Four critical success factors behind Sony’s simultaneous standardisation and outsourcing of purchase-to-pay
Delivery Construct / GBS / Outsourcing, Finance shared services, HR, O2C, Outsourcing, P2P process, Purchase to pay, R2R
At last week’s purchase-to-pay conference, I was impressed by the case study on Sony Europe’s ambitious programme to centralise local offices and outsource their purchase-to-pay functions in just 12 months. Jan Fonfara, Sony Europe’s Head of Finance Processes said that Sony Europe’s finance operations were decentralised with an unsustainable cost structure and with poor visibility. Here are my take-aways from their journey to provide better value.
The vision: To improve customer focus and create a more competitive cost structure, Sony Europe looked to centralise decision-making and achieve cost savings in just one year. This meant moving to one legal entity and one standardised process with centralised process ownership. At the same time they moved to outsource purchase-to-pay, OTC and record-to-report.
How they did it:
Define a standard process, communicate and control. Sony used their own process experts to define processes with one document outlining one acceptable and mandated process. Everyone has to follow the same process unless they can present a document which states that, legally, they are obliged to follow a different process.
Outsource activities. Working with their BPO partner, WNS, Sony Europe transferred knowledge and trained the outsourcing team so they did not have to retain activities locally.
Implement “No PO, No Pay”. Sony also implemented a no PO, no pay policy. Fonfara said they didn’t go live with the policy on the same day as the outsourcing, but a few months afterwards to give suppliers some time to get used to the new process.
Assign responsibility. Sony retained a small, but highly skilled team of two in charge of ensuring delivery in case any part of the process broke down. They were deemed as fully accountable for the performance of and the relationship with the BPO.
The end result: Standardisation and outsourced activity. Business was not disrupted and local finance teams were transformed and changed their focus to value adding activity. Cost savings were achieved through reduced labour costs.
The four critical success factors:
1. Having a change programme in place that includes HR, IS, and buy-in from senior management who will support you if things get difficult
2. Having a central team with full ownership and control
3. Making the new process mandatory, and not letting people stray unless they have a legal reason to do so
4. Using your outsourcing partner as an arm of your organisation. Sony used WSN like a shared service centre to the finance team. They treated them like a business partner, and didn’t strictly rely on the SLAs.