Bensalem & Bangalore: a winning combination
What cinched the deal, explains Terri Sasso, VP Controller and Business Services, was looking at "total cost of ownership" – not just the cost of what was paid for services, but what was paid for mailings and manual processes, and the cost of non-compliance.
Along the way some valuable lessons were learned: "We spent a great deal of time on the implementation of the system and not enough time on the processes and how people’s lives would change," says Sasso. Given the chance again, she’d run two separate teams: One dedicated to the technology, and one dedicated to the process and change management.
Interview with Terri Sasso, Vice President, Controller and Business Services, Charming Shoppes Inc.
Terri Sasso has played an integral role in maturing and transforming the Finance and HR shared services operations at Charming Shoppes, Inc. She supported the incubation of the Shared Service Center in 2002, and the team has since expanded the services within the company.
Barbara Hodge: Terri, how did Charming Shoppes’ shared services come together? Could you describe the challenges that you were faced with a few years ago?
Terri Sasso: We started shared services in 2002, after we acquired several retail companies and needed to get the synergy and leverage out of those acquisitions, because various support functions were being performed separately. When we centralized under shared services, we brought all of the Finance and HR transactional functions together under one common operational structure. So, we’ve been running shared services out of our Bensalem [Pennsylvania] corporate office since October of 2002. Then, just to fast-forward, we migrated, we standardized, we automated, and we matured.
That took us up to 2008. It wasn’t really until early 2009 that we started to explore – on a much more aggressive level – what offshoring could add. We’d always outsourced some non-core functions to domestic service providers – utility payments and tax returns and things like that. But we didn’t really look at offshoring until early 2009. Given that we had already centralized many functions in shared services and were running on common system platforms it made sense to try to get some additional leverage, cost savings, and process improvement. We went through an RFP and due diligence process in 2009 and eventually selected a strategic partner for Finance and Accounting transactional activities. We completed the transition of our accounting and finance center during the first quarter of 2010, with about 24 associates supporting us in Bangalore. All of the function leads, owners, and business process drivers lead from Bensalem, but pieces of the transactional processing for just about every function went offshore.
Who is your strategic partner in Bangalore?
In Bangalore, we have partnered with Infosys, where they have a floor dedicated to our team at their facility. Our shared services team felt like that was a really successful project, in terms of how we were able to transition and maintain the quality of the work. Our teams worked well together from the start to ensure the processes were well-defined and certified all of the agents on their respective functions both onshore and offshore. We sent our team over to Bangalore on a couple of trips during 2010, just to reinforce the training and also after steady state was reached, as there is always some process tweaking after things are running for a while.
Once our F&A contract was in place and we were moving toward transition, we immediately started to look at what I felt was really the more pressing issue: HR operations and payroll. Our existing F&A processes were fairly mature and highly automated, but our HR operations side of the house was not as far along both from a process and technology point of view. And just to be clear, included in HR operations is payroll and hiring administration, all of our central records and compliance processing, time and labor, and all of the mechanics that support capturing data and getting people paid.
We had a domestic external service provider to supply the platform and processing at the time in a co-sourced model. Our internal processes were very mainframe and batch-driven and we really didn’t have all of the components within the overall platform to support our operations efficiently. And ultimately it would mean we’d have to turn everything upside down to truly transform the operations. We recognized, as we surveyed the external landscape, that we had an opportunity to leapfrog to a PeopleSoft™ based HR Platform. And not only adopt new technology, but make use of outsourcing to support pieces of those processes and systems that we certainly couldn’t support in-house at that time.
As we looked at our options then we were pretty constrained with regard to how we would pay for this. So we worked diligently to refine the business case which was built around the benefits of paperless processing, employee and manager self-service, and the upside of improved compliance. Ultimately we were able to obtain approval to move forward with the project in January 2010.
In March of 2010 we started working on the implementation. It was obviously a very intense project which required us to change just about everything. Every time we turned over a rock, we found something else that we didn’t know about our existing processes. And changing HR systems affects every single person in the company so it has to be right. Long story short: through a joint team effort we were able to hit our ‘go live’ target in January of 2011.
From what you’ve told me – no capital and constraints with regards to payment – you were in a tough situation. What were some of the most compelling issues in the business case that really turned this in your favor?
We had to look at the total cost of ownership – not just the cost of what we paid for services, but what we paid for mailings, manual processes, and the cost of non-compliance. In addition, the new system was expected to give us better visibility to real time information to ultimately help us manage hours and pay-rates more effectively.
Having visibility to information quickly has been tremendously helpful for us, apart from just reducing paper. Self-service theoretically allows you not to have to touch all of the transactions. I would warn that this is still an area of cultural change and continual training for us and the team is still working toward optimization. When you move things to self-service, you have to ensure that the data is entered correctly; otherwise you have to intervene again and are actually adding work to the process.
In summary, there were significant tools that we just didn’t have before the implementation. By virtue of having those things now, it gives us a better understanding of our HR and payroll information.
Has there been any negative impact as a result of moving onto this "cloud" way of working?
Having this as a turnkey implementation was critical, otherwise I do not think it would have been possible in a nine-month window, and it was also the basis for us to be able to consider it at all. We have not had any system performance issues with this model and are able to work with Infosys to perform required patches and improvements as necessary without competing with other initiatives. Since it is an Opex model, all of the costs sit with our service center as opposed to some technology costs being in the depreciation line, but this was contemplated and accepted at the time.
So you’re moving towards a modern data-based function. How is your relationship with your clients – the business itself – changing?
The intent was to "leapfrog" and have world-class data and world-class reporting. We do still have challenges with adoption and change management internally. There are lots of growing pains as new processes have been implemented and our teams are still learning. It’s like starting up shared services all over again for the first time, and for anyone who has done that you know you just have to persevere through the worst and keep charging toward the goal. Regarding some of the issues early on … much of the new working model wasn’t rehearsed well enough with the outsourcer. We spent a great deal of time on the implementation of the system and not enough time on the processes and how people’s lives would change.
What advice would you give, based on your experience of the past 15 months? Would you spend more time preparing the processes versus the implementation?
Yes. You really need two teams. You need a team dedicated to the technology and a team dedicated to the process and change management. Because we were changing everything, the full impact of the new processes as implemented in the system could be experienced only toward the end of the project cycle and much later than when we started training with end users. Unfortunately, when the processes break down, it is externally viewed as a system problem when really it is a process problem. Technology is not the cure for an undisciplined process, so continuing to refine and improve our processes and monitoring controls will help us to achieve the business case.
Change management is so often held up as the make or break part of any big implementation. Given that you’re now 15 months into this project, can you give me some specific examples of what you could have done to smooth the way a bit?
I would have added more resources on the change management side and made sure that we had more regular face-to-face communications with our HR and business stakeholders than we had scheduled. This became challenging to keep up due to the aggressive time frame and the intensity of the re-design and testing activities. Considering these things ideally go live around the beginning of the calendar year, getting more resources in the December time frame was also a challenge. That said, our implementation teams were fully dedicated and worked tirelessly throughout the project to ensure the quality and timeliness of the go live.
A question about the selection process: What did you look for in a provider and what made Infosys a good match?
What we really wanted was to own the design of processes and customize them to our business needs so we could add value. To be clear, that doesn’t translate to customizing software. We attempted to embrace the best practices and leverage out-of-the-box functionality as much as possible, though coming from a heavily customized legacy environment this became part of the change management challenge. We had begun a good working relationship with Infosys on the Finance and Accounting side and believed we could leverage that to manage a better outcome long term for the payroll and HR services.
Thank you, Terri, for your time.
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