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Transcript of Business Services Transformation Creating your own Shared Services Center 7 th...
Business Services Transformation
Creating your own Shared Services Center
7th Controllers’/Accountants’ SummitAssociation of CPAs in Commerce & Industry14 July 2015
www.pwc.com/ph/consulting
Business Services Transformation2PwC
PwC’s 18th Annual Global CEO Survey:Cost reduction is top of CEOs’ agenda
July 2015
Complete a domestic M&A
Complete a x-border M&A
Sell majority interest in a business or exit a significant market
Outsource a business process or function
Insource a previously outsourced business process or function
Implement a cost reduction initiative
Enter into a new strategic alliance or joint venture
End a new strategic alliance or joint venture
PwC
PwC’s Finance Benchmark Survey Findings:What sets top performers apart?
Cost-efficiency
Faster turnaround
Leaner operations
Sharper insight
3July 2015Business Services Transformation
4PwC
PwC’s Finance Benchmark Survey Findings: Priorities for making Finance more effective
Finance professionals recognise that the nexus of improved
technology, communication, and
collaboration is critical if they are all
going to be more effective in carrying out their functions
Business Services Transformation5PwC
Setting the context
Shared
• No business unit control of central overhead
• Inflexible to business unit needs
• Remote from business
• Unresponsive
• Higher costs
• Different control environments
• Duplication of effort
• Variable standards
• Independent of business
• Synergies
• Lean, flat organization
• Dissemination of
best practices
• Business unit maintains control of decisions
• Responsive to client needs
• Economies of scale
• Consistent standards & controls
• Common systems & support
Shared
Centralized
SSO’s combine the benefits of centralized and decentralized operations
July 2015
Decentralized
Business Services Transformation6PwC
Key statistics
of Fortune 500 companies have implemented a SSO58%is the average cost savings achieved due to SSO40%is the average improvement in productivity per year34%
SSO is no longer a strategy – it is a Best Practice
July 2015
Business Services Transformation7PwC
Objective of this presentation
Introducing Business Services Transformation / Shared Services Organisation (BST / SSO)
Purpose
BST / SSO helps to:
> reduce costs
> increase business efficiency
> enhance control and transparency
Why is it important to you
July 2015
Business Services Transformation8PwC
Agenda
1.BST / SSOs – an introduction
2.Case Studies – what are others doing
3.New trends based on our latest survey
4.Making it happen
July 2015
Business Services Transformation10PwC
What is Business Services Transformation (BST) ?
A strategic approach to manage Business Support functions (Finance & Accounting, IT, HR, Procurement etc.)
1
Ability to improve service quality, transparency, control, drive compliance3
Freeing up time of business executives and cash of business to make better decisions4
Generate cost reduction (typically 20-50%)2
July 2015
11PwC
Common drivers for Business Services Transformation
• Drive value: provide business with real insight to make better business decisions
• Manage cost: take control of costs without sacrificing long-term success
• Flexibility: provide a scalable, standardized platform for future growth
• Organise and operate: build and run an efficient and effective organisation
• Manage talent: build capability, optimise resources and develop talent
• Manage controls, risk and regulation: create a robust, cost effective system of control and risk management in response to regulation
Business Services Transformation12PwC
A broad range of services can be provided through an SSCNon-transactional processes are gaining importanceServices delivered by SSCs surveyed by PwC
Source: PwC - Shared Services: the Edge Over (2014)
Accts
paya
ble
Fixed a
ssets
Genera
l ledg
er
Accts
receiv
able
Interc
ompa
ny
Travel
expe
nses
Cash m
gt
Credit &
collec
tion
Externa
l repo
rting
Mgt rep
orting
Payrol
lTax
es
Cost a
cctg IT
Procure
ment
Treasu
ryFP&A
Custom
er se
rvice
s
Contro
lling
Facility
man
agem
ent
Regula
tion (
legal)
Other
0%
20%
40%
60%
80%
100%92% 90%
87% 85%78% 76%
52% 50% 49% 48%45%
42%
34%31% 29% 27%
20% 20%17%
7% 6%
20%
July 2015
13PwC
Shared services is part of an overall transformation of the Corporate Center
Shareholders/ investors
Business Units
Adapted from Goold, Campell, Alexander. Corporate Level Strategy
Core
Addedvalue
Shared services
Non-discretionary activities• Legal compliance• Tax and statutory financial reporting• Activities in support of shareholder/stakeholder
requirements
Discretionary activities that add value
• Leverage competencies• Guide major business unit decisions• Provide functional leadership• Co-ordinate organizational matrix (e.g.
geographies)Non-core activities which lie in the center because of economies of scale and scope• Accounting and Finance, IT, HR
transaction processing and service provision
• Legal, Corporate Communications• Marketing Services, Contact
Centre, Surveillance
Corporate Center Activities
Business Services Transformation15PwC
Examples of different SSO modelsOrganizational Unit Centre of Excellence
Regional Global
Country
Duplicate Shared Service Centers by organization for each region
Process Approach – each process delivered from best-in-class
SSO’s are located by country processing data for each org. unit
SSO processes all BUs across a geographical region
A single SSO processes all BUs across all locations
Choosing the right model is critical for delivering business benefits
July 2015
Business Services Transformation17PwC
Global Medical Devices Company
APAC Multi-function SSO
Geographic Footprint
1* Corporate HQ: USA
6 geographies:•Latin America•North America•Europe•Asia Pacific•Middle East•Africa
Business layers &HQ
Europe SSO : implemented
APAC –SEA : implemented
Rest of APAC: being transitioned
North America & Latin America SSO: being implemented
•Europe SSO:100+ staff•North America SSO: 300+ staff•Latin America SSO : 50+staff•Asia Pacific SSO in Singapore: 175+ staff•Satellite HR SSO in China
Implementation statusSSO 5SSO and/or
BPONo. of centres
Business Over view
•Revenue > USD 7 billion•Presence in more than 50 countries•Approx 29,000 employees
Core Finance Systems
•SAP R3, SAP, APO, SAP BW•Hyperion•Iscala•MDM, C2C & other HR
systems
America
South America
China
Europe
Singapore
Finance •GL closing •Intercompany accounting •Accounts payable•Travel & Expenses•Fixed assets
HR•Maintain HRIS •Expat management•Offer management•Learning & development •Policies & procedures•Benefits admin •Share Scheme admin•Recruitment admin•Management Reporting
Customer Service: •Customer Master Data•Order processing•Pricing validations•Service/Contract billings
July 2015
Business Services Transformation18PwC
1* Corporate HQ:Switzerland
6 geographies:•Latin America•North America•Europe•Asia Pacific•Middle East•Africa
Global Electronics Manufacturing Company
Order to Cash•Order entry – Customer
billing•Accounts Receivable /
Cash Applications•Credit & collections
Purchase to Pay•Order processing•Accounts payable•Travel & expenses
account
General Ledger and Close•Fixed Asset accounting•Inter-company
accounting •Tax Accounting•Closing / Financial
reporting
Payroll•Master data & Payroll file
opreparation•Payment
Treasury back office
China Finance SSO Geographic Footprint Business layers &HQ
3 SSO’s operational
Currently conducting a dlocation assessment to ddetermine the location for danother Asia FSSO
Business Over view
•Revenue > USD 12 billion•Presence in more than 50
dcountries•Approx 96,500 employees
Core Finance System
•SAP
•China based Finance SSO •India based SSO •Europe based SSO•New location for rest of Asia being assessed
Implementation status
SSO 3SSO and/or BPO
No. of centres
Switzerland
India
China
July 2015
Business Services Transformation19PwC
Global Manufacturing Company
Order to Cash•Order entry – Customer
billing•Accounts Receivable /
Cash Applications•Credit & collections
Purchase to Pay•Order processing•Accounts payable•Travel & expenses
account
General Ledger and Close•Fixed Asset accounting• Inter-company
accounting •Tax Accounting•Closing / Financial
reporting / Preparation of Yellow
Book
Payroll•Master data & Payroll file
preparation•Payment
Finance SSO Geographic Footprint
1*Corporate HQ: dGermany
5 Geographies: •Africa•Americas•Asia•Europe•Oceania
Business layers &HQ
SSO: being implemented
Business Over view
•Revenue > EUR 1.5 billion•Presence in more than 180countries•Approx 8,000 employees
Core Finance Systems
•SAP
Implementation status
SSO 2SSO and/or BPO No. of centres
Singapore
Germany
•Asia Pacific SSO in Singapore•Europe SSO in Germany
July 2015
Business Services Transformation21PwC
Implementation strategy for BST / SSO
Lift, Shift & Transform is the preferred option
for process migrations
July 2015
Business Services Transformation22PwC
A shared service delivery model for Finance
Change Manageme
nt
Technology & Information Infrastructur
e
Organization & People
Transactional Process
Efficiencies
Finance Transformation
Plan
Order to Cash
Data Architecture
Organization Structure, Roles & Responsibilities, Performance Measurement, Career Development & Training
Finance Capability Development & Training
Procure to PayRecord to
ReportOperational tax
Eliminate, Simplify, Standardize, Automate:
Change Leadership
Existing ERP System
Existing Application
Platform
New Enabling Technology
July 2015
Business Services Transformation23PwC
Greatest challenges while setting up BST / SSO
Different platforms, non-standardised processes and Change Management
are key challenges July 2015
Business Services Transformation24PwC
Continuous improvement initiatives
Most BST / SSOs are not adopting Six Sigma or TQM – they prefer “normal” Business Process Re-engineering initiatives (e.g. Lean)
July 2015
Business Services Transformation25PwC
Productivity improvement because of BST / SSO implementation
The general feedback was that SSOs need to be optimised further
July 2015
Business Services Transformation26PwC
Extent to which processes are standardised in BST/ SSO
Process standardization is a big benefit => results in Operational Efficiency
July 2015
Business Services Transformation27PwC
Benefits in relation to cost, quality and time
The business benefits of BST / SSO are clear !!!
July 2015
Business Services Transformation28PwC
Realised cost savings because of BST / SSO
Payback period is < 2 years
July 2015
Business Services Transformation30PwC
BST / SSO implementation – Key considerations
Strategy
SSO model
Key Considerations
Business case
Location
Functions and
Processes
• Cost vs. benefit analysis
• ROI / IRR / Payback
• Other business benefits
• Alignment to strategy
• Quality & Productivity of labour
• Tax considerations
• Infrastructure & accessibility
• Single tower or multi tower
• Nature, maturity and complexity of processes
• Business drivers
• Organic / In-organic growth plans
• Foray into new markets
• Local vs. Regional vs. Global
• CoE ?
July 2015
Business Services Transformation32PwC
A structured approach is required
Feasibility
Top-Down Analysis
AssessDesign and Construct
Implement
Impact AnalysisTransition/Change
Management
• Location assessment
• Fit/Ready assessment of processes
• Business case
• Implementation roadmap
• High level To-Be design
• Roll-out design
• Assess As-Is
• Design detailed To-Be landscape
• Identify gaps
• Mitigate risks
• Localize design
• Develop & conduct training
• Design SSO SOPs
• Integrate technology
• Post implementation support
Bottom-Up Analysis
Reassess• Align business case
Support• Project management – Communication & Project Tracking
• Process documentation – Documentation of As-is and To-Be processes
• Stakeholder management – Management of stakeholder expectations and concerns
• Update road map
July 2015
Business Services Transformation33PwC
Up front analysis must be robustFeasibility – Fit/Ready Assessment Methodology
Fitness Evaluation Summary
Readiness Evaluation Criteria
July 2015
Business Services Transformation34PwC
The seven essentials for success
1. Know your problem
2. Sell the change
3. Stand behind your benefits case with absolute confidence
4. Balance clear vision with detailed design
5. Start early, move fast
6. Understand the up front costs
7. Remember the retained functions change, tooSource: PwC - Transforming business services:
the seven essentials for success (2013)
July 2015
Thank you!
This presentation has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers Consulting (Philippines) Inc., its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
© 2015 PricewaterhouseCoopers Consulting (Philippines) Inc. All rights reserved. “PricewaterhouseCoopers” and "PwC" refer to PricewaterhouseCoopers Consulting (Philippines) Inc. or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate legal entity.
Benjamin Azada
Principal, Consulting
+63 2 459 3011
Gary Ona
Senior Manager, Consulting
+63 2 845 2728 ext. 3230