Survival of the Quickest: The Four Phases of Shared Services

The airplane landed and the rain clouds clustered together over our heads to give the arriving Brits a home-from-home welcome. We had all descended on Madrid for the Annual Deloitte Shared Services and Outsourcing Conference. With the promise of sunshine, great content, direction and free expertise for two days, 450 professionals gravitated to Spain’s capital seeking affirmation that what they were doing was ‘right’.

The conference room was a huge auditorium where each participant was armed with a desk, desk lamp (no bigger than your thumb) and a microphone just in case you wanted to chip in. The scene was set for ‘learning’ and first up was head of the UK shared services team, Peter Moller. He’d obviously been practicing his stand-up-comedy banter as one joke followed another and before long I’d forgotten where I was and why I was there. As he shifted his attention to the subject of ‘Trends in Shared Services’ we all coughed and composed ourselves and engaged the learning part of our brains.

The key message voiced by Peter was that multinationals are: moving to a single chart of accounts; moving onto a single ERP instance if their business allows this; and moving to a single process. So far, so not-surprising. However, the second part of that statement, which triggered a ripple of slight relief across the hall, was that whilst this is actually happening, progress is SLOW.

But we ask ourselves why? Four key reasons were highlighted as:

1) The ‘As Is’ mess which we are all trying to move away from is so messy and so complicated that unsticking ourselves from it is, in itself, a mammoth task. We all know we want to get to this white, clean lined, brightly lit process nirvana, but first we have to find our way out of this jungle which has been allowed to grow wildly around us.

2) Rarely is there a business that provides one service, or one product, or hasn’t acquired another company. Most organisations as we know them have been built up through M&A and have a suite of business lines, each operating like their own little kingdom. The first problem that this presents is around standardisation. Take Alstom as an example – one part of the group makes trains, the other services power stations. How likely is it that the P2P process for both businesses will be the same? Not very. So introducing standard processes across multi-product businesses is a big challenge.

3) The second problem that multi-lined businesses face is politics. Within kingdoms live kings, all of which need to be ‘bought in’ and the more complex the business the longer this will take and the higher the risk of project collapse. This slows progress down.

4) And finally we stand in today’s world, very familiar with what needs to change and what life may look like once our job is done, but there are so many tools, techniques, and models to get us from A to B, we can sometimes be unsure which route to take and which will serve us best. This uncertainty can undermine our intentions, and again slow the project down.

In a recent survey managed by Deloitte, they identified 4 key stages on the journey to finance process optimisation:

The Accelerate Phase (the quick-win job of putting low value, rules based activity in a captive shared services centre locally or off shore)
The Embedded Phase (where activities within the SSO, or impacting the productivity of the SSO, are standardised)
The Transform Phase (where high value finance activities like management reporting are brought within the scope)
The Continuous Improvement Phase (where processes are made touchless through automation tools)

Deloitte’s survey reported that 85% of its respondents were in stages 1 and 2 and only a tiny 15% had reached the Transform or CI Phase. We are all pointing in the same direction. We are all moving in the same direction, but like a sea cucumber crossing the ocean floor, progress is painfully slow. There are of course exceptions, which present cases of companies moving through these stages as nimbly as a gazelle. One case in point is The World of TUI. With market forces working against them in 2000 with no-frills airlines competing with their offering and potential customers booking their own trips on the internet, they had to reduce costs, and quickly if they were going to survive.

Therein followed a speedy move to finance shared services, with over 300 FTEs, and then a speedy move to automation, which shrunk the team to 130 FTEs. The final leap, made at relative break-neck speed, was outsourcing over 90 FTE roles to WNS in India and dispersing the remaining roles into the business. TUI’s SSC was created and then eliminated in the time that many organisations manage a feasibility study.
But this said TUI had a burning platform which they needed to run from to avoid death. It will be interesting to see if there is a gear change in speed of progress at a macro level given the current economic climate and the sense that slow movers could be the losers.