VALUE LIES IN THE EYE OF THE BEHOLDER…



One of the main catalysts for creating a Finance and Reporting Shared Service Center at Barclays, in 2001, was the move to a common ledger platform (SAP) across the business units. This realized a number of cost and control benefits by centralizing related services and standardizing operational processes in the UK.

Five goals were key: delivering world class analytics; achieving world class business partnership; setting the highest standards of governance and control; creating a truly global finance organization; and developing a high-performing team. In 2009, these efforts culminated in the creation of a Global Operating Model for Finance and Reporting services, leveraging off a Barclays shared services captive in Noida, India.

This article shares some learnings as we moved from "infancy" to "maturity." While most business cases usually expect an immediate "value epiphany" on what’s often a sizeable investment, the key is to harness value across a number of areas on the path to "valued partner status." Simply put: demonstrable value-add can be closely aligned to the life cycle of a shared services function (see also Figure 1).

Value_Add 

BUILD SHARED SERVICES PROPOSITIONS FROM ORGANIZATIONAL STRENGTHS
One of the pitfalls of designing a shared services function without understanding your innate organizational strengths is that you could end up with a blueprint that may be an award winning example of leading edge design, but quite frankly is starved of the business support and buy-in it needs to flourish. Often, the decision to move to a shared services environment is not taken by the actual end-users of that service, namely the clients. The best way to avoid such a pitfall is to tie the success of the shared services function as closely as possible to that of the clients and/or business units it is there to support. Shared objectives and senior business ownership and oversight are just some ways in which you can ensure your model is not starved of the oxygen and renewable energy it needs to flourish.

A SHARED SERVICES BLUEPRINT IS NOT JUST FOR CHRISTMAS
As I’ve mentioned, adding value can usually be defined by the stage at which a shared services function is in its life cycle. A key step is to periodically review your shared services blueprint against your current business environment. The shared services must be allowed to evolve and adapt to optimize its value at any given time. In my own experience, this can be best achieved by developing a service framework that constantly adapts and aligns itself to changing climates and influences. This holds whether you are looking from the "inside out" (from a position of shared services expertise) or from the "outside in" (customer/business insight).

COST, QUALITY AND CONTROL— YES, ALL THREE, PLEASE
Different stakeholders will naturally have differing views as to which of the three factors, cost, quality and control, is most important to your organization. The key is to ensure visibility of all three through quantitative and qualitative indicators. Shared services functions are designed for different reasons, and as such, measurable value-add must reflect the organization’s stated objectives. That said, established metrics or indicators should not be the absolute measure of a shared services function’s success. From a client perspective, demonstrable value-add can just as effectively be gleaned through less formal indicators, such as client satisfaction ratings and service performance reviews. For example, presenting an above average KPI achievement can very easily turn to dust if your client measures success in a different way. In my own experience, Customer Primacy training was an excellent way of putting our clients at the heart of what we do; effectively: going beyond the numbers.

YOU CAN HAVE ANY COLOR YOU LIKE, SO LONG AS IT’S BLUE
Positioning what you do in terms of the value you add to your clients is crucial. Similarly, your shared services model or offering must be closely aligned to what your clients value individually or as a collective. Some activities may be regarded as more valuable than others, of course, however, it is important to remember that some of the more "utility" type benefits that underpin most shared services functionality usually go unsung, although they may be highly valued by other stakeholders, for example Group Functions. It is important that such intrinsic value is recognized, harnessed and clearly understood by your clients. From Barclays’ perspective, we achieved this through regular re-appraisal of the shared services model and the establishment of a service proposition framework. Our teams were thus inspired to achieve valued business partner status and, at the same time, gained better customer insight into areas that didn’t necessarily rank high in the value chain. To share an example: The ability to adapt to a changing regulatory environment (for example, Sarbanes-Oxley/Basel 2/ IFRS) through centralized expertise may not necessarily be recognized and thereby valued by individual business units, which take this for granted.

BUSINESS CHANGE SHOULD INEVITABLY LEAD TO SERVICE CENTER CHANGE
Operating a flexible service model allows you to respond to changing business needs brought about by internal or external influences. Agility and being able to offer expert guidance on how such change will impact your clients and the services you provide to them is crucial. At Barclays, we have a core team of technical experts aligned to service lines, who are able to assess and implement required change. In addition, this team is also tasked with continual process and service improvement through innovation and leveraging best practice. By its very nature, such a team probably sits at the higher end of the value chain, which makes it easier to demonstrate value-add. The key is to focus on organizational strengths and to seize process or service opportunities as they arise. Change is not something that your service model should obstruct or seek to minimize.

INTEGRATE, NOT COMPLICATE
In this unsettled global climate, a robust but flexible approach to shared services can make the difference between "below benchmark" and "world class performance." The ability to leverage off shared capacity can support solutions for cost challenges, enhance standardization and engage unseasonable business opportunities during a period of significant market turbulence. Efficiency gains can also be achieved by greater alignment of fragmented services, by not duplicating activities (for example, business satellites), and higher delivery effectiveness through some of the more established process improvement techniques. Similarly, growing your organization’s shared services capability (whether at a regional, national or global level) can allow business units to take advantage of new opportunities (for example, acquisitions) while leveraging off local expertise, cost-efficient locations and hours of operation—all ways in which continually to re-size and refine your shared services model.

At Barclays, the creation of a globalization strategy for the Retail and Commercial Banking arm allowed what was a UK-centric shared services model to grow into a planned, multi-regional Center of Excellence for Finance and Reporting services. This will be achieved through a Global Operating Model (GOM) blueprint, which sets out a number of strategic imperatives of the division, namely:

  • migration to a 24/7 operating model
  • efficiency at least equal to that of the global financial services industry
  • centralized operations in cost-efficient locations;
  • automated, robust processes; high standards of control
  • high staff satisfaction

A further principle of the GOM is to help business units with the formulation of future globalization plans through leveraging shared services capability and resulting benefits.


About the Author:
Martin York is a member of the Executive team responsible for the Finance and Reporting Shared Service Center at Barclays Bank PLC. He is directly responsible for the Global Retail and Commercial Banking client relationship as well as the Center’s Business Change function. Prior to joining Barclays in 2003, Martin worked in a number of Finance, Commercial Change and Audit roles in the UK and Internationally. Martin is also a current member of the Barclays Bank Finance aLeadership Development Network.
Contact Info:
martdelyork@btinternet.com