Posts Tagged ‘The Hackett Group’

Shared services: friends, that is really not just about cost!

May 22, 2010

An old stereotype, common-known (in a new scenario of the global financial crisis): We implement BPO or shared sevices (SSC) solutions as we want to cut cost. And the global economic crisis would just support that way of thinking (and doing things). However, things are not as simple as they seem to be at first glance…

“Going up the value chain to knowledge-based services isn’t just about cost reduction; it allows you to create a lot of value for the organization.” (Shared services shines in challenging times: Insights from Deloitte’s global shared services survey, p. 8)

Good news for people perceiving F&A (F&A – finance and accounting) BPO and SSC operations in a long-term perspective, adding value for organization running them and developing also advisory services, not just transactional ones: corporations tend to recognize that quality is more important than quantity, although the latest one is obviously not unimportant.

While a few years ago the main reason for implementing a shared services organization was the cost aspect, it is not the most important reason any more. Why is it so? One reason is the increasing role of the F&A function for corporations. Professor Joe Lampel from the Cass Business School in London, describes the situation as follows: “Today (…) it’s much more difficult to obtain money, your own ratings have come under greater scrutiny, and bonds have to be carefully managed. All of these things have put a lot of pressure on the CFO.” No woner then that according to 70% of top performing corporations (according to KPMG methodology, refer to KPMG survey Thriving not just surviving: Insights from leading finance functions) the F&A has significant influence on core operations, for 61% of them the finance function has material influence on marketing, supply chain (55% of respondents) and IT (53%). That clearly means: F&A managers actively influence business leaders to make better decisions across all functions. Therefore timely reporting of business results, delivering accurate budgets and forecasts, and investor relations management are the priorities for the F&A function.

Timely reporting, accurate figures… – it is all about quality. Let’s briefly discuss the findings of some surveys undertaken in the past two years and showing the increasing role of qualitative aspects in the F&A function, incorporated in shared services organizations (SSOs).

Higher transparency, process quality and process security are the most important drivers to implement an SSO according to the study Shared Service Center – the 2nd Generation undertaken by PricewaterhouseCoopers (PwC) in 2008. These objectives are followed by decrease of error rates, increase of customer satisfaction –
and cost reduction, expressed as less important than the previous objectives.

Service and quality improvement, accuracy and timeliness have been given as main reasons for having established or for establishing an SSO by 85% of world-class corporations identified by The Hackett Group in 2008. Service standardization was the next reason for 83% of them and about 80% said that cuts in
administrative costs, headcount and salary/wages reduction are the most important drivers to implement a shared services organization.

The increasing role of F&A (which – as such – “just” represents back-office operations) and the supporting business processes performed by shared service centers make the F&A function and the SSO existing within this function even more important for corporations. Shared services become strategic influencers, offering
corporations a tool to facilitate enterprise growth, improve focus on core business and enhance talent management.

Magdalena Szarafin


Zero-defect quality: Management tools to meet the challenges of tomorrow

July 21, 2009

Can a shared service center be better, i.e. more efficient (quantitative aspects) and more effective (qualitative aspects)? How can performance be measured? What is the gap between our shared service center and the best ones?

Did you know that the most enterprises manage their shared service centers in form of cost centers, while a profit center model would be better for them in terms of delivering of the value added for the whole enterprise, customer orientation, operative cost cuts and shorter period of amortization? And although such instruments of continuous improvement as six sigma and total quality management (TQM) contribute to increased productivity and process standardization, only a few companies can successfully use them. The most shared service centers have relative big potential of improvement regarding the process and service standardization. Companies also experience problems with implementation of a complex internal control system, which could support them to transparently measure the performance and to deliver relevant information for strategic and operative management.

But: over 50 per cent of shared service centers use benchmarking as the instrument to measure performance. There are some performance measure tools available online, which deliver the gap analysis between our shared service center and the best in the class.

As the findings of a current study of The Hackett Group show, 65 per cent of companies could cut the costs of the finance function by minimum 21 per cent implementing the shared service organisation model. In some cases the cost reduction was up to 60 per cent. The Hackett Group expects the use of shared services to grow in the coming three years by 50 per cent.

For a shared service center to be successfully implemented, good leadership is needed. The reason why shared service center projects can fail is among others not sufficient support offered by the top management.

Six sigma, leadership for shared services, centralisation within decentralisation, the question of efficiency and effectiveness, profit center vs. cost center, process and systems harmonization, shared services vs. outsourcing and many other interesting topics will be presented in form of presentations, round-table discussions and case studies during the event “Financial Shared Services 2009” organized by Axiom Groupe and held on 17-18 September 2009 in Barcelona, Spain.

Why not learn the way to zero-defect quality and prolong the summer, spending a few days in Barcelona?

Magdalena Szarafin
Magdalena Szarafin has immense knowledge of the outsourcing sector and is one of the authorities in shared services and outsourcing industry analysis. Her research interests include insourcing and outsourcing in connection with the value chain. She is an author of many publications dealing with outsourcing, knowledge management and total quality management (TQM).
Magdalena lives in Frankfurt, Germany and she works as an International Management Accountant in a big multinational group, dealing with preparation of financial statements under IAS/IFRS and local GAAP. In her leisure time she prepares a PhD dissertation focused on shared service centers.
Contact her to leverage her knowledge and in-depth BPO and shared services industry penetration experience.


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