Aligning Shared Services with Business Goals
The opportunity shared services and business transformation presents to both public and private sector has been widely recognised. But despite notable progress in terms of uptake and implementation of transformation projects, New Zealand companies still have a long way to go before they can be labelled ‘best practice’.
Interview Transcript with Barry Vryenhoek, Chief Executive, healthAlliance New Zealand Limited
In this exclusive interview with SSON, Barry Vryenhoek, Chief Executive at healthAlliance New Zealand Limited talks about how shared services can climb up the value chain, operational challenges, and best practices in change management.
Arthur Chan: For our readers who may be unfamiliar with healthAlliance, can you describe your shared services journey?
BV: healthAlliance evolved from the original Health Alliance which was established between the Counties Manukau and Waitemata district health boards (DHB) to provide back end services, including ISIT, procurement, supply chain, finance and shared services platforms. We now also support the northern region DHB. This now includes the Northland DHB and Auckland DHB. So we now support staff of 26,000, and we look at the expenditure of the four DHB which is about 5.4 billion dollars a year, of which about 700 million goes down the supply chain procurement process.
Our vision and journey was led by the Chief Executives, and the positive aspect of this was that it was based on a set of shared principles to deliver shared services.
Arthur Chan: We’re seeing changing attitudes towards back office functions, from reducing costs to value creation as their main goal. But what foundations must a shared services operation have before it can climb up the value chain?
BV: I think it comes down to having the principles. And I guess the key part was that we – the regional government’s group – agreed that there would be one regional system. And I think that without these founding principles, it would be very difficult to move up the value chain into shared services. We had to bring the organisations together – this was a key part that the customers had to adhere to. In the health sector, it’s a matter of being able to say to the Commissioner that we need to have regional process before we can put a regional system in the areas we lead – procure and supply chain. It comes down to being able to say: "This is the process for the supply chain and this is the system to support it".
Once you’ve done that, you can look at processes end-to-end, reduce the variations and automate transaction. Only then can you add value around continuous improvement and innovation. So we’re very much at the beginning of the journey.
Another insight for readers is that you have to do this alongside technology. I wouldn’t say technology should be the leader, in fact, I’d argue process should be the driver – but it’s important to have the systems to be able to support those changes.
Arthur Chan: In your opinion, what are the most common integration issues in Shared Services as operational structure changes? What tips do you have to overcome these challenges?
BV: Some things come to mind: I think the government must be principle-based – which I’ve talked about already. I also think there must be a clear purpose – and I think our purpose is very clear: we must deliver the benefits and we must have one process and system. There is to be no variation or re-work; and then we need to deliver continuous improvement and innovation. To deliver this, it’s all about people, so you have to create a culture that is driven to deliver results and benefits. I call this a "performance based culture" and through this you get a results-based culture. And then you’ll keep coming back to the question: "What is the regional process to deliver benefits and have we made this as good as we can?"
This may seem easy, but the underlying enabler is really all about change, and changing the way we do things we’ve done for quite a while is not an easy task.
Arthur Chan: You mentioned change. To truly transform a Shared Services into a business partner, changes to culture, processes and workflow are inevitable. What pearls of wisdom do you have when it comes to change management?
BV: I think what you need to have is good leadership; because change management is all about leadership. When you have that leadership, you must have a vision. If you want change, you have to ask "What are the milestones and the targets and results?" This lets people see they’re making progress.
I think the second real challenge is the systems and processes needed to work together because if they don’t work together, you don’t get synergies – you get individual silos.
Another point I’d note is that the executive and leadership team must walk the talk. So if you want change, the change must be led from the top.
The final point is that when issues come up, you can’t let them linger. You must deal with them straight away. I have a saying here: "You deal with bad news straight away; the good news can take a slow ride to your desk", because this is when the doubters start to challenge the changes you put in place.
Arthur Chan: How can our readers drive their Shared Services operations on to boardroom agendas and get stakeholder buy-in towards true business partnership?
BV: I think the first thing is you have to have a business plan. If you don’t have a plan that demonstrates to the board the benefits and when they’re going to see results – cost savings, efficiencies etc. – you won’t get buy in. The second thing the board wants to see is whether you meet your milestones.
I think the third thing relates to considering the risks involved. You have to be transparent. We have to report to about 12-13 board about all the issues we face. There are several ways you can do this, eg, a monthly report which would meet these requirements.
Another issue that affects executives is to engage relationships across the business. In our case, we’re bringing together four independent DHBs, each with their own processes and systems. Of course, they’re all going to say that their processes and systems are superior, and getting them to find agreement can be difficult. What I find is that once you sit down with them, you generally spend 80-90% of your time arguing about the remaining 10%. So if you can turn the argument to the 80% you agree on, it speeds up the process.
Barry Vryenhoek is a speaker at the Shared Services & Business Transformation Forum New Zealand to be held in Auckland, 22 - 24 May. If you want more information about the event, please visit the official event website, www.sharedservicesevent.co.nz, call +61 2 9229 1000 or email email@example.com
Barry Vryenhoek was previously General Manager of Corporate Support and Chief Financial Officer (Army) with responsibility for the Army’s customer service delivery of: logistics, business and commercial programmes, shared services, partnership management, syndicated procurement, facilities management, finance and management accounting, asset management, corporate services, knowledge and information management and communications. In March 2011 he was appointed CEO of healthAlliance the newly established Shared Service provider to four Northern District Health Boards. healthAlliance provides, shared Information Systems (clinical and business), Procurement, Supply Chain and Logistic, Finance, ERP (Oracle) Payroll, Programme Management and Continuous Improvement.