Mungovan and Sabo Shared Services 2.0

Shared Services 2.
0
Massachusetts Digital Summit
October 19th, 2009

Program Agenda
Theory
• What are Shared Services?
• Why Do Organizations Adopt Shared Services?
• How are Shared Services Implemented and Optimized?
• How does Oracle Enable Shared Services?
• What’s Next/Trends?
Copyright ©2009, Oracle. All rights reserved.

Oracle Confidential 2
What Are Shared Services and What Are the
Benefits?
Shared Services is a service model designed to gain

efficiencies in routine processing by leveraging
common practices and enabling technology
• Reduces costs
• Improves productivity
• Promotes timely execution
Key Benefits
• Enables better decision making

• Leverages existing and exploits emerging technologies
• Ensures acceptable levels of control and risk management
• Optimizes skills/capabilities of the organization
• Promotes collaboration across the extended enterprise

Pre-Shared Services
Silos of Resources/Data
Purchasing Manufacturing Distribution Marketing Sales

LOB 1
FINANCE
HUMAN RESOURCES
INFORMATION TECHNOLOGY

LOB 2
FINANCE
HUMAN RESOURCES

LOB 3
FINANCE
HUMAN RESOURCES

Post-Shared Services
Independent LOBs with Common Model Support
LOB 1 Purchasing Manufacturing Distribution Marketing Sales
FINANCE
SSC HUMAN RESOURCES

Shared Service Models Are Highly Mature And
Successful
Shared Services Are Highly Mature… …And Have a High Success Rate
• Service delivery models for Shared % of

Services are proven respon-
dents
– Ranging from sharing only technology 100 28 5 100
and/or processes and/or people 90
– Varying strongly in scope 80

67
70
60
• Technology is mature 50
95% of SSC
– Core are global ERP/HRMS systems 40
implementations
– Wide range of tools in use 30
rated
20
“successful”
10
• Best-practices available in 0
abundance a
Yes, b
Yes, however, c
No, we have sum
Total
definitely a we had some major
– From numerous successful
full success. issues. problems.
implementations in all industries
Source: Hackett “The Future of Shared Services” 2005

Why Implement a Shared Service Center?
Tactical vs. Strategic Business Drivers
  Improve Service Levels

  Process
High
Standardization
  Process More   Process
with Same/Less Improvements
  Increase Control
STRATEGIC
  Capture Acquisition Synergies

Medium
  Data Visibility
  Coordinate IT
  Accelerate ERP Increasing

Implementation
(sustainable)
Low
  Headcount value/continuous
Reduction improvement as
f(x) of time
Low Medium High
TACTICAL

Top Business Drivers for Shared Services Are
Process Standardization and Improvements
Business drivers for adoption of SSC (% of respondents)
Process
standardization
Facilitate process
improvements
Headcount reduction
Improve service levels
Increase control
Accelerate ERP
implementation
Data visibility and
comparability improvements
Coordinate IT
Process standardization
Cross-division/location and improvements
comparability Other business drivers
Capture acquisition
synergies
0 10 20 30 40 50 60 70 80 90
Headcount reduction is not #1 priority, although important

Source: Deloitte Research “The Future of Shared Services” 2003; Oracle analysis

Overwhelming Evidence of Proven Financial
Benefits From SSCs
• Average ROI for shared services implementation is about 20 percent

– Average payback period approximately three years
– 74 percent meet or exceed their financial targets
• Measurable direct bottom-line impact, e.g. up to 45% reduction of

finance cost through shared services
• Sizeable benefits achievable in payroll administration - the early

adopter in HR shared services
– Top performers beat the average payroll cost per employee by 47%
• Shared services also deliver on intangible benefits

– Such as productivity, quality and customer service

Shared Services Cover A Wide Variety Of Processes
Across Multiple Functional Areas (1 Of 2)
Functional Areas And Key Processes Covered By SSCs
Finance HR Procurement Services
• Cash disbursements • Rewards administration • Supply data management • Order and contract
• Revenue cycle • Payroll services • Requisition and PO management
• Accounting & External • Data management, processing • Service execution
reporting reporting and • Supplier scheduling • Service operation
• Tax management compliance • Receipt processing • Planning & strategy
• Treasury management • Staffing services • Compliance management • Function management
• Compliance • Workforce development • Customer management
management service • Sourcing execution
• Planning and • Organizational • Supplier management &
performance effectiveness development
management • Total rewards planning • Sourcing & supply base
• Business analysis • Strategic workforce strategy
• Function management planning • Function management
• Function management
Source: Hackett; Oracle Insight analysis

Shared Services Cover A Wide Variety Of Processes
Across Multiple Functional Areas (2 Of 2)
Functional Areas And Key Processes Covered By SSCs
Information Technology Marketing & Sales Manufacturing Corporate Services
• Infrastructure • Marketing • Production planning • General administration

development & communications • Inventory management • Travel & transportation
management • Brand and product • Shop floor scheduling • Real estate & facilities
• End user support management • Capacity management mgmt
• Application development • Planning & strategy • Function management • Government affairs
& maintenance • Market research & • Legal
• Quality assurance analytics • Quality management
• Risk management • Sales execution • Risk & security
• IT business planning • Sales operation management
• Enterprise architecture • Sales planning • Corporate
planning • Function management communications
• Emerging technologies • Planning & strategy
• Function management • Executive office
Source: Hackett; Oracle Insight analysis

Ensuring Successful Shared Services
Implementation: Best Practices (1/2)
1 • Clearly define the Shared Services vision
– Senior executive driven process with operating unit leader participation
– Clear alignment of Shared Services vision with overall organizational goals
2 • Develop a detailed business case for change
– Develop “case for change”; include both hard benefits (e.g. labor cost reduction) and soft
benefits (e.g. service improvement, better visibility, etc.)
– Do not under-estimate the implementation and transition costs
3 • Define scope for economies of scale and skill
– Scope includes “scale” based processes (e.g. Payables, invoices, etc.)….
– …and “skill” based processes (e.g. legal, marketing, tax, etc)
4 • Establish appropriate executive leadership
– Steering committee includes HQ and operating unit executives
– Use distinct leadership for SSC development vs. operations
5 • Select the right people for the project
– Select the “right” resources, not the “available” resources for the project
– Release SSC project resources from their day-to-day responsibilities
Source: “Ensuring Successful Shared Service Implementations: From Vision To Operation”, Accenture

Ensuring Successful Shared Services
Implementation: Best Practices (2/2)
6 • Communicate extensively
– Establish a clear communication plan (message outline, timing, audience, communicator)
– Communicate to potentially affected employees early-on
7 • Start transition planning early
– Start transition activities up to 180 days prior to SSC implementation
– Focus on knowledge transfer, data conversion, and training activities
8 • Use technology as a strategic enabler
– Streamline/consolidate core transaction processing systems (ERP, HRMS, etc.)
– Invest in workflow capabilities, case management solutions, and self-service tools
9 • Recruit and train the “right” team for the Shared Service Center
– Use a mix of internal and external hires to develop the SSC team
– Develop and implement an enduring training plan
1
• Over support each implementation
0
– Over staff the organization during the transition and stabilization periods
– On-site project representatives for support & issue resolution during stabilization phase
Source: “Ensuring Successful Shared Service Implementations: From Vision To Operation”, Accenture

Example Governance Structure for Shared Service
Centers
COO
SSC Leadership Steering Committee
• Service delivery
strategy
Advisory Board SSC Management • Scope expansion
• SLA approval • Significant issue
resolution
• Process & strategy
review • Funding review
• Issue resolution
• Operation unit behavior SSC Operations User Committee
influence
• Continuous • Resolve service
improvement feedback performance issues
• Continuous
improvement ideas
• New requirements
Source: “Optimizing Shared Service Performance through Better Service Management”, Accenture

Hindsight Reveals to Experienced Shared Service
Organizations that Executive Sponsorship is Critical
Success Factors Deemed Most Important by Surveyed Executives
0% 10% 20% 30% 40%
Executive Support
Change Mgt /
Communication
Standard Processes
Employee Engagement
Customer Buy-in
Planning
Strong planning and process standardisation are not enough on their own.
Source: Shared Services: A Benchmark Study, March 28 2005, Arthur D. Little / The Johnsson Group; based on a survey of 40 global
organisations, workshops, and client engagements.

Best Practices Adopted By Shared Service Center
Leaders
Best Practices Employed In Shared Services Operations
Percentage of Centers
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Service Level Agreements 82%
Key Performance Indicators 71%
Imaging/Workflow 48%
Employee Development Programs 45%
Account Managers 42%
Continuous Improvement Model 40%

Call Center 40%
Balanced Scorecards 39%
Employee Self-Service 34%

Governance related
Communications Model 31% Performance related
Customer Self-Service 28% Technology related
Manager Self-Service 25%
Source: “Shared Services: The Evolution of Higher Performance”, Accenture 2004

Shared Services: Top Optimization Initiatives
Top Initiatives
Percentage of Respondents
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Increase automation tools
Streamline processes
Expand scope of services
Improve customer service levels
Improve controls
Expand the number of internal customers
Improve overall governance structure
Improve performance management
Develop/improve formal training programs
Source: Deloitte Research

Most SSC Organizations Move Beyond Simple KPI
Measurement to Form SLAs with Internal Customers
Continuous Improvement and Self Service are also Key Drivers
70% 68%
62%
60% 56%
49%
50% 44% 44%
40%
40%
32% 32%
30%
20%
10%
0%
KPI SLA Continuous Employee Imaging Call Centre Balanced Governance Employee
Improvement Self-Service Workflow Scorecard Board Development
Model Programme
SLAs that do not promote simplicity, transparency, and accountability are

likely to cause more administrative burden than benefit.
Source: Shared Services: A Benchmark Study, March 28 2005, Arthur D. Little / The Johnsson Group; based on a survey of 40 global
organisations, workshops, and client engagements.

What Makes a Service Level Agreement (SLA)
Successful?
Critical Success
Factors What You Need
• Short (1-3 pages) and simple to understand

• Bundle services by business units to enable tradeoffs across
Simplicity
functions
• Enable straightforward, ongoing communication
• Invoicing clear and understandable

• Pricing provides insight into service cost drivers and encourages
Transparency and desired behavior
Choice
• Base level “lights-on” operations separated from optional services
• Flexible, scalable service levels, up or down
• Track performance against internal targets and external

Metrics and benchmarks (without adding excessive infrastructure)
Accountability
• Link business and service management
Source: Booz-Allen & Hamilton 2000, “Getting Shared Services Right: Capturing the Promise”

Integrated Technology Is a Key Enabler For
Shared Services
IT standardization in SSCs continues
Homogeneity 100%
of IT landscape
in SSC 80% 47%
54%
65%
60%
40%
46% 53%
20% Heterogeneous
35%
Uniform
0%
2003 2004 2005
“One single integrated ERP system” identified as the single most

important best-practice for SSC performance (Hackett 2004)
Source: Hackett “The Future of Shared Services” 2005

Technology Enablers For Shared Services
Top 10 Technology Enablers ERP Standardization Is A Given
1. ERP % of
respon-
2. Data Analysis and Reporting Tools dents
10
100
17
3. Workflow
80 19
4. Document Imaging
5. Data Warehouse 60
54
100
6. ePayment 40
7. Employee Self-Service
20
8. EDI
0
9. Manager Self-Service a
ONE b
Legacy c
Multiple d
Multiple sum
Total
common System ERP ERP
10. Financial Consolidation Tool ERP systems instances
system.
Source: “Shared Services: The Evolution of Higher Performance”, Accenture 2004

Oracle E-Business Suite Offers Rich Functionality
For Shared Services
Key Differentiators
• Single, comprehensive suite of applications covering Reduce IT

all key functional areas for SSCs (Finance, HR, Supply integration and
chain, Procurement, etc.) maintenance costs
• Rich functionality for a variety of self-service tasks Reduced workload

for SSC staff
• Pre-built, workflow across various functional areas Integrated

• Delivers complete process solution (e.g. Procure to processes across
Pay, Order to Cash, etc.) HC and SSC
• Daily business intelligence Enable

• Pre-built reports and dashboards by user roles and continuous
responsibility improvement

Oracle Confidential
Key Oracle Differentiators for Shared Services
• Unifying Technology
– Oracle Applications are designed to support multiple organizations in one instance
• Workflow
– The key link between SSC and the divisions being served is built into Oracle’s
applications
• Interfaces
– Management tools for open interfaces to legacy systems, and a comprehensive
application integration framework to enable seamless integration
• Self Service
– Integrated applications to be used by the division being served, driving strong operating
efficiencies
• Business Intelligence
– Powerful means to monitor and manage performance by both the SSC and the divisions
being served
• SEM Products
– Activity Based Costing or Balanced Scorecard can be used to manage performance
against service level agreements
• Integrated Customer Relationship Management (CRM)
– Oracle CRM Modules are pre-integrated into the E Business Suite application family
Source: Oracle Global Implementation Guide

Four Important Trends in SSCs: Outsourcing,
Automation, Global Reach and Scope Expansion
• Outsourcing and offshoring

– Once an organization feels comfortable with internal Shared Services it may decide to
outsource and/or offshore operations
– Mature offerings in Finance/IT available, HR/procurement/etc. taking up speed
• More automation
– Most important objective of most SSCs: single global ERP/HRMS system
– Top 2-4 priorites are: vendor self-service, e-procurement, employee self-service
• Global reach - movement to global shared service models

– Pressure to move to lower labor markets
− Increased efficiency with lesser SSCs
• Scope expansion along all corporate functions

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Shared Services 2.

October 19th, 2009

Copyright ©2009, Oracle. All rights reserved.

Shared Services is a service model designed to gain

• Enables better decision making

Copyright ©2009, Oracle. All rights reserved.

Purchasing Manufacturing Distribution Marketing Sales

Purchasing Manufacturing Distribution Marketing Sales

Purchasing Manufacturing Distribution Marketing Sales

Copyright ©2009, Oracle. All rights reserved.

LOB 1 Purchasing Manufacturing Distribution Marketing Sales

LOB 2 Purchasing Manufacturing Distribution Marketing Sales

LOB 3 Purchasing Manufacturing Distribution Marketing Sales

SSC HUMAN RESOURCES

Copyright ©2009, Oracle. All rights reserved.

• Service delivery models for Shared % of

and/or processes and/or people 90

– Varying strongly in scope 80

Source: Hackett “The Future of Shared Services” 2005

Copyright ©2009, Oracle. All rights reserved.

  Improve Service Levels

  Capture Acquisition Synergies

  Accelerate ERP Increasing

Copyright ©2009, Oracle. All rights reserved.

Improve service levels

Headcount reduction is not #1 priority, although important

Copyright ©2009, Oracle. All rights reserved.

• Average ROI for shared services implementation is about 20 percent

• Measurable direct bottom-line impact, e.g. up to 45% reduction of

• Sizeable benefits achievable in payroll administration - the early

• Shared services also deliver on intangible benefits

Copyright ©2009, Oracle. All rights reserved.

Functional Areas And Key Processes Covered By SSCs

Finance HR Procurement Services

Source: Hackett; Oracle Insight analysis

Copyright ©2009, Oracle. All rights reserved.

Functional Areas And Key Processes Covered By SSCs

Information Technology Marketing & Sales Manufacturing Corporate Services

• Infrastructure • Marketing • Production planning • General administration

Source: Hackett; Oracle Insight analysis

Copyright ©2009, Oracle. All rights reserved.

Copyright ©2009, Oracle. All rights reserved.

Copyright ©2009, Oracle. All rights reserved.

SSC Leadership Steering Committee

Copyright ©2009, Oracle. All rights reserved.

0% 10% 20% 30% 40%

Copyright ©2009, Oracle. All rights reserved.

Service Level Agreements 82%

Key Performance Indicators 71%

Employee Development Programs 45%

Account Managers 42%

Continuous Improvement Model 40%

Balanced Scorecards 39%

Employee Self-Service 34%

Source: “Shared Services: The Evolution of Higher Performance”, Accenture 2004

Copyright ©2009, Oracle. All rights reserved.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Increase automation tools

Expand scope of services

Improve customer service levels

Expand the number of internal customers

Improve overall governance structure

Improve performance management

Develop/improve formal training programs