Annual Shared Services and BPO Conference 2013 Shared services from feasibility through to implementation. Tibor Nagy & Jeppe Larsen

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1 Annual Shared Services and BPO Conference 2013 Shared services from feasibility through to implementation Tibor Nagy & Jeppe Larsen

2 Key considerations Will the corporate vision and goals be reached by implementing a shared services strategy? What functional activities can be transferred to a SSC? What would be the impacts on the current structure? Captive vs. Outsourcing? Standardisation first and then shared services? What is a realistic timetable to have the program implemented? What will be the implementation costs and ROI?

3 Themes to be considered Deloitte utilises a proven five-phase methodology with all critical work streams necessary to plan, design and implement shared services organisations and optimise the performance of existing SSC operations. Shared Services Detailed Design Implementation Assess Transition Optimise BPO Prepare Evaluate Confirm Contract Value Project management Change management Vendor management Tax Real Estate Management Organisation People Processes Information Technology Security and controls How will we create vision and strategy for the organisation? How will we manage the effort? How will we make change happen? How will we effectively engage and manage 3rd party vendors? How will we optimise the tax structure? Where will we locate the facilities and how do we optimise our portfolio? How must the structure of the organisation change? How do we minimise the negative impact on colleagues? How must processes change? What applications and IT infrastructure changes must be made? How will we ensure policy and procedures are followed?

4 Will the corporate vision and goals be reached by implementing a shared services strategy?

5 What functions/activities can be transferred to a SSC? High-volume High-value Financial Procurement HR Sales Other admin. Accounts payable Accounts receivable Travel and expense Fixed assets General ledger Financial controlling Reporting Cost accounting Treasury Tax Internal audit Budgeting Transactional procurement Order tracking E-catalogue Compliance management Contract management Material specification Inventory management Category management Payroll Benefits Employee records Pension admin. HR Master data Training design and delivery Recruiting Relocation Customer service Call centre Order management Complaint management Nielsen analytics Sales force efficiency Competitor monitoring Social media analytics Claims admin. Document services Legal Corporate affairs Security Facilities Information systems Telecommunication s PC/desktop support Help desks Data centre Application development Infrastructure development and maintenance

6 Functional Shared Services vs Global Business Services (GBS)? Most common situation Global business services Business 1 Business n Business 1 Business n Region 1 Region n Region 1 Region n Region 1 Region n Region 1 Region n Global Business Services HR SSC F&A OS F&A O/S F&A SSC HR OS F&A O/S HR OS F&A OS Outsourcing relationships Shared Services Centres

7 What would be the impacts on the current structure? Degree of functional integration Little sharing Sharing of tools and processes Sharing of locations Full integration Governance Governance by/in function Single over-arching governance with one GBS lead, often C-level Leadership Functional leaders per location Global leadership across functions Process ownership Informal process networks End-to-end global process owners Continuous improvement CI specific to function/bu Enterprise-wide CI with common budget and tools Service management Different models per function/bu Consistent service management framework Customer interaction Myriad of customer interaction tools Universal customer interface supported by standard toolset People development Specific to centre and/or function GBS competency model and training curriculum Culture Different culture at each centre Strong GBS culture and brand Systems and master data Multiple systems and decentralised master data One integrated platform, centralised master data management Location Many sites not integrated Integrated global footprint best placed for labour, cost and expertise Sourcing In-house and outsourcing, not aligned Managed Services blending captive and outsourcing solutions

8 The culture aspect and why it is difficult to get right? Company Shared culture Location SSC

9 Outsourcing vs Shared Services Pro Supplier maturity Access to best practice Focus on core competence Economies of scale Competition for talent Con Flexibility Management of risk Breadth of services Managing attrition Competitive advantage

10 Captive vs Outsourcing The reality: More and more organisations are adopting hybrid models using both options Model Description Rationale Example Segmentation Usage of both in-house as well as outsourced models each in a clearly defined area Desire to hold complex or high-end or sensitive activities in-house Sometimes, inability to get business buyin to outsource Axa Prudential BP Commonly, IT is outsourced Competition Usage of both in-house as well as outsourced models in overlapping areas Create competitive tension to improve performance Reducing risk Cater to variable demand American Express Dell Management In-house entity manages relationship with outsourcers Leverage local knowledge and local presence to best manage outsourcers Ameriprise Financial

11 Standardisation first and then shared services? Goal Now

12 What is a realistic timetable to have the program implemented? Step 1 (6-8 weeks) Opportunity assessment Vision and business drivers Design principles Functional scope Degree of GBS integration Sourcing strategy High level benefit case * Per unit/cluster Step 2 (10-12 weeks) Strategy (feasibility) Determine baseline Agree local/central process split Governance and leadership model Location determination Organisational structure Prepare high level road map Business case Step 3 (2-3 month) Design Organisational design Governance framework Process definition and documentation Design enabling technologies Site selection and fit out Change & communication Implementation planning Step 4 (2-3 month) Build Implementation Detailed process and activity design Process documentation Training programme and material Implement people plans Enabling technology implementation Testing and cut-over planning Step 5 (2-3 month)* Transition Solutions go-live Knowledge transfer Manage transition and relationships Post go-live stabilisation Step 6 Optimisation Re-engineering opportunities Continuous improvement

13 What will be the implementation costs and ROI? One time and annual costs Annual savings Experience tells us: Labour arbitrage is the key driver Do not include more then 5% efficiency YoY when implemented Multiple functions adds complexity but drives additional benefit Experience tells us: Payback time of years Single biggest cost is the organisational transformation

14 Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited ( DTTL ), a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of DTTL and its member firms. Deloitte LLP is the United Kingdom member firm of DTTL. This publication has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances. Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication Deloitte LLP. All rights reserved. Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC and its registered office at 2 New Street Square, London EC4A 3BZ, United Kingdom. Tel: +44 (0) Fax: +44 (0) Annual Shared Services & BPO Conference Deloitte LLP. All rights reserved

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