Q&A: Michael Colicchio, Celanese , Hungary

Just 30 months ago, Michael Colicchio, Director for Global financial Shared Services for Celanese was approached to launch and manage a Shared Service Center for Celanese in Budapest, Hungary. The center recently received an Honorary mention for 'Best New Captive Shared Services Organization,' at the Shared Services and Outsourcing week, in Hungary. In this two part interview, Michael spoke to SSON about the highs and lows of implementing a shared service center.

SSON: Michael you were approached 30 months ago to set up the shared service center here in Budapest - how have those 30 months been to you?

Michael Colicchio: Very interesting. 30 months ago I was living in Dallas and we’d been living there for a year and a half – I am from New Jersey and before going back home for American thanksgiving. I was approached by our controller who is now our CFO to talk to me about what they had been looking at in Central Europe and he told me about a project which was a site collection, as we had already decided that we wanted to do financial shared services and he approached me with a couple of names of people who he thought would be reasonable candidates for the job - his real intent was to get me to say ‘ I would like to do the job.’So starting 30 months ago I start to think - how would I do this? I had never done it before – I had no roadmap and we were going to use consultants.

It proved challenging in some ways and it proved enjoyable in other ways and it definitely has been the best experience I have ever had. Some of the challenges are just dealing with a local culture that you know nothing about and trying to figure out what buttons you need to push to get things done and to motivate people. The Hungarian workers that we hired; they’re young, ambitious and bright - speak multiple languages - minimum of three, all with university degrees. And one of the promises I made to them when I was recruiting them; was I will train you properly, I will give you excellent training and that is a promise that if you break it - you will never get that faith back. So we had to really keep all of our promises and make sure all our training material was thorough well documented, relevant and lengthy enough. Then design a face to face work shadowing program with the folks that were losing their jobs – that’s not easy. So what I did along with one of my colleagues is we visited every site in Western Europe that those jobs were going to go away from and had a little town hall sit around the table and explain what our intentions are and we did that with plenty of advance notice - so we actually told the organization a year in advance that we were thinking of this so rather than keep it under the table where it never stays hidden - we brought it out publically and said we don’t know when, we don’t know where, we don’t know how and we may not do it but we’re exploring it. So going to all these sites in Western Europe, it was physically challenging to go and visit London – the UK and France and all the other sites we were in and tell people you are losing your jobs – but telling them you didn’t do anything wrong and meaning it. But telling them it doesn’t make any sense for us in the space that we are currently at to have a size of almost 7 billion in revenue and services that rendered all over the place and I think that face to face went a long way.

SSON: In terms of building the business case for the center and establishing it - how quick has that turn around being for you and what has the return been on your investment?

MC: I can’t disclose how much our investment was and how much savings we have because it is not public information and we don’t have to say that, but we saw significant reduction percentage wise in our spend.. Significant. The beauty of this though isn’t only that we have saved money, because that is only one prong – only one road. The most important thing is that we went from a very slow, very disjointed, non-compliant organization to one that is now much leaner, more efficient, quicker and more nimble. We satisfy our customers which are mostly internal very very well. The customers are happy with what we have done. They needed to take a leap of faith to come on this journey with us and we made promises again and had to keep these promises.

SSON: How have you managed to keep your customers happy?

MC: One way we keep them happy is by talking to them often and the way that our business is aligned is that we have three chiefs of finance for our three major line of finance – one is located in Germany, one is in China and the other is in the US. And I communicate with them often. We’re peers so we trust each other, when we started this off, I asked them 'what is your expectation – what are the things that you don’t want me to do and what are the things that you want me to do more of?' And when you start that dialogue off that allows you to develop a nice tight SLA ( service level agreement) and that SLA can be used to kick off this and say this is what we are going to do and the SLA is detailed enough as it is designed enough to say this is your responsibility – this our responsibility and these are the commitments we will make from a timing perspective. So if somebody calls and wants a change made to material in master-data, then we give them a 48 hour turnaround and we track that, so we have a system that will track our KPI commitments.

SSON: How often do you re-evaluate your SLAs?

MC: Not often. In fact we have not re-evaluated at all in the last year, since we formally implemented it. We don’t see the need to, it is an ever-agreeing agreement and it has clauses in it that talk about if there is a divestiture of the business and how long the business still has to pay for that service. Because if we had 25% of the businesses go away because of a divestiture, I can’t just immediately turn off that spigot. I still have a time-frame and I have to give people notice. And we may then acquire something else in that time period, so I wouldn’t want to have to cut people and bring people back in because it would completely destroy your financial shared services organization. So we really don’t want to re-evaluate it and unless there is major thing and we haven’t had anything major.

SSON: Are you looking at consolidating any other processes into the center in the next few years?

MC: I’d like to. The one thing that we have just announced and we are planning to bring in on June 8th is we’re bringing our business and analysis group here. That is the group that works very closely with our business finance directors and provides them with timely, critical business decision information that they need. We’ve been doing that form various locations around the world and now we are consolidating that. And when we are done – we will have about 16 people in that group here. We’ll still have people around the world doing that work, but we will have a group of 16, who could share insights, learnings, techniques, tools and we will do that with one ex-pat and the rest will be Hungarian.

SSON: On that note - we are here in Hungary and obviously the market here is quite saturated in terms of staffing. How are you competing with other organizations to firstly recruit and secondly maintain the staff you have?

MC: Well it is interesting. Right now I think we are sort of mature … at first when we came here we needed to work with recruitment firms and work very tightly with them and let them know the profiles we are looking for and the type of people we want - the skill sets. And that is the only way to get to that market is through recruitment firms. But there are a number of things that happen here in Budapest in Hungary around job fares, that you can participate in job fares and pick up hundreds of cvs and I thought of something else. I thought if I was selling a house in the US, I don’t know how it works in the rest of the world; you have what is called an open house. People come into your house and you showcase it. And I thought why are we not doing this here to showcase this nice house – because we have a very nice office and I could have this group walk around the office, show them it and have them talk to the people where who are their future colleagues. We did that last year in about 2008 and had about 50 visitors, we did it again about 6 weeks ago and had about 150 visitors.

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