Launching Shared Services Late & Learning From Best Practice
The relatively recent emergence of Latin American multi-nationals has brought some interesting challenges for the leading companies in our regions, as well as for their executives. Brazilian companies in particular, who have had a late start in this process, were able to catch up in recent years and, today, are well represented amongst some of the world’s largest organizations.
One of these Brazilian companies, Vale, was able to grow from a single mineral mining company, with operations concentrated in Brazil, to a global diversified enterprise – second largest in its sector worldwide and one of the 25 largest enterprises in the world. Most incredibly, this transformation took place in a very small period of time – less than 10 years.
Vale, formerly known as Companhia Vale do Rio Doce or CVRD, was a state-owned business until 1998, when it was privatized. Shortly after privatization, in 2001, there was a change in the control group, which led to a much stronger focus on growth, rather than on dividend generation. This new strategic direction made it possible for Vale to increase its market capitalization from USD 8 billion in 2001 to more than USD 160 billion by the end of 2010. Moreover, it made Vale the company with the largest TSR (Total Shareholder Return) amongst large listed enterprises between 2001 and 2010 – a list where the second position belongs to Apple!
Considering the company’s strategy, and aiming to support its bold growth ambitions while maintaining control over operations, Vale’s Executive Board decided, in 2005, to implement a Shared Services Organization. Initially this was restricted to Brazil, and covered a wide range of processes, including Procurement, Financial Services, Human Resources, Information Technology, and Facilities Management.
Taking advantage of being a "late adopter" of the Shared Services concept, the leadership responsible for implementing this project took a good look at the market and implemented a model that went beyond the mere "centralization" version adopted by most companies. The model selected for Vale really emulates an external service provider, building a professional and transparent relationship between Shared Services and its internal clients. Additionally, it gives the internal client autonomy to take decisions on the balance between service level and cost, not only on an annual basis, during the budget cycle, but also for each individual transaction requested by internal clients.
After a very successful implementation in Brazil, and reductions in company costs accompanying important improvements to the services provided, in 2007 it was time to move ahead and roll-out the model to other geographies. From 2007 until the end of 2010, Vale’s Shared Services Organization has incorporated the processes under its scope in 10 other countries in South and North America, Europe, Africa, Asia and Oceania – and now covers 99% of Vale’s employees worldwide.
The current challenges for this organization are to continue to support Vale’s investment plan, the second largest of any company in the world, over the next five years; implement a single set of business processes in all geographies; and offer the same experience to our internal clients, wherever they are.
About Joäo Henrique Moraes
Mr. Joäo Henrique Moraes joined Vale in November 2008, as Shared Services Director for South America, and in December 2010 he moved to his current position, as Shared Services Global Head. He started his career in Esso (ExxonMobil affiliate in Brazil) in 1985, in Information Technology. During his career in Esso, Joao had assignments in Internal Audit, Strategic Planning, Budget, and Treasury. In 1999, he became Procurement Director and in the following year he participated in the creation of the Shared Services Center for ExxonMobil, in Curitiba, Brazil. In 2003, he was transferred to Baton Rouge, Louisiana, responsible for Procurement operations in that state. In 2005, he was transferred to Buenos Aires, Argentina, to set up the Procurement Center for the Americas. During this period he served as General Manager of ExxonMobil Business Support Center SRL. Joao was a board member of Quadrem International Limited, and is an alternate board member of Vale Fertilizantes. Joao is an engineer, with an Executive MBA by Coppead, and leadership training by Thunderbird, MIT and IMD.