Profile success factors Shared Service Center

PROJECT INSIGHT 1 0

K EY

S UCCESS

F ACTORS

O F

S S C

I M P L E M E N T A T I O N

Client:

Global industry leaders

“Building our SSC was like a marathon: We were tired half way through the course.

But we pulled ourselves together and continued our mission against all odds! And today we are all extremely proud looking at the platform we created and the level of professionalism we are operating in today” Head of Shared Service Operations, Global Process Industry Leader

Project:

Shared Service Center implementation

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Background The current economic situation has focused industry leaders on objectives such as synergies, economies of scale and functional excellence which in turn has created high motivation to engage in Shared Service Center (SSC) initiatives. Furthermore, SSC initiatives are additionally fueled by longer term strategic objectives such as the need for greater transparency & control of processes due to tightening regulations as well as the flexibility to respond to market changes. The best SSCs also support company growth by acting as platforms for efficient integration of acquired or merged companies and they foster groupwide harmonization and standardization of procedures. The SSC’s potential is diminished when the implementation plan underestimates the scope and impact of issues which commonly arise during a SSC set-up. Even with extensive preparation and planning, shared service projects neglect aspects that can have a significant impact on the overall success of the centralization initiative.

10 Key Success Factors of SSC implementation We condensed our experiences from more than 15 years of successful SSC project work into 10 key success factors. These need to be adequately considered throughout the organization’s SSC journey to safeguard the realization of the intended goals: 1. Secure executive leadership 2. Communicate vision 3. Create change culture 4. Engage business units 5. Develop sustainable business case 6. Master project management 7. Consider resource management 8. Align organizational structure 9. Redefine governance 10. Ensure service performance

Client:

Global industry leaders

Project:

Shared Service Center implementation

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Ensure dedicated executive 1. Secure executive leadership leadership involvement SSC projects often face challenges to overcome resistance from affected stakeholders. Solving project roadblocks requires a strong executive leadership. Weak executive leadership and insufficient visibility of top-management support results in insufficient buy-in and follow-through, both of which are crucial for a successful SSC implementation. Many SSC projects already fail during their initial phases due to their inability to motivate key stakeholders who need to bring the SSC concept into operation.

Inform stakeholders on a re- 2. Communicate vision gular basis during the transIn many cases SSC objectives communicated to the organization formation period are only outlined on a strategic level if at all and do not explain the “new rules of the game� and upcoming operative activities which are crucial for implementation. These findings are also backed by research, indicating that a lack of communication routine increases the risk that SSC initiatives loose momentum after their launch. It is therefor crucial to set up a communication concept which encourages and enables individuals to take responsibility for their new vision and to work toward their new strategic goals.

Move and motivate all employees participating in the implementation

3. Create change culture SSC implementation projects success can be improved significantly by adequately treating the people aspect and the impact of change management. For SSC initiatives it is vital to point out the importance of their participation to affected stakeholders. If the change management concept fails to foster passion and the willingness to support the implementation, it automatically delivers reasons for resistance and risks the success of the entire SSC project initiative.

Client:

Global industry leaders

Project:

Shared Service Center implementation

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Involve business units in the 4. Engage business units implementation with dediIn every SSC project the (local-) business units must be aware cated responsibilities about their organizational engagement to ensure a successful functional transformation. In successful SSC-implementation initiatives they are part of the project and have dedicated implementation responsibilities. At the end the local support is crucial for project success. In the early phases of SSC-initiatives the relevant know-how needed to achieve a decent service quality lies within the local units. Successful SSC projects effectively include local responsibles in the set-up phase to safeguard the consideration of local specifics.

Compile a realistic business case taking into account all relevant aspects of the project

5. Develop sustainable business case Every SSC implementation must start with the question: Is the project worth doing it? To answer this question it is crucial to develop a business case which realistically assesses costs and savings the SSC initiative is expected to deliver. After the initial phase many SSC projects face an increasing risk of “shut down” because they significantly deviate from initial business case expectations. This is mainly attributed to the following shortcomings including:  Incomplete identification and overoptimistic evaluation of costs and savings  Missing business case update procedure incorporating real cost data (for project and service costs)  Lack of robust processes to manage, monitor and realize benefits  Lack of early engagement and commitment of stakeholders to realize the benefits (e.g. by sign-off procedure) Rather than basing the decision for a SSC on an overoptimistic case, the key is to realistically assess the benefits in the individual situation and to deliver on the assumptions.

Client:

Global industry leaders

Project:

Shared Service Center implementation

Develop a down-to-earth implementation plan that is tailor-made to the organizational capabilities

6. Master project management

Staff resources with the right skill-set from the beginning

7. Consider resource management

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During the SSC implementation the project milestones cannot be realized at once. The organization requires bearable transformation steps to avoid loosing stability and control and thus keeping project costs from spiraling out of control. Furthermore, the large scope of transformation steps requires a stringent project approach. This needs effective project management which knows how to execute the necessary operational SSC tasks at the right time. And manages to have the right skills in place at the time when they are needed.

Successful transformations are always adequately staffed. Beyond basic project management, full-time positions are necessary to support line management, communication, training and organizational development. It is vital to ensure that resources with the right skill sets are in place.

And keep in mind: In many SSC implementation projects the team that drives the transformation is different from the operations team that will provide the services after transformation. Know-how management and the target-oriented transfer of knowledge therefor are crucial tasks in the SSC set-up-phase.

Constantly align the SSC 8. Align organizational structure organization to the service Once the transformation is completed and the services are centradelivery model lized, the SSC project does not end: In many cases it is even just the beginning. After stabilizing the service delivery often adaptations in the delivery model take place. To maximize the SSC benefits, a constant adaptation of the service organization towards changes in the delivery model is needed. With growing SSC maturity it becomes more and more important to optimize the interaction between the center and its customers by streamlining the interfaces. This is also essential if the center is used as a platform to integrate new or acquired businesses. Here, a formal integration procedure can significantly improve speed of PMI-initiatives.

Client:

Global industry leaders

Set-up a governance framework that supports process optimization

Project:

Shared Service Center implementation

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9. Redefine governance In order to sustain targeted SSC benefits, the interaction between business units, functional governance units and IT needs to match with the transformed functional service model. This requires the implementation and maintenance of according governance instruments with clear roles & responsibilities. An effective governance model is the precondition to unlock benefits coming from cross functional end-to-end process optimization.

Constantly control SSC 10. Ensure performance levels performance and customer Once the SSC is implemented and running stable, SSC initiatives satisfaction as basis for often miss to concentrate on optimizing performance levels. SSC continuous improvement initiatives therefor need to focus on improving quality and efficiency levels once the service transformation has been conducted successfully and SSC operations are stabilized. At this stage of transformation it is important to initiate performance assessments of the current service delivery in order to document and publish its performance levels not only to service providers but also to the customers. Many SSCs utilize a balanced score card approach to manage costs and quality and promote performance of their service levels by comparing them with external benchmarks on an ongoing basis.

During the stabilization phase SSCs often operate at a higher than planed resource level. Executing improvement initiatives based on the performance data support to develop into the planned resource base.

Client:

Global industry leaders

Project:

Shared Service Center implementation

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About Santiago Advisors

Strategic implications

Santiago Advisors is a senior management consulting company focusing on organizational development and growth. Following the maxim “Enabling Growth” we specialize on concept development and implementation of complex reorganizations with focus on Finance, HR, Purchasing and other administrative functions

The implementation of a shared service center is just one of many ways in meeting goals of functional and organizational excellence.

However, successful SSC implementation projects are influenced by many critical success factors before-, during-, and after the transformation phase. Even among the top performing SSC facilities, relatively few have developed without being confronted with at least some crucial roadblocks during their project phase.

The SSC implementation team should not underestimate the direct- and indirect impact the SSC has on people and other affected organizational units. To safeguard success the organization beyond the Shared Service Center needs to change as well. For example, an effective functional governance is needed to support process harmonization and cross-functional optimization, an effective IT- support model is crucial to maintain efficient service delivery and fulfilling customer demands.

The transformation project does not end with it‘s „Go-Live“! SSC initiatives build on an aligned corporate structure. With a corporate structure supporting the SSC set-up, new levels of professional service delivery can be reached!

Contact Santiago Santiago GmbH & Co. KG Jagdschlösschen Anrath D – 47877 Willich www.santiago-advisors.com Dr. Alexander Tarlatt +49 151 20 33 53 22 alexander.tarlatt@ santiago-advisors.com Hans-Joachim Schmidt +49 151 20 33 53 27 hans-joachim.schmidt@ santiago-advisors.com

Role Santiago Advisors Santiago Advisors has more than 15 years of experience in supporting international SSC implementation- and optimization projects. We support our clients in all phases of the SSC lifecycle.

During the set-up phase we are conceptual experts in developing the initial SSC strategy, the service delivery models as well as rollout procedures. During the implementation we engage in the program management of SSC initiatives. Here, drawn from our operational experience of running SSC operations in pioneer centers, we help our clients in defining the right organizational setup and timing for structural changes. As transformation agents, we tailor an adequate change management toolset fitting into the client’s organization. Santiago has a track record of successfully supporting SSC initiatives: from the start-up phase to major scope extensions leading to end-to-end optimization exercises.