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

Process Resistance

I see two kinds of resistance to joined-up process thinking. Sometimes it’s a failure of imagination. People who can’t imagine that things could be significantly better. The opposite of visionary.

More often though, there is understanding of the potential – but a wilful decision not to embrace it. Now resistance may be justified in some circumstances. But most often it’s just an aversion to rigour, accountability and a long-term perspective.

I was in a GBS leadership team discussion recently at a Fortune 500 company. The Head of HR heard the pitch, and the mixed responses from around the table, then summed it up perfectly for her colleagues:

“We may not like it necessarily – but this discipline is exactly what we need.”

Moving an entire GBS organization to a new way of working requires significant and sustained effort, and continuing executive sponsorship.

But without this new way of working, this GBS organization cannot safely deliver its ambitious growth targets.  It reconciles the tension between its twin objectives: to expand at pace, delivering substantial savings and sustained service innovations over the next five years, and to ensure compliance in a highly regulated environment.

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© Text Michael Gammage 2013

How To Simplify Global Shared Services

Most multinationals are almost ridiculously complex. It’s a barrier to innovation, compliance and sustainable improvement – and increasingly a C-Level issue. Simplification has been one of three strategic priorities at GSK, for instance, since 2008.

So Deloitte’s report on reducing complexity in global shared services organizations is well-timed. Unfortunately though it misses the point.

Deloitte sets out survey results which illustrate the prize.  Tackling complexity effectively, says Deloitte, can reduce the costs of delivering Finance, HR and IT by up to 20%, even in already ‘rationalised’ global shared services organizations.  And yet only 30% of CFOs believe that their efforts in tackling complexity are successful.

The low-hanging fruit of labour arbitrage and automation were harvested long ago. ‘Getting a grip on complexity is’, in Deloitte’s words, ‘the next frontier in reducing costs [of Finance, HR, IT and other non-core support activities]’.

Which is great. But, alas, Deloitte’s report on how to get a grip on complexity is – frankly – very complicated.   It could do with a complexity reduction program of the sort that it proposes. It presents interesting ideas but doesn’t join the dots.  Its definitions of an operating model and a business model don’t quite work. Its attempt to define four different types of complexity – portfolio, organizational, process and information infrastructure – don’t hang together well. It’s light on governance and controls. It recognises the significance of master data management but doesn’t link it with process management. To its credit, the report clearly advises a focus on end-to-end process. But it dismisses ‘process flow diagrams’ in favour of an exotic visual value stream approach, the benefits of which would be incidental at best.

More fundamentally, it overlooks what must be the 72pt headline to the complexity-slayer story: the power of process visualisation.

End-to-end perspectives, expressed in the language of the business, with design principles that make it intuitive and easy on the eye. All managed within a methodology that blends compliance rigour with support for people doing real work, and ensures IT alignment. This is what drives engagement in sustainable improvement and therefore, ultimately, in business simplification.

And it’s not just effective in untangling process spaghetti, or bringing coherence to process fragments.  I’ve seen it equally effective in enabling organisations to escape the deadweight of enormous SOP document libraries and migrate to a far more agile world where end-to-end process provides the overarching narrative, supported where necessary by far fewer, and far slimmer, SOP documents.

A picture being worth a thousand words etc, we shouldn’t be surprised that once people can see what’s going on, they are far better equipped to identify unnecessary complexity and collaborate to safely ‘make things as simple as possible but not simpler’ (to paraphrase Einstein, who never wrote on shared services, as far as I know, but knew a thing or two about complexity..).

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