rapid benefits of alternative shared services models
TRANSCRIPT
Rapid Benefits with Alternative Shared Services Models JANUARY 19, 2016
Agenda
Who We Are
Why Shared Services?
Trends in Shared Services
Case Studies
Best Practices & Lessons
Agenda
Why Shared Services?
Trends in Shared Services
Case Studies
Best Practices & Lessons
Who We Are
Who We Are
Who We Have Worked WithOUR CLIENTS
Agenda
Trends in Shared Services
Case Studies
Best Practices & Lessons
Who We Are
Why Shared Services?
Achieve the Triple Benefit of Shared Services
Higher Quality
Lower Costs
Improved Control
What Exactly is Shared Services?
• Treats its internal clients as if they were an external client. Treats them with the same level of respect and service that external clients expect
Elevator Speech
• Provides non-core services to the “business”, employing a specialist team, geographically unconstrained, and focusing on the requirements of the internal client. This involves a philosophy and approach totally unlike traditional “corporate-driven” centralization.
Definition
• Has the goal of providing high quality, non-core, but mission critical services (which can include both repetitive common processes and more specialized professional services) to the business at lower cost and more efficiently than the business could otherwise provide for itself.
Goal
• Achieves cost savings and higher quality of service by leveraging organizational re-alignment, economies of scale, technology, lower cost locations, client interaction framework, standardized end-to-end processes, and best practices.
How-To
Why Shared Services in Public Sector?
Funding Decreases
Technology Demand
Growth in Services
Workforce Demographic
s
Cost of Services to
Public
Unified Shared
Services Management
FEELING THE “SQUEEZE”
Remote from business
Unresponsive and inflexible
No Business/ Operational control over costs
Viewed as central overhead
Prevalence of shadow operations
Centralized
Challenges Disparate
processes Multiple
standards Duplication
of effort Different
control environments
High cost and costs unclear across the business
Not scalable
Decentralized
Challenges Responsive
to Business and Operational needs
Business/ Operations control decisions
Customized solutions to meet Business/ Operational requirements
Benefits Shared Highly client
focused Commercially
driven Service
Partnership Agreements
Clear unit costs
Flexible delivery
Clear understanding of drivers and activities
Common systems and support
Consistent standards and controls
Tight control environment
Economies of scale
Benefits
Costs too high, poor compliance environment
Unresponsive to needs of business
Centralization/Decentralization Cycle
Why Shared Service in Public Sector?Recent Creation of the Unified Shared Services
Management Office creating more incentive and visibility to build Shared Services
Why not? Has worked well in the Private Sector for 25+ years, and is also working in the Public Sector today. The same basic challenges and significant opportunities exist around implementing but need to be adapted and applied differently.
Significant funding issues today … everywhere. Shared Services can deliver potential “triple benefit” of efficiency/effectiveness/control
Cost savings from the “back office” can be used to fund core and front line services.
Why Shared Service in Public Sector?Remember that the scope across the “back office” is very
significant.
Must determine what needs to be physically close to the internal “customer” or “client” vs what can be done remotely.
Consider who your “client” is – internal and external. Also need to think about “citizens” as key stakeholders.
Although public sector adoption of shared services has grown, the results achieved do not yet approach those in the private sector
Part of the solution to the new socio-economic challenges
Impact of an aging populationIncreased international competitionMore difficult economic environment
Agenda
Case Studies
Best Practices & Lessons
Who We Are
Why Shared Services?
Trends in Shared Services
General Trends in Shared Services• Started in mid-1980’s - driven by private sector
multinationals
• Successfully implemented Shared Services initiatives achieve “20%-45% cost reductions from the current state” (The Shared Services Roundtable, March 2015)
• 100% of Hackett’s top quartile benchmarked enterprises leverage Shared Services (Hackett 2013)
• More prevalent today in midsized companies and businesses
• Outsourcing has been part of solution mix in private sector
• Improved services, not just cost
General Trends in Shared Services
• “Moving up the value chain”
• New adopters are moving directly to multifunctional/Global Business Services model as part of their implementation strategy (Deloitte, 2015 Global Shared Services Survey, February 2015)
• Technology options continue to grow (spend on technology is not the problem)
• Significant focus and growth in the Public Sector globally
• Slower to adopt – so far
Unique Challenges Facing Public Sector
Unique Challeng
es to Public Sector
“Politics”Across System
State and Federal Workforce:
Locations, Department
s, Leadership
Shifts
Governance Issues
“Traditional Silos”
Funding Sources
Increased Costs
Transparency creates
critics“Failures” jumped on
“Culture”Tenure Change
Management
Agenda
Trends in Shared Services
Best Practices & Lessons
Who We Are
Why Shared Services?
Case Studies
U.K. Federal Government• Part of 2004 Initiative from Office of Government Commerce
(OGC). Initiated by Gershon’s Efficiency Review
• Full review in 2008 reported annual savings exceeding £20 billion
• 2011 review found that past efforts mainly focused on technology and end-to-end process ownership with reductions in hand-offs
• Were some challenges as well as successes as identified by the National Audit Office (NAO)
• Next Phase to focus on better harnessing Shared Services• Standardization of process• Increased automation• Single ERP platform - better leveraging of technology• Eight Shared Service Centers (SSCs) reduced to five
• Two independent of any single customer• Three standalone in terms of operations and subject to performance monitoring
Government of New Brunswick
• Passed legislation to give Internal Services Agency (ISA) power to operate as a business
• Autonomy of operations• Divergence from “normal”
• Transactional and Administrative services into a single model
• Payroll & Benefits, AP, IT Services, & IT Operations
• Benefits Achieved• $8.8m in annual savings, net of investment• Government-wide strategies• Economies of scale with more consistent service delivery• Opportunities for staff development and improved retention
U.S. Department of Health and Human Services
• The US Department of Heath and Human Services (DHHS) Shared Services “Program Support Center” (PSC) provides support services to all components of the U.S. Department of Health and Human Services (HHS) and other Federal Government agencies worldwide. PSC has a broad range of over 40 services and products
• To clarify customer confusion around “true costs” or “full costs” in an allocated environment, the PSC operates with funding received at the beginning of the year, with the commitment to ensure costs are agreed upon.
• They work throughout the year with their customers to ensure cost discipline – and agree upon any additional funding needs via Service Level Agreements (SLAs) or Inter Agency Agreements (IAAs)
University of California – Davis - Multi
• Good initial work in the Business Case and Design
• However, due to the time schedule, the Build cycle was compressed
• Resulted in sub-optimal service delivery and customer issues
• Fixed by having a review of services, leadership change and a comprehensive “playbook” of areas to modify
• Now initial areas have been corrected and center is growing services again
Iowa University System – Multi- single• Initial Shared Services work in Finance, Information
Technology and Human Resource begun by the governing board and an external firm
• Minimal “buy-in” with the functional staff at each university
• Lack of “ownership” on the financial targets, objectives and timeline as a result
• Supplemental exercise begun to validate findings• Benefit in validating, and in some cases modifying findings• Larger benefit in that each functional area worked closely
on the engagement• Buy-in was achieved for a much larger number of areas• Foundation laid for future Shared Services activities
University of Oklahoma - ITUnlocking Cost Efficiencies and Demonstrating ROI
Category ProjectionStaff Efficiencies $6.0MEnergy: Data Center Power and Cooling Efficiencies $1.3MShared contracts, volume discounts, license pooling $3.5MFiber sharing partnership OK State Regents/Higher Education $4.6M
Campus Infrastructure consolidation $1.7MExternal Affiliates Chargeback revenue $1.0M
TOTAL $18.1M
44% Retur
n
City of Houston - HRProblem: City facing $50-70M Budget DeficitOpportunities: Centralization; reduce liabilities; improve efficiency; eliminate redundancyPlan: Implement Shared ServicesProcess:
Step 1: People – Redefine Roles and ResponsibilitiesAnyone spending over 51% of time moved to Central HR
Step 2: Process StandardizationFocus on quality of service and transparency
Step 3: Technology Adds CapabilityReduce reliance on expensive and unnecessary add-on solutions
ResultsHR Staff to Employee ratio improved from 1:38 to 1:119Improved quality of serviceMore efficient, better placed staffSelf-service functionality Improved understanding of customer issuesEnhanced use of SAP Capital Management Module: $650k of annual savings
Agenda
Trends in Shared Services
Case Studies
Who We Are
Why of Shared Services?
Best Practices & Lessons
Tips & Tricks #1• Having a Business Case is key
• Consider functions, processes, sub-processes, locations, regions, operating units and entities
• It is really important to distinguish between “solutions” vs “quick fixes”
• Multi-functional now often the chosen way to proceed
• Consider how far up the value chain you want to go
• Senior level Executive sponsorship is key - executives must understand and support the roll-out
• Remember always that the project does not end with “go-live”
Tips & Tricks #2• Do not underestimate the change management required
• Consider a multi-faceted communication and advisory approach
• Generate a culture of service and continuous improvement
• Make sure your team includes both includes users, subject matter experts and “front line” resources and be prepared to travel to meet and work with users
• Assign your best resources and people to the project
• Assign end-to-end process owners
Tips & Tricks #3• Separate transformation from ongoing activities
• Offer end-to-end services by provisioning as many non-core services as possible under one organizational umbrella
• Realignment can help remove silos and foster a strong shared service culture and team spirit
• Enable succession planning, job rotation, new opportunities and targeted and consistent training programs
• It’s all about the “customer”
• Do things differently – that’s the whole point!
Top Three Takeaways1. Shared Services can
be complex, but it is not rocket science
2. Start with a Roadmap and supporting business case
3. You are not alone, others have gone before
