Headcount Distribution Exempt (20%) Systems (23%) Personnel (64%) Benchmark Low Non-Exempt (80%) Benchmark Low Other (24%) Exempt (29%) Personnel (64%) Systems (19%) Non-Exempt (66%) Contract (5%) Company ABC Company ABC Personnel Systems Other TGIF 61% 22% 17% CMG 61% 21% 18% CHG 63% 1% 36% CTG 48% 14% 38% Exempt Non-Exempt Contract TGIF 10% 84% 6% CMG 37% 54% 9% CHG 41% 59% 0% CTG 51% 49% 0% 20

21 Roadmap for Implementation Step 3: Set up a Service Level Agreement Identify resources People Infrastructure Determine operating costs What volume can you handle? Are there special requirements? Determine unit prices Determine service levels and fees Timing (close cycle) Volume Develop change management, issue resolution, and escalation processes 21

22 Roadmap for Implementation Step 4: Initiate Preparation Project Set up infrastructure Consolidate instances Implement common chart of accounts Implement common calendar Merge ledgers, operating units, inventory orgs Set up secondary ledgers and ledger sets Regulatory and Statutory Reporting Adjusting Ledgers Set up MOAC 22

23 Infrastructure Four main technology issues surrounding globalization: Availability Access/Security Performance Functionality E-Business Suite Release 12 is designed to support a global enterprise within a single instance, and it has several features that enable sharing of data and facilitate the globalization effort. 23

24 Technology - Availability Prearranged level of operational performance during a period of time Service level agreement or three nines / five nines To a user, it means the ability of the user community to access the system Scheduled vs. Unscheduled downtime Maintenance Patches, configuration changes, etc. (reboot required) Hardware/software failure Environment anomaly 24

25 Example of Silos Instance Sets of Books, A Legal Entities, B OUs, and C Inventory D Orgs Distinct Release Redundant and configured differently Charts of Accounts and Calendars Size (GB) Disparate and misaligned 1, Languages Sets of Books Calendars Charts of Accounts Redundant Objects Legal Entities Operating Units Charts of Accounts Reports and data extracts must be done 40 times Inv Orgs Modules Calendars Installed With 10 calendars, the company is depreciating 9 assets 17 in 10 different 4 ways and 5 closing periods Redundant Objects 21 at different times Security Rules on Value Set 13, Sets of Books Difficult to comply with local and statutory regulatory requirements ,480 Security Rules X Responsibilities 17, ,876 Legal Entities Easy to over- or under-pay taxes and misstate financial information Cross Validation Rules 86,845 39, ,960 Operating Units Difficult to leverage supplier relationships (terms, discounts, etc.) Currencies EBS Inventory Users Orgs Impossible to know if a product 43,986 is actually in 30,494 stock (or where 247 it is on 3,023 the shelf) N/A eprentise. All rights reserved.

26 Why Consolidate Instances? Reduction in infrastructure costs (hardware, maintenance, licenses) Global Reporting/ Analytics Create Centralized Shared Services (maintenance, setup, centralized processing) Eliminate duplicate integrations and interfaces Lower license and support fees Consistent Business Processes Provision of better customer service and the ability to operate globally Agility to grow and to embrace new initiatives Reduction in personnel to support multiple systems Facilitate efficient and effective decision making with timely and reliable fact based information Access real-time information at consolidated level Operation of a single business with consistent data, streamlined processing and the ability to leverage markets, suppliers of other parts of the business eprentise. All rights reserved.

27 eprentise Consolidation Software 27

29 A Global Chart of Accounts Primary ledger is single source of truth for all accounting, reconciliation, and analytical reporting Consistency but flexibility to accommodate different requirements External reporting without relying on a separate financial consolidation system Drill down to individual transactions in the subledgers without translation Transparency (3-5 years) to meet IFRS standards and international auditing requirements Common metrics and reporting structures with common interpretation Enterprise Visibility with Subledger Accounting and Secondary Ledgers Accounting policies are standardized across the entire enterprise Data remains consistent and has full drill-down and rollup capability, auditability, and visibility into all of the activity for the entire ledger set Conversions not required for data warehouse queries Facilitates the movement to a shared service center Increases the level of enterprise governance and control of new code combinations 29

30 FlexField Software to Change your EBS Chart of Accounts Map Segments and Values or Code Combinations Changes CCID everywhere Segment Mapping All setups All 1 subledgers 1 Mapping All history Looks M 1 as though Mapping the new chart of accounts was 1 part M of Mapping the original implementation Full audit trail, drill down, roll up Built in exception reporting 30

31 Calendar Change 31

32 Period Date Change - Impact on Journals 32

33 Insert New Dates 33

36 Roadmap for Implementation Step 5: Roll out SSC Operations Establish standard business processes Set up governance and compliance controls Hire resources Develop training program 36

37 Process Standardization The backbone of a globalization effort is the understanding that business processes are intrinsically linked and not confined to departmental, geographic, or organizational boundaries. Shared services center as a way to standardize on common global processes such as: Corporate treasury Invoice processing Receivables processing Sarbanes-Oxley Compliance Account maintenance Corporate reporting Expense processing HR maintenance Costa Mesa Nottingham São Paulo Kolkata 37

38 Governance Effective management of shared enterprise assets is necessary for an effective global strategy Collaboration Implementation of effective controls Idea of the benevolent dictatorship 1. There can be no wavering about where the finish line is placed (a single global instance) 2. Anything less than success or short of completion is not acceptable (no special exceptions) 3. Obstructionism is not tolerated 38

39 Training and Communication Effective globalization training has to take a more personalized approach that seeks buy-in along with providing information New skills New processes New functionality New regulations A training manual alone is not enough to be effective 39

40 Roadmap for Implementation Step 6: Measure Results Are you achieving the returns on investment? How close are you to best practices? What do you need to do to further reduce costs? 40

41 Where Do You Fit? Accounts Payable Benchmark Results Accounts Payable Headcount and Costs First Quartile Headcount per $ Billion Sales 6.2-CTG 8.4 Personnel CTG.030% Cost as a Percent of Sales Systems.002% - CHG.008% - CTG.011% Other.006% Total.047%.057% - CTG First Quartile %.026%.013%.126% Second Quartile Third Quartile Fourth Quartile CCI CMG 67.9 TGIF 77.8 CHG.073%.089% - CCI.118%.210% - CMG.219%.244% CMG.249% TGIF.030% - CCI.038%.046%.062%.073% CMG.090% TGIF.022% - CTG.028%.035%.036% CCI.068% TGIF.062% CHG.089%.153%.155% - CCI.209%.345% - CMG.355%.141% CHG.387% CHG.407% TGIF Second Quartile Third Quartile Fourth Quartile 41

42 Determine Opportunities for Cost Reduction Company ABC Company ABC 42

43 A Case Study on Global Finance Transformation and Operations at Experian Globalization Best-of-breed 43

44 Experian Global Finance Transformation US UK France Ireland US Instance - Oracle 11i UK Instance - Oracle 11i 3 EBS instances converged into a Single Global Instance Global COA / Processes Regional Shared Service Centers processing Ongoing global roll out Oracle 11i Ireland Australia N.Zealand* Italy Spain Denmark Hong Kong Norway Sweden* Finland* Estonia* India Gemstone Start "UNIFY" Instance Oracle R12 France Japan China Korea Malaysia Singapore Gemstone Go-live US & UK migrated to "UNIFY" instance US UK Canada Chile Costa Rica S.Africa Russia* Morocco* * GL Module Only ** Additional modules Single Global Instance Oracle R Netherlands Germany Austria N.Zealand** Sweden** Estonia** Bulgaria Greece Monaco Belgium Brazil Mexico Argentina Turkey Project Gemstone Goals Single Global Instance of Oracle EBS R12 Global Chart of Accounts Standard Finance Processes Global Finance Shared Services Organisation Three regional Finance Shared Service Centres Global Hyperion EPM & OBIEE fully integrated with EBS Global Finance Center of Excellence (COE) 44

45 Experian Global Finance Transformation Oracle EBS Modules implemented and planned * Core Financials Other HR & Payroll Purchasing Order Management HRMS I-Procurement Advanced Pricing Self Service HR Payables Service Contracts Passive Payroll Receivables Project Billing Payroll Advanced Collections Time & Labour Advanced Benefits General Ledger AME Absence Management Fixed Assets BRM Billing * I-Recruitment Cash Management Oracle GRC AGIS I-Expenses Note: Not all modules used by all countries 45

46 GCS Support Then and Now (an Iterative Process) EBS Support (Prior to Gemstone) 3 Regional EBS instances. Two located in UK, one located in USA. 2 Regional support areas Functional / Development teams in each location Break fix team in each location Different support models in place Knowledge base decentralized 3 different EBS infrastructure footprints Duplicated DBA teams Strategy and Support leadership silo d and duplicated EBS Support (Gemstone Go Live) Consolidation project to move from 3 EBS to single global instance, infrastructure located in UK Outsourced Break/Fix support to support partner (TCS) Experian Development FTE s reduced Support presence included 3rd shore (offshore center in Kolkata, India).of support to a 24x7 model Support management centralized, global incident system implemented Built out EBS Regression Test Bed platform Began formal Release Mgmt process to include instance and DBA resource utilization management EBS Support / Strategy (Gemstone 2yrs old) Outsourced Support Model transitions to Service Level Agreement (SLA) basis Formal Change Process put into effect simple change < 10 days, Planned change > 10 days Release Management process furthered Instance refresh policy established Configuration Mgmt process furthered, began use of automation tool (isetup) 46

47 Process Collaboration How Do We Work Together? Process Collaboration Matrix Business Partners Business Process Process Owner Process Sponsor Global Corporate Systems GCS Process Partner / SME GCS Technology Partner Order to Invoice NA: TBD NA: TBD GCS SME LATAM: TBD LATAM: TBD GCS SME UK&I / EMEA: TBD UK&I / EMEA: TBD GCS SME APAC: TBD APAC: TBD GCS SME Invoice to Cash TBD TBD GCS SME Recruit to Retire NA: TBD TBD GCS SME LATAM: TBD TBD GCS SME UK&I / EMEA: TBD TBD GCS SME APAC: TBD TBD GCS SME Purchase to Pay TBD TBD GCS SME Record to Report TBD TBD GCS SME GRC TBD TBD GCS SME Enterprise Performance Management TBD TBD TBD Business Intelligence: Data Integration / Master Data Management / Middleware: Data Warehouse / Data Design Authority: 47

48 Soft Benefits of Implementing Shared Service Centers Customer-focused organization Establishes global processes and accessibility to data Hastens incorporation of new business units Improved access to consistent information Enhanced ability to refocus business units from transactional processing to analytical analysis Focuses on core competencies Eliminates silos, and assures that management everywhere is reading from the same page Number of control points in a process and the number of variations of a process are greatly reduced, mitigating the risk of process error. Drastic quality improvements Leverage technology Fewer customer contact points 48

49 Questions? 49