Positioning your SSC for the upswing
Didier Staquet, VP Head of Finance & HR Services at DP DHL was one of the presenters speaking on SSC Vision: Moving up the Value Chain at the IQPC Shared Services Exchange 2010 which recently ran in Amsterdam. SSON caught up with him to find out how DP DHL are currently squeezing extra value from shared services.
SSON: DP DHL has been operating shared services and outsourcing for over 10 years now. How are you currently pursuing that extra value within the organization?
DS: We are trying to move up the value chain by moving away from transactional services, which are basically too costly to operate in Western Europe. So where possible we are progressively migrating them to centers outside of Europe, whilst trying to retain our staff in our Western European centers, by getting them more involved in complicated tasks. An example of this is on the billing side - we've moved from billing to revenue insurance, and we have also moved from intercompany processing to intercompany netting, from group reporting to statutory reporting and also to management information analysis.
We are serving Western Europe out of that center, but we are doing more interesting things thanks to the fact that over the years people have basically acquired necessary expertise to do so.
SSON: So your transactional services are now outsourced to cheaper countries?
DS: Some are still processed in Western Europe; others have been outsourced to captive shared service centers that we run either in Asia or in Latin America, some divisions we outsource to India.
SSON: So do you think you are still favoring labor arbitrage?
DS: Labor arbitrage can still play a role but predominantly by simplifying and standardizing the tasks, which allows us to let them be operated by less experienced staff.
SSON: Do you believe multi-functional services are essential to creating added value?
DS: Not necessarily, of course there is a lot of value that can be gained in combining several services back into one. Nonetheless, it can be very successful to specialize in one process at one center and ensure that processes will be over-optimized, by creating a global center of expertise in that specific process. So you can create value both ways.
SSON: Has DP DHL achieved a center of Excellence?
DS: We have some centers of excellence for some processes, like billing and we are trying to build another one for group and statutory reporting. However, there are other processes where more work is required.
SSON: How effectively have you managed change on this journey?
DS: Managing change is probably one of the most difficult things to do on this journey. You need to convince a very large amount of people that you will ultimately create more value than you will destroy. We know that when we implement these programs, we are letting a huge amount of expertise and years of experience go. Therefore we need to make sure that this can be replaced with something better. 50% of the job is to convince and build credibility among our partners. If you have a business partner on board from the very start, then he / she understands that it's going to be difficult, but in the end something better will come out of it.
SSON: DP DHL is currently preparing for the market in 2020. Can you explain the study that you have undertaken and how you are going about doing so?
DS: Well, it's a study the company has done on a much wider scale, involving economists, professors and sociologists who have views and opinions on how the world will look in 2020 and the impact it will have on the logistics and transportation business.
SSON: What are your predictions for shared services and outsourcing in 2020?
DS: It is becoming increasingly difficult to find young resources coming out of University with the right credentials who are interested in working in shared service centers, so I think we need to have an even bigger proportion of our local services operating outside Western Europe.
The complexity of our processes keeps on increasing, so we need people who are more and more conversant with multiple systems and technologies. The aim of the global standard process maybe a nice one, but it is just too complicated to get to when the company is changing. So rather than pursuing a dream that may never happen, we are better off investing in people who can navigate value, process and services. Finding the right location for shared service centers in 2020 will obviously be a challenge – notably to serve local Indian and Chinese businesses.
SSON: I am sure you have experienced your own share of attrition - do you have any tips or suggestions on how a company can retain the talent? What are you currently doing to encourage a continuous talent lifecycle at DP DHL?
DS: I find an effective way of keeping the talent within a group is by giving them new things to learn. One of the advantages of a shared service center is it gives employees career opportunities to gain accounting degrees. It is about trying to make sure our employees learn something new and then use this experience for a new appointment, which we try to encourage every 12 or 18 months. That works quite well.
SSON: What processes are currently lending themselves to innovation within DP DHL? Have you maxed everything out and if so what are you considering next?
DS: We are trying to optimize all the processes. I don't believe that any of the processes we are operating today have been maxed out. We are still very labor-driven and a lot more work could be automated and dematerialized. For example, some years ago we began the move to e-invoicing from the supplier to the customer side, but there are still a lot of obstacles in our organization to complete that journey. By the end of the year we will have our first country where 90% + of all our customer invoices are electronic, but we still have other countries where it is only 10% to 15%, thus one of our challenges is to push everybody to the 90 % result.
SSON: Who do you benchmark against?
DS: We don't spend the usual amount of money trying to benchmark our accounting processes against other companies because it is so complicated to find something similar you can compare against. But through regular contacts we try to form a picture of where other companies are. We look at the cost of finance as a percentage of revenue as the ultimate benchmark.
More about Didier Staquet
Didier joined DP DHL 13 years ago and since then has worked in 6 different countries - Belgium, France, The Netherlands, Germany, Denmark and Sweden.. He currently manages Finance and HR Services in Europe with 1600 employees across 20 countries. His experience includes large scale project and program management, SAP and Oracle Financials implementations, Finance Shared Service Centers set-up, Business Process Optimization, Accounting and Treasury.
Didier holds three degrees in Chemical Engineering, Industrial Engineering and Finance.