Advising from a Place of Experience

SynFiny Advisors helps companies of all sizes and industries grow and flourish.

It is often those with the most experience who give the best advice. SynFiny Advisors is no exception. Founded in 2014 by Jeff Wuest and Graham Cater—corporate executives with extensive financial management experience—SynFiny is rooted in the idea that seasoned advisors—people who have truly been there, done that—are ideally positioned to guide companies to success.

Today, the Cincinnati-based management consultancy firm with a global footprint is the second fastest-growing company in Ohio, with two years on the Inc. 5000 and more than a dozen offices spread over five continents. Since its foundation, SynFiny’s mission has expanded to encompass key functions of leading and managing an enterprise. Fueling this mission is an enviable talent pool of multi-functional advisors from a variety of industries and a shared desire to embrace new projects and solve new problems.

Best In Class Advisors

With an average of 25 years under their belts, SynFiny’s seasoned advisors boast sterling credentials and impressive track records, as well as an eagerness to share their expertise. “Because many of the people we put on engagements have seen this or that problem before, we’re likely to solve it faster,” says Christian C. Lee, North America managing partner. Many of SynFiny’s 250 advisors have held leadership positions at established organizations; they often work exclusively for SynFiny. “These are people who don’t want to stop learning and being active,” Lee says. “They like working on engagements, they enjoy the flexibility, and they want to be part of something great.”

With its hometown and international offices, SynFiny manages to be both globally minded and locally accessible. Its curated roster of advisors works with companies on mergers and acquisitions, strategic planning, business process transformation, source-to-pay, financial planning and analysis, information technology, supply chain management, and other services. “For a small company, we’re diverse not only in the type of work we do, but also in our ability to support other international companies,” says Wuest.

Eager to roll up their sleeves, advisors often embed in the companies they’re assisting. Whether they’re overseeing a tricky merger or helping a company boost profitability, SynFiny’s advisors will run meetings, draw up roadmaps, coach managers, and even sit in for C-suite roles when companies are changing leadership. “It doesn’t matter if the proposal is $20,000 or $2 million or for a public, private, or nonprofit entity. We give the same caliber of service to all clients, and we never turn down small gigs,” says Lee. “We think in terms of relationships, and we always keep in touch.” Not surprisingly, 70% of SynFiny’s contracts are repeat business.

Since SynFiny’s inception, it has added to its client list—100 and growing—and has developed strong relationships all over the world. Yet, one thing has remained constant: the company’s mission to bring great people together, strive for excellence, and serve clients with honest, insightful advice that helps them grow and flourish.

Shared Services: The “AND” Solution

This is the first in a series of papers that addresses how to get the most value out of implementing a Shared Services organization. This paper will address the key benefits Shared Services have to offer a company.

Background

Shared Services are defined as “consolidating non-core (back office) support services, and delivering these from centralized locations to provide lower costs, higher quality/reliability, standardization and harmonization of processes, and a flexible services delivery platform from which to leverage growth or manage business constriction” (from the Shared Services & Outsourcing Network Organization).

Larger companies have been utilizing Shared Services structures since the 80’s and 90’. However, there are still some companies who have not taken advantage of this development and continue to have the various back office activities carried out within each of the individual Business Units (BU’s) in the company. Sometimes this is because there is a belief that it is important to keep these activities close to the line. Other times, it is because moving to a Shared Services structure requires a significant amount of time and resources, and if it is not handled correctly, it can be a big distraction for the organization. However, the benefits easily outweigh the costs. This paper will attempt to outline those benefits, hopefully in a way that will convince those remaining companies to implement their own Shared Services organization.

The High Level Benefits of Shared Services

I have titled this paper Shared Services: the “AND” Solution because Shared Services provide multiple benefits. At a very high level, implementing a Shared Services structure can allow a company to achieve the following:

  • Frees the BU’s up to focus on delivering their business goals.
  • Productivity improvement (+10% to +20%).
  • Cost saving (-20% to -40%).
  • More timely data (2X faster).
  • More reliable, sustainable data accuracy.
  • Centers of expertise that provide stronger governance since they are closer to the activities.

These are all additive benefits, i.e. a company can achieve the cost savings AND the quality improvements AND the improved timeliness AND the stewardship benefits. The combination of these can enable a step change improvement in a company’s overall financial results. Particularly when a company realizes there are work processes across many functional areas that could benefit from a move to a Shared Services structure.

Shared Services “AND” Explained

In order to understand how that’s all possible, let me first explain in a little more detail what a Shared Service is. Again, there are a lot of activities or work processes that can be considered back office or non-core because they aren’t directly involved with selling product or making a profit. Rather, they are the internally focused activities that allow an organization to function. For example, payroll to ensure employees get paid accurately and on time, or general ledger to ensure the books are closed each month timely and accurately, or managing the office space where the employees are located.

As mentioned, in some organizations (particularly highly decentralized companies) these activities are carried out in the individual BU’s. Moving to a Shared Services structure essentially centralizes these activities into one organization (in a later paper, I will recommend that the Shared Services organization be its own separate entity, because the organization oftentimes has a different mindset and goals than the individual business units, and also needs to remain objective about what is best for the company overall versus what might be best for an individual BU). Below is a very simple diagram of a company after it has implemented a Shared Service organization:

Before

Corporate

  • Policy
  • Common Accounts/Definitions

Business Units

  • Strategy
  • Profit/Loss Management
  • Manufacturing
  • Sales and Marketing
  • Core Internal Processes
    • Human Resources
    • Accounting
    • IT
    • Facilities & Real Estate

After

Corporate

  • Policy
  • Common Accounts/Definitions

Business Units

  • Strategy
  • Profit/Loss Management
  • Manufacturing
  • Sales and Marketing

Shared Services

  • Human Resources
  • Accounting
  • IT
  • Facilities & Real Estate

Now that we have established a common understanding of what a Shared Services organization is, how exactly does it deliver all these “AND” benefits?

  1. By consolidating this work, it eliminates a significant number of redundancies and duplication occurring in the BU’s, which reduces the number of people required to do the work.
  2. Moving this work to a central group and out of the BU’s allows the BU’s to focus on those activities that are going to drive their business strategy, and ultimately improve the company’s top and bottom line.
  3. Consolidation can allow some of the work to be “phased” to better manager peak workloads. This is particularly true if there are multiple service centers around the world, as work can be passed from one service center to another, allowing progress to continue on a 24 hour basis.
  4. Consolidation allows a company to better leverage its overall scale, particularly when negotiating with any external providers.
  5. Consolidation of these services requires the implementation of globally standard work processes. Standard work processes help ensure consistent quality of the data and results. Over time, it also makes it possible to process data faster, making the data available to the BU’s sooner.
  6. If the company has done its pre-work properly, when it moves to a globally standard work process, it will use what has been identified as the current best approach throughout the company (where “current best approach” means delivering the best combination of cost, quality, speed and stewardship).
  7. The pre-work in consolidating the different services can also identify which business processes are no longer needed and thus can be eliminated.
  8. Global standardization also increases the return on investment (ROI) of any IT projects related to these services, as the development costs are lower (since only one solution needs to be developed), the benefits are achieved more broadly (globally vs. locally), and the improvements can be rolled out are faster.
  9. Having service centers located around the world allows for 24 hour support to the BU’s, improving turnaround time on end user requests.
  10. Because most of the services can be done from anywhere in the world, it allows the work to be located in low cost locations or countries, enabling the company to benefit from wage arbitrage opportunities.
  11. Standardizing and simplifying work processes makes it easier to outsource the service, which drives further savings, and oftentimes also results in improved resiliency, redundancy, flexibility and security (this is because the vendor is providing the service to multiple customers and thus is able to spread their investments over a much larger base, and they can also more easily flex up and down for changes in volume).
  12. Consolidating the services makes it easier to quantify the total cost of the service, which in turn makes it easier to benchmark externally and identify savings opportunities.
  13. Consolidation creates “centers of expertise” in each of the work processes. Because each of the services is managed globally, any improvements can be quickly rolled out to the entire company, realizing the benefits faster.
  14. Sometimes creating a shared services organization enables a company to optimize its tax structure. This is particularly true if the Shared Services group is going to handle all intercompany transactions, as it will allow this group to ensure the company is meeting all of the local tax requirements.
  15. If any of the services were being outsourced before, then consolidating helps to ensure that consistent governance is in place globally, and that the company is receiving the best overall value from the relationship.
  16. Having a dedicated Shared Services organization helps to accelerate the integration of any acquisitions into the parent company’s work processes, thus achieving synergies faster. And a Shared Services organization also enables divestitures to occur more quickly with less impact to the rest of the businesses.

Summary

Shared Service structures came into being in the 80’s, and were adopted by many companies in the 90’s and 2000’s. However, there are still some companies who have not taken the step to create a Shared Services organization, either because of other priorities, concerns, biases or constraints. However, the time has come where it’s almost a necessity to have a Shared Service organization in order to remain competitive in the current marketplace.

This paper has attempted to create a basic understanding of what a Shared Service organization does, and then identify at a high level some of the benefits of moving to such a structure. While it’s true that making such a move is time consuming (taking anywhere from 9 months to 2 years, depending on the scope and scale) and resource intensive, the benefits can be significant and additive, and in our opinion warrant the effort to undertake such a transformational change.

Crisis Management – Procurement

Insights to help Procurement Leaders prepare and sustain the business during major business interruptions

SynFiny Advisors has developed a series of Crisis Management Insights to help you strengthen and grow your business after having faced a major business interruption.  Our objective is to provide a framework that allows any business (no matter how big or small) to maintain focus while dealing with the multitude of distractions that take you away from your core business.   Our advisors’ share their seasoned experiences and “been there, done that” practical advice to not only survive but thrive in a crisis situation.

Procurement Leaders and Teams will be placed under significant stress during periods of major business interruptions arising from unexpected natural disasters, civil unrest, massive economic disruptions like the 1997 and 2008 global financial crises, and the COVID-19 global health pandemic of 2020. This Insight outlines 3 Key Action areas that Procurement Leaders and Team need to focus on with speed and urgency, during the onset of a crisis:

Stakeholder and Business Alignment

  • Identify Mission Critical Materials or Services
  • Conduct Risk Assessments on Potential Disruptors in Supply of Goods/Services
  • Call out “Red Flags” and request leadership for help or support needed to resolve
  • Create Rapid Action Plans to address and mitigate risk areas
  • Align Procurement Strategy with Company Leadership and your teams regularly
  • Secure functional leader support where needed and keep them regularly apprised.

Supplier Management

  • Create a Supplier and Business Partner Communications Plan outlining business Impact and Support Needed from them.
  • Deploy your Supplier Communications with Strategic Suppliers first.
  • Have your teams meet regularly with suppliers and ask them to share the impact of the crisis to their business and what their own mitigation plans are to address risks.
  • Push Back on Price Increase Requests until after the situation has stabilized.
  • Get your Functional Leaders or CEO in top-to-top supplier engagements, to underscore mission-critical support from key suppliers, as needed

Supply Assurance

  • Protect supply of goods and services to keep your factories or selling channels is usually paramount in any crisis. This should be called out by your Business Leadership as an important priority.
  • Calibrate the Supply Planning with the front-end commercial side of the business (Sales and Marketing) to ensure synchronicity with demand.
  • Put priority on single-sourced items and find alternate sources or even a second sources.
  • Conduct effective partnering with the appropriate stakeholders to undertake rapid qualification, especially where the primary supplier is failing to deliver what is needed.
  • Regularly review of safety stock levels and increase inventories for high risk items.

Key Takeaways

Crises situations usually present rapidly changing conditions early on, putting the onus on Procurement leaders to be closely engaged with internal stakeholders, suppliers and external partners, to monitor and regularly communicate high risk areas, and create rapid response action plans to protect sufficient supply of goods and services throughout and beyond the crisis.

Conclusion

SynFiny Advisors exists to bring talented “been there, done that” experience to bear on solving client problems.  Each engagement results in measurable, pragmatic, and actionable recommendations. We assist in developing Business Process Transformation scenarios to survive changing economic conditions and minimize disruption to your organization and business partners. Our approach is very simple, we Define, Design and Transform. And in doing so, transform your business from ‘existing’ to ‘exceeding’.

Download and read the full insight.

For more information, contact Jet Antonio (jantonio@synfiny.com).

Other contributing authors to the “Crisis Management” series include the following:

Crisis Management – COVID-19 Crisis Learnings for CEOs

Insights to help you prepare and sustain your business during a business interruption

SynFiny Advisors has developed a series of Crisis Management Insights to help you strengthen and grow your business after having faced a major business interruption.  Our objective is to provide a framework that allows any business (no matter how big or small) to maintain focus while dealing with the multitude of distractions that take you away from your core business.   Our advisors’ share their seasoned experiences and “been there, done that” practical advice to not only survive but thrive in a crisis situation.

Many companies and organizations will be placed under significant stress during periods of major business interruptions arising from unexpected situations like natural disasters, civil unrest, massive business and economic interruptions. Examples include the 1997 and 2008 global financial crises, and most recently, the COVID-19 pandemic. This Insight provides business leaders with key guidance on what they need to do to sustain their teams and keep their business running through a major crisis.

Key Vulnerabilities and Concerns

With an impending crisis, it is critical for leadership to identify and reinforce areas vulnerabilities within their organization. These areas of concern may not be consistent from crisis to crisis; therefore, it is important to look at each crisis on an individual basis. Some common areas of vulnerability include:

  • Safety: Ensuring the safety of your team is the first priority, in particular those engaged in production and customer delivery. For COVID-19, sourcing of protective gear and safety equipment was a challenge, as well as preventive measures.
  • Organization: Be prepared to work differently. From unpaid leave, reduced staff and reduced wages to virtual work and supplier limitations, businesses must be flexible in the ways that they accomplish mission critical tasks. Waves of job, salary reductions and remote work can have significant impact on employee morale and engagement. While manageable, keeping motivation and team effectiveness upbeat will be more difficult in the long term. HR is a critical asset while navigating the legal and labor law aspects of these issues.
  • Cash: Good cashflow is essential to surviving a crisis. With rapidly declining revenues it is critical to tighten cost controls. And the cashflow issues are not restricted to your organization. Partners and suppliers with cashflow issues could also have an impact on your business.

How to Prepare

Identification of vulnerable areas is a great first step. The second step is to develop plans to reinforce vulnerable areas during a crisis. Some key considerations include:

  • Stay calm – Import stress and export serenity. Staying positive is not easy in the crisis times but CEO sets the tone and people are looking up to lead team and their reactions will be influenced by what they see and hear from them.
  • Develop a rapid response plan – Put actions in place to ensure your people are safe during the crisis. Reinforce operations for mission critical products and services so they are available during the crisis. Think through your critical processes, and in particular those that are unique/have limited number of people that can operate them. Each function needs to quickly evaluate its vulnerabilities and take action to address them via training, back-up support, creating job aids etc. Provide support for the local communities that you operate in.
  • Develop a communication strategy – Clear and consistent communication is essential to ensure that team members know how to behave during a crisis. While being open about the issues and choices is not easy and needs to be carefully managed, it ensures organizational continuity. Establish a daily emergency team meeting between management and the GM/CEO so up-to-date information (e.g., crisis situation updates, changes to organizational priorities and objectives) is communicated through the organization (up and down the chain of command). These communications also provide important “face-time” to the organization. Even when remote work is necessary, virtual technologies are widely available and easy to implement.
  • Focus on cash flow – Careful tracking of receivables, expenses, inventories, and credit limits is essential during a crisis. Approaching your banks, suppliers and customers in advance has helped to soften the blow and avoid the worst outcome.
  • Support key long-term partners/supply chain – While key focus of each organization is on ensuring its own physical and financial safety, providing support to the key long-term suppliers and customers can also be an important consideration. Forward looking businesses have developed programs to provide additional credit and/or discounts to ensure their supply and sales remain sustainable.
  • Learn from other regions – Tried and tested playbooks from other countries and regions can help provide a great foundation for managing a crisis. For companies with intercontinental manufacturing footprints, the key questions to ask are: When were they hit? How hard were the hit? Different geographies will have different answers to these questions.

Post-Crisis

Once your Rapid Response Actions are complete, the Leadership Team’s focus should shift towards post-crisis preparation. Some actions include:

  • Study trends in the marketplaces where you operate. Look for shifts in consumer behaviour and dynamics in out-of-home and in-home consumption.
  • Hold “Recovery Workshops” for your key teams to get them to focused and inspired about the future.
  • Focus on the Fundamentals –  Ensure You have a robust cash cycle and actions to preserve your cash balance.  Delay or avoid non-essential spending.

Crisis situations also present new business opportunities. These opportunities can come in the form of M&A deals for struggling organizations and enhanced government support.

Key Takeaways

  • Take time to identify key areas of vulnerability that present risk to your mission critical operations.
  • Reinforce vulnerable areas with additional resources and plans of action to keep operations running smooth during a crisis.
  • After plans are in place and running, shift Leadership team’s focus to post-crisis preparation. Look for opportunities to emerge from the crisis stronger than when it started.

Conclusion

SynFiny Advisors exists to bring talented “been there, done that” experience to bear on solving client problems. Each engagement results in measurable, pragmatic, and actionable recommendations. We assist in developing Business Process Transformation scenarios to survive changing economic conditions and minimize disruption to your organization and business partners. Our approach is very simple, we Define, Design and Transform. And in doing so, transform your business from ‘existing’ to ‘exceeding’.

Download and read the full insight here.

For more information, contact Jet Antonio (jantonio@synfiny.com)

Other contributing authors to the “Crisis Management” series include the following:

skyscrapers

Building a Business Case for Source-to-Pay

Digital transformations are changing the ways that organizations do business. Strategic sourcing, order management, and payables have evolved from a functional exercise to a competitive advantage. And as organizations grow, so does the complexity of their supply chain, resulting in issues in the areas of decision making, compliance, and waste (monetary, time and potential materials). Leading Supply Management Organizations (SMO) are benefiting from improved innovation, faster speed to market, better cost optimization/value, more profit, increased productivity, improved cash flow, and better controls by implementing Source-to-Pay (S2P) strategies and technology-enabled automation into their procurement process.

Those new to S2P still face many challenges in the areas of supplier management, low-cost country sourcing, risk, compliance, etc. These organizations must maximize the benefits from the S2P model in the following ways:

  • Thoroughly understand the needs and spending forecast of the business
  • Extract the greatest possible value from regional and global supply markets
  • Build collaborative relationships with high-performing, strategic suppliers
  • Minimize supply risks
  • Obtain collaborative and corrective behaviors from the people who spend
  • Align strategy with business performance measures (e.g., cost of goods sold, working capital, cash flow, profit, shareholder value, market leadership and innovation)

Whether purchasing direct materials for manufacturing or indirect materials/services to support the finished product, a best-in-class SMO applies S2P strategies to all procurement decisions.

This translates to following key imperatives for S2P organizations:

Increasing Visibility: The most competitive S2P organizations are capable of connecting massive amounts of information and data from many sources, systems, locations, languages, and formats to create 360˚ visibility that supports a full range of strategic S2P activities (not just spend management).

Ensuring Compliance: Driving business performance means convincing employees to adopt preferred S2P processes, strategies, standards, and decisions. Compliance grows from a solution that combines aligned objectives, understanding risk, communication, collaboration, and consistent technology adoption.

Generating Savings: Minimizing costs/maximizing value can often feel at odds with other business objectives. S2P’s role is to make sure the results materialize in highly quantifiable ways. This could be hard savings to the bottom line or cost avoidance. This need had been poorly met from a S2P technology perspective, but the situation is improving rapidly.

What is Source to Pay (S2P)?

Chart of source to pay

S2P is comprised of two distinct parts of the procurement process: Source-to-Contract (S2C) and Procure-to-Pay (P2P). S2C includes steps of assessing business needs, industry/supplier capability, economic analysis, strategy creation, strategy execution, and strategy renewal. On the other side, P2P covers the transactional flow of an order including collecting master data (e.g., supplier, material, pricing, etc.), order management, product or services payment, and compliance. S2P automation refers to using technology to streamline all or part of the S2P process.

Requisitioning: The “need” is generated in 2 ways: by automatic inventory/demand replenishment or by users that wish to purchase goods or services. Automation allows the users to plan or complete the requisitions electronically, often selecting items from a catalog that they are permitted to order from.

Requisition Approval: An approval policy should be in place, which may include no approval below certain dollar limits or manual approval by budget/functional owners. Once a requisition is raised, it follows the approval release policy before being converted to a purchase order (PO) and sent to the supplier.  Manual approval processes have proven ineffective, as approvals are often not obtained or obtained after-the-fact due to time constraints. Automation allows for these requisitions to be routed electronically, following a decision (approval) authority matrix that ultimately reduces approval time. Most applications now allow approvals to be done from an email on a mobile device.

Issuance of Purchase Orders: Once a requisition is approved, a PO is issued to a supplier. Automation allows POs to be efficiently sent electronically with acknowledgments and proposed changes being returned electronically from the supplier.

Receiving Invoices: In traditional organizations, invoices are still mostly submitted by suppliers on paper via mail, then manually entered.  In automated AP departments, invoices can be received electronically via email in PDF form, via e-invoice, or via a third-party network.  Paper, PDF, and e-invoices can be swept up and scanned into the workflow using Intelligent Data Capture (IDC) and routed for goods receipt and or approval.

Matching Invoices: Once received, invoices should be matched to POs and receipts so that suppliers receive payments on time.

Issuing Payments: A combination of electronic payments, direct funds transfer, automatic bank account reconciliation, and Procurement cards (P-Card) are quickly increasing the volume of payments processed electronically. This steadily reduces the number of checks many organizations issue and reduces fraud risk and escheatment work.

Quantifying the Benefits of S2P

Hackett benchmarks  suggest that a world-class S2P strategy will increase business results for companies by:

  • Lowering PO process costs by nearly two-thirds
  • Reducing order-to-pay cycle times
  • Increasing payment-on-time to suppliers
  • Increasing user and supplier satisfaction
  • Doubling PO and Invoice management capacity for each FTE
  • Reducing FTEs required to manage each billion dollars of indirect spend by half
  • Increasing cash flow
  • Converting Accounts Payable into a profit center

Reviewing each of these benefits in detail highlights the impact an S2P strategy can have on a business.

1. Impact on compliance

Informational chart about source-to-pay

Best-in-class companies (91% + spend under management) with an implemented S2P solution show orders and spend are compliant with contracts, resulting in reduced maverick spending and minimized consequences from any maverick buying practices. Compliance policies drive users to the company’s purchasing channel of choice to ensure that the negotiated savings show up in the bottom line. For channel compliance and spend visibility, including assignment to the department or budget center where the spending resides is critical. Too often, senior executives want to insulate their organization from the need to comply and thus become the root cause behind why E-S2P, E-Invoice, and E-Pay policies do not work.

2. Impact on Transaction Processing

Manual PO processes are characterized by human errors, inaccuracies, and rework.  Automating approvals, escalations and triggering events ensures that POs are expedited quickly. Furthermore, finding goods and services is easier when supplier catalogs and product information are available online and responsive to searches. APQC performance benchmarks show that S2P automation has a significant impact on the total cost resulting from procurement cycle time.

total cost of procurement cycle

3. Impact on Transactional Processing Cost

Automation lowers transaction costs for PO and invoice processing, reducing the administrative overhead of the S2P organization. According to APQC and IOFM studies, organizations that implement e-invoicing and significant automation can realize a potential savings of 80% in processing cost per invoice.

Chart of Cost Per Invoice

4. Impact of S2P Automation on early payment discounts

While the use of e-payments is on the rise, companies are only capturing 19% of discounts offered to them by suppliers in return for early payment. Ardent Partners suggests that companies in the top quartile of performance, which adopt early payment discounts, realize discounting participation rates nearly four times as high as bottom quartile performers.

5. Impact on FTE

APQC says that a top-performing organization with implemented S2P solutions can operate with a headcount of 16 and 36 Finance/Accounts Payable FTEs per billion dollar spend respectively.

Source to pay procurement cycle chart

chart of finance function FTE per $1 billion revenueCreating a New Savings Wave – Linking

An S2P system may provide the monitoring and compliance checking capabilities without involving a spend analytics solution. However, spend analytics tools integrated with contract management and S2P systems can generally do much more sophisticated types of analysis, monitoring, and compliance checking. This increases efficiency, improves cash management, reduces inventory requirements, and slashes maverick spending. This often represents a process and prevented overpayment savings of 2-5% in many organizations, but the largest contribution of a properly implemented S2P system is a centralized, clean, data store that provides a solid foundation for spend analysis, which offers savings opportunities in the 5-15% range while enforcing the negotiated savings.

Conclusion

As companies across the globe are increasingly counting on Source-to-Pay strategies to deliver on savings, it’s imperative to not only develop a strategic outlook towards its supplier management initiatives but also to back its strategies by ensuring its savings initiatives are realized. By automating all or most of the components of the S2P process, organizations will increase visibility into its procurement process resulting in increased compliance and direct impact on the targeted savings.

About the Author

Larry Williams

Larry Williams

Partner & Source to Pay Leader

Larry Williams has been a partner of SynFiny Advisors, a business consulting company, for the last 2 years. Larry brings 40 years of Supply Chain experience in Engineering, Project Management, Production Management, Purchasing/Procurement/Accounts Payable/Shared Services, and Acquisition & Divestitures. For 12 years he had global ownership for the P&G Accounts Payable Solutions managing +$50Bn of Payables across 176 countries. He also led the innovation and deployment project portfolio and provided operational support to four regional S2P Service Centers. Larry spent the last 3 years with P&G leading the Procure-to-Pay area for large, global acquisitions and divestitures. Larry holds a degree in Mechanical Engineering and is certified as a Lean Six Sigma Black Belt.

tall buildings

Building Blocks to Creating a Successful Shared Services Organization

Most larger companies today have put in place some kind of Shared Services organization, be it a small, local group or a large, global structure. However, just creating a Shared Services organization is not enough in and of itself. This paper will address the key building blocks to help ensure that a Global Shared Services group is as successful as originally envisioned when the commitment was made to implement such a change.

Shared Services are defined as “consolidating non-core (back office) support services, and delivering these from centralized locations to provide lower costs, higher quality/reliability, standardization and harmonization of processes, and a flexible services delivery platform from which to leverage growth or manage business’ constriction” (from the Shared Services & Outsourcing Network Organization).

Many large companies have implemented a Shared Services organization in an effort to achieve the benefits mentioned above. However, not all of those implementations have gone smoothly, particularly global implementations. There are some key fundamental building blocks a company needs to have in place before implementing a Global Shared Services structure to ensure it delivers on its promise.

Foundation of Successful Shared Services

We believe there are 5 key design elements that build upon each other and are necessary to create a successful Global Shared Services organization. They are:

  1. Common Chart of Accounts/Definitions
  2. Standard Policy
  3. Common Work Processes
  4. Solutions and/or systems
  5. Separate Shared Services Organization

1. Common Chart of Accounts/Definitions

The first step is to standardize the Chart of Accounts and any Defini tions related to the internal work processes that will be moved to the Shares Services structure. More specifically:

  • Standard Chart of Accounts means one set of common cost elements used in all internal financial reporting, and the definitions and the application of those definitions is also consistent throughout the company.
  • Standard Definitions applies to activities in areas like HR, Real Estate and IT. For example, a standard definition for travel expense versus relocation expense, or how floor space is attributed to Business Units (BU’s) throughout the company.

calculator and pen laying on financial documents

The organization that is responsible for Corporate Policies should also be responsible for creating and maintaining the Standard Chart of Accounts or Standard Definitions. For each function, that will likely be a group in their global or corporate organization. So if there is a Corporate HR group, then they should own driving the common definitions for all of the appropriate HR terms, as well as all of the global HR policies. If everyone isn’t using the same definition for certain activities, then it’s going to be extremely challenging to create standard policy and common work processes.

2. Standard Policy

Once a standard Chart of Accounts and Common Definitions have been created, then the same global or corporate functional group should lead creating standard global policies for each of the internal processes that are part of the Global Shared Services transformation. However, they should also involve the BU’s and the Global Shared Services organization to ensure the policies allow for work processes that are implementable, efficient and effective.

Also, if the policies are not being followed consistently, it will be important for the functional head of that process to provide their visible support to ensure compliance. If people aren’t following the policies, the Shared Services transformation will not achieve its breakthrough improvements.

3. Common Work Processes

Once the Common Chart of Accounts and Definitions, and the Standard Policies are in place, the next step is the development and implementation of well thought out end-to- end work processes. The documentation of the current and future state work processes is critical. It needs to be laid out in a clear and concise manner, so the transition to the Global Shared Services structure is delivered in the most effective and efficient way possible. It also needs to clearly identify the key deliverables, as well as ownership and accountability of key inputs and outputs. Ideally, the key deliverables will be documented via Service Level Agreements (SLAs) that are agreed to with the customers during the design phase, when trade offs between quality, cost, speed and compliance are evaluated.

We recommend having one group centrally, led by the Process Owner, but with representation from the Policy team, the Shared Services Centers, IT, and the BU’s, develop work processes that are consistent with the policies, while also assessing efficiency and effectiveness. The starting point should be the current work processes. However, the Process Owner should look across all the BU’s to identify best practices for each work process, so when the work is moved to the Service Center, it’s using the current best approach (best here meaning the appropriate balance between quality, cost, speed and stewardship).

two women in an office writing on a white board

Unfortunately, most companies jump straight to replacing costly systems when implementing a Shared Service structure. However, before making any system changes, it is important to align on the optimum Process. Once that has been determined, then one can began to look at making system changes that enable the implementation and automation of the agreed to best practices. Putting systems in place before Policy and Processes have been finalized is like putting the cart in front of the horse……it will only lead to rework later on.

4. Solutions and/or Systems

The first step in developing the appropriate systems and solutions is to identify the current work process and system for each service that is going to be part of the Shared Services transformation. As mentioned previously, this often requires involving the people doing the work today. Once the baseline process and system are established, then work should commence with the team to identify the best overall approach and what additional improvements could be made, including opportunities to remove any redundancies, eliminate non-valued work, and minimize the number of times humans have to enter any data.

Also, one should utilize the work process and the systems experts to identify any watchouts associated with any changes. It will be especially important to have the IT experts participate, because sometimes the system itself may have limitations that need to be taken into account. Or conversely, the standard solution that comes with an “off the shelf ” system may be the simplest solution to execute and the easiest to maintain going forward.

5. Separate Shared Services Organization

In order to have a successful Global Shared Services organization, it is important that it be separate from the other organizations. That’s because:

  1. It is going to have different goals and measures then the rest of the organizations in the company.
  2. It is a services organization with a focus on internal customers, so its mindset will probably need to be a bit different than the rest of the company.
  3. It needs to be objective about what is best for the company overall, versus having any potential bias if it remains within one of the other organizations.

If the Global Shared Services group is going to be large, then we recommend that the head of this group report directly to the CEO, again to have the ability to make decisions that are best for the company overall, and not be biased by other groups within the company. If the Global Shared Services group is going to be small, then the services could report up through Corporate or the Functional Head that offers the most services within the Shared Services organization. However, if a company is trying to drive value from having a Shared Services structure, then we would suggest going with a larger Global Shared Services group reporting directly to the CEO.

Summary

Many companies have created Shared Services organizations over the past few decades, some more successfully than others. In this paper, we have discussed what we believe are 5 key building blocks for implementing a strong Global Shared Services organization, which in turn will allow the organization to deliver the desired savings, quality, speed and stewardship benefits. Note also that each of these 5 elements builds upon the others. So if you skip one of the building blocks, it will negatively impact any downstream elements, ie. if you don’t have common work processes, then it will be difficult to achieve any significant productivity improvements within the Global Shared Services organization. The 5 building blocks all fit together. As such, it’s important to execute them in the right order and involve the right people/organizations in order to have a successful implementation.).

About SynFiny Advisors

We value experience. Our advisors leverage decades of Fortune 50 experience in financial planning & analysis and shared services design and operations to deliver breakthrough solutions for our clients. This collective experience has been distilled into a proprietary consulting methodology that enables our advisors to quickly apply their experience to the specific objectives of our clients, leading to faster and longer lasting value creation.

For more information please visit synfiny.com.

Our Shared Services Practice

Christian Lee

Partner and Shared Services Leader

Christian has 30+ years of industry experiences, including 27 years of experiences in engineering, manufacturing operations and procurement. He has over 10 years of experience in procurement shared services from strategy, design, execution to operations. He has also spent many years in leading small to breakthrough process transformation projects. In the past 7 years, Christian has been leading consulting engagements with clients such as Johnson & Johnson, Coty Inc., Mars, and Wendy’s on procurement shared services design, execution and process improvements. Christian is also a Lean Blackbelt Certification candidate. Christian has BSEE degree from Michigan Technological University, and MBA from Boston University. If you have any questions, please contact Christian Lee, Managing Partner and Shared Services Practice Leader at SynFiny Advisors at cclee@synfiny.com.

Successful Change: 2 People You Need; 4 Things You Can Do

Objective: How to ensure change, big or small, is accomplished successfully despite operational challenges.

Initiating change is only half the battle won; sustaining that change till the finish line and getting the desired outcome is when you win the war. Accomplishing the change needs disciplined relentless pursuit in the face of everyday operational tasks and requires a culture which embraces and promotes change.

Change can be big and disruptive in the form of adding new product lines, implementing new technology, venturing into unchartered geographies, outsourcing functions and other major shifts in operations. These changes cut across the organization horizontally and demand a significant realignment of people, process and technology. Further, the span of these changes run across multiple years, undergoes executive turnover and has to be performed in conjunction with day to day operations. No wonder that most research shows that only 35% of the transformation change initiatives accomplish what they envisioned.

Incremental changes are limited in scope and duration and are improvements instead of transformations – such as making format changes to PO and vendor invoices for better sync. Unlike few and far between big changes, however, the incremental changes are continuously happening in the organizations at any given time.

How then can we ensure that change, transformational or incremental, stays its desired course despite day to day operational commitments and challenges?

Two people you need…

These recommendations if adopted and practiced over a period of 3-5 years will seep into the DNA of the organization and bring a cultural shift.

Dedicated Leader: Once the executive buy-in is obtained for change it is essential that the baton is handed over to a leader who is committed and owns the change. This leader is responsible for ensuring that transformational or incremental changes carried out across the organization are successfully completed. The Dedicated Leader should not have significant day to day operational responsibilities to ensure the focus and commitment. He/she will be working with the operational leaders to handhold, support and continue the momentum.

A strong leader is essential to lead the change. Bringing change is not for faint hearted as no change happens without its due share of push backs and teething challenges. There will be initial nay-sayers who will complain about anything they can come across. The Dedicated Leader has to ensure that they stay firm despite all the pressure.

Change Champions: The execution for change has to happen at the operational level, at the shop floor and it is imperative that one of their own team members is championing that change. The operational player(s) who are enthusiastic, open and ready to embrace change, their operational day to day workload should be reduced and they should be made Change Champions, agents and ambassadors of change. Their operational expertise will be a huge plus when communicating change, they can speak operational language.

Change Champions will help to counter any negativity and misconceptions about the change then and there. They will be go-to person for the functions in case of any doubts. They will bring in to the Dedicated Leader on-the-ground realities of how change is being perceived and any course correction if things are getting derailed.

… and four things you can do

Relentless Communication: You cannot overcommunicate the message for change. If your throat gets soar after repeating same stuff umpteen times, you are on right path. Communication is the key to ingrain the culture of change in the heart of the organization. The need for communication does not stop on ‘announcements’ of projects. If you want people to continuously look for optimization opportunities, you need to continuously stress upon that need.

Comprehensive communication plans detailing out ‘What, When, Who, How and How often’ should be prepared. The message must be objective, simple to understand, easy to share and leave no room for ambiguity. Townhalls, posters, workshops, banners, events whatever it takes to get the message across and get the buy-in, is worth it.

 

Measure the Change: The journey of change is monitored with milestones of performance. Divide and quantify the total change effort into small quantifiable milestones. Showcase the performance charts at visible places, so that people can see how their efforts to embrace change is adding to bottom line. For a cost savings project, showcase $$’s saved and $$’s to be saved.

Celebrate Milestones: To keep the teams motivated, especially in transformation efforts when the change spans over years and conflicting priorities can derail it, milestones will help to know where and when you stopped and what roadmap you have to walk to finish the change.

Goals and Rewards: Don’t stop at just measuring the performance, incorporate them into annual goals. Organizations should recognize and reward change champions and operational players who exceeded expectations in adopting the change. During performance reviews help them understand that doing business as usual is expected, thinking and working outside the box will help them get exceeding expectation ratings.

For making change effective, transformational or incremental, incorporate above recommendations into your daily operations and you will soon see culture changing. Adopting the changes may not be easy at first because change does not happen in the comfort zone. Everyone wants it so long as it does not affect their sandbox. Organizations must strive to bring a culture where change is seamlessly ingrained as part of their daily work and not as one time stretch.