Award-Winner Interview: Reginald Van Peteghem, Borealis
(Borealis AG is one of Europe's largest producer of plastics and related materials; the company has operated a financial shared services center for nearly 15 years. At the 8th Annual Shared Services Week in Sitges, Spain, in May 2008, Borealis Financial Services won the Shared Services Excellence Award for Best Process Improvement & Innovation; meanwhile, Borealis' Director of Financial Processes & Services, Reginald Van Peteghem, walked off with the coveted Thought Leader of the Year 2008 award. SSON caught up with Reginald recently to ask him what it was that put Borealis - and himself - ahead of the field in innovation and process improvement, and to find out about his plans for the future.)
SSON: Reginald, tell us about the Borealis shared services journey and how you got involved.
Reginald van Peteghem: We’ve had a financial service center since 1994. In the beginning it was linked purely to activities which had to do with finance and the treasury area, so we had central banking, internal bank, our credit and receivables handling – everything which had cash streams involved, we had centralized. At the same time, by 1996 we created one single instance of SAP – we were one of the first big companies to be able to do this. Following that, the big waves of activities we brought in came in in 2002; we brought in all transactional parts of the finance function - so general accounting, accounts payable, full accounts receivable, a proportion of procurement tasks. So from 2002 onwards we’ve had enormous growth.
If I look at where it is now, we now have - apart from some very specific functions like tax, like business planning - basically all the activities of Borealis finance and accounting happening within the service center. We have about 110 employees now and the total number of finance employees in the whole of Borealis is only about 150; you can imagine that the majority of tasks are now done in the service center.
I came in about four years ago now; I came in just when we’d rolled out the big waves, so we were just emerging from a group of, at that moment, 30 to 40 employees, and growing to a team that was about 90 to 100 employees. The moment when I came in was when we’d just had the expansion and we needed to stabilise the project.
SSON: What was your previous role?
RVP: I was basically the biggest customer of the center before! Because I was Finance Director, Belgium, which was – certainly at that time – the biggest team to which the center was providing services. So I went from customer to provider, you could say.
SSON: Whereabouts is the SSC located?
RVP: We have the biggest group – what we call the Center – based in Mechelen, in Belgium, halfway between Antwerp and Brussels. What we have here is all the transactional parts, all the areas that are very highly automated: the payables, the receivables, a big chunk of general accounting we have here, the whole credit team is sitting here – so a lot of the team is sitting here centrally. We still have employees at our producing locations, which are still part of our service center; the key activities we’ve left at these locations are statutory accounting and cost accounting.
SSON: What is the geographical spread of your employees?
RVP: We have slightly more than 50 per cent in the Mechelen center, then we still have – because we need to bring in certain services from Austria as we have acquired a new division there – quite a big team in Austria; then we have a minimal presence in several other European countries for our statutory books.
SSON: And what’s your specific role?
RVP: My title is Director of Financial Processes & Services, so I’m not only a service provider but also I own most of the processes: I tailored them for the company. I have a double hat, you could say.
SSON: Borealis won Best Process Improvement & Innovation at the Shared Services Excellence Awards – what made you stand out from the competition in this area?
RVP: If you look at the way we approach innovation within the service center, we build it on three legs. One is that for every process, we have a clear team vision where we want to go. This means that once a year we do a strategic workshop and we really define where would we like to see this process being five years from now - and we really put some very challenging numbers to it. If we look at the payables process, we want to go for a full paperless process, for instance. If we look at general accounting, we want to limit the number of manual bookings to about ten per cent of what it is now. We choose breakthrough items where we say "ok, we know we might not even have an idea now about how to do this" but we state a really clear vision of where we want to end. Linked to that one is basically the whole statutory deployment, also the kind of systems we want to have and so on, based on those visions.
The second leg that we build our innovation upon is what we call the breakthrough projects, meaning projects we run here trying to achieve step changes – sometimes in quality, sometimes in cost, sometimes it’s automation we want to do – projects which we define and which cannot run longer than a year, but within that year we clearly want to see step changes. So for instance we introduced a self-billing system about two years ago; we clearly defined a good self-billing system and we made it happen for at least 40 per cent of our invoices – just one year, a Big Bang focus on it. The key thing about doing these items is that at any moment we make sure that we have no more than three of these projects running; have the focus of the whole team just on those ones so you don’t dilute any of your attention on it, and those breakthrough projects get the full focus of resources, funding and so on - and they’re always linked to a certain KPI that we measure before and after.
So that’s the second leg. The third leg we’re building upon is that we expect all our employees to be innovative. When I started here about four years ago we introduced a system where all employees could post ideas for improvement, and we had the commitment that everything they posted we would analyse, and they would always get a clear answer: if we took it on board we would implement it, and if we didn’t they would have a clear answer as to why we weren’t doing it. And in the beginning – the first two years – we made it a target of the employees, to make sure they posted at least three or four ideas a year. Since then we’ve let it go and now it’s just a part of the day-to-day innovation stream within the company. We just make sure that all the employees, whenever they see something they can improve, hey bring it forward – and easy things, for example, we say: "Look, if you’re doing a booking it shouldn’t take any more than ten or 15 minutes. If you find a booking and every time you’re struggling with it and it takes you an hour, it means something’s wrong with the process." Or: "If you encounter the same error many times in a quality item, highlight it, bring it forward."
And by doing that – by making the employees aware that every time they see something for improvement they should list it – you don’t really need programs like Six Sigma continuously working in your company because you don’t need to bring people in to do the analysis: we’ve asked our employees themselves every moment of their working day to think "is what I’m doing here now an efficient task, is it a quality task?" And that of course helps a lot boosting innovation. You can say it’s continuous improvement and the whole team is linked to it.
SSON: As well as setting up processes yourselves which contribute to innovation and improvement do you look outside for new ways?
RVP: Of course things need to make sense. For example today we are very much interested in e-billing, but at this moment I don’t have a business case on e-billing, so yes we are on the lookout - but we are not going for every fashion item there is in the industry.
SSON: What would you say are your biggest assets as a shared services organization?
RVP: The biggest asset is, first of all, the team itself, starting with the management team. We run this organization very lean: we have 110 employees and a management team of five. And we run it as a process-driven organization where everybody owns a process: I have a manager for purchase-to-pay, a manager for everything linked to order-to-cash processes, another one for all the accounting, so this is really a process-driven organization working very fine.
The second thing is, of course, that we keep some knowledge-base in our countries; that is a very good system as you have the local contacts and the local know-how, working very fine. A lot of companies try to centralize everything; we have not done that. With us, everybody is working in the same way, all the processes are standardized, but we haven’t put everybody centrally because we want to keep that local know-how that you need in many tasks.
And the third key asset has been our standardization effort, starting in 1996 with one single instance of SAP: we have always kept that one, we’ve always built upon that one, we have been automating our processes and eliminating waste continuously, just by doing everything in a standard way. We are not a service center where we provide services in many different ways to different BUs; no, we are a service center with one way of working, trying to do that one in the most efficient and optimal way.
SSON: Let’s move on to you personally. As well as Borealis’ triumph in the Best Process Improvement & Innovation category, you were honored as 2008 Thought Leader of the Year: what do you think set you apart from the competition?
RVP: I think what set us apart as Borealis – because you could link this to myself as a person but I think this is an achievement of the whole team – is the innovation, clearly, what I explained about our three-leg approach. Secondly, I think we’ve tried to go a little away from what is the chosen path of many other SSCs who greatly play on labor arbitrage but are not always taking the maximum benefits from their processes and systems.
I think we have a clear vision on that - a clear process-driven vision where we continuously analyse where in the processes we can improve, sometimes by taking in some more activities here in the processes, sometimes automating steps: the key thing why we were chosen to be Thought Leader of the Year is that our process approach is a clear alternative for all SSCs that are situated in high labor cost areas, showing that there is an opportunity to survive if you want to be able to eliminate and automate as much as possible.
My biggest asset is to continuously grow a good management team that can build upon the ideas that have been there already for several years. On the other hand I also try to inspire some of my peers not to give up and to make sure that there is still clearly a way to handle services within Europe. Not everything needs to be outsourced: I think that it is clear there are some ways in which people can still be competitive, so I try to build on that vision and try to inspire others to do that - and actually I see a lot of companies that are moving in the same direction.
SSON: What are your ambitions for the next few years?
RVP: My ambition looking within the company is, we have probably achieved the maximum within the finance area: I want to continue the same success story as in finance in a multifunctional service center. So looking to build Borealis a multifunctional SSC and trying to achieve the same values as we have in the finance area.
SSON: Finally, what advice would you give to someone just setting out on a shared services journey?
RVP: Well I think for people who need to set out on the journey it’s key that they need to know what their mandate is about. Know their company culture, know their mandate: is the mandate strictly about reducing cost? Or do you have a mandate to shake up processes and systems: yes or no? I think that clearly depends on what you can do in the service center. If you just get a mandate to reduce cost, I always clearly advise to take all the low-hanging fruit. If you can automate something on a very transactional process, go ahead immediately. Try to have one system for a process. If you have a broader mandate so you can shake up the processes, make sure you are linked in with other teams: if you’re in finance, you cannot shake up purchase-to-pay if you don’t involve procurement. Make sure you’re not working on an "island"; on an island you can’t shake up processes.