Posted by: susiewest on: November 5, 2009
Globally there is a shift in shared services. And the recession has only oiled this movement. Shared services ten years ago was mostly, if not exclusively, about transaction processing. In the past 5 years there has been a development which means shared services organisations are keen take on finance activities which are more strategic, yet do not require to be too close to the business.
A few examples are where shared services organisations are managing budgets, and profit and loss accounts, and are involved in the pricing of products. Rather than just being about data input, shared services is now much more about providing information (of course based on the data that they input), and providing advice to the rest of the business to aid their decision making.
In addition to this there is also a growing expectation for shared services to impact the top line and I know of a number which are doing this through cash realisation. By changing payment terms and optimising capital, and shortening DSO and extending DPO, working capital inflates and the interest added as a result can certainly be well into the milions.
Look out for my next blog post for Trend No. 7.
Posted by: susiewest on: November 4, 2009
October is a busy time for conferences – first there was the exceptional Deloitte Shared Services Conference in Prague. Every year Deloitte host an excellent event for 400 or so practitioners. Then there was the Hackett conference in London, and finally there was sharedserviceslink.com’s SAP conference for shared services operations running off SAP. I am thankful to say that the key messages that chimed through all three events were very much aligned.
Over the next few weeks I will be blogging about the 8 key shared services trends, starting tomorrow, with Trend No.8 – The Recession has Been Good for Shared Services. Check out the series and let me know if you agree or disagree at susie.west@sharedservicelink.com
Posted by: susiewest on: October 9, 2009
Next week in Prague Deloitte Consulting is hosting their huge annual shared services conference. I remember going to one of the early ones in 2004 when I worked for an e-invoicing company. The scale of the event has mushroomed over the past few years, and the conference this coming week will probably cater for over 500 shared services people from across Europe.
I don’t know any other shared services event that has this scale. I sometimes think I know all the ‘players’ in this small market, but the Deloitte conference always reminds me that this is a dangerous, and inaccurate belief! Along with hosting a really strong conference, and providing entertainment and dinner throughout, usually involving cheeky magicians or half naked beauties (men and women of course) on strong black horses, Deloitte’s has also mastered the Shared Services Hand Book/Annual Report. If you haven’t seen this then click here for the report insights. The report itself is one of the most comprehensive reports I have read this year on shared services practises and trends. So many shared services reports can veer on dry, but this one has life in it, is excellently written and covers all the areas you want answers to.
That Deloitte’s publish this annual report and host this event each year offering free access to all attendees, shows their absolute commitment to shared services as a steadfast, anchored part of their consulting offering. If you didn’t know about the event this year be sure to look them up in 2010 – you have 12 months to prepare yourself for their eye-opening, gulp-inducing evening entertainment display.
Posted by: sharedserviceslink on: October 2, 2009
Last week we had a really good webinar sponsored by Basware. Lloydspharmacy, the UK’s 13th largest retailer, implemented invoice automation to reduce the cost of its accounts payable function, create greater efficiencies and speed up payment to its suppliers – successfully transforming finance from a cost centre to a business-value generator.
In this webinar Lloydspharmacy talked about the way automation has streamlined their processes so far and how their attention is now focussed on the next stage; to quickly increase the number of e-invoices they receive.
Download the presentation or play the webinar for free here.
Posted by: susiewest on: September 29, 2009
One chief KPI in purhcase to pay and shared services, as we all know, is the number of invoices processed per FTE per annum. In 2008 The Hackett Group shared with the world, that the top performing shared services orgnisations were processing 35,000 invoices per FTE per annum. Seeing that the average productivity was just under 12,000 per FTE in 2008, this 35,000 didn’t seem all that bad.
However, we ran a webinar with Lloydspharmacy last week and their rate is a staggering 129,000 per FTE. They put this down to the fact that they use the Basware solution, and have just started rolling out their e-invoicing service (around 80,000 are now pure electronic). When their e-invoicing project is fully rolled out the 129,000 will increase to 166,000 per FTE. Impressed?
Technology delivers amazing results. I have just been updated on another programme this morning where £400,000 savings were bagged in the first year, and productivity, because of the solution, rocketed from 10,000 per FTE pa to 70,000. Not only this but the invoice processing time dropped by 75%, helping the client clear the invoice back log.
In December we are running the AP Automation Summit in Paris. So join us on the 9th and 10th to find out how technology can take your shared services operation into a different league.
Posted by: susiewest on: September 22, 2009
In the past 18 months, the world economy has fallen and lifted. This has arguably been a ‘good thing’ for shared services. Especially Accounts Payable.
1/ The significant emphasis on cost control during this period, in order to protect margins, has made shared services an even more valuable corporate asset today than it was during our stronger times. Shared services is now seen in a new light, where appreciation has a place, and internal customers and stakeholders regard shared services as a ‘survival enabler’ rather than a ‘pain’.
2/ The Accounts Payable function is relied on much more to provide the information which will drive business decisions. Not to provide data. There’s pressure on Accounts Payable to provide the full liabilities landscape in an accurate and timely manner.
3/ A symptom of this is that Shared Services Directors now have the attention to push through required organisational change, which, in the past, may have been blocked. Where there was serious resistance, there is ample help in pushing down the road blocks.
4/ According to a recent paper by Deloitte within “many organizations, opportunities are likely to abound for turning today’s increased appetite for change into lasting improvements.” This means change. All these pointers lend themselves to a massive opportunity for Accounts Payable – which is to implement the much needed change, either through change behaviour programmes or through the adoption of technology.
But there’s a risk – now that there’s a window to adopt AP automation technology, which is much needed, there is a little bit of pressure on ensuring that the ‘mix’ of technology supports your aims.
We have just spent the last couple of months compiling the AP Automation Summit in Paris for the 9th to the 11th December. Depending on what your PO rate, your supplier curve, your volumes, your countries and your relationship with Procurement look like, your choice or ‘AP mix’ may look totally different to the next man’s. Find out more by clicking here
Posted by: susiewest on: September 16, 2009
Yesterday I was talking to the Global Accounts Payable Owner of one of the world’s larget companies. They process 5 million invoices annually and each one costs $9 to process. Doesn’t it hurt when you realise it’s costing the company $45 million each year to pay suppliers? Ouch! You can buy sizeable companies for that. Add on top of that the $400 million annual savings which they could get from early payment discounting, (but in fact they are only taking $5 million of this), and you begin to realise that dramatic change needs to happen.
One reason why productivity is low, cost per transaction is high, and payment discount deadlines cannot be met is because invoices bounce, and when they do bounce, they hit the business units who, in this case, ’sit on them’. This is by no means an uncommon story. So how do you change this behaviour and force change so the shared services metrics can climb, and hard savings can fatten the bottomline?
I talked to him about pricing. Do you charge your customers? The answer was yes (you would be surprised how many shared services don’t charge…). OK – and how do you charge? Is it a flat fee or is it per activity? The answer was ‘flat fee’.
One way a company I did a lot of work with in 2005 and 2006 changed PO compliance was that they charged the business units $90 for a ‘bad’ invoice and $9 for a ‘good’ invoice. As the months passed and it came to quarterly reviews between the shared services centre and the business units, the MDs would angrily confront the Shared Services Director wanting to know why their fees had rocketed. ‘Well, remember we changed the model to activity and quality based? Well – your unit is only 22% PO compliant, so 78% of transactions we process on your behalf are charged at €90.’
All of a sudden the accounts payable problem becomes their problem. You can imagine how quickly PO compliancy climbed.
The company I was speaking to yesterday welcomed this advice. It’s a ballsy Shared Services Director who implements such an approach, but, let’s face it – Shared Services Directors are made of tough stuff, and never signed up to the shared services job to make friends. The important thing is that this approach drives change very effectively, and if the business doesn’t like such an idea, you really have to ask yourself, and them, why not.
Posted by: susiewest on: September 8, 2009
You may have heard the recent news that Kofax has just bought 170 Systems. For any shared services organisation or purchase to pay operation looking to sign a deal with an AP automation suite over the next 12 months, this will serve as interesting information. 170, a US registered company, always appeared to have a real strength in the Oracle market, working with customers like Eaton, and Readers Digest. Their line level matching technology, and workflow capabilities which were on the market 5 or so years ago meant they could offer functionality which other Accounts Payable automation technology providers struggled to keep up with. But customers had to pay the price for the extra pleasure, and commercially 170 was always seen to be positioned at the higher end of the investment
Thought No. 1
I have often thought that there are too many players in this market, and although the purchase to pay market is huge, technology providers are wise to invest their efforts on selling to a only slice of that market – the slice where the volume justifies the investment, ideally where invoices are processed centrally, and where more invoices match first time than not. This slice is too small for the number of vendors support it. So it is not surprising that acquisitions are taking place.
Thought No. 2
It seems like an excellent opportunity for Kofax. They will now have a workfow engine which is technically rich, which they can button on to their own well established data-capture technology, enabling them to offer a much more wholistic solution to increasingly demanding customers. This will put them in a new legue, functionally, opening up deals to them which were previously hard to win in a direct capacity. Which leads on to my third thought…
Thought No. 3
Prior to this acquisition, Kofax could only afford to win certain deals requiring a suite of technology, if they were packaged up with other software providers. If they sold direct, they may have experienced a gap between what they could offer, and what the customer was asking for. So often, shared services organisations want the whole gambit – data capture, auto matching and workflow. Now they have it, potentially a very elegant, wholistic solution which ticks the boxes of process requirements listed in endless RFPs. This acquistions places Kofax neatly to sell direct.
Thought No. 4
So all of this sounds great for Kofax. It is indeed an exciting development. And the price for the sale? A very reasonable $32.9 million. For anyone looking to install data capture and workflow in 2010, surely this must be a serious contender to consider.
Posted by: susiewest on: September 4, 2009
There is a block of cloud the size of North America passing over the United Kingdom. It has been doing so for months, and as we near the Equinox, the promise of our Indian Summer seems increasingly incredulous. Which is one reason why I’m so pleased I spent 2 weeks in August in Italy under something I hadn’t seen for a while – the sun. I was staying with friends and as we all have careers in the F&A shared services ‘space’, you can imagine that much time was given to the ‘state of purchase to pay’ debate. Endless conversations, over glasses of Chianti and Limoncello, pointed to the growth opportunity that exists in this market for outsourcers and technology providers, but also the frustration with the speed of that growth. However, I sense a change…
In the past month I’ve met with MDs of a number of companies selling solutions to Finance Shared Services, and there is a sense that the purchase to pay train is beginning to pick up speed. Although it is not out of the question for a service provider to do one deal a month per region (which might not sound like a lot), there are claims that growth is indeed being seen. This growth, however, is certainly not in the 25-50% (we are still in a recession afterall). However, the confidence for 2010 is very clear. And maybe it’s becuase a new kind of technology is being talked about, a kind of solution which may just serve as a shot in the arm for this market. What about the concept of Workflow as a SaaS? Forget the install and the config, instead you can plug and play within a heartbeat. Sounds tempting? Sounds relatively inexpensive, surely? I can say no more than this: there are a number of providers ‘out there’ who have this exciting technology at some level of development – some ready to launch. So watch this space. Maybe ‘purchase to pay cocaine’ is a little strong… but this might just prove to be the sugar rush which this market needs.
