Seven Strategic Imperatives for Transitioning to a Shared Services Model

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1 A Point of View Seven Strategic Imperatives for Transitioning to a Shared Services Model Abstract Given today s tough business climate, organizations are adopting a shared services model to realize cost savings, increase efficiency and agility, and ensure better sharing of technology and resources. However, a great deal of time, effort, and resources are required to transition to a shared services model. Over the last two decades, transitions have become increasingly complex and involve multiple geographies, business units, and towers, thereby requiring a more holistic and collaborative approach. Understanding the nuances of global transitions with respect to people, processes, technology, and governance can promote greater efficiencies and better performance. Traditionally, enterprises adopt a lift-and-shift model in their transition programs. This paper outlines seven strategic imperatives that are likely to shape the future of the shared services model. The paper also provides a proven approach for delivering seamless and first-time successful transition programs. Enterprises with footprints across multiple geographies can adopt the outlined approach to conduct transition programs with improved governance and efficiencies. The Evolution of Transition Management and Its Rising Complexity During the last two decades, organizations of all sizes have set up shared services centers to provide harmonized services to the enterprise. As a function, transition management in shared services has evolved from delivering project management to driving domain consulting led program management. Transition teams, focused on services such as finance and accounting (F&A) and supply chain management, are further strengthened by domain specific teams that enhance transition solutions and service delivery. In addition, readily available transition management toolkits help organizations reduce the transition time and optimize resource utilization. Figure 1 outlines the evolution of transition management over the last two decades. Complexity of transitions Simple data/voice task with minimal interface Single chain of command as stakeholders Focus on a simple process without many technology disruptions Primary a lift and shift approach Growth of multiple delivery centers requiring additional coordination Implementation of IT creating a host of automated application Improved technology infrastructure increasing reliablity Disparate processes and system across various BUs/countries Multiple stakeholders across client organizations leading to delays in sign-offs Key solution aspects often overlooked due to cost/time pressures Standardization driven through knowledge Transfer (KT) Expectation of operational performance from Day One Effective transition and process controlsaggressive timelines, costs pressures, and increased complexity Stability in operational performance achieved in 6 months or more No standardized transition process 1995 Year 2015 Figure 1: The evolution of transition management

2 Transition management has become more complex due to the increasing size of programs spread across multiple countries, business units, and delivery centers. Transitions spanning multiple geographies require organizations to deal with different languages, cultures, regulations, and local business practices. There have also been major shifts in traditional service delivery with the introduction of the hub-and-spoke model, which requires special focus on change management. Parallel implementation of platforms, case management solutions, and point solutions such as workflows during process transitions add to the growing complexity. The nature of engagement has also changed with respect to technology, people, process, and governance in the following ways: Technology Technology is advancing at a rapid pace to keep up with changing customer preferences. IT has become more customer-centric due to technologies such as cloud services, Big Data, and social media. As the role of technology as an enabler becomes even more critical, the transition process is being redrawn, leading to additional complexity. Transitions are also no longer a 'lift and shift' activity; instead, they follow a model of 'transform and transition. People Organizations need to form long-term partnerships and ensure cultural alignment, irrespective of the location. There has been a shift from traditional transitions, such as from one process location to another, to multiple shared service centers. The pace has also become more aggressive. This involves significant challenges in managing people dynamics due to multiple geographies and cultures involved. Process Process complexity has increased multifold as organizations increase their focus on optimizing core, value-adding processes in addition to transactional processes. While many processes are automated, capturing process variations and ensuring standardization is a significant challenge during global transitions. Governance In multi-geo and multi-process transitions, the governance becomes extremely complex because of divergent stakeholder agendas. Hence, a robust governance framework is essential. Top questions organizations have during the transition life-cycle Organizations involved in multiple, large-scale transition programs across geographies are likely to have one or more of the following concerns or questions during the course of their transition life cycle: How do we visualize strategic intent in the form of a solution blueprint and ensure that it is delivered through the engagement? How do we achieve the expected levels of standardization across countries and business units while managing change? How do we sequence a large, multi-country or multi-tower transition? In case of a longer transition life-cycle, multiple vendors, or shared service centers, how do we manage supplier relationships to achieve greater ROI right from the beginning? Much of our process knowledge lies with Subject Matter Experts (SMEs). How will our SMEs transfer their knowledge to the transition team? How can we identify risks and ensure timely mitigation so the transition stays on schedule? How will shared center services manage the transition across different geographies while ensuring that the end-customer experience is consistent across similar service requests? Driving Robust Transition Management The answers to the above questions must be aligned with the organization's strategic imperatives. The following sections outline a few strategic imperatives that can be translated into executable solutions. Visualize the broader picture during blueprinting Organizations must create a well-defined blueprint that defines the criteria for success of current and future transitions as well as for steady- 2

3 state operations. At the same time, effective governance ensures better management of the transition program within a defined framework. Additionally, the solution design should accord due importance to change management. The program management team must be empowered to analyze the impact of the change and align resources with the business need. Effective solutions are the backbone of any transition program. Below are some key considerations for making a robust transition plan: Joint transition planning workshop with key stakeholders to develop a vision and a long-term outlook Use of an appropriate transition methodology based on the nature of the project, processes, and technologies; for instance, a transition that does not involve significant redefinition of processes is easier to execute Integration of expected transition efforts and timelines with the analysis of dependencies from each stream, to arrive at accurate go-live dates through bottom-up estimation techniques Improvisation techniques such as conducting a quick pilot and translating the learnings into major phases of the transition Accuracy in staffing, such as ensuring the appropriate number of transition, program, and project managers Integrate planning and identify risks in advance Organizations need to delve deeper into transition requirements to identify risks and dependencies such as SME availability, travel and logistics timelines, business seasonality, holidays, regulations, and geopolitics. Transitions typically involve multiple stakeholders and various streams such as process and quality, technology infrastructure, enabling tools, and facilities and resource management each with individual project plans. The program manager should therefore be able to integrate these plans and track execution in real time. In most organizations, strategic projects that improve business performance may be being executed at the same time as the business process transitions. These projects have common stakeholders and utilize common resources. During the planning stage, it is important to integrate the timeline of the shared services transition with other ongoing projects to avoid resource scarcity. Plans for IT hardware and applications, hiring, knowledge transfer, ramp-up, business continuity, and operations team restructuring must be integrated with the transition plan. Transition managers must also take inputs and ensure buy-in from all stakeholders in terms of timelines, deliverables, and resource commitments. Sequence the phases of the transition program for on-time transitions Organizations must consider the expected benefits, process heterogeneity, organizational change, regulatory compliance requirements, governance complexity, and organizational risk to arrive at the right sequence for the proposed transition. To effectively sequence the transition program, the parameters below need to be considered. Country-wise: Organizations can prioritize transition of processes by country and carry forward lessons learned in one country to the others. IT landscape-led: If different ERP systems are being used in different countries, processes, or business units, it will be prudent to analyze the IT landscape to decide whether to harmonize it first and then transition the business process, or vice versa. Tower-wise: In some cases, it is beneficial to create a shared service for each tower (country, process, function, business unit). For instance, for a process spanning multiple countries, the organization must always start by defining a target operating model that delineates the to-be process. Then, they should onboard key stakeholders in those countries onto the desired process. Process-led: Standardized processes can be transitioned earlier to help realize benefits faster. People-oriented: Change management processes during the transition need to be planned carefully to ensure effective communication with all relevant stakeholders for the success of the transition program. Use a robust governance mechanism and change management measures during and after transition A robust governance mechanism is essential in business process transition and service delivery. However, in case of large, complex programs, transition and delivery co-exist due to the longer timelines. In this scenario, it is important to leverage learnings from earlier transitions. The governance mechanism should include the project organizational structure, communication plan, and escalation matrix to help transition program managers integrate their efforts better and guide the team to achieve objectives. 3

4 The shared services engagement is usually driven by a joint collaborative team to resolve challenges at the operational, transition, and steering committee levels. A long-term focus on building relationships between shared services and operations teams is therefore an important criterion for success. Program managers should create trust within the team by being transparent about project-related activities and deliverables. They must engage in discussions with the business operations team on deployment of resources and the best approach for collaboration. Organizations must align their change management plan with the transition plan to strengthen the partnership between shared services and business operations in the long run. It is also important to understand the organization's history, culture, and infrastructure to better prepare for the impact of change. Transition program managers should align the executives of both shared services and business operations with a broader vision and objectives. Furthermore, they should look out for resistance to the program and address it proactively. Reduce the learning curve with effective knowledge transfer Effective knowledge transfer (KT) is fundamental to the success of any shared services transformation program. Knowledge that has been captured over long periods of time from disparate processes or systems needs sophisticated models of retention and enhancement to reduce the learning curve. Furthermore, hands-on training and face-to-face meetings help in effectively transferring and retaining tacit knowledge. Today, the enterprise knowledge base relevant to transitions extends beyond areas such as F&A, supply chain management, and human resources management to include industry domains such as life sciences, manufacturing, and retail. Service providers should therefore be ready with the right domain experts, documented knowledge assets for better standardization, and the right technology platforms to support the transition. A domain-specific transition framework saves the time required for transitions within that domain. For instance, healthcare organizations can use process maps for medical writing or pharma co-vigilance as part of the transition framework. In the retail domain, tools specific to data analytics processes can be used for statistical analysis of the transition. Domain training manuals and programs can also be included in the transition framework before the KT phase starts. Monitor and track transition in real time to mitigate risks In today's hyper-connected world, the ability of organizations to identify and mitigate risks has increased manifold. Digitization leads to data transparency, which in turn increases visibility into the system. This allows the transition manager to identify risks early on. Digitization also reduces the gap between data and decisions by creating a seamless knowledge flow and enabling transition managers to manage risks on a real-time basis. Advancements in technology also improve collaboration, which helps avoid risks proactively. Risk management is essential for the success of transition projects, and can be enhanced with two methods. First, standard project management risks should be mitigated with built-in controls in the project plans. Second, transition performance should be monitored online on a real-time basis to pre-empt challenges and gain greater control Automating activities across the transition life-cycle enables a common platform for deliverables, stakeholder reporting, communication, and transition performance monitoring. This helps systematize risk management, as well as identify, assess, and track important risks in the normal course of transitions. A digitized dashboard that captures key transition parameters supports performance monitoring and reporting, and brings in greater transparency across the transition lifecycle. Furthermore, publishing key performance indicators to all stakeholders regularly helps manage issues effectively. Ensure consistent service standards and disciplined execution Shared services should follow global service standards across processes, functions, and locations. Such standards codify the solution, transition, delivery, quality, and risk frameworks as well as templates that must be used while managing transition programs. Near-shore transition and delivery teams must be fully engaged in solution design and transition to ensure that they share their inputs and work as a cohesive unit. Transition program management teams across the globe must be on the same page with respect to competence, processes, and technology tools. Rigorous compliance with the transition methodology is also critical for disciplined execution. For instance, if staffing numbers are not validated after the initial estimates are generated, the organization runs the risk of either understaffing or overstaffing. Rewarding team 4

5 members for the right behavior also helps ensure successful transition. Managing Transition with Minimal Disruption Managing the transition to a shared services model is a complex and demanding task that, unless handled right, can have an adverse impact on business operations. Transition professionals bring in dedicated expertise, scalable project management capabilities, and industry best practices to ensure smooth and seamless transition. A proven transition approach along with a structured set of tools, methodologies, and domain experience helps minimize costly business disruptions. To ensure a successful outcome and maximize the quality of transition deliverables, it is critical to plan proactively and adopt a phased approach. 5

6 About the Authors Mahesh Petkar Mahesh Petkar leads a team of transition managers for the travel and transportation, retail, and consumer packaged goods industries in the Business Process Services (BPS) unit of Tata Consultancy Services (TCS). He has over 16 years of experience in manufacturing, business consulting, IT, and BPS. Petkar has led multiple global programs involving IT and BPS transitions across the US, Europe, and the Asia-Pacific region. Kuldeep Pandita Kuldeep Pandita is a domain transition leader for manufacturing in TCS' BPS unit, with 14 years of experience in transitions and service delivery. He has managed transitions for Fortune 100 companies in various industries, including banking, media, metals and mining, specialty chemicals, and professional services. 6

7 About TCS' Business Process Services Unit Enterprises seek to drive business growth and agility through innovation in an increasingly regulated, competitive, and global market. TCS helps clients achieve these goals by managing and executing their business operations effectively and efficiently. TCS' Business Process Services (BPS) include core industry-specific processes, analytics and insights, and enterprise services such as finance and accounting, HR, and supply chain management. TCS creates value TM through its FORE simplification and transformation methodology, backed by its deep domain expertise, TM extensive technology experience, and TRAPEZE suite of solution accelerators and governance enablers. TCS complements its experience and expertise with innovative delivery models such as using robotic automation and providing Business Processes as a Service (BPaaS). TCS' BPS unit has been positioned in the leaders' quadrant for various service lines by many leading analyst firms. With over four decades of global experience and a delivery footprint spanning six continents, TCS is one of the largest BPS providers today. Contact For more information about TCS' Business Process Services Unit, visit: bps.connect@tcs.com About Tata Consultancy Services Ltd (TCS) Tata Consultancy Services is an IT services, consulting and business solutions organization that delivers real results to global business, ensuring a level of certainty no other firm can match. TCS offers a consulting-led, integrated portfolio of IT and IT-enabled infrastructure, engineering TM and assurance services. This is delivered through its unique Global Network Delivery Model, recognized as the benchmark of excellence in software development. A part of the Tata Group, India s largest industrial conglomerate, TCS has a global footprint and is listed on the National Stock Exchange and Bombay Stock Exchange in India. For more information, visit us at IT Services Business Solutions Consulting All content / information present here is the exclusive property of Tata Consultancy Services Limited (TCS). The content / information contained here is correct at the time of publishing. No material from here may be copied, modified, reproduced, republished, uploaded, transmitted, posted or distributed in any form without prior written permission from TCS. Unauthorized use of the content / information appearing here may violate copyright, trademark and other applicable laws, and could result in criminal or civil penalties. Copyright 2015 Tata Consultancy Services Limited TCS Design Services I M I 11 I 15