Shared Services Delivery Model

Outsourcing Strategy & Management

Agenda:1. Corporate perspective2. Business Units Perspective3. Economics Perspective4. Technology Perspective5. Implementation Perspective

Shared Services Delivery Model

A Corporate perspective

Outsourcing Strategy & Management

Group 1

Topic Page .

Definition and goal of a Shared Service Center (SSC) . . . . . . . . . . . . . . . . . 03

Corporate Objective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 03

Measures in perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 04

Secret of Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 05

Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 06

Shared services- maturity process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 07

Potential services for a SSC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 08

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 09

4

Definition and goal of a Shared Service Center (SSC)• SSC - supporting processes within an organization on an

approximately similar way, are delivered a new, semi-autonomous unit and on the basis of agreements it provides services to other units

• The goal is generally to improve the service quality while cutting costs

• SSC versus centralization, service-oriented versus task

Creating -

shared services standards,

policies,

tools and an associated strategy of service delivery, and

continued improved performance

Corporate Objective

5Measures in perspective

Measures at task level:Stopping investments

Orcutting down on currentinitiatives

Measures at a process level:Collaboration and joint investments

Measures at a functional level:Concentration, integration, mergers,

Take-over or outsourcing

Saving potential

Short term(0,5-1 year

Medium term(1-2 years

Long term(2-5 years)

Stopping projects

Cutting down on training and learning

Cutting down on engaging external consultants

System optimazation

Collaboration regarding purchasing, support, etc.

Optimization and standardization of processes

Integration, mergers and concentration

Outsourcing of parts of the organization

Shared Services Centre

Full outsourcing

Capitalizingeffects

6

Secret of Transformation

CorporateCommunication

7

TrendsC

ost

s

Volume

Startingpoint

Impact Scale reached Impact Scale

reached

Complexity Costs will increase

To take maximum concentration and complexity there will be need for new solutions.

Shared services- maturity process

9

Potential services for a SSC

Facility Management

- mailroom - copying and printing service- archive - purchase - cateringCustomer Service- sales service- telephone customer service (call

center)Administration- financial administration - pensions administration - PayrollPersonelmanagement (HRM)- recruitment and selection - Personnel administration- training

ICT Services

- application development- Helpdesk - Management and operation - Training- Real Estate Management - management buildings- Security management- Sales and marketing- ad coordination - direct mail - sales- Tele ordering - Order administration

Shared services requires maturing process not purely corporate mandate

Thank You

Moving Towards Shared Services- Business Units Perspective

PGPM508_03 Ashish BaijalPGPM508_12 Sivaram GunavelPGPM508_19 Priya Khanna PGPM508_23 Chetan MahindraPGPM508_36 Anjana Rao PGPM508_59 Prashant Malviya

Group 2

Need• Absence of standardized process• Multiple software systems serve different business units• Requirement of broad range of technologies from

mainframes to client/server to distributed SOA• Evolving new business products and technology variation• Lack of experienced technical personnel• Expensive maintenance costs• Holistic view to monitor various processes and functions• Quicker data retrieval by eliminating the need to roll up

results from multiple units• Keep business units focused on profit-making activities

• Absence of standardized process• Multiple software systems serve different business units• Requirement of broad range of technologies from

mainframes to client/server to distributed SOA• Evolving new business products and technology variation• Lack of experienced technical personnel• Expensive maintenance costs• Holistic view to monitor various processes and functions• Quicker data retrieval by eliminating the need to roll up

results from multiple units• Keep business units focused on profit-making activities

Challenges

Benefits

• Promotes the consolidation of scarce resources with specific technology skills that can be shared across business units

• Methodology based on industry standards and best practices

• Avoiding duplication and encouraging reuse• Flexible engagement models that will accommodate

clients’ diverse business unit needs• Ownership remains with the business unit• Keep business units focused on profit-making activities• Cut operating costs• Can support strategic initiatives

Financial & People Implications• Cost Reduction due to infrastructure sharing capability • Establish transfer pricing for internal shared services

• Relocating knowledgeable personnel to service centers to establish the knowledge base, or, the reverse, sending service center resources to the business unit.

• Internal people dissatisfaction and unrest due to drastic changes in everyday work

• Reduced requirement of infrastructure and human resources

• Cost Reduction due to infrastructure sharing capability • Establish transfer pricing for internal shared services

• Relocating knowledgeable personnel to service centers to establish the knowledge base, or, the reverse, sending service center resources to the business unit.

• Internal people dissatisfaction and unrest due to drastic changes in everyday work

• Reduced requirement of infrastructure and human resources

Communications

An Economic Perspective

Shared Services

Group 3 Prachi Joshi Prateek Jain Ritambhar Roy

Raghu V N Sameer Dhamangaonkar

Satish Sawant Sohail Khan

What is Shared service?• Shifting common administrative activities from individual

business units to a centralized operation to reduce costs and improve service quality

What it does? • Improves overall efficiency and control while giving every

business unit access to functionally deep and talented resources.

• Enables business units to focus on what really matters like satisfying customers and developing new products and services to sustain competitive advantage.

Common shared Service Functions

Cost Reduction

• Central theme of shared services’ business case▫ Process improvements, a key driver of cost reduction, also a prime

concern among SSOs• Recession induced urgency to deliver cost savings to bottom-

line▫ Reduced operations leading to lower headcount▫ Implementing and/or improving enforcement of controls over

spending• SSOs share general pressure to cut their own costs

▫ Headcount reductions, deferral of infrastructure and IT projects, cut in discretionary spending

• Improving productivity as a complement to cost reduction efforts▫ Eliminate, Simplify, Standardize, Automate

SSOs are strategic enablers, not just supporters

• Strategic pursuits of an organization using SSOs▫ Facilitate enterprise growth, improve business focus and enhance

talent management▫ High quality data can be made available from across the enterprise for

analysis and subsequent action Aggregated and standardized information Data consistency and reliability

▫ By optimizing schedules, frees up resources for advisory support▫ Supports business growth, especially growth through acquisitions▫ Talent sourcing and development tool

Training ground for talent; find and develop business-bound employees Improves attraction and retention among SSO personnel

Other economic implications

• Manage tax implications of shared service efforts▫ Growing global footprint; different tax regimes▫ Appropriate transfer pricing policy; consider rules of country where

SSC is located and country where service is delivered▫ Advisory services in shared environment; some portion of the revenue

must be generated in low-tax jurisdictions▫ Intangible value generated out of standardized technology and

processes• Opportunities presented by IFRS reporting

▫ IFRS reporting done by SSOs will reduce cost of compliance with effective internal controls

▫ Enterprise-wide financial reporting consistency and hence improving cross-entity comparability

How to realize ROI while implementing Shared services

From Cost Centre to Profit Centre…Way forward

Old v/s New Model

Group 5

Nitin Goel

Kapali Chawla

Puneet Taneja

Sorabh Marwah

Santanu Biswas

Sandeep Sreenivasa

Shared Services - Definition

Shared Services is a service delivery model where organizations achieve economies of scale through the creation of a separate entity

in which the “customers” have a degree of ownership and determines the types of services and service levels provided

How service provides people, processes, technology, structures, and funding will be done.

Dedicated Governance Model

Focused on Selected business or IT services

Overview• Requirements

▫ Standardization and Centralization of Support functions▫ Facilitates shared expertise▫ Economies of scale may be realized in High Volume

transactions• These elements can only improve efficiency• True Benefits of the shared services environment are

dependent on supporting Technology infrastructure• Focus is on managing high volume transactional

activity in a standardized manner• Greater emphasis on the way the data is updated in

the systems and the connectivity between units and Shared service

• Technology architecture demands the integration of several discrete components, which must function in an integrated manner to ensure successful delivery of the end to end process

Generic Principles Devolved Data Entry – Minimize data entry & transactional activity

◦ Manager & Employee Self Service◦ Workflow

Data Integrity – Effectively share data between them◦ Captured once at origin & Validated at origin◦ Audit Trails

Data Integration – Use of multiple apps requires integration◦ Workflow Integration – employee resigns, workflow must be updated◦ Self Service – Updating of data without intervention of SSC staff

Management Information - provide critical management information◦ Reporting Tools should be available◦ Capability to produce outputs locally or globally & Audit trail functionality

Data Protection- compliance with data protection◦ Access rights ◦ Data deletion and Retention Policies

Application Sourcing – Multiple suppliers or single supplier of integrated solutions◦ Buy not build◦ Scalable/Flexible – Accommodate changes in organization size◦ Implementable/ Supportable – Should be supportable by the vendor

SSC Technology Architecture

Facts, Figures and Recommendations• The top three challenges to making a global shared

services approach work in the real world from a technology perspective were ▫ managing ERP systems (34.6%), ▫ knowledge management (28.8%) and ▫ workflow and imaging tools (28.8%)

• Shared services are not technology projects, they are about business change. Technical engagement is needed throughout

• Implementation requires consistent & persistent communications and change management – regardless of people or political fluctuations.

THANK YOU

Shared Services Implementation &

Processes

Outsourcing Strategy & Management

Group 5Abhishek Dwivedi PGPM508_09Mihir Jana PGPM508_14Ankan Majumdar PGPM508_24 Krishna Prasath PGPM508_33Kedar Sahasrabudhe

PGPM508_40Arun V M

PGPM508_54

Shared Services Implementation ModelApr 12, 2023

33

Outsourcing Strategy & Management,

Group 5

• Data collection– Company operation details, vendors, services offered,

organization structure• Opportunity Identification

– Services which does not form core business– Find out services which can be outsourced/unified

• Value Proposition– Service composition to be provided by vendor– Possible business benefits out of it

• Final Report & Review– Review of business value– Final decision whether to continue to next phase

Assessment of Potential ValueApr 12, 2023

34

Outsourcing Strategy & Management,

Group 5

• Scope– Services to be included in a model– Individual components to be serviced

• Current State Analysis– AS IS and TO BE processes– Gap Analysis & Recommendations

• Operating Model– Operational details– Formation of teams, roles, communication model, SLA terms

• Charge Strategy– Billing Strategy

• Business Case– Final business case presentation– Contract signing and agreement on further phases

Due DiligenceApr 12, 2023

35

Outsourcing Strategy & Management,

Group 5

• Organization & Process Design– Current organization structure and design– Detailed study of current processes– Gap analysis and recommendations

• Training Design– Training requirements (Process & Technology)– Knowledge transition

• Service Management Framework– Key service level governing parameters– SLA terms and support framework

• Transition Planning– Formulation of transition team and detailed transition

plan• Technical Design

– Identification of infrastructure requirements– Design for upgrade/modification of software and

hardware systems• Roll out strategy

– Final rollout plan

Process & System DesignApr 12, 2023

36

Outsourcing Strategy & Management,

Group 5

• Application & Technology Build▫ Application development▫ Technology implementation

• Shared service center build▫ Location preference, facility design

• Shared Services Organization build▫ Creation & implementation of organization structure

• Training▫ Training to customers for new changes▫ Training to vendor employees about new processes

• Detailed rollout▫ Application deployment & Hygiene testing▫ Regular monitoring and support

Rollout & SupportApr 12, 2023

37

Outsourcing Strategy & Management,

Group 5

• Orlando based company, serves all north American Siemens companies

• Back office in Bangalore• Major handling of payroll, procurement, import-export,

accounts payable processes• Siemens company enters with SSL contract after

negotiations about overall contract• Acts as minimalist profit center and is forced to pass on

benefits to Siemens companies• Major IT infrastructure to support processes• Growth based on volumes

Siemens Shared Services LLCApr 12, 2023

38

Outsourcing Strategy & Management,

Group 5

The Road AheadApr 12, 2023

39

Outsourcing Strategy & Management,

Group 5

STAGE I Achieve economies of scope & scale by integrating more Lines of ServicesSTAGE II Constant price reductions by process improvements.STAGE III Become a profit center from a cost center by carrying out similar activities for other companies. Outsourcing the services of our shared service center for a fee.