Shared Services Defined
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1 Shared Services 101
2 Shared Services Defined The objective of Shared Services is to optimize the delivery of costeffective, flexible, quality services to all clients. Combines the Best of Both Models: Scale & Efficiency Centralized Model Shared Services Model Distributed Model Standardization eliminates redundancy Consolidation into service centers leverages economies of scale Retained organization redesign satisfies local or unique requirements Service Level Agreements (SLAs) drive shared responsibility for results Focused on client service and cost management Service / Responsiveness 2
3 Where does the value come from? Economies of Scale Consolidated functions and processes eliminate redundancies and minimize the cost of transaction processing activities Shared Services Value Economies of Skill Standardization Centers of excellence allow for the development of specialized skills which can be leveraged across the organization Standardized practices and compatible data: provide a common language to diverse operating units, facilitate analytical decisionmaking Flexibility Flexible infrastructure that acts as a services utility to supply customers on demand and allow operating departments to plug into the infrastructure when reorganizing 3
4 Shared Services Core Capabilities Definition: Shared Services is a model in which a stand alone organization performs both customer facing and/or back office services on behalf of its customers, which may include employees, agencies, vendors, citizens, and students. 1. Service 7. Processes 6. Enabling Technologies & Infrastructure Strategy and Vision 2. Governance Model 3. Customer Relationship 5. Process Standardization 4. Performance
5 Service & Culture Customer involvement and shared responsibility Governance model with involvement of the customer from strategic level to day-to-day operational level Two way SLA s including expectations on the customer Dedicated process development teams involving representatives from the customer Professionalism and transparency Professional arms length relationship with SLAs Transparent pricing Service and performance reporting Clear scope of activities Clarity for the users Single point of contact within Shared Services through web, mail and phone. It s clear how to contact the SSC and issues will be tracked Processes well defined end-toend with clear understanding of who s doing what activities and when Service culture and true partner to the business Shared Services vision and strategy coordinated with the group strategy Inclusive governance model End-to-end focus to avoid suboptimization Deliberate service culture built into the performance management framework 5
6 How does Shared Services deliver value differently from Centralization? RANGE OF BENEFITS New Location Wage and real estate arbitrage Consolidation Re-organization and de-layering CENTRALIZATION NOTE: Benefit ranges are illustrative. Transition from Centralization to Full Value of Shared Services Many organizations stop here leaving value behind and decreasing the likelihood of sustainability and scalability Re-engineering Simplified, standardized system/process Enabling Technologies Case Mgmt., Doc. Mgmt., Self-Service Continuous Improvement Service Mgmt. Clear 2-way SLAs agreed by clients Exceptions Increase Increasing cycle times, shadow organizations drive up cost Lack of Clarity Unclear ownership, costs, responsibilities Governance Model Independent, linked to customers Poor Customer Service Multiple points of contact, delayed responses Performance Mgmt. Self-directed workteams, scorecards Customer Relationship Mgmt. Metrics-driven case management Frustrated Workforce Back-office mentality, tenure wages SHARED SERVICES
7 What are the typical benefits from Shared Services? Financial Benefits Labor related savings from economies of scale Non-labor Savings (e.g., procurement spend, real estate) Reduce Risk/ Improve Compliance Clear accountability (e.g., service level agreements) Simplified audits (e.g., through enabling technology) Increased control & visibility (e.g., standard reporting) Benefits Customer (Agency, Department, Vendor, or Citizen) Benefits Faster transaction response time (e.g., shorter cycle-times) Responsiveness (e.g., calls/ tracked & answered) Fewer errors (e.g., standard processes) Employee Benefits Better career options (e.g., in new org and in the State) More autonomy (e.g., less supervisors per employee) High-performance culture (i.e., metrics driven) 7
8 What can be Shared? 1. Remote Can the process be completed without inperson contact or by providing remote access to the data/information? 2. Repeatable & Rules-based Can a standardized, rules-based policy framework be implemented to handle the transaction? 3. High Volume Is there sufficient volume that would drive economies of scale?
9 What is the typical scope of Shared Services activities? Procure to Pay Record to Report Revenue Hire to Retire Technology Services Customer Care Sourcing Strategy Accounting Policy, Control & Audit Revenue Planning HR Strategic Planning IT Strategic Planning Inquiry Manage Supplier Relationships Procurement Function Perform Requisition & Process PO Accounts Payable Travel & Expense Compliance Document Planning, Resource Alloc. & Forecasting Finance Function Perform Reporting Cost Accounting Fixed Asset Accounting Intercompany Accounting Record Transactions Reconcile Accounts Close Books & Consolidate Document Revenue Function Cash Credit & Collections Cash Application Manage Sales Orders & Invoice Customer Legend Treasury Tax Accounts Receivable Document Performance Compensation Administration Employee Services Learning Administration Staffing Benefits & Pension Administration Time Administration Payroll Administration Employee Data Document Business Leadership & Governance Emerging Tech. Research IT Function Program End User Support Mainframe Operations Server Operations Application Maint./ Development Technical Support Supply Chain SCM Function Inventory Warehousing & Distribution Transportation management Other Real Estate & Facilities High potential for shared services Legal High potential for retained organization Communications 9
10 Shared Services Operating Model The Operating Model for true Shared Services emphasizes common, rigorous service delivery management and process excellence. 10
11 What are the major steps? Planning 6--9 Months Implementation 9+ Months Weeks Go / No-Go 3-6 Months Months Wide Range Assess Design Build Deploy Define the Shared Services Vision and Strategic Objectives Perform Data Collection and Benchmarking Develop the Operating Model Develop the Implementation Plan Develop the Business Case Design the Business Processes Design the Organization Design the Enabling Technology Select Location and Real Estate Develop Hiring Plan and Recruit SS Leaders Develop Communication Plan Plan Workforce Transition Develop Training Plan and Development Program Design Facilities Design Service Mgmt Framework Develop Shared Services Mgmt Processes Build Performance Support and Training Materials Build-out Facility Recruit Shared Services Personnel Draft Service Level Agreements Develop Key Performance Indicators Develop / Deliver Build Communications Build the Organization Conduct Deployment Planning Execute Deployment Plan Confirm Service Level Agreements Conduct Training and Work Shadowing Develop / Deliver Deployment Communications Test Shared Services Center Readiness Execute Workforce Transition Plan
12 Shared Services Implementation Approach Vendor Master Functional Capabilities Accounts Payable Travel & Expense Enabling Capabilities Contact Center Document Project Workstreams* Process Technology People Program Program Organization Metrics Infrastructure (Facilities) Change *Note: The seven workstreams above are not intended to be interpreted as a project organization chart. Project leadership must select the team composition appropriate for the implementation.
13 Assessing the Change Key Questions The first phase of the journey, the assessment must focus on answering a few key questions Strategic Intent and Vision Scope of Shared Services Fit with Other Change Initiatives Shared Services Operating Model Change Strategy Implementation Strategy Business Case 1. Strategic Intent and Vision: What is the strategic intent of establishing shared services cost reduction or more? Why change? 2. Scope of Shared Services: What is the appropriate scope of Shared Services? Which processes / sub-processes / activities? 3. Fit with Other Change Initiatives: Where do overlaps exist? How will the initiatives be aligned? Will plans for current initiatives need to change? 4. Shared Services Operating Model: What process, technology, and organization changes are required? How will services be sourced? 5. Change Strategy: What should be communicated? How to engage - when and to whom? How will the organization adopt new ways of working? 6. Implementation Strategy: What initiatives are required? How should the initiatives be sequenced? How is the program organized for success? 7. Business Case: What are the service and economic benefits? What level of investment will be required? What risks must be managed? 13
14 Questions? 14
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