Rocky road to a shared service center
Matthias Gröbner is Project Manager in the InfoCom Competence Center at Roland Berger Strategy Consultants.
If you don't give yourself enough time to plan a shared service center, you may be in for some nasty surprises at the start. In their column, Matthias Gröbner and Andreas Spieler from Roland Berger explain how to avoid trouble with unclear SLAs and non-harmonized systems.
Many companies have already standardized and harmonized their production and core business processes using IT solutions. But this is an approach that can be used with other corporate functions too. For example, increasing numbers of companies are bundling cross-disciplinary functions at a central point and making them available to the whole of the corporate group in a shared service center (SSC).
The goal in implementing a shared service center is to increase the efficiency of the services offered and to exploit economies of scale. It also allows the functions to define different service levels, something which they may not have been able to do before, thereby improving the service they provide to customers.
Besides IT functions and the traditional operational functions such as call centers, cross-disciplinary functions like Human Resources, Accounting, Controlling, Facility Management and Purchasing can be brought together within a central service company (Figure 1).
For this to work, companies need to unify business processes that previously ran separately; this will enable the desired efficiencies and savings to be achieved. However, business processes cannot be modified or optimized until the IT systems involved have been adjusted and standardized.
Many companies have already standardized and harmonized their production and core business processes using IT solutions. But this is an approach that can be used with other corporate functions too. For example, increasing numbers of companies are bundling cross-disciplinary functions at a central point and making them available to the whole of the corporate group in a shared service center (SSC).
The goal in implementing a shared service center is to increase the efficiency of the services offered and to exploit economies of scale. It also allows the functions to define different service levels, something which they may not have been able to do before, thereby improving the service they provide to customers.
Besides IT functions and the traditional operational functions such as call centers, cross-disciplinary functions like Human Resources, Accounting, Controlling, Facility Management and Purchasing can be brought together within a central service company (Figure 1).
For this to work, companies need to unify business processes that previously ran separately; this will enable the desired efficiencies and savings to be achieved. However, business processes cannot be modified or optimized until the IT systems involved have been adjusted and standardized.
Overview of SSC transformation (figure 1)
There are three main IT areas to consider when implementing a shared service center (Figure 2):
When the SSC opens, all employees must be able to use the IT systems they need. In other words, they need to be able to communicate with each other and be authorized to access the business applications that used to run in different infrastructures. This is particularly important if the IT functions within the group are not yet harmonized and decentralized IT infrastructures still exist. In that case the problem is very similar to realizing a PMI.
Introduce a single address book
This affects numerous IT systems:
- Collaboration services
- Business applications
- KPI systems
1. Collaboration services
When the SSC opens, all employees must be able to use the IT systems they need. In other words, they need to be able to communicate with each other and be authorized to access the business applications that used to run in different infrastructures. This is particularly important if the IT functions within the group are not yet harmonized and decentralized IT infrastructures still exist. In that case the problem is very similar to realizing a PMI.
Introduce a single address book
This affects numerous IT systems:
- Active directories (ADs): The ADs need to be consolidated in order to make a single address book available to the SSC staff and to facilitate central AD authentication. Besides ADs, the associated e-mail and file services need to be merged as well so that staff can share data and use functions like group mailboxes and calendar applications across all departments.
- Authentication processes: Different authentication mechanisms (AD, SAP, authentication management, etc.) need to be unified or at least centrally controlled and managed. Otherwise, the process of setting up new authorizations within different IT infrastructures and processes is time-consuming and risky. A central authentication management tool can help here and can ensure revision security.
- HR systems: The structure and employee data from the HR systems is usually taken as input for ADs and for issuing authorization. However, this can be done only if all employees are recorded in a single HR system and corresponding information can be provided to other systems.
Andreas Spieler is Senior Consultant in the InfoCom Competence Center at Roland Berger Strategy Consultants.
2. Business applications
The SSC staff previously worked with different business processes and applications in their decentralized entities. This needs to change, because efficiency can be increased only if processes are harmonized.
However, in order to achieve harmonization, the respective IT systems and workflows will need to be consolidated and possibly also adjusted. Interfaces to the surrounding systems must not be forgotten, either.
Defining SLAs is difficult
3. KPI systems
To set up a shared service center, companies need to compile a standardized product catalog and determine a system of cost and performance accounting on the basis of services rendered. Service level agreements (SLAs) also need to be defined. The IT department needs to make appropriate KPIs and reports available to facilitate this. This is no mean feat when the systems used are heterogeneous and feature different data structures and reporting systems. In order to obtain meaningful data, a company-wide target data model needs to be defined and the various data warehouses consolidated. This is the only way to ensure the accountability of the SSC.
Requirements placed on IT when establishing an SSC (figure 2)
An IT transformation project on this scale is not easy to handle. So make sure you bear the following success factors in mind:
- Plan backwards and plan early: Consolidating IT infrastructure and harmonizing business systems takes months and often years. If you start developing the business and technical concept too late, you'll have no chance of realizing the project on time.
- Have a plan B: If you do not manage to harmonize IT fully by the start date, you need to think about how SSC staff can work together with different IT infrastructures and business systems. Workarounds will therefore need to be prepared (e.g. operating applications in a common virtual environment), and these also take time to implement.
- Review the options for outsourcing: Extensive reorganization of the corporate group should be taken as an opportunity to review the possible options for outsourcing, especially regarding the IT infrastructure. As always, the motto here is: first consolidate and standardize internally, then outsource.
- Favor standard software: When harmonizing business processes, you should check whether you can introduce standard software to cut costs and make it easier to outsource at a later date. The guiding principle should be to customize the software as little as possible, because customization costs more. To facilitate this, the department must be happy to work with standard processes. If need be, some departments may need to deviate from their preferred or ideal solution.
- Define the business blueprint early: Even if IT plans well in advance, it cannot work on the concept and its realization until the business managers have clearly defined the future processes and the respective staff functions.
This article was originally published on www.cio.de on April 13, 2011.
CIO expert column
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