Shared Services: Search For Missing Benefits Continues

Deloitte 2013 Global Shared Services Survey ResultsDeloitte’s 2013 Global Shared Services Survey report, just published, confirms that things are progressing as expected. There’s growth – in the breadth of services offered, and in the spread of locations – and more complexity and sophistication, with more multifunction SSCs, more hybrid delivery models and more stand-alone GBS organizations.

This year, Deloitte is not publishing the main survey findings, listing only the questions asked of the 270+ respondents.  But one line in the executive summary hints at what is perhaps the most interesting story of all:

“A multifaceted approach to addressing the retained organization is required to realize the intended benefits.”

The word on the street is that few shared services programmes deliver their business case. They may do great things, they may employ very talented people, but often there seems to be a question mark over benefits realization. And although the 2013 Survey report doesn’t comment on this directly, a (separate) Deloitte webinar last week seemed to confirm that there’s no smoke without fire.

Now it’s true that that webinar was focussed on HR Shared Services. But many SSCs are now multi-functional, and Deloitte claims to have worked on 900 shared services projects. So it seems a credible source.

In Global HR Shared Services: Emerging Trends, Brett Walsh and colleagues from Deloitte shed light on Shared Services ‘optimisation’ challenges:

“Much has been said about the role of shared services in the transformation of the Human Resources function. Yet for many companies, the benefits expected from transformation are proving elusive.”

“Long after project go-live, when systems and delivery models are in place, organisations still struggle to release the full potential of their investment in HR Shared Services. In fact, many organisations report either failure or significant underperformance compared to their original business case.”

There’s no single solution. Every organization is different.  But I’m going to stake a claim that one of the root causes for the ‘missing’ benefits – maybe the root cause – is a laid-back approach to process management.  It’s the attitude that defining process is simply an overhead and a non-value-add activity; that it doesn’t matter if process is in duplicated and overlapping fragments, in different tools and formats, unconnected with real work, and ‘governed’ only by email.

Without the rigour and support of a process management platform, effective collaboration among the stakeholders on the design and implementation of change must be in jeopardy.  We see it mostly obviously, and dramatically, in the chasm that can appear between IT and the business, but it undermines effective collaboration between all the other stakeholders too.

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© Text Michael Gammage 2013

Burning Platforms

A prospective client shared the hidden costs of ‘normal’ process management.

This is a back-office function of 4k people within in a global organization of 100k+ people. This particular division is changing fast, like most back offices.  Its transformation team set up almost 40 major change projects last year – covering offshoring, outsourcing, systems consolidation, shared services, organizational restructuring and Lean initiatives.

Every one of those change projects started with a process capture phase.  Typically 2 FTE take 4 weeks to define the current processes in detail, as the start point for managing change.

That’s roughly 6 FTE full-time employed on capturing the As-Is processes. Scale it up across the organization and that’s around 150 FTE employed full-time in capturing the current processes as the start point for managing change.

Downstream, after the As-Is processes have been defined, there’s probably much more waste – and risk – in how the To-Be processes are designed, analysed and implemented.

But it’s ‘the way things have always been’. For busy execs there’s no burning platform. It’s easy to jump to the conclusion that adopting Nimbus as an enterprise process platform looks like ‘additional time and effort, that we don’t have, to achieve a nice-to-have’.

Bring out the hidden costs though and it’s easy to re-frame it, correctly, as an investment of the existing time and effort into building a joined-up, comprehensive and real-time view of the business, and a flame-proof platform for sustainable improvement.

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© Text Michael Gammage 2013

When Process Standardisation Backfires

Current orthodoxy is that process standardization is a Good Thing.

People are committing enormous resources to programmes to deliver global processes supported by a common toolset. It’s driving business transformation across every industry and region.

Process standardization is a fine idea.  But the heretical truth is that, as in everything, it’s the ability to execute that counts.

A standardization program can unlock game-changing efficiency savings and service improvements. But pitfalls abound:

It becomes IT-led. IT systems are at the heart of most major programmes. Too often IT takes the wheel, leaving business stakeholders in the back seat. And so a business transformation program morphs into an IT project.

Out-of-scope impacts are missed.  Costs ‘saved’ in one standardization project re-surface as incremental ‘work-around’ costs in other parts of the organization.

The voice of the customer is muted.  Standardization delivers efficiency savings but at the cost of the customer experience.

Process variants are concreted in. There is a one-time negotiation instead of a framework that enables variants to be continually re-optimized, reflecting developments in global best practices and changes in business units’ requirements.

The benefits aren’t sustained. The change doesn’t stick. Gartner termed it ‘organizational snap-back’. McKinsey published an estimate that only 10% of cost reduction programmes showed sustained results three years later.

It’s time for a reality check.  I can’t be the only one who’s seeing projects with hidden costs and flaky benefits pedestalized because they are delivering ‘standard global processes’?

Without a platform for effective collaboration among the stakeholders, and a complete understanding of the big picture, there are very significant risks that the benefits of any standardization initiative will be mythical. And without a means to deploy process content in a way that ensures real adoption, the opportunity for ongoing collaborative innovation is missed.

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© Text Michael Gammage 2013

Dealing With Process Commitment Phobia

On the edgeThe Process Clinic

– a confidential service for CxOs with process problems and nowhere else to turn. We’re here to help!

Dear Dr Process,

I thought I was a good CEO and ran a tight ship. Sure, my organization kept making the same mistakes.  We re-implemented SAP so many times that we made the careers of three generations of Deloitte partners.  Our efficiency programs were like Whack-a-Mole, increased costs popping up in one unit due to costs savings projects in another one. And we managed our outsourced relationships in a way that mostly just enriched the lawyers. But that’s normal, right? That’s what I thought at least. Until this weekend, when my best friend told me about Process Commitment Phobia.  Now my confidence is shattered – I’m writing to you from my iPad under the duvet at the Ritz Carlton – because, the way Alex told it, my organization definitely has PCP. Is there any cure?

Name and room number withheld

Dear Friend,

Don’t despair. These symptoms are certainly classic PCP.  But first you need to discreetly check some more to make sure of the diagnosis.  Here’s three easy tests. Ask your business transformation leaders if the start of every project feels like Groundhog Day – deploying teams to define yet again the business processes and their relationships with systems, documents, metrics and so on.  Then ask your Chief Risk Officer if her people feel one step removed, trying to track processes that are described and ‘managed’ in a mash up of formats and tools.  Finally, ask your Lean Sigma leader if his people are challenged to ensure that performance improvements are real and sustained.  If the answer’s ‘Yes’ to all three, then you can be sure it’s Process Commitment Phobia.

The good news is that PCP can be cured.  It’s hard work and you can’t do it overnight.  You’ll need to swap silo perspectives for joined-up thinking; extend the classic project focus to include long-term and sustainability; and to learn to embrace clarity in roles, responsibilities and accountability.

Your startpoint is to agree on a process platform for the enterprise.  A collaborative framework that uses the universal language of end-to-end process, and in the language of the business, not just IT. It will need to bring together all the stakeholders within a single governance environment – making it easy to get involved in the design and implementation of change. And, critically, it has to connect with operational reality. It has to help people across the organisation to get real work done. It has to be so intuitive, personalised and easy to use that it becomes ‘the way we work here’.  And it has to make it easy to feed back improvement ideas.

It’s tough medicine, I know. We’re just so used to seeing process as an overhead – as worthless hieroglyph fragments, ungoverned and in a variety of tools and formats. And it’s always comfortable to have vagueness and gray areas in accountability.  The sweetener I recommend is a spreadsheet.  Get your people to calculate how much time and cost would be saved, and black swans avoided, by having a complete understanding of the business.

So come out from under the duvet. Get dressed and go meet the Board as usual. And be open with them. Many of them will recognise PCP in their own behaviors.  Unless you can convince them to think differently, the organization will resist and snap back.  Treating PCP starts at the top.

Yours

The Process Doctor

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© Text Michael Gammage 2013

Social Business: Finding Meaning At Work

There’s a report published last week by McKinsey that deserves to be widely noticed.  It challenges some common preconceptions about how we see work – and highlights our deepest motivations in our work.  It confirms just how universal – and important to the bottom line – is our search for meaning at work.

Intellectual Quotient (IQ) matters, says McKinsey: everyone needs role clarity, clear objectives and access to the resources to get the job done.  Emotional Quotient (EQ) is similarly vital: we need trust, respect and a sense of collegiate collaboration.  But while IQ and EQ are absolutely necessary, they are far from sufficient for peak performance, says McKinsey.  Being ‘in the zone’ demands that work has meaning.  High performance organizations operate in a high-IQ, high-EQ, and high-MQ (Meaning Quotient) environment.

The productivity differential when working at peak performance is astounding. Yet most executives report that they and their employees are ‘in the zone’ at work less than 10 percent of the time.  The McKinsey authors conclude:“The opportunity cost of the missing meaning is enormous”.

What’s really fascinating in the McKinsey results is how much, across a wide range of cultures and income levels, meaning at work is universally linked to the idea of service to humanity: to society, to customers, to co-workers.  It’s the first data I’ve ever seen that confirms that our most profound happiness, our deepest sense of wellbeing, comes from being connected to others, and being able to serve them in some way.

It has to be sincere of course. It’s difficult to reconcile ‘We want to make the world a better place’ with ‘and crush the competition’. ;