the common challenges of common practices...accounts payable fte 5,333 17,793 41,388 * per 1991...
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The Common Challenges of Common Practices
Prepared by: Helene Abrams CEO eprentise
Tips for Effectively Moving to a Shared Services Center
Session ID#: 10427
@eprentise
Learning Objectives
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 from shared service center operations.
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
Company Overview: Incorporated 2007 Helene Abrams, CEO
What is a Shared Services Center?
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.
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
How Shared Services Center Operate
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
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
Example Shared Services Center Functions
■ Operating Units (OUs) ■ Responsibilities ■ Multiple Organizations Access Control ■ Subledger accounting ■ Subledger users are assigned responsibilities ■ Ledger Sets ■ Legal Entities ■ Customer and supplier bank accounts
R12 Was Designed for Shared Service Center Operations
Common Challenges
■ Global Standardization ▪ Data
— Common Definitions
— Redundancy
▪ Business Processes
■ Localizations ■ Alignment of business initiatives ■ Governance, Controls ■ Increasing Costs ■ Global Support ■ Downtime
Common Challenges for Shared Service Center Operations
■ 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
Global Standardization
Business Process Standardization
Key components to successfully managing change on a global scale
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
Critical Success Factors for Gaining Efficiencies and Streamlining Operations
■ 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?
■ How will it meet stakeholder’s requirements and be measured?
Things to Think About When Establishing a Vision for Shared Services
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
Three Traditional Shared Services Organization Models
Roadmap for Implementation
Roadmap for Implementation
■ Step 1: Determine what processes the SSC will cover ■ Step 2: Measure Current Operating Costs ■ Step 3: Set up a Service Level Agreement ■ Step 4: Initiate Preparation Project ■ Step 5: Roll out SSC Operations ■ Step 6: Measure Results
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
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
Determine Current Practices and Costs
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
Measure Against Best Industry Practices
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%
Accounts Payable Supplemental Analysis Accounts Payable
Measure Against Best Industry Practices
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
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
■ Set up MOAC
■ Four main technology issues surrounding globalization: 1. Availability
2. Access/Security
3. Performance
4. 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.
Infrastructure
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
▪ Environment anomaly
Technology – Availability
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
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
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)
Redundant Objects
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
Charts of Accounts and Calendars Disparate and misaligned
Redundant Objects
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
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
Consistent Business Processes
Why Consolidate Instances?
Three Types of Changes:
Name Changes
ID Changes
Synchronization
Changes Made Automatically During Consolidation
■ 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
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 combinations
A Global Chart of Accounts
Roadmap for Implementation
Step 5: Roll out SSC Operations ■ Establish standard business processes ■ Set up governance and compliance controls ■ Hire resources ■ Develop training program
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
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)
3. Obstructionism is not tolerated
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
Roadmap for Implementation
Step 6: Measure Results ■ Are you achieving the returns on investment? ■ How close are you to best practices? ■ What do you need to do to further reduce costs?
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
Determine Opportunities for Cost Reduction
Company ABC Company ABC
A Case Study on Global Finance Transformation and Operations at Experian Globalization Best-of-Breed
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
Oracle R12.0.6
US & UK migrated to
"UNIFY" instance
* GL Module Only ** Additional modules
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)
Project Gemstone Goals
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* Experian – Global Finance Transformation
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)
EBS Support (Gemstone Go Live)
EBS Support / Strategy (Gemstone 2yrs old)
(an Iterative Process)
Process Collaboration Matrix Business Partners Global Corporate Systems
Business Process Process Owner Process Sponsor GCS Process Partner / SME
GCS Technology Partner
Business Intelligence:
Data Integration / M
aster Data M
anagement /
Middlew
are:
Data W
arehouse / Data D
esign Authority:
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
Process Collaboration – How Do We Work Together?
■ 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
Soft Benefits of Implementing Shared Service Centers
Questions? Comments?
THANK YOU
Helene Abrams [email protected]
eprentise www.eprentise.com
Accelerating the time for change in Oracle E-Business Suite
Visit eprentise at booth 1225!
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