Playing Off Your Strengths: Internal Best Practices Close Gaps on Laggards

Breaking the Mold in Conventional Thinking Performance improvement is one of the key items on shared services leaders’ agendas and, as such, deeply embedded in their job descriptions. Most service level agreements incorporate continuous improvement and year-on-year productivity gains as a matter of course, but while shared services leaders certainly have the ambition and drive for this, most, behind closed doors, will confess that they lack the tools and platform to do it well.

This problem is one that Tim Sheridan was well familiar with over the course of his shared services career [spanning both operational leadership roles as well as consulting], particularly in his last role starting up and running shared services for the Asian region of a large multi-national: “Budgets or performance targets are generally set fairly arbitrarily. It's pretty common to assume last year minus 5%. As a shared services leader, it’s then up to you to trickle down a strategy which leads to cost-cutting across various teams in order to arrive at the desired results," he says.

It's an approach that is shortsighted and even counterproductive, he believes. "You wouldn't run a real business like this," he explains: "In a real business you would look at some internal benchmarking, identify deficiencies, evaluate your productivity, understand which efficiency gains can be driven from productivity improvement, and generally take into consideration the landscape around you before coming up with an intelligent, data-based budget."

Sadly, in formulating shared services budgets, much of this intelligence is cast to the wayside and leaders cling, instead, to outdated formulas. The single biggest hurdle, Sheridan says, in the lack of a modern platform to capture and work with comprehensive and accurate resource, cost and performance data at insightful levels of detail. Most companies rely on pulling resource and cost data from ERP or HR systems, which is high level, incomplete and static.

The result, as most leaders privately acknowledge, is nonsense.

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If you wanted to do a true evaluation using your ERP data, says Sheridan, you would have to exponentially increase the number of cost centers to correctly capture the depth and breadth of resource and cost data required for a complete set of analytics. “Currently, ERP simply cannot do that. Nor can you update or allocate cost assignments regularly, which real time business demands,” he says.

A Strategy for Tomorrow – Based on Yesterday’s Data? By way of example, Sheridan explains: "The typical volume-per-FTE metric that we all love so much compares actual monthly volume to FTE data that is often six months out of date. So any productivity improvements that emerge could just as well be the result of increased volume without adequately reflecting the true number of FTEs. And when you ask the team to clarify, they often need to research.”

A modern-day shared services demands to be run like a modern day business, says Sheridan. And this means benchmarking yourself internally, and figuring out where you are efficient and where you are inefficient , across a complete set of ‘cause and effect’ analytics.

“The real wins, then, are gained in driving the inefficient operations up to the level of your efficient ones, and having analytical visibility to the drivers" he explains.

Even once you have the data however, a key challenge is visibility . It's not enough for the shared services leader to be granted certain insights, explains Sheridan, but you need your direct reports and functional-, process-, business-, or country leaders to see the same data – and understand it in the same way. Visibility and transparency are probably the most significant enablers of performance improvement, he says.

Visibility and Transparency: Silver Bullets Having experienced these challenges firsthand, and struggled with trying to meet randomly set budgets, Sheridan has spent the last year developing a tool to plug this gap. It’s a tool he would have loved to have at his fingertips in his previous roles. "I realized that what we need is something that provides instant visibility over metrics and links these to real live data," he explains. "Driving real continuous improvement across shared services, which is a highly complex framework, should be so much more than grabbing arbitrary numbers out of the air."

The tool he has developed through his company, Connected Insight , helps the modern-day shared services leader quickly identify laggards, whether they be processes, countries, or business units, and leverage best practices in use elsewhere to bring these laggards up to scratch. “"Effectively, we have replaced Excel, PowerPoint, and the ERP systems that most performance improvement leaders are grappling with and placed the benefits of data analytics and data visualization at the fingertips of any shared services stakeholder,” says Sheridan.

The beauty of this cloud-based tool is that it highlights and compares the data that is most significant in identifying your internal performance gaps. “Your decisions should be driven by your internal capabilities. So the strength that one customer brings to the table can easily be leveraged against the weaknesses of another to drive performance improvement – if the data is transparent,” he explains.

The benchmarking capability of the tool is also a powerful ally in fielding that difficult question business leaders love to ask: “Can you show me what your shared services has done over the past year.?" But it's also a tool that promises more far-reaching change than many are comfortable with.

"Most CFOs ‘get it’,” says Sheridan, “but many others are intimidated by the potential of this kind of tool, and the transparency it offers. What we are talking about here isn't getting down to 3% or 5% cost – we are talking about closing the gap on significant performance gaps internally by comparing performance across business unit customers. So you could possibly be looking at far greater performance opportunities. But the change and upset this implies can be intimidating."

One crucial factor that is often overlooked is evaluating what part of the process falls within the shared services scope and what part is under the control of the business unit. "I wanted to be able to expand the measures beyond shared services to incorporate the business unit partner – because much of shared services productivity depends on the business providing upstream inputs into the process,” says Sheridan. “You need clear visibility over that, so that you can push back where necessary to drive end-to-end improvements. And many of those improvements will start with the business unit. But shared services also needs to be prepared to take their own actions once the business unit improves its end, which is where a clear driver-based analytics model is critical; and thus the need for comprehensive and accurate data.”

The Future is Dashboard-driven What we are seeing here is a glimpse of the future in shared services process management. Earlier this year, SSON interviewed Piyush Gupta , a Mumbai-based VP and Senior Executive who heads Group Shared Services and the Business Operations Center at Reliance Industries Ltd. A true visionary, Gupta painted a picture of a future shared services being driven by "dashboards, and not much else".

Today, we are one step closer to that vision. Connected Insight delivers a first and vital step: a platform that efficiently sources resource, cost and performance data, and duplicates as an ongoing scoreboard and clearly tracks performance improvement over time.

“RPA needs a scoreboard.”

It's particularly valuable when coupled with automation drivers like robotic process automation, Sheridan emphasizes. "RPA needs a scoreboard! Amidst the feeding frenzy right now, it's important to remember that RPA is still only a solution, not an objective. So, especially with new tools like robotics, it’s really important to track the impacts clearly, constantly, and over time. Anyone with a mandate to ‘improve’ needs to be able to demonstrate their impact at a moments notice. Right now, ERP systems are still holding shared services leaders back. But with new tools that bridge those ERP shortfalls, we are a step closer.”

A Final Tip: “Mobile” Rules In today's world, mobile rules. Most of know that from personal experience, whether booking a table or a flight or evaluating a carpenter. Because of the time and effort associated with transformation, many enterprises are lagging behind these mobile technology trends, however. But the Cloud is offering a paradigm shift in opportunities to enterprise leaders who want to leverage real-time data. Solutions such as Connected Insight’s can be installed in less than a week, and are designed around three key principles:

simplicity – to reflect the shared services fluid operating environment; effective return on investment – measured in weeks or months, not years; and flexibility – meaning tools can adapt and report on changing definitions and structures as well as across different ERP systems.

"At the end of the day, a shared services leader’s ability to drive change will depend entirely on his or her ability to ‘see’ valuable analytics around their operation at a level of detail that allows them to drive improvement,” says Sheridan. “The number one enabler here is efficient data sourcing. And that's always been the main stumbling block in the past.”