The Common Challenges of Common Practices: Tips for Effectively Moving to a Shared Services Center

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The Common Challenges of

Common Practices:

Tips for Effectively Moving to a

Shared Services Center

Helene Abrams

CEO

eprentise

[email protected]

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Learning Objectives

After completion of this program you will be able to:



Objective 1:

Learn the mechanics of running a single global instance

in a shared services center operation.



Objective 2:

Understand common business processes and how they

are implemented.



Objective 3:

Explore real-world examples of and lessons learned

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Agenda



Introduction

 What is a Shared Services Center?  How Shared Services Centers Operate

 Common Challenges

 Critical Success Factors for Gaining Efficiencies and Streamlining Operations  Roadmap for Implementation

 Case Studies  Conclusion

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eprentise Can…

…So Our Customers Can:

 Consolidate Multiple EBS Instances  Change Underlying Structures and

Configurations

 Chart of Accounts, Other Flexfields  Inventory Organizations

 Operating Groups, Legal Entities,

Ledgers

 Calendars

 Costing Methods

 Resolve Duplicates, Change Sequences,

IDs

 Separate Data

: Transformation Software for E-Business Suite

 Reduce Operating Costs and Increase

Efficiencies

 Shared Services  Data Centers  Adapt to Change

 Align with New Business Initiatives  Mergers, Acquisitions, Divestitures  Pattern-Based Strategies

 Make ERP an Adaptive

Technology

 Avoid a Reimplementation

 Reduce Complexity and Control Risk  Improve Business Continuity, Service

Quality and Compliance

 Establish Data Quality Standards and a

Single Source of Truth

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What is a Shared Services Center?

An operational entity which performs all of the non-core

business processes for all of the divisions within an enterprise

so that companies can:

• Focus on core business competencies

• Reduce costs and gain economies of scale

• Standardize business processes

• Implement better controls

Provisioning of services by one part of the organization and its

shared use by the rest, who fund this service.

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Incentives & Drivers of Global Operations

Consolidate repetitive data-centric processes to support migration to a shared services center or a centralized data center

Generate financial reports directly from the system of record

Reduce operating and maintenance costs to improve the bottom line

Create a single source of truth to improve business processes and business intelligence

Enable revenue optimization whenever and wherever possible to improve the top line

Capitalize on enterprise-wide synergies to leverage purchasing and to better understand customers

Obtain access to new markets and the opportunity to scale the business

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How Shared Services Centers Operate

Select locations with lower labor costs, different time

zones

Operates as a separate profit center



Transaction processing is the main revenue generator, not a support

function.

Recognizes economies of scale



High volume of transactions



Ability to transact across businesses



Accommodates local and statutory requirements



Centralizes expertise in various areas

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Example Shared Services Center Functions

AP Invoicing Purchasing Credit Card Reconciliation Warranty Tracking Procurement General Accounting Billing Credit and Collections Taxes Statutory Reporting Travel & Expenses Finance Payroll Processing Benefit Management Time and Labor Reporting HR and Payroll

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R12 Was Designed for Shared Service Center Operations

Operating Units (OUs)

Responsibilities

Multiple Organizations Access Control

Subledger Accounting

Subledger Users are assigned responsibilities

Ledger Sets

Legal Entities

Customer and supplier bank accounts

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Common Challenges for Shared Service Center Operations

Global Standardization



Data

 Common Definitions  Redundancy



Business Processes

Localizations

Alignment of business initiatives

Governance, Controls

Increasing Costs

Global Support

Downtime

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Global Standardization

Business and implementation differences exist among

different installations and need to be maintained

Different calendars, currencies, and charts of accounts are

difficult to reconcile

One-to one relationship between each set of subledgers

(purchasing, payables) in Oracle Applications

No cross-instance functionality

MOAC functionality doesn’t enforce standards

Oracle Applications consolidate only at General Ledger

Level

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Business Process Standardization

Key components to successfully managing change on a global scale

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Critical Success Factors for Gaining Efficiencies and

Streamlining Operations

Single Global Instance

Common Global Chart of Accounts

Standard Calendar

Shared Master Data

Common Configurations

Elimination of Silos



Ledgers, Legal Entities, Operating Units, Inventory Orgs

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Things to Think About When Establishing a Vision for

Shared Services

What is the governance model?

What type of functions, processes and services? How many processes ?

What is our approach? What are the economics? How long will it take?

What type of culture and organization do we want? How will it impact the rest of the organization?

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Three Traditional Shared Services Organization

Models

Corporate Service Center B.U. B.U. B.U. Regional Service Center B.U. B.U. Regional Service Center B.U. B.U. Company A/P “Center of Excellence” B.U. Corporate Accounting “Center of Excellence” Company B.U. Corporate | 15

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Roadmap for Implementation

Step 1: Determine what processes the SSC will

cover



Identify processes and data that can be shared across

the enterprise



Standardize common business processes, workflows



Identify common data

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Roadmap for Implementation

Step 2: Measure Current Operating Costs



Benchmark existing processes



Identify metrics for best practices



Compare existing to best practices



Determine opportunities for saving

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Measure Against Best Industry Practices

Benchmark High

Benchmark Median

CCI w/o TGIF & CHG $1.81 Benchmark Low Best Practice CHG $4.40 TGIF $4.12 CCI $2.39 CTG $1.74# CMG $1.69#

Accounts Payable Cost per Invoice Processed

$16.63 $3.93 $1.35 $0.80 Benchmark Low Benchmark Median

CCI w/o TGIF & CHG 30,575 Benchmark High CHG 11,303 TGIF 14,562 CCI 23,765 CMG 36,181**# CTG 53,148**#

Invoices Processed per Accounts Payable FTE

5,333

17,793

41,388

* Per 1991 Shared Service Study

** Invoices are processed by CCI FTEs which are not reflected in CTG and CMG headcounts # Business units receive a bill from CCI A/P in addition to performing some of their own A/P

Unit Cost and Productivity Comparison Accounts Payable

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Resource Distribution Other (13%) Personnel (64%) Systems (23%) Benchmark Low Company ABC Other (24%) Personnel (64%) Systems (19%) Personnel Systems Other TGIF 61% 22% 17% CMG 61% 21% 18% CHG 63% 1% 36% CTG 48% 14% 38% Headcount Distribution Exempt (20%) Non-Exempt (80%) Benchmark Low Company ABC Exempt (29%) Non-Exempt (66%) Contract (5%) Exempt Non-Exempt Contract TGIF 10% 84% 6% CMG 37% 54% 9% CHG 41% 59% 0% CTG 51% 49% 0%

Measure Against Best Industry Practices

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Roadmap for Implementation

Step 3: Set up a Service Level Agreement



Identify resources

 People

 Infrastructure



Determine operating costs

 What volume can you handle?  Are there special requirements?  Determine unit prices



Determine service levels and fees

 Timing (close cycle)  Volume



Develop change management, issue resolution, and escalation

processes

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Roadmap for Implementation

Step 4: Initiate Preparation Project



Set up infrastructure



Consolidate instances



Implement common chart of accounts



Implement common calendar



Merge ledgers, operating units, inventory orgs



Set up secondary ledgers and ledger sets

 Regulatory and Statutory Reporting  Adjusting Ledgers

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Infrastructure

Four main technology issues surrounding globalization:



Availability



Access/Security



Performance



Functionality

E-Business Suite Release 12 is designed to support a

global enterprise

within a single instance

, and it has

several features that enable sharing of data and facilitate

the globalization effort.

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Technology - Availability

Prearranged level of operational performance during a

period of time



Service level agreement or “three nines”/”five nines”



To a user, it means the ability of the user community to access

the system



Scheduled vs. Unscheduled downtime



Maintenance



Patches, configuration changes, etc. (reboot required)



Hardware/software failure

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Example of Silos

Instance A B C D Distinct Release 11.5.10.2 11.5.10 11.5.10.2 11.5.9 -Size (GB) 1,425 548 61 96 -Languages 4 2 1 1 4 Sets of Books 104 48 1 30 183 Calendars 10 7 1 1 19 Charts of Accounts 40 43 1 18 102 Legal Entities 120 48 0 47 215 Operating Units 121 49 0 47 217 Inv Orgs 137 50 1 48 236 Modules Installed 9 17 4 5 21

Security Rules on Value Set 13,012 300 15 153 13,480

Security Rules X Responsibilities 17,350 445 6 75 17,876

Cross Validation Rules 86,845 39,925 25 165 126,960

Currencies 56 28 1 28 64

EBS Users 43,986 30,494 247 3,023 N/A

Sets of Books, Legal Entities, OUs, and Inventory Orgs

Redundant and configured differently

Charts of Accounts and Calendars

Disparate and misaligned

Sets of Books – Difficult to comply with local and statutory regulatory requirements

Legal Entities – Easy to over- or under-pay taxes and misstate financial information

Operating Units – Difficult to leverage supplier relationships (terms, discounts, etc.)

Inventory Orgs – Impossible to know if a product is actually in stock (or where it is on the shelf)

Charts of Accounts – Reports and data extracts must be done 40 times

Calendars – With 10 calendars, the company is depreciating assets in 10 different ways and closing periods at different times

Redundant Objects

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Why Consolidate Instances?

Reduction in infrastructure costs (hardware,

maintenance, licenses)

Reduction in personnel to support multiple systems

Provision of better customer service and the ability to operate globally

Agility to grow and to embrace new initiatives Global

Reporting/ Analytics

Facilitate efficient and effective decision making with timely and reliable fact based information

Access real-time information at consolidated level

Create Centralized Shared Services (maintenance, setup, centralized processing)

Eliminate duplicate integrations and interfaces

Lower license and support fees

Operation of a single business with

consistent data, streamlined processing and the ability to leverage markets, suppliers of other parts of the business

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eprentise Consolidation Software

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Changes Made Automatically During

Consolidation

Three Types of Changes:

Name

Changes

ID Changes

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A Global Chart of Accounts

 Primary ledger is single source of truth

for all accounting, reconciliation, and analytical reporting

 Consistency but flexibility to

accommodate different requirements

 External reporting without relying on a

separate financial consolidation system

 Drill down to individual transactions in

the subledgers without translation

 Transparency (3 - 5 years) to meet IFRS

standards and international auditing requirements

 Common metrics and reporting

structures with common interpretation

Enterprise Visibility with Subledger Accounting and Secondary Ledgers

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

Accounting policies are standardized across the entire enterprise



Data remains consistent and has full drill-down and roll-up capability, auditability, and visibility into all of the activity for the entire ledger set



Conversions not required for data warehouse queries



Facilitates the movement to a shared service center



Increases the level of

enterprise governance and control of new code

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FlexField Software to Change your EBS Chart of

Accounts

Map Segments and Values

or Code Combinations

Segment Mapping

Changes CCID everywhere

All setups

All subledgers All history

Looks as though the new chart of accounts was part of the original implementation

Full audit trail, drill down, roll up Built in exception reporting

1 1 Mapping

M 1 Mapping

1 M Mapping

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Calendar Change

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Insert New Dates

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Move Legal Entities to New Set of Books

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Roadmap for Implementation

Step 5: Roll out SSC Operations



Establish standard business processes



Set up governance and compliance controls



Hire resources

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Process Standardization

The backbone of a globalization effort is the understanding

that business processes are intrinsically linked and not confined

to departmental, geographic, or organizational boundaries.

Shared services center

as a way to standardize on common “global”

processes such as:

 Corporate treasury  Invoice processing  Receivables processing  Sarbanes-Oxley Compliance  Account maintenance  Corporate reporting  Expense processing  HR maintenance Costa Mesa Kolkata Nottingham São Paulo | 37

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Governance

Effective management of shared enterprise assets is

necessary for an effective global strategy



Collaboration



Implementation of effective controls

Idea of the “benevolent dictatorship”

1. There can be no wavering about where the finish line is placed

(a single global instance)

2. Anything less than success or short of completion is not

acceptable (no special exceptions)

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Training and Communication

Effective globalization training has to take a more

personalized approach that seeks buy-in along

with providing information



New skills



New processes



New functionality



New regulations

A training manual alone is not enough to be

effective

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Roadmap for Implementation

Step 6: Measure Results



Are you achieving the returns on investment?



How close are you to best practices?

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Where Do You Fit?

Headcount and Costs Headcount per $ Billion Sales 6.2-CTG 8.4 17.1 19.9 29.6 46.3

Cost as a Percent of Sales Personnel .027 - CTG .030% 0.61% .073% .118% .219% Systems .026% .038% .046% .062% .011% Other .013% .028% .035% .089% .006% .126% .153% .209% .355% First Quartile Second Quartile Third Quartile Fourth Quartile First Quartile Second Quartile Third Quartile Fourth Quartile 56.5 – CMG 67.9 – TGIF 77.8 – CHG .244% – CMG

.249% – TGIF .073% – CMG .090% – TGIF .141% – CHG .387% – CHG _{.407% – TGIF}

.002% - CHG .008% - CTG 27.2 – CCI .089% - CCI .210% - CMG .030% - CCI .022% - CTG .047% .155% - CCI .345% - CMG .036% – CCI .068% – TGIF .062% – CHG

Accounts Payable Benchmark Results Accounts Payable

Total

.057% - CTG

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Determine Opportunities for Cost Reduction

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A Case Study on Global Finance Transformation and Operations

at Experian

Globalization Best-of-breed

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Experian – Global Finance Transformation

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 US UK France Ireland Oracle R12 Spain Hong Kong Ireland Australia N.Zealand* Italy Denmark Norway Sweden* Finland* Estonia* India France Japan China Korea Malaysia Singapore US UK S.Africa Russia* Morocco* Netherlands Germany Austria N.Zealand** Sweden** Estonia** Bulgaria Greece Monaco Belgium Brazil Mexico Argentina Turkey

UK Instance - Oracle 11i US Instance - Oracle 11i

Oracle 11i

"UNIFY" Instance Single Global Instance

OracleR12.0.6 US & UK migrated to "UNIFY" instance Canada Chile Costa Rica Gemstone Start Gemstone Go-live

3 EBS instances converged into a Single Global

Instance

Global COA / Processes Regional Shared Service Centers processing

Ongoing global roll out

 Single Global Instance

of Oracle EBS R12

 Global Chart of

Accounts

 Standard Finance

Processes

 Global Finance Shared

Services Organisation

 Three regional Finance

Shared Service Centres

 Global Hyperion EPM

& OBIEE fully

integrated with EBS

 Global Finance Center

of Excellence (COE)

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Experian – Global Finance Transformation

Core Financials Other HR & Payroll

Purchasing Order Management HRMS

I-Procurement Advanced Pricing Self Service HR Payables Service Contracts Passive Payroll

Receivables Project Billing Payroll

Advanced Collections Time & Labour Advanced Benefits

General Ledger AME Absence Management

Fixed Assets BRM Billing * I-Recruitment Cash Management Oracle GRC

AGIS I-Expenses

Note: Not all modules used by all countries

Oracle EBS – Modules implemented and planned *

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GCS Support – Then and Now

3 Regional EBS instances. Two located in UK, one located in USA.

2 Regional support areas

 Functional / Development teams in each location

 Break fix team in each location

 Different support models in place

 Knowledge base decentralized

3 different EBS

infrastructure footprints Duplicated DBA teams Strategy and Support leadership silo’d and duplicated

Consolidation project to move from 3 EBS to single global instance, infrastructure located in UK

Outsourced Break/Fix support to support partner (TCS)

 Experian Development FTE’s reduced

 Support presence included 3rd shore (offshore center in Kolkata, India).of support to a 24x7 model

 Support management centralized, global incident system

implemented

Built out EBS Regression Test Bed platform

Began formal Release Mgmt process to include instance and DBA resource utilization

management

Outsourced Support Model transitions to Service Level

Agreement (SLA) basis Formal Change Process put into effect –

simple change < 10 days, Planned change > 10 days Release Management process furthered

 Instance refresh policy established

 Configuration Mgmt process furthered, began use of automation tool (i-setup)

EBS Support

(Prior to Gemstone) (Gemstone Go Live) EBS Support EBS Support / Strategy (Gemstone 2yrs old)

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Process Collaboration – How Do We Work Together?

Process Collaboration Matrix

Business Partners Global Corporate Systems

Business Process Process Owner Process Sponsor GCS Process Partner / _SME GCS Technology _Partner

Bu si ne ss I nte llig en ce : Da ta In te gra tio n / M aste r D ata M an age m en t / Mi ddl ew are: Da ta W are ho use / D ata D esi gn A uth ori ty :

Order to Invoice NA: TBD NA: TBD GCS SME

LATAM: TBD LATAM: TBD GCS SME

UK&I / EMEA: TBD UK&I / EMEA: TBD GCS SME

APAC: TBD APAC: TBD GCS SME

Invoice to Cash TBD TBD GCS SME

Recruit to Retire NA: TBD TBD GCS SME

LATAM: TBD TBD GCS SME

UK&I / EMEA: TBD TBD GCS SME

APAC: TBD TBD GCS SME

Purchase to Pay TBD TBD GCS SME

Record to Report TBD TBD GCS SME

GRC TBD TBD GCS SME Enterprise Performance Management TBD TBD TBD | 47

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Customer-focused organization

Establishes global processes and accessibility to data Hastens incorporation of new business units

Improved access to consistent information

Enhanced ability to refocus business units from transactional processing to analytical analysis

Focuses on core competencies

Eliminates silos, and assures that management everywhere is reading from the same page

Number of control points in a process and the number of variations of a process are greatly reduced, mitigating the risk of process error.

Drastic quality improvements Leverage technology

Fewer customer contact points

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Questions?

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