Posted by: susiewest on: November 26, 2009
A statistic was shared with me the other day by The Hackett Group which I found both surprising and refreshing. In one of their recent surveys, when asked, 50% of respondents said that they now had multi-functional shared services versus 25%in 2003. Quite a jump in the last 5 years.
The arguments for this shift significantly out weighs those against. Firstly the treatment of transactional finance can, and should, be applied to the transactional part of any function in the business, so long as it does not negatively effect the overall corporate objective of increasing revenue/profit/market share.
Within HR, Procurement, IT, Legal and even Marketing, there are activities which do not require face-time, and can be readily automated, off shored, standardised, centralised, and consolidated on a single system without it being detrimental to the business. Within all these areas, companies are beginning to ‘chop up’ the activities into ‘this bit needs to be local and requires local knowledge/meetings with the business’ and ‘this bit can be shared serviced/offshored/automated’.
Secondly we are seeing the increase in Global Business Services, not just Global Finance Services. This means that the person who championed improvements in F&A can now roll best practice out into the other functions, and ensure that there is no time wasted ‘re-inventing the wheel’. The template used for Finance can now be utilised elsewhere.
Thirdly with ERPs now elegantly accommodating Finance, HR and Procurement, and with shared services projects and ERP implementations almost being treated as a single initiaitive, more and more companies are realising that economies of scale can be realised if a) the shared services scope widens to cross function and b) the ERP suite is maximised to support a cross functional shared services strategy.
If you would like to find out more about this, Mark Burrows, Vice President Global Shared Services of Juniper Networks will be talking about getting multi-functional shared services right at ‘Attaining F&A Shared Services Process Excellence’ taking place from the 9th to the 12th March 2010 in London.
Posted by: susiewest on: November 17, 2009
Which ever way you look at shared services, the common opinion will be that an expansion is occuring. If shared services in your organisation historically touched a 10th of the activities or people, or countries, or businesses, prepare for this model to morph into a greater, but encapsulating structure, which will not only climb its ladder to take on the more value adding activities talked about in Trend 8, but it will stretch out its web to scoop up more people, businesses, countries and functions.
What do I mean by this? Well, as you know shared services may have had the country platform in your business, or possible the regional. Yet, if the European operation looked at the American, a difference in operations and methods, objectives and styles may quickly be appreciarted. Perhaps both report into their own regional CFO, and both run off different systems and work with different service providers. Occassionally they may share ‘best practie’, but this is more by accident than design. An outsider looking in would be oblivious, perhaps, to the notion that these 2 regional SSOs are actually under the umbrella of a single company.
What we are seeing now is a shift to Global Business Services, or Global Finance Services. This is where, globally, there are common processes, policies, documents, procedures, aims, objectives, and practicies, and they all funnel upwards, reporting to a single C-level individual. The ramifications of such a model are huge. Shared services organisations do deals with service providers regularly throughout the year. If you now have your global operations in scope, your purchasing postition with the provider strengthens significantly and your ROI will be realised quicker. If this is a deal with a Brainware, Basware or OB10, or a mega deal with an SAP or Oracle, the savings created by bulk buying are significant.
In addition to this, the power of one will enable change to happen at a pace which is desirable. One of the biggest enemies of shared services is resistance, often from local finance. Once EMEA, APAC and The Americas have become a single model, the gravitas of shared services adopts a more credible, permanent, respectable weight, and as a result combative local finance consider being a partner to this giant rather than a sabateur.
We are also seeing that Global Business Services are extending outside the Finance Function and into HR, Legal, Procurement, IT and Real Estate/Facilities. The best practices gleaned over the past 10 or so years are now being considered for similar activities outside finance. This will be the subject of my next blog!
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 – Shared Services are Moving Up the Value Chain. 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.
