Sourcing Shangri-La

Finance Transformation Case Study - BAE Systems

The BAE Systems case study video released today provides another example of Nimbus Control as an enabling platform for Finance Transformation and shared services.

The scope may, at this stage, be limited to one country - but it shows how the controls and audit framework is embedded within the operational end-to-end processes, with all the efficiencies that can deliver.

The focus is on standardization, service excellence and continuous improvement. What the video doesn’t mention is that it was also enabling an ERP consolidation…

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07 Oct 2011 Accenture: What's Holding Back Shared Services

30 Sep 2011 Optimize 15,000 Business Controls? No Problem

 

How Not To Implement Shared Services

A shared services center to deliver HR, finance, procurement, IT and other services for the UK's seven Research Councils. It seemed like a Good Idea when it was announced in 2006. 

Five years on, a review by the UK's National Audit Office (NAO) makes gloomy reading. Overspent £130m against a budget of £79m, and projected savings significantly less than expected. 

How did it happen? The NAO report highlights three fundamental flaws:

Lack of Clarity

"A key factor contributing to escalating costs was the early lack of clarity about how the service would operate. An outline design, known as a target operating model, was not agreed until August 2008, nearly a year after implementation had begun, but it was incomplete and lacked detail. Some elements of design were still ongoing during transition and system launch."

Confused Governance

"Early governance structures were complex. Reviews commissioned at various points during the project showed that responsibilities and accountabilities needed clarification."

Poor Management of Outsourcer

"A contract with Fujitsu to design and build the systems and ICT was "poorly managed".  It was eventually terminated at an additional cost of £13m."

Each of which could, of course, have been avoided, or at the very least mitigated, by the adoption of an appropriate process management platform.

No surprise that developing process maturity is an NAO theme - and runs through the NAO's recommendations in this case: to harmonise processes further, to strengthen end-to-end process management, and to embed continuous improvement.

Hear stories like this one, and other shockers in the Process Hall of Shame, and it's bewildering how organizations can still be in denial about the need for a process management platform at the heart of any shared services project.  As though it was a 'nice-to-have'.

Whereas actually it's the key to clarity at every level; to effective collaboration within a robust governance framework; to IT alignment; to drive process harmonization; to controlling a multisourced environment; to making life easier for the SSC workforce; and to enabling a culture of continuous improvement.

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07 Oct 2011    Accenture: What's Holding Back Shared Services

19 May 2011    Service Integration and Process: In Six Minutes

 

Deloitte Shared Services Insights: Could Do Better

Accenture's report earlier this month did a good job in advancing the debate about shared services. By comparison, Deloitte's latest shared services insights disappoint. It's a commendable report - but it kind of misses the point.

Overlook the waffle and the sloppy thinking: Accenture's report does nail the essential truth - that a service management framework is vital for sustainable success:

There needs to be a “system around the system” that includes the people, discipline in procedures, communications, service expectations, performance measurement and key cross-functional processes, such as continuous improvement and client relationship management. It’s this broader shared services system around the system— which Accenture calls the service management framework—that sets shared services organizations that have achieved high performance apart from those with a sub-optimized centralized service delivery model. The service management framework is the keystone...

I've argued elsewhere that Accenture needs to go further and recognize that the service management framework for shared services, in its best developed and most valuable form, is the business process management platform at the heart of the enterprise. 

But, that qualification aside, the idea of the service management framework is a crucial advance and deserves to be adopted.   It provides the context by which we can understand that Deloitte's latest list of worthy insights - on the importance of change management, IT alignment, governance and enhanced controls - are in fact all inter-related.  And jointly soluble, once we frame this correctly. 

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13 Oct 2011    Placing A Big Bet On Global Shared Services

07 Oct 2011    Accenture: What's Holding Back Shared Services

 

 

Placing A Big Bet On Global Shared Services

"The companies you work for are placing a big bet on your success. Your job is to scale fast...". Deborah Kops's presentation captured the moment at this week's Finance Summit.

Shared services is set for very rapid growth. There is a convergence around an SSOS model of shared services implementation: Stabilize - Standardize - Optimize - Source. It's a model that's driving the expansion of shared services into global business services operations, delivering not just the traditional Finance & HR services but others such as Procurement and Supply Chain - and doing all this in an increasingly multisourced mix.

Unsurprisingly, change management featured heavily, reinforcing the importance of a service management framework. One organization reported 28 change initiatives running concurrently in its P2P process alone in this FY.

The challenges are changing as shared services moves up several gears, and beyond the easy wins in automation and labor arbitrage:

Customer Satisfaction. The pre-conference survey showed service improvement was on a par with continuing cost reduction. Several SSOs are using KPIs based on the Net Promoter methodology to measure client satisfaction.

Continuous Improvement. There's an new focus on continuous improvement programs. CI was one of the delegates' top budget priorities for 2012. 

Talent Management. There's a lot more focus on people, morale, motivation, engagement and retention. 

No surprise that there was a lot of interest in Nimbus Control as a service management framework that can orchestrate complex change and enable continuous improvement.  It was in the challenges of ERP projects that the visualization of process, in the language of the business, seemed especially powerful. Stakeholders in most organizations simply don't have proper visibility of the current and future state, can't do easy gap and impact analyses, and have no governance framework, beyond email, for managing change.

My conference highlight, by the way: sharing a table with a global P2P owner spending $52bn this FY. Awesome.

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11 Oct 2011    Continuous Improvement Made Easy

07 Oct 2011    Accenture: What's Holding Back Shared Services

 

Continuous Improvement - Made Easy

Naturally, I would say that Emitra Nelson from Cameron stole the show on Day 1 of the Summit for Finance Leaders in Dallas today (you can hear her story on a SharedServicesLink webinar on 18 October - more details here).

But if I couldn't vote for Emitra, on the grounds that hers is a Nimbus success story, my choice for the most thought-provoking presentation would be Andrew Simpson, Head of Business Services in America for BP, whose case I summarised in a doodle in my notes as this:

 
(my maths is shaky, so I'm hoping this means what I was thinking!)

Andrew defined Continuous Improvement (let's call it CI) as 'operational excellence through process improvements' , or, more informally, as 'stopping business insanity'. He listed the 20 most common excuses he's heard about why CI can't be done, the funniest being the manager who claimed that it would be 'against corporate policy'.

He then proceeded to show exactly how he has implemented CI, and went on to make a totally convincing case that, in the long run, 'background' CI can be even more valuable than high-profile transformation programs.  And a CI culture, he argued, will also make any major transformation program more likely to succeed: people are engaged and energised by change, not simply resistant.  In shared services terms,  CI is 'the critical success factor for any SSO that wants to stay relevant'.  

What's really interesting is how few of the organizations represented in the audience have a serious CI program.  There's lip service but little commitment. How can that possibly be? At the end of the day, CI is pretty straightforward. 

Maybe the clue lies in a video Andrew used in his presentation to illustrate resistance to change (can't find it on YouTube, but it was like this).  The hamster keeps getting on the wheel, spinning faster and faster until it's out of control and finally gets flung out into the cage - then does it again, and again and again... 

Maybe the hamster enjoys the adrenalin rush - just like the business enjoys the thrill of firefighting.   And when, after a while, the hamster is punchdrunk with concussion and unable to think clearly, well that's like the business getting so used to living in firefighting mode that it too can no longer see clearly - and so resists the CI initiative that is ultimately its way forward.

Finally, a great endorsement for CI: people from BP's Business Services unit are sought out by the rest of the business.  It's career-enhancing because it has a carefully thought-through and well-executed CI program that encourages people to bring their brains to work. It breaks out, he noted, of the analysis paralysis of left brain thinking, the belief that life is a machine and we just need to understand how the cogs fit together to get it to work perfectly.  It recognizes the special and unique value that diverse perspectives, working intelligently together, can create.

There was a ton of other good stuff too of course.  More on that later in the week, I hope.

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07 Oct 2011    Accenture: What's Holding Back Shared Services

20 Sep 2011    BPM: The Foundation For Operational Excellence

 

Accenture: What's Holding Back Shared Services

Hats off to Accenture for bringing some reality and insights to the debate about what's holding back Shared Services. 

Everybody's doing shared services, everybody thinks it's strategic, yadda yadda yadda. The reality though is often disappointment and missed business cases.  Sustainable success in shared services is still the exception.

The Deloitte Shared Services survey, published in April, highlighted some lessons learned: the importance of governance, a collaborative framework, transparency and change management.   

Governance was also a theme running through the PwC/HfS report on Global Business Services, published in July: it has to be 'ongoing', 'well-integrated, consistent and rigorous' and not just another tool for vendor management.  

Those were useful contributions.  But Accenture's report this week Trends in Shared Services: Unlocking The Full Potential brings a new focus.  It spells out what the leaders are doing, and how they are succeeding. And process excellence is front and center.

Noting how one leader in shared services uses automation and metrics and process improvement specialists, it continues:  

"...while other elements are certainly in place - C-level support, comprehensive change management and a relentless focus on value - it is the organization's continued focus on process excellence that stands out ."

I share the report's enthusiasm that shared services will mature to become ubiquitous. And that we are witnessing the emergence of "a long-envisioned" model of integrated business services.  I agree too that 'managing multisourcing consistently' is a huge challenge for most organizations. And I'm delighted that Accenture highlights the vital need for a service management framework.   

But I have one quibble. Because even Accenture hasn't quite joined up the dots.

What is it, ultimately, that enables process excellence, that provides the collaborative framework for change management, that ensures transparency and IT alignment, that supports Lean and other continuous improvement programs, that provides the governance framework for the effective management of outsourcers, and that allows cloud and social media to be most effectively leveraged?  It's a business process management platform. 

It's not a panacea. It can seem a bit boring. It's an unspectacular answer when your SSC is 'in a complete mess'. But everything points to the business process management platform as the foundation for success in shared services.  It underpins process excellence. It's what enables the service management framework.  And it's the only way to optimize the management of process variants, which, the report notes, is the real problem in process standardization. 

What is the business process management platform that can do all this? I've defined it elsewhere as a platform that uses the universal language of end-to-end business process to enable four capabilities.  The only way I'd improve on that definition now, especially in the light of the Shared Services workshop in London last week, would be to re-iterate the importance of adoption.  If our brilliant process management models don't engage process stakeholders, and help real people to get real work done and to contribute to improving things , then we're missing the biggest trick of all.    

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03 Oct 2011    Shared Services at IP11: Your Top Issues

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Sustainable Improvement In Shared Services Performance: Here's How

My colleague Rob Speck tells a story on his excellent new Process Maximus blog that perfectly illustrates the performance deficit in shared services, and how to address it. 

It's a deficit that has been largely hidden until recently. Shared services is wildly popular, and growing across all industries and regions. In Deloitte's 2010 Global Shared Services Survey, 89% of organizations declared shared services to be 'strategic'.

But scratch the surface and it's not hard to find business cases that have failed to deliver, sometimes spectacularly. According to the Deloitte survey, 78% of organizations reported ‘no significant positive impact’ on process efficiency or quality. 

In practice, promised efficiency gains have proven difficult to deliver, and sustainable improvement has been even more elusive.

Rob's story illustrates the prevailing condition of many shared services organizations.  His client was the shared services division of a Fortune 100 company, providing Finance and HR services. The SSC's processes were 'managed' and 'governed' in Word and Visio and peoples' heads. Process ownership was fragmented and unclear. KPI metrics were disconnected from their business processes.  Onboarding new clients to the SSC was challenging. The confusion and complexity demanded a culture of heroics.  It was, the client said, in a moment of despair: 'A complete mess'. 

OK perhaps this is slightly harsh, but it was, in many ways, a fairly typical SSC. 

Rob's case study shows how that SSC deployed Nimbus Control to significantly up the pace of its journey towards operational excellence.  At the heart of its success is an integrated management platform that provides visibility and enables effective collaboration, across a complex hybrid delivery landscape, on the continuous improvement of its end-to-end processes.

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08 Aug 2011    Outsourcing Buyers and Sellers: Swords Into Plowshares

20 Jun 2011    Building A Robust Global Services Organization

BPM: The Invisible Gorilla

Crowds aren't always right. Today's conventional wisdom about business process management is that is tedious, technical and matters only to IT.  I believe that mindset is about to be inverted.

There's a famous experiment where subjects were shown a short video clip of a basketball game. They were asked to count how many times one team took possession of the ball. When asked afterwards, most observers had not noticed that a figure in a gorilla suit walks into the middle of the court, turns to face the camera, beats his chest and dances a jig before strolling out of the picture.

What we pay attention to guides our expectations of what we are going to see. If it doesn't fit the template we are currently working with, then often we won't see it (consciously at least), no matter how bizarre.

So how do we ever learn anything new? That's where the brain's right hemisphere comes into play.  But before I go any further, let me acknowledge my inspiration here: A bo0k that took over my summer holiday, possibly one of the most interesting books that I've read in thirty years: The Master and His Emissary by Iain McGilchrist. 

Managing The Downside Of Global Processes

Why is is that even leading multinationals seem less healthy than successful companies that stick closer to home?

In an article just published Understanding Your Globalization Penalty, a McKinsey team set out to provide some answers.

The findings from McKinsey's organizational health survey data (from 600k people in 500 corporations) was 'troubling'. The weaknesses shown by even multinational leaders 'touch on all three major areas of organizational health—alignment, execution, and renewal'.  The McKinsey team was clearly surprised:

"The global leaders we studied represented the cream of the crop—they not only enjoyed strong financial performance but also had significant global scale and scope, which is why we included them in the sample. If organizations like these can’t stay healthy as they grow globally, can any company?"

To make sense of the data, they went on to interview executives at 50 global corporations. The answers highlighted the familiar challenge: how to balance the benefits of local ownership and focus against the potential benefits of global scale and coordination.

The McKinsey team noted that many multinationals just don't have the collaborative framework in place to make the right choices, and be able to continuously re-optimize as circumstances change:

"Complicating matters further, our interviews suggested that, for most companies, about 30 to 40 percent of existing internal networks and linkages are ineffective for managing global–local trade-offs and instead just add costs and complexity."

This is very much at the centre of our radar at Nimbus. Our clients are looking for a collaborative framework that enables them to manage the trade-off between standard global processes and necessary local variants.  

It's easy to love global processes.  To some extent, they can be imposed - in supplier payment terms, for instance. But, most often, some local variants will be essential for legal reasons, or just plain efficient in overall business terms. And it's always fluid: what is justifiable as a local variant today may not be next year; and sound new reasons may emerge for new variants.

So every enterprise needs a collaborative framework that, on the one hand, enables a relentless convergence towards global processes, and higher levels of automation, but, on the other hand, recognises that standardization is ultimately unattainable, and is able to manage intelligently the local variants and the continual re-optimization of the balance between global and local.

It's a capability that looks set to become ever more crucial. The McKinsey team note that many firms 'are wrestling with the corporate center’s role in their increasingly globalized institutions'. They suggest that 'it may be time for some companies to reimagine what the corporate center does... And since even leading multinationals appear to suffer this globalization penalty, the importance of addressing it will only grow larger in the years ahead'.

Shared Services is usually at the heart of the global processes vs local variants tension. I hope to return to it here over the coming weeks, with some customer examples. It will also be one of the strands in the Shared Services workshop session on Day 2 of the Inspiring Performance 2011 conference in London. So do please register if this floats your boat - spaces are limited - and join the debate.

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20 Jun 2011    Building A Robust Global Services Organization 

19 May 2011    Service Integration and Process: In Six Minutes

 

Simplicity, Process And Effective Communication

We live in a world where simplicity is so under-rated.  Real erudition is surely to be able to explain something simply, in a language that's suited to the capacity of the audience.  It's the genius of the parable.

It must be the zeitgeist because several of my colleagues have posted interesting pieces this week on aspects of simplicity: Janne Eriksson on Design Thinking (if IKEA designed process...);  Tom Molyneux on applying Nudge thinking to process; Mark Cotgrove on complexity as a root cause of failure for most projects; and Chris Taylor on simplicity and user adoption. 

After we'd listened to a presentation at the SharedServicesLink P2P conference yesterday, I turned to face the delegates on my table. It was going to be an embarrassing admission - I was, after all, representing a conference sponsor - but I determined to be brave.  "I'm going to be honest with you", I said. "I don't actually know what ERS stands for".  Turned out that I needn't have worried. Nor did anyone else on the table. And we'd all sat through a half hour presentation in which ERS was a constant reference. Even in the gripping but arcane world of touchless P2P, it pays to keep it simple.

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26 Apr 2011    Process As Science And Art

21 Jan 2011    Think Simplicity, Think Process

 

 

Attaining Touchless P2P

My first time at the Attaining Touchless Purchase-to-Pay conference in London this week - now in its fifth year. 

Great hands-on (touchless - geddit?) presentations from Vodafone, BG, Diageo, Pearson and others.  But the star of the show for me was Ericsson. After almost a decade of relentless transformation, it has migrated from 100+ national P2P processes into a global P2P process delivered off a single instance of SAP. Along the way, it has shed one third of its FTEs, reduced F&A costs to 0.2% of opex - and is approaching 'touchless' in many areas. 

As ever, it was the shared learning that was most valuable.   The Ericsson presentation highlighted four lessons that recurred in other presentations across the two days:

1. Automation has to follow after process standardization and optimization [encouraging that process standardization was a top priority in the pre-conference delegate survey]

2. Never under-estimate the value of collaboration and investment in change management; never make the mistake of thinking 'this is an IT project'

3. There has to be one process - integrated across the enterprise and down to the task level - and a shared understanding by all the stakeholders

4. Governance is breakfast, lunch and dinner - especially with respective to policing process variants. [Ericsson's ongoing program on 'deviation reduction' must frighten the life out of those who would dare argue for special treatment]

Ericsson is also among the leaders in fusing AP and Procurement, having just moved its global Supply Chain into Finance.  Vodafone too has a single integrated global operating model across Finance, Supply Chain and HR.

But most organizations are yet to make real progress here. It was a major theme of the conference. As Susie West, CEO of SharedServicesLink, put it in her keynote: "Automation alone won't achieve much without standard processes and alignment. If there's one take-away from this event, it's this: how are you going to get alignment? "

Collaboration, standardization, alignment, variant management, compliance...  I would love to say that Ericsson leveraged Nimbus Control as a process management platform to deliver its success. But, alas, I have to report that they built an in-house toolset (which looked uncannily familiar!).  

For those who admire Ericsson's pioneering spirit but would prefer to adopt a proven platform for process management and performance improvement: please come and check us out at Inspiring Performance 2011 in London in September.

PS haha - just heard that an Ericsson speaker won a prize in the end-of-conference raffle, donated by one of the conference sponsors: Nimbus! Dear Reader, are you going to believe me when I claim that this is not a stitch up? 

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23 May 2011    IBM Global CFO Study 2010: Finance Transformation

20 June 2011    Building A Robust Global Business Services Organization

Building A Robust Global Services Organization

Rick Lucas and Drew Wright at Everest Group sounded an alarm last week about the challenges in building a robust global services management organization.

Highlighting the increasing complexity of global services delivery, they make the point that today's world demands different expertise and new capabilities. Relying upon the skillsets that have worked for the last twenty years could be, they warn, 'catastrophic'.  

It's not just new leadership that we need. As I've argued elsewhere, the complexity and pace of managing global services - the challenge of service integration - demand a similar revolution in process thinking.

The tools and methods that we've used for process management for twenty years won't deliver in today's world either.  They are too technical, fragmentary, ungoverned and disconnected from real business operations. 

Successful global services organizations will rely on process management platforms that can:

- provide line-of-sight between a target operating model and operational realities

- enable effective collaboration, especially between IT and the business

- wrap governance, compliance and controls around the operational processes

- deliver at the front line and engage the organization in continuous improvement.

Everest makes the case for recruiting the right talent 'to execute with excellence and deliver the next generation of value from global services'. But even the best talent can't deliver sustainable excellence without a joined-up view of the business.

Optimizing service delivery across supply chains that are global, cross-business and cross-service providers, demands transparency, shared understanding and clear accountability. Cue the enterprise process management platform, the crucial enabler.

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23 May 2011    IBM Global CFO Study 2010: Finance Transformation

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Process: How To Break Out Of Binge Culture

"We're about to start another process documentation binge" said the prospective client I was talking with, a shared services director. 

"It's across the business, driven from the center" he went on. "The trouble is that we define the processes but nobody seems to bother about following them.  They're too difficult to understand. So we have a lot of compliance issues."  

Dear Reader, I'm not making this up.  This is a major European energy group.  [I'm even resisting naming and shaming the process tool mandated by the center because this malaise is not unique to this tool - it could any one of the technical process tools.]

I share the story as a brilliant example of the dysfunctional state of so many organizations when it comes to process management.  Stuck in a wasteful and dispiriting 'binge' culture.

At the other end of the spectrum, leaders like Nestlé, Cameron and Carphone Warehouse join up the dots.  They see process as an enterprise asset which underpins risk management and provides one of the keys to sustainable change. They want an enterprise-wide process management platform that gets everyone collaborating effectively on continuous improvement. They aspire to be fluent in end-to-end process.

Which isn't just good for their stockholders: it makes for a much more inspiring place to work.

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23 May 2011   IBM Global CFO Study 2010

26 Apr 2011    Process As Science And Art

 

 

 

Shared Services: Rethinking Process Management

Drawing on data published recently by Deloitte and HfS/Hackett...

How Shared Services optimization demands a new approach to process management. 

In three slides:

Download Shared Services - Rethinking Process Management - 26 May 2011

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19 May 2011    Service Integration and Process: In Six Minutes

06 Apr 2011    Deloitte Global Shared Services Survey 2011

 

 

Shared Services and Outsourcing Gets Groovy

With backing from FatBoy Slim, it wasn't going to take much for me to enjoy the Shared Services and Outsourcing Revolution video shown at SSOW in Amsterdam and just released online by SSON. 

We could quibble with the calculation of $1.3bn cash flow benefits. We could point out some inconsistencies in the logic of the storyline.  But basically it's five minutes of excitement - and broadly right.  It's very plausible that 89% of executives worldwide now see shared services as strategic to their business.

Next year, it will be Nitin Sawnhey backing a more reflective video on how the cosmological underpinning for sustainable success in shared services and outsourcing is process management.  With a bluesy number from John Mayer on the heartache of losing control (of one's processes)... Meantime, play me that Fat Boy Slim again. Process and good music - Mmmmm.

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19 May 2011    Service Integration and Process: In Six Minutes

12 May 2011    Postcard From Amsterdam: SSOW 2011