Leveraging Nearshore for Added Quality: Coloplast Finance Center

Coloplast’s Finance service was very decentralized and fragmented, typical of many mid-sized companies, which led to inefficiencies. Wojciech Faszczewski, Managing Director of Shared Services Centre, Coloplast Finance Europe, speaks with SSON's Barbara Hodge Coloplast started on its Shared Services journey in 2009, with a primary focus to move a number of F&A functions into a new center in Poland, as part of what became known as the "Lights Out Project". This initiative differentiated itself from the start by looking beyond cost, as its leaders realized they did not have the size or scale to drive the kind of transactional cost savings that guide other implementations. Instead, they chose to focus on "value add" services like tax compliance, general ledger, and closing. What drives a new service delivery model? Though operating internationally, Europe generates the lion’s share of Coloplast’s global revenue, which made a near-shore location in Poland a natural choice for delivering both cost-effective and quality Finance services. It was, in fact, the lack of process consistency and quality across the 15 countries Coloplast operated in, in Europe, which instigated a new approach. These issues were exacerbated by the fact that every country was evolving its own way of doing things, with little commonality across operations. Wojciech Faszczewski, Managing Director of Shared Services Centre, Coloplast Finance Europe, explains: "Every business did things differently, and their own way. There was very little consistency or reliability across the region’s operations. Even with one ERP, you may find it implemented a dozen of different ways. We had to get to a consistent level of quality and a consistent level of standardization and transparency. Those were the main drivers for transformation." Service and synergy What made this implementation unique was that it took all F&A staff out of local centers in 15 countries, with no retained staff left behind. This was necessary, explains Faszczewski, to ensure that all value that could be driven through the processes was, without diluting it through on-site activities. For the businesses, it represented enormous change, as in some cases there had been 15-20 staff providing on-site F&A services, in other cases only 1 or 2. The overall impact was around 100 FTEs, Faszczewski says, with a 2-year transition plan calling for 1:1 migration. But during the first year, synergies meant the center gained additional capacity, with the result that at the final count there was ca. 10 percent saving in FTE, as certain synergies paid off immediately. In addition, once the initial migration was completed, three additional countries (including the US and Canada) were absorbed without taking on any additional staff. Career paths The impact of the shared services has been felt first and foremost in terms of quality at group level, while costs have also decreased. A less expected, but positive, development is the fact that the center is today able to retain more staff by providing career development opportunities, says Faszczewski. "The new shared services today employs 100 people in one location [the center expanded since launch], and correspondingly offers greater variety in career choices and progression. In the past, with just a couple of people operating within a local center, there was very little if any scope for development. So the impact on talent has been very positive", he says. [eventpdf] What gets measured gets done Measurement is crucial to tracking progress and to getting stakeholders on board but you cannot measure everything, warns Faszczewski, for fear of hitting "analysis paralysis". Tracking the right KPIs at the right time is far more important. The "right" KPIs will vary with the lifecycle of a center, so it is important to take stock of where you are at a given time and maturity level. For example, at launch, quality was the most important KPI for Coloplast’s new Shared Services, as it had to convince the business that it could run the same processes without errors, and getting stakeholders on board was a priority. So at the start, the focus was on measuring errors and managing stakeholders expectations. Once the center had become established, however, and more countries transitioned into the center, sharing best practices, more value was released and the focus shifted to improvement. A small PMO office manages improvement metrics and KPIs and reports on them regularly. It also evaluates which projects are worth implementing to drive additional improvements. Two such examples include: a mentorship project was launched to introduce new employees into the business faster and more effectively, and thereby enable them to start to contributing sooner. Under the previous, decentralized scenario, it took anywhere from 3 to 5 months for a new member of staff to become fully integrated. Today the same is achieved in two months. initial analysis concluded that invoicing costs were unacceptably high. As a result, Coloplast is focusing on driving less paper and more e-documents through its system. While not yet 100% electronic (low volumes made the ROI too low) the new process has already driven a lot of improvement. The future... In February of this year [2014], Coloplast Shared Services took another step towards becoming a global, value-led delivery center: in response to Coloplast’s newly communicated strategy to become the "best medical technology company in the world", the Shared Services announced it was becoming a "World Class" center. This shift closely aligns the existence of the services delivery center, and its mission, to the overall strategic goals of the company. When the World Class Journey was launched, the name of the delivery center was changed to Coloplast Business Center to reflect increased scope – beyond Finance – and to emphasize the fact that the center now supports Coloplast’s business worldwide. The new naming also reflects the fact that Business Services is an integral part of the Coloplast family. As such, the Business Center is a critical enabler of Coloplast’s growth. Read also: Why Germany’s Mid-market "Motor" Is Banking on Shared Services

Leveraging Nearshore for Added Quality: Coloplast Finance Center

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