Que viva España! – Shared services in the heart of Catalonia (weekend impressions)

September 21, 2009

What would you do with burnt toast? Would you put some jam into it, scrape it or put another slice on? Gemba, muda, kaizen – what are actually these concepts about? What are the characteristics of the world-class companies? Are shared services just about cost? Working capital: How do the bigger than Canon, Disney, Intel, McDonald’s, Mitsubishi Electric and Volvo manage it?

Financial Shared Services Excellence held in Barcelona on 17-18 September 2009: This event is (unfortunately!) over now and I have noticed it at the latest while having landed at the International Airport of Frankfurt yesterday. The weather was a few degrees cooler and that was the middle of the weekend… Today is Sunday – the highest time to give some impressions from the stay in Barcelona, and the presentations on shared services as well.

If you do not get the top management to support your ideas and initiatives, it will be hard to achieve your goals. And it is also possible for a shared service center to be located in a high-cost location (as the Netherlands for instance) and to achieve cost savings if the resources are well-allocated – these are some of the messages from the presentation by Steven Flipse (Sanoma Uitgevers).

A shared service center with about 250 headcount is able to process about 2 millions transactions per year: To process cash collection for more than 20,000 invoices issued per month and to process 35,000 supplier invoices per month included payment via in-house bank. Except of that payroll processing for 20,000 headcount staff is possible as well, as the example of 3S Solvay Shared Services) shows. But: The way of thinking: “We are good” can quickly mean: “We are dead” in a shared service center model. That is why the philosophy “how to get more value from the shared services?” and continuous improvement are necessary, what has been clearly presented by Pierre Boyer.

A journey to lean has been presented by Emmanuel Decroix and Rafael de Ansorena (BNP Paribas). Among others such Japanese terms as gemba (standing for a place where value added processes take place, common-known kaizen (standing for continuous improvement) and how to avoid muda (meaning waste) have been illustrated and many examples from the banking practice have been shown. A concept of a rotating supervisor has been presented as well.

I (Magdalena Szarafin) could contribute as the speaker during the event as well. I have presented the use of Web 2.0 technologies for finance professionals discussing the Axiom platform, consisting of almost 1,700 finance professionals and other business leaders. Web 2.0 technologies, as social networking, RSS, blogs, wikis, mashups, podcasting, widgets stand for a huge market valuated at USD 4.6 billion by 2013. Getting and staying in touch, presentation of ideas, promotion yourself and your company, helping people asking for advice and getting advice regarding business problems – these are only a few examples why it counts to make the use of Web 2.0 solutions.

Barcelona (photo by Marion von Guretzky-Cornitz)
Barcelona (photo by Marion von Guretzky-Cornitz)

LyondellBasell Industries were present during the event as well. Dr. Marcus Demgenski has shown us the way from efficiency to effectiveness in shared services. The cost of finance function at Basell is about 0.75% of revenues while the same ratio amounts to 0.78% for the world-class companies identified by The Hackett Group. Among others, working capital was a topic for the group: a team of experts has identified an EUR 162.6 million validated working capital reduction potential

Ignacio Rabadan of GM has discussed such topics as harmonization of processes and systems, knowledge management issues, cost rationalization and adaptation to changing business environment showing shared services of GM as the case study.

The presentation about world class performance and trends in shared services by Martin Wolleswinkel of The Hackett Grouphas given the insights into the question “What does it take to get to World-Class”? The general characteristics of the world-class companies are as follows:

• Clear vision and initiatives to achieve the targets,
• Consistent communication of the burning platform and the improvements achieved,
• Changes to the service delivery model, leveraging IT to swap technology for labor, realizing labor arbitrage savings, simplifying and standardizing processes,
• Looking for further opportunities for improvement: Change has become integral part of their corporate DNA,
• Fully committed management, no mere lip service.

And the best: Shared services are no longer just about cost. Service quality and delivery are as if not more important according to The Hackett Group survey.

Paco Pelegri of Hasbro has presented a case study dedicated to the role of a financial shared service center: If that is a profit, a cost or an actual service center? It is expected that the focus for work in the SSC will be as follows in the coming years:

• High service level to internal and external customers,
• Low complexity and high volume of work,
• Process driven jobs and standardized workflows,
• Work reduction, simplification and standardization.

Strategies for cost reduction (quantity) and increasing of value added (quality) have been presented by Jean Claude de Vera (Lafarge). These both strategies are in fact interrelated and therefore should also be perceived together. They are supported by the geographical organization of the group consisting of national centers of expertise, regional shared service centers and a global shared service center.

Shared services being the core of profitability culture: The keys to successful implementation of shared services and them to be centers of growth without overspending have been presented by Virginia Guerrero and Joaquin Yagüez of KPMG. The concepts presented were actually as simple as the common-sense; that can just mean: business is simple in fact, people (can) make it complicated…

Close to Barcelona (photo by Marion von Guretzky-Cornitz)
Close to Barcelona (photo by Marion von Guretzky-Cornitz)

The 2-day-session has brought many terms and concepts known from Toyota production system. Elias Miera of Pfizer has given a presentation about kaizen, known as continuous improvement. He has presented concepts and tools for continuous improvement and made it clear: When problems arise in a process we often create additional steps designed to fix the problems after they occur, rather than preventing them before they occur. Comparing it to a broken toaster producing burnt toasts, what we need to do is to fix the toaster so the toast does not burn instead of scraping burnt toast.

And finally Philip King of Atos Origin was talking about the future of outsourcing presenting the benefits and pitfalls of BPO vs. shared services and the expected trends in BPO and shared services industry. Virtual shared service centers, as conglomerates of these both approaches (BPO and traditional shared service centers) have been discussed as well. Philip has also expressed the opinion that the cost aspect is not the only one consideration area while talking about BPO or shared services.

The two days were very inspiring, making it possible to meet business leaders representing shared services industry, having different stages of development of their shared service centers and industry experts from different countries as well. Very good networking possibility has been given during the breaks, interactive sessions and the dinner. What can be added now? Well, I am going to visit Barcelona in two months during the next event Innovation for Business Excellence.

Magdalena Szarafin
http://www.szarafin.info

P.S. Many thanks: to the employees of the Axiom Groupe for the professional organized event, your efforts and assistance during our stay in Barcelona, to the speakers – for the engagement and making this event really interesting, to the participants – for sharing your international business experience during the interactive sessions – let’s stay in touch! And my special thank to Marion von Guretzky-Cornitz – for the pictures of Spain which I could use to make this text live.


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