Q&A: Graham Russell, AstraZeneca

SSON spoke to Graham Russell, Global Head of Transaction Processing at AstraZeneca, at the recent Shared Services and Outsourcing week in Budapest, Hungary about the role of transformation in AstraZeneca and outsourcing transactional activities to a BPO

SSON: I am speaking to Graham Russell, Graham, there was a lot of talk today, particularly within the G8 Summit around transformation. I know this is an area you are working in within AstraZeneca. Can you give me your view on what transformation is and how you’re using that within the AstraZeneca Captive Shared Services?

Graham Russell: I think transformation can be used to describe the journey that brings you from the starting point to an end point, with the end point reflecting the vision point that you are after. It is typically used within a captive setting as you would do if you are optimizing processes; modifying changing or upgrading, changing and improving systems with a view to bringing you to a more standard, potentially single instance of ERP for example. And then in the event of outsourcing, it is not unusual to find the BPO providers who continue that journey. They will do more application of lean six sigma type principles to further optimize those processes, apply further degrees of technology to bring both the process and the system to a more optimal state.

SSON: So what stage are you at in AstraZeneca with looking to outsource to a BPO?

GR: In AstraZeneca, we’ve got something of a mixed bag. We’ve got some captives and we have some country based finance organizations. We are on a transformation journey right now to bring the countries into the captive centers on which we are establishing region by region and we are currently evaluating whether we should or could outsource to a BPO provider. The decision is not taken yet, but we are currently in that evaluating process.

SSON: And will that be to outsource finance transactional activities?

GR: It is to outsource finance transactional activities. We have basically introduced an operating model, which breaks finance into three pieces: there is what we call transactional activity, which is much of the back-office activity, specialist finance which includes things like tax and treasury, insurance and pensions. And the third category is business partnering. The areas where we are actively looking at outsourcing are in the transactional area.

SSON: You mentioned in a session with Phil Fersht that you think business partnership is very important to an organization. How are you implementing that in AstraZeneca and how does that operate on a day-to-day basis?

GR: The partnership principle to which I referred was how working with a BPO provider, you could successfully engineer your contract. It was actually in response to a question Phil asked about what was necessary to arrive at a successful contract and my response was that one of the key things was good partnership and good collaboration and so on. The response was about what was required of both parties to engineer a good result.

SSON: And as you mention contracts, can you give me an idea of the importance of governance and contacts when it comes to outsourcing to a BPO?

GR: I would take those separately. So firstly on the contract front, there are a number of ingredients on a contract; a number of clauses and conditions, key business terms and principles that need to be agreed upfront. Again you are looking for a partner who has the spirit of wanting to help you deliver successful business outcomes, enabled by good level service agreement and automated to provide outstanding service delivery. So that is where the contract has to go. I think it is fair that many people in my space today say that there is not a great history of contracts being written easily. Parties seem to approach them very adversely rather than in a partnership-like way. Historically they have been focused around products and commodities rather than the service we see today, so I think there is some work to be done to make contracts a better place to be in the future

As to the governance and assuming that it is post contract and into implementation - we are speaking about governance structure that basically governs the operation underlined by the contract. A good governance structure would require a good multi-level set-up, both in the provider and in the client; so for example, maybe a senior executive at the provider and a senior CFO or executive at the client and then layers beneath that of management leadership levels that interface at each level of the process. And then on a monthly basis, there will be things like process reviews, issues reviews, maybe a quarterly review with CFOs and so on. So getting that right model, a structure that is probably mirrored from one to the other and that meets frequently and behaves like partners and dialogues comfortably are amongst some of the things required for success.