why shared services

Professional Outsourcing Report

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the constant search for improvement, robust governance, etc., all contribute to providing much better quality and con-trol, thus improving the overall customer experience in a cost-efficient manner. Getting that part of the story over to stakeholders can be challenging – but it can be done with the use of tangible examples of what can be achieved. While headline cost reductions can be seductive, the shared service scene is maturing.

People are starting to appreciate that, on one hand, implementation needs careful thought, but, on the other hand, the rewards of a wider transformation of the organisation, driven by both a new systems platform and new ways of working, can deliver significant benefits. In most organisations, stakeholders will probably not be convinced by crude,

Professional Outsourcing Magazine covers shared services a lot, mostly with reference to the private sector. How-ever, the public sector is a major user as well, as magazine stalwarts Andrew Rothwell and Ian Herbert from Lough-borough University are well aware; they interviewed Chazey Partners about how the idea works in higher education and share their findings here.

The value of shared servicesQ. It is clear to many stakeholders that the value of shared services appears to be limited to the cost and efficiency paradigm. How do you convince senior management to see beyond cost-cut-ting?A. The fact is that the shared service model is capable of delivering a lot more. The adoption of leading practices,

cost-based objectives – they have to visualise a world where better service and quality are achievable.

Sponsorship and change managementQ. While academics love to moan about administration problems, the back office is always going to be a “Cinderella” issue; it needs to be there, it needs to work but, at the end of the day, you don’t want to see it! How do you persuade senior management to follow through into the critical stages of implementation?A. A popular but unfortunate notion in shared services is that once certain activ-ities are “removed” from the operating units, they essentially devolve into an “out of sight, out of mind” reality. Noth-ing could be further from the truth.

Why shared services for higher education?

Andrew Rothwell and Ian Herbert interview David O’Sullivan of Chazey Partners about his views as a practitioner on the potential and possibilities for shared services in higher education in the UK.

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More to it than cost

Stakeholders will probably not be convinced by crude, cost-based objectives - they have to visualise a world where better service and quality are achievable.

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Shared services is, in essence, very much a new way of doing things and this requires more rather than less active governance. The model also requires active involvement from the operating units, but a well-designed governance framework based on negotiated service level agreements can provide an envi-ronment of transparency and mutually beneficial adjustment between the SSC and its customers.

In our experience, senior management sponsorship and ongoing attention to change management are often the two most prevalent points of failure. These are often relegated to being after-thoughts that involve little more than communication and training. If change management is weak, stakeholders will complain. The outcome of this will


definitely be weakened sponsorship in response to noise factors and lack of success. The spiralling impact will un-doubtedly undermine the programme.

In reality, change management is a very comprehensive and time- consuming activity that requires signif-icant stakeholder engagement, educa-tion, involvement and participation. It is critical not only to making the transi-tion work, but also ensuring the change is sustainable. This has to be managed through a comprehensive governance and service management framework that we call the client interaction framework (CIF).

RecentralisationQ. One of the paradigms of modern management is decentralisation and

empowerment; how do you respond to someone who says “the shared service model is just new centralisation – noth-ing more”?A. These are the essential ingredients that distinguish shared services from simple centralisation.

Self-serviceQ. One of the most significant aspects of business transformation is the notion of creating “intelligent” customers able to draw on a range of self-service applications. Unfortunately, self-service can also be a euphemism for transfer-ring work (and its associated cost) from where it can be seen (and measured) to front-line units, where it becomes both lost and perhaps even more costly, what is referred to as “squeezing the balloon”.

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Self-service options are taking over in formerly complex areas

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I had to re-engineer an e-Procurement system that required the user to make as many clicks to buy a pencil as it did to buy a laptop. The problem was that the procurement people designed the system to suit their needs and not the users’.

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What is your experience?A. Certainly I agree with both the sentiments and perception. However, a strong counter-argument is that self-ser-vice is, to a great degree, providing a better way for managers and employees to do what they have to do already. A great example of successful self-service has to be airline booking systems. Today it is often far easier to book a flight this way than by approaching a travel agent. In an organisational context, if I need to change my bank details for payroll purposes, I usually have to contact someone in HR and send multiple emails. With modern day self-service, I can simply log onto an employee portal and make the change immediately, precluding the need for any other action. So in all likelihood I am using less effort. The transaction also has a much higher chance of being “right first time” when compared with traditional procedures.

Longer termQ. I can appreciate the airline ticket example, but I do that because I save time because I book flights quite often. In the HR example, it’s just one of a couple of dozen different applications that, while all might be simple enough, I only use the majority of them once in a while. It’s difficult to see that there is any benefit for me as a user when I’m trying to remember how I did something a year or so ago.A. You make a good point about the frequency of usage and the reality is that too often, many self-service applications are not properly designed with the user in mind. As a result they can be clunky. Again, fault can often lie with ineffective change management – for example, roll-ing out a self-service application without educating and explaining the benefits to

users will often be met with resistance and lack of adoption. In a previous life, I had to re-engineer an e-Procurement system that required the user to make as many clicks to buy a pencil as it did to buy an expensive laptop. The problem lay in the fact that the procurement people designed the system in a manner that suited their needs and not the users’, who needed to buy goods and services so they could do their job for the company.

Shared services collaborationQ. A key tenet of the success of shared services in the private sector is that SSCs talk freely with each other to benchmark progress and share best practice. This is because, as semi-autonomous units at a distance from the core operating divisions, they are not in the position of compromising competitive advan-tage. However, there are relatively few examples of organisations that are in direct competition with each other ac-tually sharing services. In an increasingly market-driven HE sector dominated by performance league tables, competition between institutions is increasing, thus reducing the willingness for manage-ment to collaborate with their perceived competitors.A. We are currently working on a num-ber of assignments in the US HE sector and in many respects the challenges are similar to the UK, albeit they have been perhaps facing these challenges for a longer period of time. HE colleges and universities in the individual States may come under an overall governance framework, but they experience similar issues when it comes to competitive forces. And their instinct is often to work independently on requirements rather than collaborate on common needs. But

there are some very good examples of collaboration.

At the moment, for example, we are involved in an initiative to replace a 30-year old payroll/personnel system, which no longer meets the evolving op-erational needs of the university (which has 10 campuses). It will feature a single payroll, benefits, human resources and academic personnel solution for more than 200,000 employees supported by 400-500 SSC employees.

While it might be argued that the over-all governing structure of the university was the primary means of establishing such collaboration, the reality is not the case. Indeed it was through generating a strong value case for all stakeholders that outlined the benefits that brought people to the table. The challenge was always going to require meeting the self-cen-tred needs of each campuse. And I say this without any cynicism intended.

on who the newest investors in CEE and Poland’s BPO/SSC sector were and why they’d decided to settle there. John Hampton, HR director for UPS, discussed how the company had consoli-dated all of its shared services into a GBS centre in 2011.

“We told the staff to stop their own consolidations so we could get a more realistic grip on it,” he explained. The result was finance, HR and call centre operations all working from a single location.

Factors making Poland the right choice included language capabilities, including 12 for internal purposes. Of the intake, 40% had a management degree and there were a lot of other degree-level entrants as well. “What we’re really proud of is our diversity, we have 70% female staff. CSR is also important to the business, which encourages its employ-ees to contribute to the community and also makes grants.”

Numbers were one thing (and inevi-tably a larger company has a lot of im-pressive figures). People in the audience were equally interested in the culture and the politics. Poland has a border with Ukraine, and inevitably thoughts turned to the turmoil that particular country has gone through. “It’s not an issue,”

Let’s get one thing straight; judges on awards panels can’t be bribed. Let’s get another thing straight; less than

a Rolex is an insult. Seriously, any specific details of the judging process for the 2015 Central Eastern European Shared Services and Outsourcing Awards are under strict NDA. I’m pleased to assure anyone who needs to know, though, that full impartiality was observed – and anyone who knew one of the nominees declared an interest immediately.

You can see the list of winners in the box in this article. The shortlist revealed some interesting cultural points about the region involved; although we consider ourselves more reserved in the UK than, say, Americans (he generalised), the reserve in CEE led to only two towns nominating themselves in some of the “best location” categories, including the one the editor presented on stage (Best City of the Year, CEE – a worthy win for Vilnius but it could have done with more competition).

Poland remains the economic power-house of the region, so for the awards it had its own categories while the rest of CEE had separate prizes. For the seminar and speeches part of the event, however, it was treated as one.

The day kicked off with a discussion

the panel seemed to think; the military issues were happening on the other side of Ukraine, nobody felt Poland was about to be invaded anytime soon. That said, panellist Andrzej Wilk, senior VP of the global business centre for Mon-eyGram, confirmed that his company had high-level discussions with the US embassy and concluded that there was a low risk.

If you considered the amount of people coming into the business as a direct result of the business intelligence function the company could now run specifically because it had outsourced some of the more basic work, it had doubled its size.

The day moved on to discussions on both sophisticated business services on offer in CEE and on operating and controlling shared services operations in both CEE and Poland. Scott Newman, managing director of State Street Bank, based in Boston with about 30,000 employees worldwide, offering asset management, research and trading and thirdly the custom bank or asset admin-istration, said 10 years ago it wanted to grow into Europe. It moved to Kraków for a number of reasons, including environment; the criteria, he said, still stack up nicely. Despite the financial crisis the company has grown. Culturally the

Pole positionIn February the CEE Shared Services and Outsourcing Awards Gala took place in Warsaw; Guy Clapperton was there, as a juror but more importantly as an observer


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People in the audience were interested in culture and politics. Poland has borders with Ukraine and inevitably thoughts turned to the turmoil that particular country has gone through.

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people are eager to learn.With 2,000 people in Kraków, the

next question is how to move up the value chain, he said, moving from simple investment funds and into hedge funds, derivatives and analytics. Contingency planning is also vital. “We are going through a review of where we can grow and looking at the opportunity of wheth-er we diversify. We have experience in Poland and we know the legal environ-ment, the regulatory environment and we’ve done the location studies, we’re in the right place,” he said.

A smaller company was law firm Linklaters, represented by shared service centre manager Malgorzata Stachowicz, also employing a couple of thousand em-ployees. Warsaw provides services to all locations from Tokyo to Brazil to the US. “Linklaters Centre is different because it’s new, having been in existence for only a year, and I don’t know any other law firm that’s established a shared service centre – it was a brave and innovative decision,” she said.

Outsourcing the finance function to India a few years ago had been a start, but shared services spread across War-saw for non-English speaking services and Colchester for the English speakers was the strategic move. The move to Warsaw led to expansion beyond the basic financial functions and the shared services centre will now handle mar-keting as well as some of the reporting functions for London.

Inevitably a lot of the meat of the dis-cussions came in the form of questions from the floor. Teresa Rondomaska of Schneider Electric’s finance spoke at length about the gain in productivity since moving to shared services – and was promptly quizzed by an audience mem-ber about how to measure such a thing


and even define it. “It’s tricky to define in shared services,” she conceded. “We ask how many documents per hour one person has processed, for example, for a simple measure.” She conceded that the company was getting great results because during its first year with an SSC it was inevitably going to improve from a standing start – and the organisation would be monitoring performance carefully.

Representatives from Hitachi Data Group, Orange Polska, Ahlstrom Vilnius, AcrelMittal and Coloplast were also

present, each having a related story to tell. Shared services was established in Poland and en route to growing substan-tially in the rest of Central and Eastern Europe; site visits during the afternoon to AVON Finance Service Centre and to Teleperformance Poland confirmed as much for any remaining doubters.

You can only hope that next year they’ll be a bit less shy about nominating themselves for the awards on offer – the talent and enthusiasm on display suggests there should be plenty of deserving nominees.

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The award winners in fullTop CSR Initiative of the Year: Poland Business RunBest University-Business Cooperation of the Year: CIMA/SGH joint study programme in management accountingBPO Contract of the Year: Global Remote Services (Romania) and Airport of RomeEmployer of the Year – BPO: Cpl Integrated ServicesEmployer of the Year – Shared Services: Mann + Hummel Service (Czech Republic)Business Centre Manager of the Year – BPO: WNS Global ServicesBusiness Centre Manager of the Year: BNP Paribas Securities ServiceRecruitment Firm of the Year: Hays Specialist RecruitmentExecutive Search Firm of the Year: Advisory Group TEST Human ResourcesSpecial Recognition Award: ASPIREEmerging City of the Year – Poland: RzeszòwEmerging City of the Year – CEE: Kaunas

Best City of the Year, CEE: VilniusBest City of the Year – Poland: KrakówGeneral Advisory/Location Advisory Firm of the Year: PwC PolandReal Estate Advisory Firm of the Year: Jones Lang LasalleBest Office Development for BPO/SSC Sectors: Business Garden (Posnan)IT Services Firm of the Year: Bulpros Consulting (Sofia)IT Services Firm of the Year – Poland: Atos IT ServicesBPO Firm of the Year – CEE: CPL Integrated servicesBPO Firm of the Year – Poland: Capita PolskaMost Unique Services Provider – Poland: Intitek PolskaMost Unique Services Provider – CEE: Process Solutions HungaryNew Entrant SSC of the Year: GE HealthcareShared Services Firm of the Year – Poland: Cisco Global Services CentreLithuania Shared Services Firm of the Year – CEE: Barclays Technology Centre (Lithuania)

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