Shared Services. Shared Services Centres as an organisational form and the implementation of such within the scope of projects

(1)

Shared Services

Shared Services Centres

as an organisational form

and the implementation of such

within the scope of projects

(2)

2 © Copyright IBM Corporation 2002

Overview of contents

2. The “right” split of activities

1. Shared Services Centre as an organisational form

3. Advantages of the SSC organisational structure

4. Strategic options for the structure of the SSC

5. Methodology in the context of SSC-projects

6. References

Shared Services Inhaltsübersicht

(3)

What is a Shared Services Centre?

performs services in the area of support processes

on a service-provider basis

A SSC is an organisational form which

for several organisational entities.

within the scope of a contractually regulated business relationship

in the form of an organisational entity

Shared Services

(4)

Accounting and Finance

Business Support

Logistics

Human Resources

• Accounts receivable

• Accounts payable

• G/L accounting

• Assets accounting

• Preparation of accounts and Reporting

• Possibly cost accounting and financial

statement

• Call Centres

• Technical Support

• Centres of Excellence

(e.g. Facility Management )

• Purchasing / Procurement

• Customer order processing

• Production planning

• Disposition

• Personnel administration

• Payroll accounting

• Processing of employee

savings/shares/loan programmes

• Centres of Excellence

(e.g. Recruiting, Training, Outplacement)

Possible specialist focus

Shared Services

(5)

Delimitation regarding centralisation: an overview

Selected sub-processes

and/or activities within

the scope of a split of

activities

Whole areas and/or

processes

Uniform standards

and control

mechanisms

Scale effects and

synergies

Uniform

management

Client and service provider

orientation

Line orientation

Possibly an independent

legal entity

Not a independent legal

entity

Formal

business relationship

Cost control

No cost control

Hierarchical

integration

Professionalisation and

optimisation of services

Bundling of

services

Shared Services

Centralisation

Possibly uniform

systems

Shared Services

(6)

Criteria for defining the split of activities

Company (local)

• Activities which are standardisable/

schematisable (able to be carried out

by a standardised work application)

• Business decisions

(accounting policy, planning,

control-ling, corporate management, business

consulting, analysis and annotation

of management statistics, etc.)

Shared Services Centre

• Activities with a large amount of local

reconciliation effort

• Activities with a variable or difficult to

measure amount of work requirement

• Recurring mass processes or

know-how oriented activities which occur

infrequently at the individual local

locations

• Billable services (the service can be

qualified and quantified)

Generally, the split of activities between the local company locations and the SSC

takes place according to the following criteria:

In order to achieve the benefits offered by the SSC organisational form, it is essential

to have the right split of activities and thus the right selection of processes to be

carried out in the SSC.

Shared Services

(7)

Typical activity split for Accounting and Finance activities

Maintenance of accounting vendor master files

Scanning of vendor invoices Invoice posting

Maintenance of vendor accounts Processing of incoming dunning letters

payment runs

Closing preparation

activities (e.g. Intercompany Clearing)

Standard Reporting

Processing and verification of travel expenses

Approval of invoices with quantity/price mismatches Approval of invoices without system-related purchase order references

Cash planning

Authorisation of travel expenses

Maintenance of accounting customer master files Processing of elec. bank statement Maintenance of customer accounts Dunning process Closing preparation activities (e.g. Intercompany Clearing) Standard Reporting Determination of credit limits and payment conditions Assessment of credit risks Determin. of value adjustment reqt. Maintenance of chart of accounts and G/L accounts manual and automated posting (e.g. accruals) Closing preparation accounting activities & Sandard Reporting Initiation of manual and automated postings (e.g. determin. of value adjustment reqt.) Maintenance of asset master files depreciation runs Posting of value adjustments Preparation of closing activities (e.g. preparation of inventory lists, asset history sheet)) Standard Report. Investment planning Physical Inventory Clarification of inventory gaps

Accounts Payable

Receivable

Accounts

Accounting

G/L

Accounting

Assets

S

ha

re

d

S

er

vi

ce

s

C

en

tr

e

C

om

pa

ny

Shared Services

(8)

Typical activity split for logistical processes

Consolidation of procurement reqt. of individual locations

Material purchasing (raw materials, assets, office and business equipment) Processing of outgoing complaints Maintenance of purchasing-related vendor master files

Selection of suppliers Negotiation of supplier contracts

Control and evaluation of suppliers

Order entry (inc. Credit limit check) and tracking Order accounting and invoice issuance

Processing of incoming complaints

Maintenance of sales master data (prices and conditions) Warehouse control Specification of marketing strategy Management of sales force Determination of prices and conditions as well as client credit limits

Determination of production amounts using strategic turnover planning as well as order receipts Material requirements determination Warehouse mgmt. for raw materials and operating supplies Strategic turnover planning Production planning and control Transport disposition Export processing Returns processing Verification of freight invoices Maintenace of master files for logistical service contracts Specification of logistics strategy Selection of logistic. service providers Negotiation of logistical service contracts

Purchasing/

Procurement

Customer Order

Processing

Production

Planning

Disposition

S

ha

re

d

S

er

vi

ce

s

C

en

tr

e

C

om

pa

ny

Shared Services

(9)

Typical activity split for HR processes

Evaluation of staff appraisals Preparation of (interim) references Support of staff disposition (resource management) Implementation of staff appraisals Implementation of staff disposition Carrying out of payroll accounting Support in determining provisions related to personnel Potentially installation of payroll-related staff data Editing, processing and administration of savings/shares/ loan applications Approval of savings/shares/ loan applications Determination of conditions Arrangement of recruiting events Implementation of Assessment Centres

Pre-selection of new hires Development of new training concepts

Training implementation Leaver support (e.g. help in finding new jobs)

Determination of staff requirement profiles New staff selection

Determination of wages/salaries Determination of training

requirements

Personnel

Administration

Accounting

Payroll

Processing of

various

employee

programmes

Recruiting

Training

Outplacement

S

ha

re

d

S

er

vi

ce

s

C

en

tr

e

C

om

pa

ny

Shared Services

(10)

Harmonisation

Standardisation

Cost Reduction

Flexibility

Quality

Of cultures

Of responsibilities

Of tasks

Of processes and interfaces

Of communication

Of services

With regard to personnel

With regard to infrastructure

With regard to systems

In the implementation of new system solns

In integrations / mergers & acquisitions

In the growth of business volumes

In modifications to the business model

In changes to market requirements

Of information

Of services

What benefits does the SSC organisational structure offer?

Shared Services

(11)

Through unified leadership, management and

coordination

Through non-location specific org. structure

Through standardised requirements, processes,

systems and control mechanisms

By efficient use of resources

With cost-effective resources

By joint use of resources, infrastructure and

standardised systems

With low location costs

By deploying scale effects

By process-oriented organisation structures

By standardised process management

By using a uniform platform

By specialisation and professionalisation

By measurement and control of performance

By Service Level Agreements

derive from?

Harmonisation

Standardisation

Cost Reduction

Flexibility

Quality

Shared Services

(12)

Potential cost savings

Shared Services

Kapitel 3: Vorteile der SSC-Organisationsstruktur

Level of professionalization

Centrali-zation

Shared

Services

(in house)

Business

Process

Outsourcing

/

Business

Transfor-mation

Outsourcing

Standardi-zation

C

os

t s

av

in

gs

p

ot

en

tia

l

10%

30%

40%

50%

20%

(13)

Strategic SSC options: geographical view

Country

A SSC in every country as service-provider for the

entities resident there

A SSC looks after all of the entities in a particular region

Regional

Region 1 Region 2 Region 3

Global

A single SSC looks after all entities throughout the globe

Shared Services

(14)

Strategic SSC options: from an organisational viewpoint

Several SSCs take care of the various business

or organisational entities

(segments/ business units/ branches/ etc.)

By business/

organisational entity

Centre of Excellence/

Competence Centre

Each process is carried out by a specialised SSC (process-oriented approach)

It is possible to have a

combination

of both the individual

geographically

- and the

individual

organisationally

-oriented strategic

options

.

(Example: several regional Competence Centres)

or

Shared Services

(15)

Locations of Shared Services Centres in Europe

Rubbermaid Services Ireland McDonalds Whirlpool Allergen Citibank Microsoft UPS Lucent Quintiles AIG 48 Woodchester France Allied Signal Belgium Hewlett Packard Switzerland

Ciba Speciality Chemicals Elizabeth Arden UK Bank of America Seagram Tate& Lyle United Distillers Rémy-Martin Tandem Wang Amoco Kodak 3M Kellogg's Owen Corning American Express Tasco Polaroid

Bristol Myers Squibb Digital Dell British Airways Netherlands Eastman Chemicals Arco BP/Mobil Reebok Unisys Monsanto DHL KLM Alcoa Spain Repsol Bayer HP GM Germany VAW aluminium AG Degussa Bayer Shared Services

(16)

Implementation strategies

Introduction of new technologies (Enabling Technologies,

ERP systems) and Process Optimisation

A

C

Route A

First:

Consolidation of

As-Is processes

on legacy systems

at the new SSC

location and, if

necessary,

stabilisation

Then:

Process

Optimisation and

implementation of

unified system

landscape

Route B

First:

Implementation of

new systems at the

individual old

locations as well as

process optimisation

and, if necessary,

stabilisation

Then:

Consolidation

of unified To-Be

processes at the

new SSC location

Route C

Parallel

consolidation of processes

at the new SSC location,

implementation of new systems and

process optimisation

B

Conti nued Impro veme nt

O

rg

an

is

at

io

na

l c

on

so

lid

at

io

n

of

S

C

a

ct

iv

iti

es

a

t o

ne

lo

ca

tio

n

Shared Services

(17)

Typical phases of a SSC project

Shared Services

Kapitel 5: Vorgehensweise im Rahmen von SSC-Projekten

Migration

Feasibility Study

(as required)

Design

Stabilisation

Assessment of

meaningfulness,

feasibility and

cost-effectiveness

of the SSC

implementation

(calculation of

Business Case)

Selection of a

strategic SSC

option and

implementation

strategy

Planning and

preparation of the

organisational and

technical relocation of

SSC-relevant

processes and

activities from the

individual, local

locations to the

Shared Services

Centre

Implementation of

transfer to the

operational entity

Stabilisation and

ongoing

improvement of

processes in the

SSC

Organisation Design

Process Design

Enabling &

Information

Technology Design

Definition of the SSC

Operating Model

(18)

Typical consulting services during the SSC design

Shared Services

Client support for

the selection of the

SSC location Determination of internal SSC organisation structure Coordination support for the

client as regards the physical set-up of the centre and

establishment of the centre`s infrastructure

Enabling &

Information

Technology

Design

Human

Resources

Aspects

(only as required)

Organisation

Design

Process

Design

As-Is process inventory,

-documentation and -analysis

Determination of activity

split between the local

locations and SSC

To-Be process design and

documentation taking the relevant legal aspects into account

Draft of Service &

Operating Level Agreements Performance Measurement concept Formulation of proposals for system-related process improvements by deploying new or expanding existing technologies

Client support for the

coordination of proposals with current IT-projects Creation of job profiles Implementation of job assessments according to Hay [As required, client support for the

selection of suitable HR measures]

(19)

Typical consulting services during the migration

Shared Services

Client support for the

organisational

relocation of

SSC-relevant processes and activities from the individual, local location to the SSC, in particular as regards coordination of the adjustment / expansion of the SSC infrastructure

Enabling &

Information

Technology

Anpassung

Human

Resources

Organisation

Adjustment

Transfer

Process

Planning and coordination of Knowledge Transfers (Training & Workshadowing)