fundamentials of shared service operations

8/2/2019 Fundamentials of Shared Service Operations

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Copyright 2007 by ScottMadden. All rights reserved.

September 16, 2007

Shared Services 101:

The Fundamentals of Designing,Building, and Implementing aShared Services Operation

Shared Services Summit West

2007

Las Vegas, Nevada


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Copyright 2007 by ScottMadden. All rights reserved.

Agenda

Chapter I. Introduction to ScottMadden, Inc. (ScottMadden)

Chapter II. Introduction to Shared Services

Chapter III. The ScottMadden Approach to Shared Services Implementation

Strategy Alignment and Project Planning

Current State Assessment

Model Design and Business Case Development Implementation Planning

Implementation and Transition

Chapter IV. Beyond Implementation The Outsourcing Process

Chapter V. ScottMaddens Shared Services Experience


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3Copyright 2007 by ScottMadden. All rights reserved.

Participant Introductions

Name

Title

Company

Shared Services Description

Shared Services A,B,C

A. Planning stage

B. One year or less

C. One plus years of services

x Objective for Workshop


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Chapter I. Introduction to ScottMadden


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Introduction to ScottMadden

Who We Are

ScottMadden is a general management consulting firm founded in 1983

We started with a focus in energy and now have three primary practice areas

Shared services

Finance and accounting

Human resources

Information technology

Real estate and facilities Supply chain

Multi-function

Outsourcing advisory services

Energy gas/electric utilities

Our clients tell us that our service is unique in the quality of our consultants and the way that we:

Listen, are flexible, and provide a solution that fits not just the generic answer Put the clients best interest first

Maintain a relentless focus on results and customer satisfaction

Provide great value, getting the work done quickly and practically

Do it with our clients (instead of doing it to them)

Support them during implementation with expert resources


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What Our Clients Say

ScottMadden worked with us on infrastructure enhancement and cost reduction projects. Compared to other

consultants, ScottMadden does a great jobthey do projects with us, instead of to us. They dont try tosqueeze us into their solution or templateScottMadden has a strong focus on relationships and resultsinstead of sales. Director

They are extremely thorough; they understand and define the problem correctly; they combine the rightinformation and the right management thinking to help solve the problem. ScottMadden never does amechanical jobthey really make me a part of the solution so that I own it at the end of the day. Theirsolutions are not academic; they are pragmatic. Director

The big firms have no desire to learn our businessjust a desire to tell us what to do. ScottMadden has thedesire to understand our company. CIO

They are practical; we can put their recommendations into play right away. SVP

They dont just consult, they actually do the work and deliver product. ScottMadden delivers work products

that we are able to use. SVP

ScottMadden people can dive in, get the work done and deliver results in the time it would normally take us tointroduce consultants to our team. EVP

ScottMadden Provides An Exceptional Consulting ExperienceScottMadden Provides An Exceptional Consulting Experience


7/1257Copyright 2007 by ScottMadden. All rights reserved.

About ScottMadden

Primary Practice Areas Capabilities

Strategy and Business Planning

Operations/Organization Design

Business Case Analysis

Project Planning and Management

Design and Implementation

Technology Support

Process Improvement and Cost Reduction

M&A Integration

Operational Audits

Employee Service Centers

Customer and Employee Surveys

Strategy and Business Planning

Operations/Organization Design

Business Case Analysis

Project Planning and Management

Design and Implementation

Technology Support

Process Improvement and Cost Reduction

M&A Integration

Operational Audits

Employee Service Centers

Customer and Employee Surveys

SharedShared

ServicesServices

EnergyEnergy

OutsourcingOutsourcing

AdvisoryAdvisoryServicesServices



About ScottMadden (Contd)

Capabilities

SharedShared

ServicesServices

EnergyEnergy

OutsourcingOutsourcing

AdvisoryAdvisoryServicesServices

Readiness Assessment

Business Case Development

RFP Development

Technical Proposal Analysis

Financial Proposal Analysis

Base Case Development

Technical and Commercial Negotiations

Implementation Planning

Relationship Management Planning

Effectiveness Assessment

Readiness Assessment

Business Case Development

RFP Development

Technical Proposal Analysis

Financial Proposal Analysis

Base Case Development

Technical and Commercial Negotiations

Implementation Planning

Relationship Management Planning

Effectiveness Assessment

Primary Practice Areas



A Sample of ScottMadden SharedServices Clients

Paper/Paper/Forest ProductsForest ProductsGeorgia-PacificMeadWestvacoWeyerhaeuser

EntertainmentEntertainmentTime Warner CableTurner Broadcasting System

PharmaceuticalsPharmaceuticalsPharmacia TransportationTransportationBurlington Northern Santa FeNorfolk SouthernUnion Pacific Railroad

TechnologyTechnologyEricssonLockheed MartinMicrosoft

SeagateSiemensSolectron OtherOther

Adidas

Bechtel

Fluor

Hospital Corporation of America

Johns Manville

Johnson Controls

Kerr-McGee Corporation

Michelin

NASA

NewellRubbermaid

Sara Lee

Woodruff Arts Center

TelecommunicationsTelecommunicationsAT&T

Bell AtlanticBellSouth

Southwestern Bell

WorldCom

EnergyEnergyCinergyLos Alamos National Lab/KSLMirantOglethorpe Power CorporationPlains All American PipelineProgress EnergySempra

Southern California Edison

Financial ServicesFinancial ServicesBlue Shield of California

International Monetary Fund

Unum Provident



ScottMadden Value Proposition

We enable you to implementWe enable you to implement

change more efficiently and effectivelychange more efficiently and effectively

We enable you to implementWe enable you to implement

change more efficiently and effectivelychange more efficiently and effectively


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Chapter II. Introduction to Shared Services



Shared Services Overview

What is Shared Services?

Under a shared services model, operating units outsource certain support functions to a centralizedsupport organization

Shared services organizations group essential business support functionssuch as informationtechnology, human resources, and financeas a business unit (or units) to serve the operating units of acorporation

Shared services is externally focused on their corporate customers, balancing the requirements of thebusiness units with the most efficient and effective delivery of services

In the most advanced models, the shared services organization runs as a business, offering competitiveservices at competitive prices to its internal customers

"Traditionally, our service organizations have been largely perceived by our customers (SBUs) to becosts instead of providers of value. This is the fundamental reason why we have put the shared servicesbusiness in place.

Ashok Arya, Principal Consultant of Dupont's Global Shared Services Business



Benefits of Shared Services

Reduce Expenditures

Improve Operations

x Raises service levels bystandardizing processes to achieveworld-class results

x Identifies and eliminates non value-added processesx Focuses efforts of shared services staff on providing

cost-effective, high-quality servicex Improves qualitative customer satisfaction and

quantitative service measures

x Allows collection and analysis of standardizeddata across the organization

x Creates comparability across the organizationthrough consistent processes

x Enables better decisions to be made based onbetter information

x Adapts easily to growth, contraction or structuralchanges within the company

x Provides one-stop shopping for employees;clear and known point of contact

Efficiently serving the customer is the driving reasonto consider a shared services arrangement

Leverage Information

Shared services, if done right, is a source of competitive advantage for a business

x Removes duplicate processesand brings them together in one organization

x Eliminates redundant labor and systemscosts; aligns labor skills and costs withspecific task types

x Creates awareness of costs for internalservices, shaping usage behavior

x Enables company to retain internal control ofcore functions while still maximizing costefficiency

x Reduces costs by 20% to 50%


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Benefits of Shared Services (Contd)

Driving Forces forDriving Forces for

Shared ServicesShared Services

Competition is demandingcontinuous cost reduction insupport services

Not only transactions, butalso for knowledge-basedactivities

Demands by business units for

improved service havedramatically increased

24/7 availability

Customized services atcommodity prices

Technology has been the greatenabler

Low-cost, reliable

communications

Shared data bases

Web-enabled self-service

Outsourcing options haveexpanded

The emergence of BusinessProcess Outsourcing (BPO)provides additional deliveryoptions

Percentof

BaselineCosts

Time

100%

Start-upStart-up

< 1 year< 1 yearMaturityMaturity

5+ years5+ yearsGrowthGrowth

1 to 5 years1 to 5 years

Step 1: Formation Centralization Consolidation

10-20% Reduction Economies of

scale Elimination of

redundantoverhead costs

Step 2: Operation Service level

agreements Unit pricing Monthly invoices Performance

measurement

15-30% Reduction Reduced demand Standardization

of service levels Process

standardization

Step 3: Refinement Process

improvement Reengineering

25-40% Reduction Minimizing

exceptions orcustomization

Improving hand-offs andinterfaces

Processsimplification

Outsourcingalliances

Step 4: Innovation Web-enabled Self-service Six Sigma

processes

Unlimited Opportunity Paperless Virtual service

center Global low cost

alternatives Strategic

outsourcing

Phases of Shared Services Development

0%


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Shared Services Overview

SHARED SERVICES

DECENTRALIZED CENTRALIZEDService CultureService Culture

Efficient Delivery ModelEfficient Delivery Model

Best PracticesBest Practices

Independent EntityIndependent Entity

Redundant

Inefficient

Non-Standardized

Unresponsive

Detached fromBusiness

Inflexible

CustomerCustomerFocusedFocused

BusinessBusinessIntelligentIntelligent

EconomiesEconomiesof Scaleof Scale

StandardizedStandardizedProcessesProcesses

Shared Services is not the same as centralization!

InfrastructureInfrastructure


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Potential Shared Services Offerings

Human Resources

Payroll

Compensation

Records management

Benefits administration

Training and development

Relocation services

Travel and expense

Labor relations

Policies and procedures

Finance

General ledger

Accounts payable/receivable

Planning and budgeting

Internal audit

Tax cash management

Foreign exchange

Customer Service

Call centers

Returns processing

Credit and collections

Order management

Legal/CorporateAffairs/Administrative Services

Litigation support and coordination

Communication services

Environmental, health and safety

Insurance

Regulatory compliance

Media relations

Security

Travel

Real estate

Facilities

Fleet management

Information Services

Standards

Technology planning and development

Desktop support

Applications development

Data center operations

Application maintenance

Telecommunications

Hardware and software

Acquisition

Logistics/Materials Management

Strategic sourcing

Procurement

Warehousing

Inventory management

Transportation

Source: Shared Services: Better Service at Lower Cost ChrisRutledge; www.sharedxpertise.org; ScottMadden
http://www.sharedxpertise.org/http://www.sharedxpertise.org/http://www.sharedxpertise.org/


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INFRASTRUCTURE

Productsand

Services

ActivityBased

Costing

C

hargebackand

Billing

ServiceLevel

Agreements

Performance

M

anagementand

Reporting

Customer

Account

Management

Business ProcessesBusiness Processes

TechnologyTechnology

GovernanceGovernance

STRATEGYSTRATEGY

StructureStructure

Shared Services Infrastructure


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Chapter III. The ScottMadden Approach to Shared ServicesImplementation


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Shared Services Implementation

Case for Change Phase ICase for Change Phase I Implementation Phase IIImplementation Phase II

Step 1Step 1Strategy Alignment andStrategy Alignment and

Project PlanningProject Planning

Step 2Step 2Current StateCurrent StateAssessmentAssessment

Step 3Step 3Model Design andModel Design andBusiness CaseBusiness Case

DevelopmentDevelopment

Step 1Step 1Implementation PlanningImplementation Planning

Step 2Step 2Implementation andImplementation and

TransitionTransition

a. Strategy alignmentassessment

a. Organizations andresponsibilities

a. New operating model a. Detailedimplementation plan

a. Execution ofimplementation plan

b. Preliminary changemanagement planning

b. Products, services, andprocesses

b. Business case b. Detailed changemanagement plan

b. Service levelagreements andcontinuousimprovement

c. Project planning c. Customers anddemographics

c. High-levelimplementation plan

c. Project management c. Pricing and charging

d. Communication plan d. Supporting telecomand technology

d. Go/no go decision d. Marketing

e. Costs e. Transitionmanagement

f. Executive summary f. Risk management

Four to twelve weeks Three to twelve months


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Implementing Shared Services Keys to Success

Shared services implementations require significant integration and coordination to ensure success.

Listed below are key elements that are essential to implementations, but frequently forgotten orignored:

Proper executive-level sponsorship with support organizations and operating units

Well-articulated drivers for implementing shared services

Detailed business case that specifies qualitative and quantitative benefits

Comprehensive, integrated, phased implementation plan

Customer and corporate (HR and IT, for example) input and buy-in

Governance

Scope agreement

Service levels

Operating model

Managing impact

Matching positions and skill sets Willingness to transition current employees out and hire new, properly skilled employees

Leveraging and integrating technology

Streamlining and reworking processes to fit shared services

Leveraging internal resources to design and build

Marketing and communicating the concept


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Shared Services Implementation Phase I, Step 1: StrategyAlignment and Project Planning

Strategy Alignment and Project


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Strategy Alignment and ProjectPlanningPhase I, Step 1

Case for Change Phase I Implementation Phase II




Step 3Step 3Model Design andModel Design and

Business CaseBusiness CaseDevelopmentDevelopment








b. Preliminary change

management planning

b. Products, services, and

processes

b. Business case b. Detailed change

management plan

b. Service level

agreements andcontinuousimprovement









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I.1.a Strategy AlignmentThe Importance of Strategy

To be a strategic partner, a shared services function and its professionals must comprehend exactlywhat capabilities drive successful strategy implementation in their companies and how the functionaffects those capabilities Key Purposes of Strategy

Articulates the future direction for the business or group Allocates scarce resources Enunciates promises Creates sustained competitive advantage

Key Questions What is the corporate strategy?

The marketplace Competitive advantage What is the corporate philosophy?

Autonomy versus control Entrepreneurship versus staying between the lines Accountability for results

What are the business unit strategies? Marketplace Independence versus interdependence

What has been tried in shared services and either succeeded or failed? Approach

Understand the corporate visionwhat it says andwhat it means Be involved in business unit planningunderstand their strategies and critical success factors Discuss with stakeholders the definition of success for shared services and what shared services

should do to support the corporate vision Incorporate learnings into shared services strategy development

If a shared services function cannot demonstrate its value in implementing company strategy, it faces

more scrutiny for being outsourced


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Strategy AlignmentAssessment

Reponses Relevant to Shared Services

Organization

Assess and build sponsorship for change

Sharpen focus of operational business units

Place support services in shared serviceorganization

Orient as customer service organization with otherbusiness units as customers

Processes Redesign the service delivery model

Standardize processes

Reengineer service processes

People

Define new skills

Reselect the staff

Train service providers

Tools

Leverage existing technology

Use technology to facilitate servicerequest/fulfillment

Automate information retrieval and communication

Automate performance reporting to speedimprovement

Example Corporate Strategy OptionsExample Corporate Strategy Options

Reduce costs of support servicesReduce costs of support services

Improve quality of support servicesImprove quality of support services

Improve business unit performanceImprove business unit performance

Gear organization for mergers and acquisitionsGear organization for mergers and acquisitions

Is a shared services approach

consistent with corporate,business unit, functional (HR, IT,Finance, etc.), and otherstrategies?

Is the corporatestrategy clear and

has it been

communicated?


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Cost Reduction

x Focus on cost

x Consolidate and

standardizex Reduce fixed cost

base, mainly throughstaff reductions

Reengineering and

ProductivityEnhancement

x Focus on process

x Reduce/eliminatenon value-addedactivities

x Reduce errors and

increase rework

x More timeliness andaccuracy ofinformation

Value Creation and

Continuous

Improvement

x Focus on value

x Leverage sharedservices network andexpertise

x Create new servicesthat enable businesstransformation

TimeTime

Benefit

Benefit

Integrated Strategic

Service Delivery

x Focus on strategicbusiness drivers

x Create strategicpartnerships

x Ensure seamlessintegration ofoutsourcing

x Enable a virtualorganization

Strategy AlignmentStrategic Direction

More Than Cost Reduction


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Strategy AlignmentConstraints

Organization Is there support for this project? (At corporate? At business unit? In functional area?)

How successful have similar projects been?

Is a major organizational change realistic?

Is adequate funding available?

Would corporate leadership support an outsourcing option?

Processes Are current service processes broken?

Will process participants support change?

Are processes in need of improvement?

Can the number of processes supporting a service/product be reduced?

People

Will corporate policies allow reductions and/or redeployments of staff?

Is there budget for extensive retraining programs?

Can new staff with needed skills be hired?

Tools

What are the limitations of the current technology architecture?

Is the IT organization capable and available to implement supporting technology?

AssessmentAssessment

NoNo MaybeMaybe YesYes

OrganizationOrganization

ProcessesProcesses

PeoplePeople

ToolsTools

I 1 b Preliminary Change


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Project ManagementAccountability Integration Plan Management Resources

I.1.b Preliminary ChangeManagement PlanningElements of Change Management

Organization Development

Role/Responsibilities Rewards Processes

Training/Education

Risk ManagementAssessment

Mitigation Monitoring

Marketing

Value Promise Brand Constituent Assessment Collateral Material Rollout Communication Plan

Audiences Development Messages Rollout

SponsorshipAssessment Development Maintenance

SuccessfulSuccessful

Transition/Transition/

ImplementationImplementation

Preliminary Change


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Preliminary ChangeManagement PlanningEarly Change Management Assessments

Who currently supports this project?

How steady is that support?

Who must support this project to be successful?

Who are the important stakeholders?

What has been communicated to date on prospective project?

What, how, and when will we communicate to those who must assist with planning?

StakeholderStakeholder PositionPosition AssessmentAssessment CommentsComments ActionsActions

John Welch Chief Executive Officer Positive Mr. Welch led development of a newcorporate strategy to make business unitsmore efficient

Joseph Novator Chief, Administrative Officer Positive Mr. Novator initiated the idea of developingshared services

Mark Peoples SVP, Human Resources Neutral Mr. Peoples has expressed doubts about theutility of shared services and theorganizations ability to adopt this level ofchange

Mr. Novator to meet with himbi-weekly to provideinformation and discussconcerns

Bill Gates Chief Information Officer Negative Mr. Gates believes that IT is over tasked andcannot provide adequate support forimplementation

Propose alterations to ITpriorities to free resources tosupport implementation

Jerry Levinson President, ManufacturingBusiness Unit

Neutral Mr. Levinson is reluctant to give up hissupport service(s) for fear of losing control

Mr. Novator to meet with himbi-weekly to provideinformation and discussconcerns

Example of Sponsor Assessment


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I.1.c Project PlanningObjectives and Core Team

Objectives for project planning in Step 1:

Review project objectives and planning assumptions

Establish a meeting schedule to collect information

Current organization, responsibilities,services, processes, service providers,customers, and costs

Existing technology architectures,databases, and software applications

Determine core team members and roles

Schedule working groups with core team to developnew operating model design options

Set up tentative meeting schedule with seniormanagement to:

Receive approval to proceed with project

Solicit budget to complete Phase I planning

Schedule business case presentation

briefing

If known, develop overall schedule of planning andimplementation to make a tentative go live date

Typical Core Team

Leader who ideally:

Understands shared services

Is experienced with managing people and projectsagood team builder

Understands financing within corporation

Can operate comfortably across functions andbusinesses (not necessarily experienced in sharedservice function to be implemented)

Other members

Leaders from relevant support services

Manager(s) from business units/customer groups

Human resources representative

Information technology manager

Manager who understands change management and

training development Organization development professional who can assist

with process analysis and reengineering

Others relevant to specific situation

Project planning provides the roadmap that the core team will use to develop acomprehensive business case and preliminary implementation plan


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Project PlanningExample Summary Project Plan

TaskTask Week 1Week 1 Week 2Week 2 Week 3Week 3 Week 4Week 4

Step 1 Strategy Assessment and Project Planning

Review project objectives and planning assumptions

Discuss corporate strategy and develop plan

Sponsor assessment and other change management planning

Select core team for planning

Step 2 Develop Current State

Comprehensive document review

Meet with service providers

Gather background and benchmark information

Interview selected customers

Meet with other stakeholders

Meet with information technology managers

Meet with information technology SMEs

Meet with selected service SMEs


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I.1.d Communication Plan

AudienceAudience MessageMessage MediumMedium FromFrom WhenWhen ApprovalsApprovals

St t Ali t d P j t


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Strategy Alignment and ProjectPlanning Exercise

Answer and/or discuss the following elements related to launching a shared services operation:

What is the strategy for the shared services operation?

What elements of this strategy are consistent with the strategy of the corporation? The corporationsbusiness units?

What elements of the strategy are inconsistent with the strategy of the corporation? The corporationsbusiness units?

If there are other shared services operations within the corporation, how is your groups strategyconsistent and inconsistent with that of other shared services groups?

What can be done to improve the alignment of your shared services strategy with the direction set bycorporate, the business units, and other shared services groups?


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Shared Services Implementation Phase I, Step 2: CurrentState Assessment


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Current StatePhase I, Step 2





Step 3Step 3Model Design andModel Design andBusiness CaseBusiness Case

DevelopmentDevelopment









management planning


processes


management plan

b. Service level




c. Projectmanagement

c. Pricing and charging





I.2.a Organizations and


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I.2.a Organizations andResponsibilitiesProcess

ChiefInformation

OfficerCIO

Planning,Coordination and

Research

ApplicationsBusinessSolutions

Network andInfrastructure

IT Help Desk

IT planning,programming andbudgeting

Research

Controls applicationdevelopmentresources

Coordinatescontracts for similarrequirements inbusinesses

Led by a businessperson

Responsible to SMT foreffective informationsystems

Coordinates andimplements business/ITstrategy

Provides projectmanagement ofprojects from an ITperspective

Project managersreport to businessaccountablemanagers forprojects

Managescontractorsassigned toprojects

Installs andmanages serversand security

Manages desktopprofiles

Managesdevelopment, testand productionenvironments

Manages test labs

Provides how tosupport for widelyused applications

Provides problemresolution

Manages securityaccounts includinglog-ons, roles,permissions andpasswords

WebCoordination

Led by businessperson who overseasweb management

Edits organization andcontent for corporation

Assists offices andbranches to developweb pages and links

Coordinates webstandards throughoutcorporation

CIO

Network andInfrastructure

Help DeskBusinessSolutions

ApplicationsWeb

Coordination

Planning andPolicy

1 Supervisor

2 Staff2 Contractor

7 Supervisor

0 Staff

2 Supervisor

8 Staff16 Contractor

2 Supervisor


1 Supervisor


3 Staff

Organization Role ResponsibilitiesCorporate ITCIO Oversight of corporate information

systems Develop and implement standards

Run configuration control board Standardize web applications

Manufacturing business unit IT Provide information technology sup portto business processes

Provide requirements for applications Maintain business-specific applications

Retailing business unit IT Develop and maintain retail salesdatabases and application

Implement applications to satisfy retail sales and corporatereporting

Develop forecasting techniques to provide inputs tomanufacturing

Etc

Etc

Etc

Interview managers and subject matter expertsto:

Determine organization structure, roles andresponsibilities

Compare roles and responsibilities at variouslevels and in various locations of theorganization

Analyze overlaps and gaps in responsibilities

Collect the numbers of FTEs performing variouswork activities

Example of Staffing Organization Chart

Example of Functional Organization Chart

Example of Roles/Responsibilities Comparison


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Organizations and ResponsibilitiesWork Activity Collection

HR Service Work Activity

Strat Spec T/P C/D Total

1. Benefits/Group Insurance a.) Health & Welfare 0%b.) Life Insurance Program 0%

c.) LOA/STD/LTD 0%

d.) 401(k)/Savings 0%

e.) Pension/Retirement 0%

f.) Severance Planning 0%

g.) Executive Deferred Compensation 0%

h.) Compliance 0%

i.) Reporting/Billing 0%

j.) Tuition Reimbursement 0%

k.) Service Awards 0%

l.) Childcare Centers 0%

m.) Vendor Management 0%

0%

2. Learning and a.) Career Ladder/Succession Planning 0%

Development b.) Training Design 0%

2.) Non-clinical courses 0%

c.) Training Coordination 0%


d.) Training Delivery 0%


e.) Organizational Development 0%

f.) Performance Management/Evaluation 0%

g.) Consulting 0%

h.) Vendor Management 0%

0%

3. Recruiting a.) External Recruiting 0%

b.) Internal Staffing 0%

c.) Workforce Planning 0%

d.) Relocation 0%

e.) Outplacement Services 0%

f.) Terminations 0%

g.) New Hire Process 0%

h.) Vendor Management 0%

0%

Organizations and


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Organizations andResponsibilitiesAssess Skills of the Organization

Human resources are the most important ingredient for improving performance through shared services

Skills must be assessed to establish a basis for conducting gap analysis with a new shared services model

Example Template for Current Skills Assessment Summary

Positions and position descriptions will be established in the new operating model

Assessment of current skills will be helpful in determining the need for new training and/or new staff

NameName Position/GradePosition/Grade Current DutiesCurrent Duties Unique SkillsUnique Skills CommentsComments

I.2.b Products, Services, and


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I.2.b Products, Services, andProcessesProcess and Examples

Develop information on what the organizationproduces and how it is delivered

At right is an example of HR services withdetails and process implications

This information is used to identify:

Potential services and processesthat might be moved to sharedservices

Relative complexity of variousservices

Disconnects and overlaps, whichmay be present in service processes

Determine the volumes associated withpertinent services, for example:

Number of database transactions

Number of forms fulfillment actions

Number of mailings

Number of checks Number of invoices

Number of vouchers

Etc.

Service Service Elements Process Implications

Payroll - Copies of pay stubs & inquiries- Garnishment fee guidelines

- Deduction guidelines

- Payroll tax guidelines

- Pay period/day information

- Employment verification &earnings reporting

- W-4, W-2 administration

- Canadian equivalents (T-1 andT-4)

- Self service securityauthorization

- Forms reductions in processes

- Ensuring information is inknowledge base

Reporting - Call center performance - Call center statistics for 3/27

Maintaining employeerecords

- Benefits enrollment

- Performance history

- Tax forms (W-2, T-4)

- Document management

- What must be retained?

- Paper or electronic retention?

Basic benefitsadministration and callrouting to vendors

- Migration to new processes - Knowledge base content,escalation rules/path

On-line access to policy andprocess

- - Employee self service andknowledge base

Table Oct-99 Sep-99 Aug-99 Jul-99 Jun-99 Average Time Min/mo Hrs/year Percent

General deductions 17420 15776 10985 13911 14831 14585 3 43754 8751 32%

Employment 5044 10855 2541 2872 4497 5162 5 25809 5162 19%

Job 3953 4719 2164 2795 3058 3338 5 16689 3338 12%

State tax 963 731 625 738 1057 823 10 8228 1646 6%

Direct deposit 2375 1904 1610 976 1226 1618 5 8091 1618 6%

Federal taxdata 869 697 594 712 980 770 10 7704 1541 6%

Garnishmentschedule 178 635 150 572 110 329 20 6580 1316 5%

Personal data 1950 1442 1068 1047 946 1291 5 6453 1291 5%

Garnishmentdeduction 370 254 336 328 322 20 6440 1288 5%

Local tax 262 164 117 146 358 209 10 2094 419 2%

Emerg contact 454 463 307 375 415 403 5 2014 403 1%

Emerg phone 106 175 131 195 243 170 5 850 170 1%

Empl deductions 179 224 108 72 107 138 5 690 138 0%

Job Earnings Dist 126 122 102 92 145 117 5 587 117 0%

Add'l pay data 63 80 107 215 109 115 5 574 115 0%

Can taxdata 21 25 40 139 55 56 10 560 112 0%

Garnishmentrule 154 121 55 45 93 94 5 468 94 0%

Personal phone 106 67 47 41 51 62 5 312 62 0%

Employment Phone 105 12 4 14 9 29 5 144 29 0%

Employees 26900 26900 20200 20200 20200 22880 27608

1206.6503 0.5801204Hrs/1000 Employees FTE/1000 Employees

Product/Service Volume Duration FTE CommentsQuestions regarding payroll 100 / day 5 minutes 1.2 Volume increases by 30

% in January and June

due to pay rate changes

PeopleSoft profile

transaction

5 / day 10 minutes 0.1

Example of Service Analysis

Example of HRIS Transaction Volumes/Level of Effort

Example of Volumes/Level of Effort

I.2.c Customers and


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I.2.c Customers andDemographicsProcess and Examples

Interview managers and customers to determine:

Customer groups and service requirements

Communications means with groups

Products/services by customer group to be provided

Other special considerations for each customer group

Interview customers themselves to:

Baseline customer service quality

Satisfaction with services, products, andresponsiveness

Ideas for improvement

Attitudes concerning proposed changes

Special requirements to provide service under anew model

Production Employees

Baseline Operations

Approximately

1,700

Seasonal Production Employees

Approximately

8,000-10,000 at one time on studio lots

70,000 different employees per year

Stores Part-time Employees

Approximately

3,000-5,000

(additional during holiday sales season)

Services Provided by SSC

Pay

Benefits through unions

Limited HR services


Pay

Benefits through unions

Limited HR services

Overhead Employees

Approximately

6,500


Pay

Benefits

Full HR services

Stable Workforce Seasonal Workforce

Employee populations vary with the season and are complex

Dental(DMO,

PDO)

HMO

Non

Contributory

Contributory

POS

ThriftPlan

GroupLIfe

FSA

Travel

LTD

Pension

Unemployment

VOE

TravelAccident

AD&D

Motion Picture

KVI

Aetna/US Healthcare

CIGNA

Oxford

UnitedHealthcare

Blue Cross Blue Shield

Hartford Life

Time Warner

Prudential

Fidelity

Ultralink (32 HMO in 32 states)

Zurich

Frick Company

Other

Ultralink mitigates the complex landscape of corporate vendors .Non UnionUnionNot provided

Example of Employee Demographics Related to HR Shared ServicesCenter

Example of Benefits Third Party Providers Currently Delivering Service

I.2.d Supporting Telecom and


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I.2.d Supporting Telecom andTechnologyAssessment Process

Resources

Determine the attitude, availability, and capabilities ofthe information technology (IT) organization that wouldsupport implementation

Investigate competing projects and their demands andtimelines

Technology landscape

Determine network type and relative capacity forexpansion

Local area network

Wide area network Extranets

Security approaches and requirements at a high level

Databases

ERPs

Relevant databases, which might includefinancial management, human resourcesinformation systems, logistics, procurement,and others

Unique, application-specific databases

Software standards

Network

Databases

Operating systems

Office suites

Technology landscape (Contd)

Applications pertinent to proposed shared services Automatic call distributors (ACD)

Interactive voice response (IVR) systems

Case management or customer relationshipmanagement systems (CMS/CRM)

Knowledge bases

Portals

Search engines

Other service support software, examples include:

HR

Recruiting software

Compensation planning

Workforce management

Finance and accounting

AP management

AR management

General ledger Etc.

Telecom

PBX system features and capacity

Local and long distance providers and services

How are current technology capabilities being used to support existing service processes?


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I.2.e Current CostsCategories

Service delivery costs

Plot FTEs performing each service process that wouldlikely be moved to shared services

Determine average loaded employee costs by FTE level

Determine total costs of each process and service

Include costs of processes currently outsourced orpartially outsourced

Facilities costs

If significant facilities will be made available by movingservices from business units, determine cost per squarefoot and total footage used

Calculate the overall costs allocated to each service asappropriate

Technology

Determine pertinent telecom, infrastructure or softwarelicensing costs directly supporting service processes

Allocate costs as appropriate where item is notdedicated to providing relevant service

Telecom charges, if significant and expected to change

Other costs

Vendor costs, as appropriate

Overhead management costs

Administrative support for relevant services

Costs for postage, publishing, advertising, recordsstorage, forms production, etc. if not included in othercosts

Tally pertinent recurring costs and costs trends, if available, to provide proposed services


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Cost AnalysisMethodology

Direct HR Costs(All costs charged to HR cost centers)

Corporate

Utilities

GlobalEnterprises

Indirect HR Costs(HR costs charged to non-HR cost centers)

Notes: 1. HR costs = Costs to administer and deliver HR services to Corporate and Business Unit customers

HR Cost?

Total HRCosts

Labor CostAnalysis

Accounting(Non-Labor)

CostAnalysis

HR Costs by Service

Benefits

WorkforceDevelopment andTraining

Recruiting andStaffing

Employee Relationsand EEO

PayrollCompensationSpecial Projects

Time mapped to activitiesbased on interviews

Costs developed from timeallocations, salary informationand standard loadings

Activities mapped to services Costs for management,

ongoing HRIS support andother support activities spreadamong services based on laborpercentage

Costs mapped to servicesbased on reviews of accountsand interviews

Costs not mapped directly toservices allocated based onlabor percentage

No

Yes

HR Costs by

Business

Corporate Energy Utilities Global Enterprises

HR Costs by Type

Direct Indirect

Corporate

Utilities

GlobalEnterprises

ExcludeNon-HRCosts


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Cost AnalysisMethodology (Contd)

Many HR employees participate in the delivery of more than one service to customers

Utilize interviews to estimate the percentage of time employees spent on various HR services Develop a comprehensive list of HR services and activities to collect employee time allocation information

Labor Cost Analysis Methodology

Develop HRServicePortfolio

Develop HRLabor Cost

Model

ConductInterviews

Populate LaborCost Model

Calculate LaborCosts

Analyze DataInputs and

Costs

Employees

Salaries

Business unit and costcenter affiliation

Allocation of time to HRservices

Allocate time of HRstaff across services

Determine labor costtype

Direct Indirect

Input raw data By business

By service

By activity type

By cost type

Labor Cost Analysis Key Elements


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Cost AnalysisMethodology (Contd)

2003 Budget

2002 Actuals

ReviewTransactionDetail For

2002Accounts

Identify HRand Non-HRCosts in HRand Non-HRAccounts

Build Non-Labor Model

AllocateDirect and

Indirect Coststo Services

PopulateNon-LaborCost Model

and CalculateHR Costs

Analyze DataInputs and

Costs

Acquire CostDetail for AllHR Accounts

By business By service

By cost type

Direct HR costsincurred by HRcost centers

Indirect costsincurred by non-HR cost centers

Review2003 Budget

for Anomalies

Identify Non-HR AccountsPotentially

Harboring HRCosts

Use actual financials to sort costs

Use budgets to identify and adjust for any upcoming projects or other anomalies in the data Obtain budget and actual information for all HR cost centers, accounts, and sub-accounts

Review transaction-level detail for all actual HR expenditures

Transaction-level detail is useful in classifying expenses by service when the account or sub-account could apply to more than one service

Accounting (Non-Labor) Cost Analysis Methodology

Non-Labor Cost Analysis Key Elements


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I.2.f Current StateExecutive Summary

Step 2.a: Organizations and responsibilities

Sponsorship and support Current organization, functions, and

numbers

Roles and responsibilities

Step 2.b: Products, services, and processes

Customer, service provider, corporate,and business unit service preferencesand concerns

Volumes and levels of effort to provideexisting services

Step 2.c: Customer demographics andrequirements

Customer groups and relevant services

Capabilities of customer groups

Common service requirements

Special service requirements

Step 2.d: Supporting telecom and technologies

Supporting technology landscape Supporting resourcescapability and

availability

Step 2.e: Costs

Service delivery costs

Facilities

Technology

Other costs

Efficiencies that can be gained by reorganizing

Products, services, and processes that can bebetter accomplished for all business units

Processes that can be reengineered andautomated for increased efficiency

Opportunities to reduce costs

IMPROVEMENT OPPORTUNITIESIMPROVEMENT OPPORTUNITIES

Current State Assessment


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Current State AssessmentExercise

Answer and/or discuss the following elements related to analyzing current operations:

What indirect functions or resources are providing services that augment or duplicate the services of yourfunction? Which activities provided by these indirect functions are candidates for shared services? Why?

What technologies exist within or outside your function that might be applicable to the shared servicesorganization? How might you evaluate these technologies?

What are the key categories of non-labor costs that might be impacted (positively or negatively) byimplementing (or improving) shared services?


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Shared Services Implementation Phase I, Step 3: Model Design andBusiness Case Development


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Model Design and Business CasePhase I, Step 3





Step 3Step 3Model Design andModel Design and

Business CaseBusiness CaseDevelopmentDevelopment









management planning


processes


management plan

b. Service level










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I.3.a New Operating ModelElements

Organization

Functional organization

elements of the organizationand responsibilities

Staffing organizationtypes and numbers of staff andreporting relationships

Functional organizationelements of the organizationand responsibilities

Roles and responsibilities

Internal roles and responsibilities

Service tiers

Support functions External relationships

Roles and responsibilities of partners

Processes

Processes to provide each service

Service delivery processes

Communications of requests

Documentation and management of requests

Fulfillment processes and procedures

Closure of requests

Communications processes

Escalation processes

Continuous improvement processes

Governance and pricing/charging

People

Skills required for new service delivery processes

Position descriptions

Training requirements

Tools

High-level supporting technology functional requirements

Communications

Requests management

Knowledge management

Self service

Telecom architecture

Technology architecture

User interfaces

Applications

Databases


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New Operating ModelDevelopment Process

Core TeamCore TeamxTeam reviews best practices and delivery optionsTeam reviews best practices and delivery optionsxThrough working group sessions:Through working group sessions:

Reviews strategy and current stateReviews strategy and current state

Discusses options for designDiscusses options for design Selects criteria for services in scopeSelects criteria for services in scope Tentatively selects services and delivery methodsTentatively selects services and delivery methods Discusses service conceptsDiscusses service concepts Outlines tentative organization that supports conceptsOutlines tentative organization that supports concepts Reviews governance and funding optionsReviews governance and funding options Tentatively selects governance and funding approachesTentatively selects governance and funding approaches Delegates detailed work to sub-teams or groupsDelegates detailed work to sub-teams or groups

xAfter iterative exchanges with sub-teams, conducts decision meeting:After iterative exchanges with sub-teams, conducts decision meeting: Reviews operating model optionsReviews operating model options Develops operating model recommendation for which business caseDevelops operating model recommendation for which business case

will be developedwill be developed

Process Sub-teamProcess Sub-teamxThrough working group sessionsThrough working group sessions

Proposes service delivery processesProposes service delivery processes Proposes escalation processesProposes escalation processes From volumes and levels of effort, estimates staffing numbersFrom volumes and levels of effort, estimates staffing numbers Outlines staff functionsOutlines staff functions Develops high-level performance metricsDevelops high-level performance metrics Provides inputs to staffing sub-teamProvides inputs to staffing sub-team

Model Designx Organizationx Processesx Peoplex Tools

Model Designx Organizationx Processesx Peoplex Tools

Technology TeamTechnology TeamxThrough working group sessionsThrough working group sessions

With process sub-team develops functional telecom requirementsWith process sub-team develops functional telecom requirements With process sub-team develops functional technology requirementsWith process sub-team develops functional technology requirements Develops tentative technology architectureDevelops tentative technology architecture Develops telecom and technology requirements lists with estimatedDevelops telecom and technology requirements lists with estimated

costscosts

Staffing Sub-teamStaffing Sub-teamxThrough collaboration with core teamThrough collaboration with core team

Develops staffing conceptsDevelops staffing concepts Begins background work onBegins background work on

sourcing optionssourcing optionsxThrough collaboration with processThrough collaboration with process

sub-teamsub-team Develops staff positionsDevelops staff positions Begins developing basis forBegins developing basis for

position descriptionsposition descriptions

Facilities Sub-teamFacilities Sub-teamxThrough collaboration with core teamThrough collaboration with core team

Develops high-level facilitiesDevelops high-level facilitiesrequirementsrequirements

Develops options for locating theDevelops options for locating thenew organizationnew organization

Change Management Sub-teamChange Management Sub-teamxThrough collaboration with core teamThrough collaboration with core team

Performs risk analysis ofPerforms risk analysis ofOperating Model optionsOperating Model options

Analyzes communicationsAnalyzes communicationsimplicationsimplications

Continues sponsorshipContinues sponsorshipcultivationcultivation

Begins development ofBegins development ofmarketing strategymarketing strategy

Model design is aniterative process

throughimplementation

SMEs andcustomers provide

inputs to refinedesign

Note: Planning can beconducted as a larger core

team or with sub-teams

i d l


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New Operating ModelKey Questions for New Model Design

Organization

Could one business service organization provideservices for all other units?

Can centralization provide scale that improves servicequality?

Which organization option most aligns with strategy?

What are the realistic location options?

Processes

Is your strategy to reduce costs, improve service orboth?

What services are similar and duplicated in more thanone business unit?

What services can be standardized or simplified andcentralized?

What services have greatest impact on businessperformance?

What services are most in need of improvement?

How can processes be improved to speed service,improve quality and/or reduce costs?

Will you use tiered service groups to provide service?

Is your strategy incremental implementation or the bigbang?

Which functional area can be implemented most simply?

Processes (Contd)

What governance approaches are most appropriate? What method should be used for funding?

When will this model be implemented?

Can services and/or customer groups be phased?

What performance will you measure?

People

Who, when, and how will service providers communicatewith customers?

How many people are needed for service delivery?

What skills are required to administer services in the newmodel?

Tools

What services will be provided through self service?Through human assistance? Via telephone? Via theweb? Via e-mail?

How can customer access to information and services befacilitated?

How do you manage requests and improveaccountability for quality and service?

How can information and processes be automaticallyprovided to service providers?

How will you measure performance?

N O i M d l


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New Operating ModelTips for Developing

Determine the services that can be better provided via ashared services model

Example criteria

Services required by multiple business units

Services that can be standardized or can beautomatically tailored for customer groups

Higher volume services where scale canprovide some efficiencies or greater depth ofservice

Services that can leverage technology

investments for better service and/or greaterefficiency

Study best practice information on shared servicesdelivery options

Consider a tiered service delivery approach

Design service from customers perspectives

Reengineer and standardize processes to extentpractical

Automate reengineered processes within cultural andbudgetary constraints

Outline the shared services organization

Provide chart of key functions with estimate of FTEs

Outline the key responsibilities at corporate, sharedservices, and in the business units

N O ti M d l


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New Operating ModelTips for Developing (Contd)

Describe service delivery processes, flows, andescalations

Describe how requests for services are communicatedand managed to fulfillment

Diagram the service flows by type service requested

Using volumes of services to be delivered, estimate thenumber of service representatives needed

Volumes multiplied by service times yields total time toprovide service

Translate hours into staffing requirements

Benchmark rules of thumb can be used in lieu ofcalculated volumes, durations, and FTEs

Study technology options to automate new serviceprocesses

Technologies can usually be phased in

Technology can be used to provide service directly, routerequests, move information, eliminate duplicate dataentry, monitor service, and assist management

Develop high-level functional requirements fortechnologies

Outline functional requirements of technologies to

support service delivery and fulfillment processes

Estimate costs of new services model

Tally software purchase, licensing and maintenance, andimplementation costs

New Operating Model Example HR


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p g pHRChannels of Service Delivery

While delivery models will vary, most models rely on a fairly consistent make-up of channels. Theseinclude channels for the delivery of customer-specific products and services, administrative andtransactional products and services, skill-based products and services, and governance/policyproducts and services. Each channel serves specific constituencies

ChannelChannel Types of Products andTypes of Products andServicesServices

Examples of ProductsExamples of Productsand Servicesand Services

Primary CustomersPrimary Customers Typical StaffTypical Staff

Operating Unit HR Unique, customer-specific x Workforce planningx Change managementx Organization designx Employee relations

x Program implementation

x BU managementx BU employees

Mid- to senior-levelgeneralist with breadth ofHR knowledge

Self-Service and EmployeeService Center

Transactional andadministrative

x Benefit and HR questionsx Benefits and payroll

enrollmentx Indicative datax Standard and ad hoc

reporting

x BU managementx Employees

Entry-level employees withstrong customer serviceskills and technologyproficiency; typically no HRknowledge required

Centers of Excellence Skill -based x Recruiting/staffingx Compensation surveys

and job evaluationx Organizationdevelopment

x Training

x BU HRx Employee Service Center

x Corporate HR

Mid-level associates withdepth in one HR functionalarea

Corporate HR Enterprise-wide HR strategy,governance, policy, andstandards

x Compensationphilosophy

x Job evaluation processdesign

x Benefits program designx Diversity policies

x Centers of Excellencex Executives

Senior-level professionalswith strong depth in one ormore HR function areas

N O ti M d l E l HR


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Service Center

New Operating Model Example HROperational View of Service Delivery

Shared services

Transactions

Information and tools

Routine services

Administrative support

Key Attributes:Key Attributes:

Service structuredService structuredand delivered basedand delivered basedon type of workon type of workperformedperformed

LeveragesLeveragescentralized andcentralized anddecentralizeddecentralizedcomponentscomponents

Heightens focus onHeightens focus onthe customerthe customer

Increases serviceIncreases servicedelivery at entry ordelivery at entry orlower service tierslower service tiers

LeveragesLeveragestechnologiestechnologies

Focuses onFocuses onproactive analysisproactive analysisand responsesand responses

Defines servicesDefines servicesclearly and basesclearly and basesservices onservices oncustomer needscustomer needs

Customer-facing

Consulting services Liaison to Centers of

Excellence, as appropriate

Business Partners

Design programs

Deliver services to businessunits

Tier 3 support for service center

Policies and governance

Centers of Excellence

Line Managers

Employees

Policies/governance

CorporateAssistedSupport

Tier 1

Tier 2

Data Warehouse/Knowledgebase

InteractiveVoice

Response

Self-Service

Tier 0

Customers Service Interface/Service Delivery Strategies,Programs and Policies

Vendors

ew pera ng o e xamp e HR


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HRCustomer View of Service Delivery

75-90%

Tier 1

x Tier 0 activities for thosewithout computer access

x Basic transactions not yetoffered in tier 0

x Basic assistancex Application assistance

x Basic activities not yetoffered in tier 0

x Basic assistancex Application assistance

x Data changesx Enrollmentx Policy/program infox Payroll/timesheet datax Referrals

x Policy/program infox HRIS reportingx Advanced services

dispatchx ReferralsTier 0

5-10% Tier 2

x Policy interpretation

x Complex issue assistancex Problem resolution

x Policy interpretation

x Complex issueassistance

x BU program design

Tier 3

x Exceptions for corporate-wide programs

x Corporate program redesign

x Exceptions forcorporate-wideprograms

x Corporate programredesign

0-5%

Employee/Retiree Manager

Centers of Expertise/ESC

Corporate HR

escalation

escalation

escalation

?



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HRShared Services Scope

Corporate HRCorporate HR Line Managers and BusinessLine Managers and BusinessUnit HRUnit HR

Centers of ExcellenceCenters of Excellence Self Service and HR Service CenterSelf Service and HR Service Center

Compensation Establish policies and procedures

Design corporate-widecompensation programs

Develop compensations policiesand procedures

Design job evaluation process

Design and oversee salaryplanning process

Apply compensation programs,policies, and procedures

Advise management oncompensation issues

Design specialty compensationprograms within establishedguidelines

Evaluate jobs

Conduct salary surveys

Communicate regarding comp-ensation issues, policies, etc.

Answer advanced compensationquestions

Answer basic compensation questions

Process and track stock options

Run and distribute compensation reports

Benefits Design benefit programs

Develop benefits policies andprocedures

Select benefit vendors

Negotiate contracts with benefitvendors

Establish severance programs

Apply benefits programs, policies,and procedures

Advise management on benefitsissues

Advise management onseverance issues

Request and deliver severancepackages

Manage vendors and reconcilevendor bills

Create severance packages

Perform plan discrimination testing

Answer advanced benefitsquestions

Answer basic benefits questions

Look up employee benefits information

Execute employee benefits changes

Administer leaves of absence

Conduct annual open enrollment

Run and distribute benefits reports

Run retirement calculations

Staffing Design staffing policies

Develop staffing policies andprocedures

Develop workforce planningprocess

Manage and assist with selection

processAdvise management on staffing

issues

Select staffing-related vendors


Develop staffing processes andtools

Create and coordinate recruitingcommunication materials

Manage job descriptions

Answer advanced staffingquestions

Process job requisitions

Answer basic staffing questions

Look up staffing information

Process candidate recruitment expenses

Coordinate background and referencechecks for candidates

Receive and scan resumes into recruitingsoftware



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HRShared Services Scope (Contd)

Corporate HRCorporate HR Line Managers and BusinessLine Managers and BusinessUnit HRUnit HR

Centers of ExcellenceCenters of Excellence Self Service and HR Service CenterSelf Service and HR Service Center

Organization,Development,andTraining

Develop enterprise core values Design succession planning

process and tools Design performance review

process and tools

Define enterprise training priorities

Define tuition reimbursementprogram

Advise managers on organization,development, and trainingprograms

Conduct workforce planning

Conduct succession planning

Identify local training needs andarrange for training

Assist managers withdevelopment planning

Coordinate and manage training(non-technical) vendors

Develop training programsAnswer advanced organization,

development, and trainingquestions

Answer basic organization, development,and training questions

Look up organization, development, andtraining information

Enroll employees in training programs

Maintain training catalog

Administer tuition reimbursement

Payroll Develop payroll policies andprocedures


Perform tax reporting

Maintain accountability forseverance plan payments

Answer advanced payrollquestions

Answer basic payroll questions Look up payroll information Input payroll data into system

Run and distribute payroll reports

Employee

Relations

Define overarching payroll policies

Define labor relations strategies Design EEO programs and

policies

Adapt overarching employee

policies to local conditions withinset guidelines Serve as employee advocate

Advise managers on employeerelations issues

Deliver new hire orientationprograms

Oversee EEO investigations

Lead labor negotiations

Conduct exit interviews

Coordinate and manage vendors,

including EAP, EEO investigations,and relocationAdminister expatriate services

Answer basic employee relations

questions Look up employee relations information Enter employee indicative data updates Maintain personnel files Process verification of employment

requests

New Operating Model Example Finance and Acco nting


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Finance and AccountingOperational View of Service Delivery

Employees

Service Center

Picture

F&ATeam

Picture

F&ATeamDecentralized F&A

Self-Sufficiency Service Interface/Service Delivery Financial Strategy and Policies

Centers of Expertise Corporate F&A

x Self-service

x Deliver central F&Aservices to businessunits and corporate

x Tier 2 for Service Center

x

Support thecorporate customer

x Develop andmaintain financialstrategies andpolicies

x Provide financialoversightx Customer-facing

x Financial consulting support

x Liaison to centers of expertise,

as appropriate

x

Transaction processingx Questions

x Routine problem solving

x Administrative support

x Self-service

x Forecasting,budgeting,analyzing, and

managing financialresources

Line Managers

Traditional Shared Services

ExpandedSharedServices

New Operating Model Example Finance and Accounting


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Finance and AccountingShared Services Scope

FunctionFunction CorporateCorporate COECOE Service CenterService Center DecentralizedDecentralized

Accounts Payable Little involvement Problem solving Processing, support Direct work to servicecenter, provide liaison toCOEAccounts Receivable Problem solving Processing, support

Payroll Problem solving Processing, support

General Ledger Problem solving Processing, support

Tax Accounting andReporting

Tax strategy and policy Provide service forcorporate, support field

Make routine tax filings Ensure compliance

Financial Reporting Set requirements Design reporting structureand formats

Provide financial reports(int. and ext.)

Maintain local distribution

Business Planning andBudgeting

Define corporate targets Provide service forcorporate, support field;maintain processes

No direct support Provide service for localcustomers

Property Accounting Set capitalization policy Provide service forcorporate and field

Ensure compliance

Financial Analysis andEvaluation

Set hurdle rates, othercorporate requirements

Design and maintainprocesses; provideservice for corporate,support for field

Provide consultingservice to local customers

Treasury (cash mgt.,bank relations, investorrelations)

Manage Corporate serves asCOE

Provide wire transfers Identify local needs

New Operating Model Example Finance and Accounting


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Finance and AccountingCommonalities

Shared services delivery frameworks are all customized to the needs of a company and its business;however, most leading models share certain philosophies and elements

The organization is externally or customer oriented, not internally or corporate services oriented

Both centralized and decentralized components exist

Decentralized largely focused on value-added advisement and/or consulting

Centralized focused on policy and program development, transactions and inquiries

More service delivery is provided at entry or lower service tiers

Integrated technologies are employed pervasively, including telephony, case management,knowledgebase, workflow, and document management

Paper is minimized

Individuals retrieve information and complete transactions via self service

Service centers cover large geographies (United States, Europe, Asia, etc.)

A recent survey by Deloitte reports that only seven percent of participants operate multiple servicecenters in a given country

Focus on metrics and measures for customer management, forecasting, process improvement, andproactive response to possible issues

Services are defined clearly and from the customers point of view

New Operating Model


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New Operating ModelSome Potential Supporting Technologies

Automatic Call Distributor (ACD) Handles queue management. Routes callers to available reps, including skill-basedrouting. Reports on queue time, call abandonment, caller volume per rep, etc.

800#/Interactive Voice Response System (IVR) Provides customers with access to information via the telephone.Provides menu options to callers and pulls information from back office systems such as the HRIS. Reports on callerselections. Can employ a variety of inbound and outbound call handling functions

Computer Telephony Integration Screen pops. Recognizes callers phone number and pulls up relevant information forcall reps while they are answering the phone. Used as a productivity enhancer

Case Management Provides caller history/information. Gives the rep information such as history, past calls, who theyspoke to, actions taken, status of their problem, etc. Tracks issue completion against established service levels

Knowledge Base Provides searchable information for call reps. Captures/interprets any policy information, requirementsanything the call rep must know to answer questions. Includes scripts for frequently asked questions. May also be usedas content on Intranet for direct customer access

Document Management Manages electronic receipt/filing/retrieval of documents. Routes documents for appropriatearchiving based on meta data (such as SS#, account #, etc.)

Employee/Manager Self Service Application and Workflow Technology Provides web front-end and back-endprocessing to enable customers to view/interact with back-end data via a pc, kiosk, etc. Includes filtering information toshow only permitted/applicable information

Web Content Management Software (portals) Serves to pull distributed data from a variety of sources into a standard

web presentation. Enables users to customize their own information, but present it in a standard, centrally supportedenvironment

Web Chat Allows customers to interact real time with a customer service rep over the web

Voice Over IP Enables call reps and customers to speak directly over the internet (bypassing telecomm costs) whilecustomers navigate the web site. Other applications can be customized to allow call rep to see what the customer sees

Wireless PDA Ports back office and web-based information to wireless personal digital assistants

Core HRIS/Payroll Systems Database-based systems used for core HR reporting and payroll functions

* other emerging technologies should be exploited as appropriate in the future

New Operating Model


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New Operating ModelExample of a Web Enabled Architecture (HR)

Intranet Applications

KBDatabase

HRISExtract

ACD

CaseManagement

System

Knowledge Base

Self Service WebApplication

ESRsPC

HRIS

PBX

HRISBridge

Links KB

HR Web

E-mail

Phone Access

PC Access(Browser)

IVR/CTI

HRISDatabase

Web Server (s)

Security

TPPTPPTPPTPP

TPPTPPTPPTPPTPPTPP

Abbreviations

P BX = private branch exchange

IVR = interactive voice response system

CTI = computer telephony integration

ACD = automatic call distributor

CMS = case management system

KB = knowledge base

HRIS = human resource information system

TPP = t hi rd par ty p rovider

ESR = employee service representat ive

I 3 b Business Case


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I.3.b Business CaseMethodology

x Recommended go/no go decision

x Cash flow analysisx Expected paybackx Qualitative benefits

x One-time model implementation costs Labor Technology Equipment Facilities Outsourcing Training Consulting Transition (severance, marketing, etc.)

x Recurring model costs Labor Technology

x Current costsx Savings

x Governancex Service scope

x Organizationx Technology

Model OverviewModel Overview

CostsCosts

AnalysisAnalysis

RecommendationRecommendation

Business Case


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Business CaseAn Example of Qualitative Benefits (HR)

An Employee Service Center approach to employee service delivery differs from the currentapproach, characterized by face-to-face, personalized service. The service center would rely uponcentralized service expertise, heavily supported by technology. The benefits of this concept include:

One Stop Shopping the ESC provides a single point of contact for all employee service needs

Integrated Life Event Solutions improved customer service by emphasizing employee life events, notplan election modifications

Increased Availability both service center representatives and employee self service access areavailable beyond the 40 hour work week

Instant Access/Response employee services are as close as the nearest telephonethe service centerobjective is to resolve all issues during the initial customer contact

Accuracy and Consistency the technology employed within the service center will force thedissemination of consistent and accurate information

Accurate and Predictable Costs the service center makes it easier to put a price tag on employeeservices

Enabler of Strategic HR Role the ESC will free up HR personnel from the day-to-day service deliveryactivities to concentrate upon more strategic responsibilities

Employee Self-Reliance the ESC will assist in placing more responsibility on the employee for theirbenefits, administrative tasks and careers

Business Case


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Business CaseAn Example of Financial Benefits (HR)

Financial business case depends on savings from reductions in costs of service delivery

(in $000's) 2001 2002 2003 2004 2005 2006

Savings from Headcount Reduction1

860 1,350 1,350 1,350 1,350

Savings from (outsourcer) Reduction2

60 180 180 180 180

Total Savings 920 1,530 1,530 1,530 1,530

Capital Requirements3

181

O&M Requirements (000's)

HR ESC Personnel Wages4

43 645 722 722 722 722

Severance5

333

Other 489 176 89 89 89 89

Total O&M Requirements 532 1,154 811 811 811 811

Total Requirements (O&M + Capital) 713 1,154 811 811 811 811

Net Cash Savings (713) (234) 719 719 719 719

NPV at 10%

IRR

1 Compensation reflects 4 % merit increase and includes 35 % load factor for benefits2 (Outsourcer) work should not be taken by HRSSC3 Costs of scanners and scanning software is not included4 Headcount is reduced to 11, but mix changes to include a Supervisor and administrative assistant

ESR salaries are based on 28,000/year (includes 7 ESRs)5 Severance dates have been moved to Jun 30 and Aug 31

Severance pay assumes 1/2 of all 26 displaced employees, equal to 6 months compensation

September Business Case

1,042

44%


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I.3.c High-Level Implementation Plan

Realign Staff (Staged)

Implement New ServiceDelivery Model at Divisions(Staged)

Conduct Training and Re-skilling

Staff National Service Centerand COEs

Design (Update) and BuildCOE

Select and ImplementTechnologies

Design and Build NationalService Center

Finalize Plan

Gain Approval

Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Activities

200820072006

Realign Staff (Staged)

Implement New ServiceDelivery Model at Divisions(Staged)

Conduct Training and Re-skilling

Staff National Service Centerand COEs

Design (Update) and BuildCOE

Select and ImplementTechnologies

Design and Build NationalService Center

Finalize Plan

Gain Approval

Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Activities

200820072006


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I.3.d Go/No Go Decision

SponsorsSponsors GoGo CautionsCautions No GoNo Go Action ItemsAction Items

Model Design and Business Case


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69Copyright 2007 by ScottMadd

fundamentials of shared service operations

Documents