Vodafone: Cutting Labor Costs 30% Through Shared Service Centers and SAP Software

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1 Partner Vodafone: Cutting Labor Costs 30% Through Shared Service Centers and SAP Software The EVO program at Vodafone Group Plc standardized the way business processes are performed throughout the firm s vast enterprise; but the biggest win came from the next step: centralizing high-volume tasks in shared service centers. Due to process optimization and economies of scale, Vodafone is doing a better job than before by many measures, using far fewer people.

2 Company Vodafone Group Plc Headquarters Newbury, United Kingdom Industry Telecommunications Products and Services Network, mobile, and data communications Employees 86,000 Revenue 46 billion ( 57 billion) Web Site Partners SAP Consulting, Accenture, IBM, HCL AXON, and igate BUSINESS TRANSFORMATION The company s top objectives Increase quality of business operations Save costs by increasing operational efficiency Improve on-time payment record and other financial key performance indicators (KPIs) The resolution Developed optimal ways of conducting business processes Made these processes standard company-wide Centralized the performance of these processes in shared service centers The key benefits Delivered higher-quality services at lower costs Reduced number of bank relationships but made them stronger and deeper Improved performance against KPI goals Read more As a result of centralizing our financial processes in our shared service centers and the work we ve done to optimize them, we have truly taken control of our payment processes. Bobby Abraham, Group Head of Finance Shared Service Centers and Senior VP of Vodafone Shared Services, Vodafone Group Plc TOP BENEFITS ACHIEVED 30% Fewer FTEs servicing Europe 90% On-time payment record, spot on target 54% Fewer queries year on year, versus 20% target See more metrics 2 / 6

3 Standardization opens the door to centralization Vodafone Group Plc is the largest telecommunications company in the world, providing telecommunications services of all kinds throughout its United Kingdom home market and around the globe. Vodafone serves over 400 million people in the more than 30 countries where it operates directly and in over 50 more through partnerships with local networks. In a program called EVO, the largest business transformation it has ever conducted, Vodafone introduced a common operating model enterprisewide for finance, HR, and supply chain operations supported by a single IT platform SAP software. Under this program, 70,000 users in 21 countries take a uniform approach to the conduct of business by following the same end-to-end business processes, developed for optimum efficiency. Business process standardization brought Vodafone many benefits in its own right, but the company could see even more advantages by taking the next step: forming shared service centers in which highly skilled specialists conduct high-volume administrative tasks such as payment processing for the entire global enterprise. Vodafone foresaw that shared service centers would optimize service quality, prevent drifting back to old, divergent methods, and save enormously on costs through economies of scale. They would also enable the firm to improve KPIs such as on-time payments. Shared service centers were never possible when all the operating companies had their own software and their own ways of conducting business. 21 Countries served by shared service centers 3 / 6

4 Centralization makes optimization possible Vodafone began its move to shared services by instituting the Vodafone Procurement Center (VPC) in Luxembourg and the Vodafone Shared Service Center in Budapest, Hungary. By giving them the charter, high-volume business transactions and other administrative tasks for the company s operating units were moved into the shared service center supported by Accenture and IBM, the implementation partners. Since the transformation also encompassed having commonalities of processes and procedures (except for tax, legal, and statutory mandates) in each finance function across operating units, it enabled the company not only to enjoy benefits from the centralization of activities, but it also boosted efficiency by optimizing on the synergies of the processes. In addition, over 37 billion in payments have been made through this system and control environments. For even higher productivity gains, the teams at VPC and the shared service center in Hungary optimized the standard processes to an extent that was never attempted when operations were conducted on a country-by-country basis. After several years of success using Hungarybased, centralized services, Vodafone took the next step by creating another shared service center in Pune, India. This move took advantage of India s 30% lower costs, use of the English language, and proximity to Asia-Pacific operations. Across the Hungary and India shared services, the highly talented specialists service 24 countries across Europe and the Asia-Pacific region. 7 billion Annual trading conducted by the VPC 4 / 6

5 Optimization delivers big rewards Recently Vodafone enlarged the shared service centers charter to include interaction centers, allowing employees from around the world as well as Vodafone suppliers to ask questions and obtain answers from the centers regarding finance, HR, or supply chain issues. Employees and suppliers can, for example, contact a finance interaction center to ask about any step in the purchase-to-pay cycle, general ledger computations, or taxes, and even to obtain technical support. Interaction centers are now the single point of access to the shared service centers. KEY BENEFITS 30% Fewer FTEs servicing Europe 5.5 days To reimburse travel expenses, versus 7-day target 90% On-time payments, spot on target 26% Fewer unique GL accounts, versus 20% target 54% Fewer queries year on year, versus 20% target 5 / 6

6 Vodafone The next step: optimizing the network s task mix As a framework for these services, Vodafone chose the interaction center functionality of the SAP Customer Relationship Management (SAP CRM) application. Thanks to SAP CRM, we moved away from the temptation of driving mess for less in shared services to doing more with the same and are on track to progressively deliver more with less a full 33% savings over two years and a further 10% year on year, says Bobby Abraham, global head of finance shared service centers and senior vice president of Vodafone shared services. Vodafone is continually finding ways to derive even more benefits from its shared service centers. One approach is to improve cost-effectiveness by shifting certain responsibilities between centers. For example, over the last few months the India center has started to serve countries where English may not be the primary language but is widely understood, such as the Netherlands, which was previously in the hands of the Hungary center. CMP22833 (14/07) 6 / 6

7 2014 SAP SE or an SAP affiliate company. All rights reserved. No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP SE or an SAP affiliate company. SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE (or an SAP affiliate company) in Germany and other countries. Please see for additional trademark information and notices. Some software products marketed by SAP SE and its distributors contain proprietary software components of other software vendors. National product specifications may vary. These materials are provided by SAP SE or an SAP affiliate company for informational purposes only, without representation or warranty of any kind, and SAP SE or its affiliated companies shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP SE or SAP affiliate company products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty. In particular, SAP SE or its affiliated companies have no obligation to pursue any course of business outlined in this document or any related presentation, or to develop or release any functionality mentioned therein. This document, or any related presentation, and SAP SE s or its affiliated companies strategy and possible future developments, products, and/or platform directions and functionality are all subject to change and may be changed by SAP SE or its affiliated companies at any time for any reason without notice. The information in this document is not a commitment, promise, or legal obligation to deliver any material, code, or functionality. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions.

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