State of Financial Shared Services: Interview with SSON’s Barbara Hodge

Tradeshift has been a proud sponsor of SSON's annual Shared Services & Outsourcing Week conferences for many years. Its online editor, Christopher Jablonski, recently interviewed Barbara Hodge to get her take on shifts in the industry Q: How has shared services evolved and what matters today? Back in the olden days, you’d centralize support services essentially to cut costs. Today, it’s way beyond that. It’s about much smarter shared services, which are less dependent on the FTE model than they are on technology. I think that’s fair to say, although I think a lot of people I speak to will still say it’s people, process, technology, and I think that’s true. But fundamentally, without the technology, you’re going to be at a disadvantage. The big trends now are minimizing cycle time (for whatever that may be), getting access to the right data right now to make reliable decisions, and identifying where there are bottlenecks. Leaders want to know where there is cost creeping in and to identify the more advantageous suppliers. You basically want to know: who should you be working with, and who is tangling up your systems and your staff so that it’s not really worth the time of working with them? Q: How has technology changed the practice? You may have good people and process, but you also need the technology. Today, that increasingly involves an analytic capability, reporting in real-time, and even a visual reporting capability. If you don’t, then you’re lagging behind. The trend is moving towards not just seeing what last month’s data was, but knowing what the data is today and being able to predict how the business should react tomorrow. That’s really what the business clients of the shared services want. They want data they can rely on, they want transparency, and they want visibility. They want to know about a problem right now, not next month in a report that shows that the problem started three weeks ago. The timelines have been compressed, which I think is very much driven by what we’re all used to in our private lives: instant access. You know, most people tell me they get a better user experience from Amazon than they do from their own financial processes. So, why is it that in the personal sphere there’s been such an evolution and we’re so used to that, but in the business sphere, people are still fairly limited, oftentimes confined by outdated systems and solutions? Obviously it’s an expense and there are tons of reasons why that’s the case, but I think that’s an interesting driver to the internal pressure to get more advanced solutions. Q: What does maturity and high performance look like? The advantage of driving improvement through the financial process is a more reliable business structure. If a stronger, healthier business can be built on knowing where the money is, then you know where you can divert money to. I think the value of partnering with the Tradeshifts of the world is that you help drive excellent processes. You invest in the technology, in the trading, and in everything else so that shared services doesn’t have to. The challenge for shared services folks is that their company’s main business is not to run X month’s invoices or X month’s finance processes, but rather to build a plane or to sell a hamburger. Therefore, getting the money allocated or getting access to the latest technology is not always that easy, and that’s where the benefit of working with a provider comes in. If you have the latest technologies, then the value of partnering with you is that they’re paying a fraction of what it would cost them to invest in their own processes, therefore getting a better return. Q: Why should shared services organizations put effort into being best in class? Internally, there’s the recognition that comes with doing well, and that can’t be underestimated in terms of career growth. But the business value is that it helps you to maximize the extent to which you can access cash to invest in growth or whatever you may need it for. So, wherever finance processes are sticky with cash, wherever there’s a bottleneck in the process, that causes a disadvantage for the business, which in the big picture means your competitors may be surging ahead and you may be falling behind. And then when it comes to going into new markets (right now everyone’s talking about Asia, for example), the more nimble you can be, the more you can react and adapt quickly, the greater the advantage you’ll have in establishing yourself in that market. Again, if your finance process is clunky or if it’s slow to connect with the suppliers (or whatever it is), you’re going to be limited. Instead, you can have a really well oiled machine. And if you can wedge out the suppliers that are causing a lot of rework and a lot of manual touch, and if you can just standardize everything, the decision-making process is that much faster. If you need something, you get it; it’s paid and you know the whole system is smooth. I guess the idea is to remove as much of the manual touch and the interaction in the finance processes as possible so that all the focus can be on business growth, sales, marketing, research and development, or wherever they need their focus to be. Q: What does the career path for shared services managers and leaders look like? Career progression is a huge issue within our market at the moment. As you know, we run the events globally and then I manage the portal. So, the portal and the events are sort of aligned, of course, in terms of the topics we cover, in terms of what we see. So, one of the concerns expressed over the years by in-house practitioners is, "Where does the career go?" How do you progress? You know, it’s not about a "back office" anymore; it’s a lot more value-add than that. But nevertheless, you’re not at the front end of the business, you’re at the backend. The way you differentiate yourself is by leveraging new opportunities, like data analytics that you can extract from any process. You can identify where there is value stuck or hidden in the process. You can release data that is vital to the business, and thereby your role becomes that much less transactional and that much more strategic. There is definitely an incredible opportunity for shared services leaders who recognize this. If you can leverage this opportunity individually, then you have access to incredibly powerful data. I think going forward, anyone in a shared services job can really excel here, since so much data runs through shared services and because you’re tasked with running the processes. Global business services are now being led by global process owners, so there’s a lot of data that either runs through a shared services center or even an individual. And, they can really deliver value to the company by churning this data and telling the story, rather than just doling out statistics. [inlinead] This interview was originally posted on Tradeshift's blog. Stay tuned for part two, next week.

State of Financial Shared Services: Interview with SSON’s Barbara Hodge

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