are you ready for a multifunctional shared services strategy?

1 | FEBUARY 2014 ARE YOU READY FOR A MULTIFUNCTIONAL SERVICE STRATEGY?

2014FEBURARY

ARE YOU READY FOR A MULTIFUNCTIONAL SERVICE STRATEGY? “Multi” may be the way implementations and SSO expansions are trending, but if you don’t have these 5 strategies in place, you’ll run into stormy waters ahead...


IntroductionYou are committed to implementing Shared Services and have finally gained the blessing of the Executive Board. But there are a number of decisions yet to be made, not least of which is what form your model should take. Today, many organizations are eschewing the one-step, two-step approach of the past, and launching an SSO supporting multiple functions, instead of just one.


Multifunctional SSO models provide services for more than one support function, generally including elements of Finance, Human Resources, IT and/or Purchasing/Procurement. According to Hackett data, more than 60% of SSOs currently support at least two functions, and survey after survey indicates that this percentage is likely to increase as companies plan to leverage existing single-function implementations or start from scratch as a multifunctional SSO. This is also true in the public sector, which is leveraging the lessons and opportunities learned from the private sector to set up right from the start with a multifunctional service offering. In addition, we are increasingly seeing multifunctional organizations that include more “non-traditional” functions like supply chain, real estate, marketing, and legal services.

WHAT IS MULTIFUCTIONAL?

So why is “multifunctional” getting so much attention? Mainly, because shifting beyond “single-function” Shared Services really allows the model to ramp up its scale and capability, and leverage synergies related to location, staff, governance, delivery and – crucially – customer experience. It is a case of one plus one equaling more than two; or, the impact of the sum being greater than its constituent parts.

In a multifunctional Shared Services model, different functional silos are brought under one reporting, governance and Customer Interaction Framework (CIF) structure. While the different functions do not necessarily have to be co-located, this is preferable, especially where this can drive labor arbitrage, improved management oversight and control, and further opportunities for standardization and economies of sale. Not least important is the fact that the customer is presented with “one face” and a unified approach.

Shifting to multifunctional Shared Services implies a ‘portfolio’ type of thinking that makes the most of synergies, leverages management, and takes a more holistic view to supporting the business. Multifunctional services are generally considered more strategic. Therefore, whereas traditional, single-function Shared Services tend to be led by a “Head” of Shared Services (sometimes at Director or Senior Director level), multifunctional SSOs are often led by a more senior person – often at Vice President or GM level. While Shared Services that were set up in the 1990s and

early 2000s generally launched with a single function (often Finance or HR sub-processes that were considered transactional and “low risk”), once established and the concept proven, enterprises would often “bolt on” additional service lines. This resulted in a more evolutionary, piecemeal shift to multifunction than a “big bang” approach. There are pros and cons to each way forward, but as the model becomes more established we see more and more institutions, especially in the public sector, taking on multifunctional launches from the start. While the change management required may prove more challenging in these cases (you’re dealing with not one, but two or more functional leaders fighting to keep hold of what they perceive as their power base), the promise of a more unified, robust, enterprise-wide services strategy carries a lot of weight, especially as the model has proven its worth many times over. It is important to remember, however, that just running multiple functions within one Shared Services model is not the same as having a multifunctional Shared Services Organization. If the functions run independently of each other, without leveraging synergies or process ownership, you run the risk of replicating the kind of silo operation that Shared Services is supposed to counter. Instead, aim for an integrated approach and framework, and make the most of synergies in technology procurement, governance and leadership.


WHAT TO CONSIDER BEFORE TAKING THE PLUNGE

1. Senior Executive Level Sponsorship

• A major driver or “critical success factor” for the success of any Shared Services initiative is the level of senior management support.

• The same is true in determining whether a single function or multifunctional route is taken. To take a “big bang” approach to multifunctional Shared Services requires a great deal of executive buy in, because more than one functional head is impacted and is required to “buy in” to the change.

• This is why the “strategic” move to multifunctional Shared Services is often initially driven from the top.

• The more “evolutionary” move to multifunctional Shared Services still requires senior level executive support, but is done at a relatively slower pace and should have the advantage of a proven track record to help with the plan to go multifunctional.

2. Business Readiness

• The general stability of the overall Enterprise, as well as the stability within the functions themselves, needs to be taken into consideration.

• The way that processes are owned and performed today is also an important factor to consider. Are processed standardized, automated, siloed? Are policies and procedures centrally managed and controlled, and are they actually followed in practice? When considering whether to start single function (and what processes are to be initially in-scope within that single function) or multifunction, the current landscape and risk profile will influence the decision. While moving at pace and going the “big bang” route does have advantages, one should not move faster than the Enterprise is willing, and able, to move at.

• It is important to consider what the roles and responsibilities for the “retained” organizations within each function will be. There need to be clearly defined responsibility, role profiles, and job descriptions. And it should be clear who owns which parts of all in scope end-to-end processes.

3. Planning

• The overall scope, not just from a functional/process/sub-process perspective but also from a business unit/department/regional/country perspective, also needs to be considered. How many business functions/departments/countries/sites will be migrated into the SSO, in which order and over what timeline?

• Geographically is this a regional or global implementation? Will there be more than one center or multiple centers? Will there be one main center and then satellite locations providing multifunctional Shared Services?

• Will the goal be to put everything into “Centers of Excellence” from a process perspective, or would there perhaps be the desire to also have “Centers of Expertise”, which usually cover more “professional and technical” rather than “transactional and administrative” processes and services. Obviously, considerations around labor arbitrage benefits, economies of scale, risk profile, etc., come into play here.

• Are the timeframes realistic and proportional to the number of functions that are transferring?

4. Internal Politics

• This links back to senior level executive sponsorship, leadership, buy-in and support.

• But it is not just about senior management. There needs to be a comprehensive understanding of internal politics, stakeholder motivations and a clear change management program in support of whatever direction is decided to be taken.

• The program should be supported by a clear understanding and communication of the core business needs that are driving the move to multifunctional Shared Services – e.g. cost and efficiency drivers, need to leverage centers to support an expanding global model, aim to remove the burden of providing these services from the business so that they can focus on value-adding decision and business support activities closer to the enterprise’s external customer base, desire for more consistent processes to support automation, requirement for a more visible and standardized overall control framework, etc.

5. People Management

• The relationship between the SSO and “the business” will be key to its success. This will require a clear plan, and focus, for the new reporting and management structures, including ownership and hand-off along end-to-end processes. Where the move is to a multifunctional Shared Services organization it can actually be easier to really consider “end-to-end” processes, because functional silos can be broken down.

• As highlighted above, the overall change management, communication and consultation plan on this proposed strategic initiative will be critical.


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Chazey PartnersChazey Partners is a practitioners-led global management advisory business. We bring together a unique wealth of experience, empowering our clients to strive for world-class excellence through Business Transformation, Shared Services & Outsourcing, Technology Enablement, Process Enhancement and Corporate Strategy Optimization. We pride ourselves in having built, operated and turned around some of the world’s most highly commended and ground breaking Shared Services Organizations, and for implementing many highly successful multi-sourced (shared services and outsourced) delivery solutions. Over the last 20 years, we have delivered numerous programs globally, in the US, Canada, UK, Continental Europe, Ireland, India, Eastern Europe, South America, Singapore, Australia, China, Middle-East and Africa. Our experience covers both Private and Public Sectors, providing expertise in a wide spectrum of business functions, including Finance, HR, IT and Procurement. Learn more about us at www.ChazeyPartners.com. Follow us on LinkedIn, Twitter, Facebook and Google+

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