Shared services and BPO: How to achieve optimum in real time?

November 15, 2009

When have you personally visited your bank for the last time? Three years ago? Or: you don’t remember it? Modern technology makes it possible: You can use different services, offered by parties located world-wide having the Internet access and telephone connection.

And parties offering these services do not have to be located in your town. Or even not in your country – and that was a good introduction to the Shared Services and BPO topic. Or – more precise – to a large international event which had gathered over 300 delegates, was organized by Deloitte and held on 14 and 15 October 2009 in Prague. That means: 6 plenary sessions, 8 breakout sessions, 5 special interest sessions, 3 site visits, many networking opportunities and of course unforgettable evening at the Palace Zofin.

But let’s start from the beginning on. The weather was not typical as for this season of the year, we could even observe the first snow… – and that in the middle of October! Probably nobody has been prepared for it but the conference has fully compensated this snowy, windy and cold weather.

In their introductory presentation, Peter Moller and Dorthe Keilberg (both Deloitte) gave the insights into emerging shared services, global outsourcing and current trends in offshoring. After that Emmanuel Jan (Lexmark) presented a case study on establishing a global approach to delivering shared services and David Mansfeld (Johnson & Johnson) in his presentation “Accelerating the benefits from shared services center” was talking about the Prague shared service center, employing 200 professionals of 27 nationalities. He pointed out that for a shared service center to have a low personnel attrition rate it is essential to offer people an environment where they can develop their skills and it is crucial to promote the best ones. A personal relation between the management and employees is essential for a shared service center to succeed, therefore it is not a good sign if you see your CEO only during the Christmas party.

Real benefits in real time... With over 300 delegates (photo by Deloitte)

Real benefits in real time... With over 300 delegates (photo by Deloitte)

After that four parallel breakout sessions took place. During the first of them, on location opportunities, Elias van Herwaarden and Alexander Hodac (both Deloitte) showed the major criteria for location of shared service operations, which are: cost aspect, skill pool and possibility to establish a new culture. They discussed the “hot”, “warm”, “cooling off” and “next” locations for shared service centers in CEE countries, as: Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Hungary, Romania and Bulgaria and pointed out that quality issues should be taken before cost aspect into consideration. The second breakout session was held by Katharina Ferrold (Carlsberg) and Emma Lawson (Deloitte) and was dedicated to HR-related challenges while establishing a shared service center. Kirk Wilkenson examined the shared service centers of COLT Telecom, which belong to world class shared service centers according to The Hackett Group. He gave the reasons, why they had established their shared services in India (Gurgaon and Bangalore) and Spain (Barcelona), paying attention on language skills, labour and rental costs and government support among other. And during the session on monetisation a shared service center Simon Tarsh and Sam Waller from Deloitte were talking about mature service centres, which are internally treated as cost centres, and which are valuable assets in the BPO market place and can therefore be monetized. The following models are available for corporations running SSCs: in-house, corporate alliance, spin-out and an outsourced option. Such corporations as: Unilever, Aviva, Philips, Citigroup, NHS, BAE Systems are examples of organisations which have used the opportunity to monetize their shared service centers, signing a joint venture or an outsourcing contract.

After the breakout sessions, four special interest sessions were offered to the delegates. During the first of them: “To be or not to be? How to assess whether a Shared Services model is right for your organisation…”, Jamie Bartlett from Deloitte and Jo Hart from DMGT discussed the procedure of preparation a feasibility study starting with the questions which the study has to answer and ending with key factors crucial for a shared services model to succeed. The session by Dorthe Keilberg and Jeppe Larsen (both Deloitte) was about the migration road map. They pointed out that we have to think local during the migration and the local areas affected by an SSC implementation are as follows: processes, organisation and technology. They also discussed the key challenges of migration and the characteristics of a good implementation. Nick Prangnell (Deloitte) was talking about shared services being a part of a larger finance transformation. Finance transformation was defined as an umbrella concept focusing on improving performance, stewardship and control of the company by enabling CFOs and their finance organisations to have greater impact on strategy formulation and execution across the enterprise. Using finance transformation with shared services offers among others the advantage that it does not commit to “shared services” as the solution and it can be as wide, broad or deep across the whole of finance as you need or want. And finally Sharon Eyre and Doug Stockton (both GSK) were talking about effective BPO governance, being a good introduction to the BPO topic.

Evening event at the Palace Zofin (photo by Deloitte)

Evening event at the Palace Zofin (photo by Deloitte)

The first day was very informative and rich in different forms of interaction. There were also two site visits offered this day: SAP and Johnson & Johnson. And finally, there was an evening event at the historical Palace Zofin combining the mix of the best Czech traditions: warm hospitality, great music, haute cuisine and perfect networking possibilities as well.

That's impressive!: Inside of Monster Prague (photo by Zi Jafferji, Monster)

That's impressive!: Inside of Monster Prague (photo by Zi Jafferji, Monster)

The second conference day started with the panel discussion on BPO with: Rick Sturge (WNS), Michel De Zeeuw (Infosys), Kirk Wilkenson (COLT Telecom), Doug Stockton (GSK), Simon Tarsh and Peter Moller (both Deloitte) followed by the plenary session on BPO vendor selection process by Tim Spence from T-Mobile. After that special interest sessions from the past day were held, giving people the opportunity to attend those of them which could not be attended in the past day. Paralelly the site visit at Monster was offered, where both: presentation of the facilities of a shared service center (very modern architecture!) and the development of the shared services concept, and the question “Why Prague?” were discussed (Zi Jafferji, Monster).

Inside of Monster Prague: Big (and nice) employees kitchen (photo by Zi Jafferji, Monster)

Inside of Monster Prague: Big (and nice) employees kitchen (photo by Zi Jafferji, Monster)

The site visit was followed by four breakout sessions: Six Sigma and Lean in a shared services environment (Nadeem Gulzar, Deloitte), Shared services in the public sector: are they uncontrollable beasts? (Roelant Reijmerink and Werner Mullink, both Deloitte), Optimisation and beyond: achieving the mindset of a BPO vendor (Kirk Wilkenson, COLT Telecom), Transforming your business and cost base by monetising your shared services centre (Sam Waller and Simon Tarsh, both Deloitte).

During the plenary session, Nigel Coffey from Pfizer started his presentation on global financial solutions at Pfizer with an anecdote on the next glass of champagne which had not been drunk during the past evening. He pointed out the role of talent for a successful shared service center: The SSC in Ireland employs people of 32 different nationalities, of which 69% have already worked in a shared service center before and 76% have already worked with a multinational. 79% of the employees possess graduate education degree and 60% of them speak minimum two foreign languages. He also presented the results of the customer satisfaction survey: While “just” 64% of the customers were satisfied with the service offered by the Irish SSC, there were 83% in 2009.

This optimistic trend in customer feedback ended the last presentation. After that Peter Moller and Dorthe Keilberg summarized the event, which was very interesting, impressive and informative, offering a lot of knowledge and new contacts.

Nice, Dublin, Amsterdam or maybe Budapest – where will the next annual shared services and BPO conference be held? – We shall see in a year-time….

Magdalena Szarafin
http://www.szarafin.info

P.S. My special thanks to Zi Jafferji for the pictures of Monster facilities sent to me!


Comments

5 Responses to “Shared services and BPO: How to achieve optimum in real time?”

  1. Nice blog on November 17th, 2009 6:17 am

    Very nice presentation. I wish I could have been there. Do you know when is the next conference?
    -Mark
    _________________________

    Dear Mark

    Yes, it was definitely an event which was worth attending.
    Regarding the next BPO and SSC conference: This event has been organized once a year for a few years time now. So the next one will take place in the next year – September?
    As I would also like to attend the event next year, I will inform you (giving a proper comment) about the details closer to the date.

    Best regards

    Magdalena Szarafin

  2. Why Outsource to India on November 20th, 2009 4:14 am

    I agree with Mark. Lemme also know ehen is the next conference

    __________________________________________

    … see my comment I have just given to Mark.

    Best regards

    Magdalena Szarafin

  3. Tripp Babbitt on November 23rd, 2009 1:40 pm

    All:

    We have found that sharing services usually results in increased costs. The design and management of work is the biggest lever for improvement. We assume things are optimal and then share services to reduce expenses, bad assumption. As service lessens in a shared services arrangement, more people are hired costing even more money.

    Please read:
    http://blog.newsystemsthinking.com/blog/shared-services-strategy/0/0/the-case-against-shared-services
    http://blog.newsystemsthinking.com/blog/shared-services-strategy/0/0/dos-and-donts-of-a-shared-services-strategy

    Regards, Tripp Babbitt
    http://www.newsystemsthinking.com
    http://www.thesystemsthinkingreview.com (government help)

    _______________________________________________

    Dear Tripp

    Thank you for the comment about possible diseconomies of scale while implementing a shared services model. That is a possible scenario as well, occuring however at the initial stage or in a few percent of implementations.

    According to one study, in around 10% of corporations which have decided to implement the shared services organization (SSO), the executives have decided to come back to the original model.

    Once again many thanks!

    Magdalena Szarafin

  4. David on December 7th, 2009 2:19 am

    I totally agree with Mark. Lemme, thank you.

  5. Jack on April 29th, 2010 10:24 pm

    Finance & Accounting costs are under severe study. With back office functions becoming more and more significant to lift cost saving potentials both shared services and BPO providers need to provide insights on how services have been priced. New economic developments make a focus on cash flow even more vital. There are many methods out there; some of them are very well thought through but often quite widespread approaches are applied.

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