Experiences with Business Process Outsourcing and Shared Services from a Global Perspective By Andre

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Experiences with Business Process Outsourcing and
Shared Services from a Global PerspectiveBy
Andrew Kris, Director, Borderless Executive
Search and Chairman of the Advisory Board,
SharedXpertise Leaders (formerly SBPOA)
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Experiences with Business Process Outsourcing and
Shared Services from a Global Perspective

• What is HR Transformation Defining BPO and
  Shared Services
• Why transform HR?
• What organizations are transforming HR and which
  processes are being transformed?
• What are the expected cost savings and what
  savings can really be achieved?
• Why outsourcing sometimes fails Hurdles to HR
  Transformation
• Choosing the right partners
• Dos and Donts

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Six simple truths

• Business transformation never fails so people
  say
• It requires total commitment from the
  organization's executive
• It can save lots of costs and make your
  organization fitter
• It will cause disruption however well you do it
  
• It requires exceptional leadership to manage
• 20 years on current performance predicts future
  performance

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Business Transformation Continuum
On-shore
Near-shore
Off-shore
Internal shared services
Selective outsourcing
Centralization Decentralization
Full scale BPO
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The essence of a services business

• Deliver services that people want and are willing
  to pay for time after time, at a cost, quality
  and timeliness competitive with alternatives.

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What you want

• As an organization we want the lowest cost, best
  quality services from back-office functions
• As a service within the company we want to be
  globally competitive
• We want to be amongst the best of the best in
  what we do

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and what you meant

• Reduce headcount 39 by end 2006
• Delayer organization
• Improve quality of service
• Reduce functional costs to less than 0.7 of
  sales by 2006
• from stated goals of a Fortune 500 corporation
  shared services

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What happened

• Changes in power-structure
• Disenfranchised client units
• Redundancy in function
• Low morale
• Best people left
• Service declined... At least initially
• So you want to motivate me?

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Back to reality an every day story

• Clients say
• We had more power/control with back-office
  services embedded in our unit - it was worth the
  cost
• People far away dont understand our business
• Theyre too expensive anyway
• Outsourcing means we will lose any expertise we
  may have had
• In the function
• Old habits die hard - well give them what we
  think they need
• Weve always done it this way
• Outsourcing can make a clear break with the past

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Shared services

• Took time and money
• Huge efforts to gain consistency of processes
• Faced resistance to change
• Service disruption
• New service skill set acquired
• May have required large investment in technology
• Challenges associated with centralization

• Cheaper through economies of scale
• More efficient and effective service, higher
  quality, consistent answers
• Avoided duplication, re-work
• Potential savings in labor costs are between 15
  and 40
• Reduced costs between 20 to 50

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Top 10 Service Success Factors

• Executive management and sponsorship
• Quality of project and service leadership
• Standardized processes
• Clearly defined scope of services
• Quality of shared services personnel
• Well defined business strategy and objectives
• Communications and training
• Solid technology platform
• Change and journey management
• Well defined vision and mission

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Reasons why shared services failed

• How do you rate the impact of the following?
• Not enough support from executive
  management 72
• Not customer centric 66
• Simple centralization exercise, not run as a
  business 64
• Poor quality services 56
• Poor charge back structure 55
• Uncompetitive with third party providers
  34
• Source SBPOA online survey, 310 respondents.

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Service provider, desired behaviors

• Service-minded - sensitive and responsive to
  clients
• Team-oriented
• Willing to acquire new skills
• Applying business discipline to personal
  activities
• Behaving like you are in business for yourself

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Internal and outsourced shared services are
closely related future steps

• Is outsourcing or a plan to outsource business
  processes a part of your corporate or shared
  services strategy?
• Yes 46
• No 25
• Undecided 29
• Source SBPOA online survey, 204 respondents.

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Perceived benefits of BPO

• Here are some of the claimed benefits of BPO. How
  do you rate them?
• Lower costs 75
• Improve service quality 64
• Greater business flexibility 54
• Lower capital investments 70
• Fewer people in function 45
• Predictable outcome 42
• Increased accountability 32
• Source SBPOA online survey, 172 respondents.

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Perceived downsides of BPO

• Here are some of the possible downsides of BPO.
  How do you rate them?
• Loss of internal know how 53
• Activity disconnected from the business 46
• Lack of control 37
• Lack of clarity in costs 30
• Lower service quality 26
• Source SBPOA online survey, 172 respondents.

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The main reasons why BPO fails

• How do you rate the impact of the following?
• Failure to manage the post implementation
  relationship 73
• Poor selection of supplier/business model 61
• Poor assessment of what stays in or is outsourced
  59
• Poorly constructed contracts 58
• Lack of competitive bidding 27
• Source SBPOA online survey, 289 respondents.

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Business transformation is here to stay

• There are benefits
• Cost reductions
• Better service
• Easier integration (acquisitions)
• Not forever unless we adapt to changing needs
• Adopt a full commercial modelbehave like an
  outsourcer
• And pitfalls
• Can take too long to pay back
• Disruption simply too great do it once
  outsource
• Outsourcers want your business

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And we come full circle

• If you wait another 10 years
• Labor arbitrage will be less relevant
• Automated processes will need fewer people
• Experts, but fewer of them in-house, will do
  higher value-added work
• Prepare for the insourced/outsourced environment
• Take charge of governance - manage the
  outsourcers

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About Borderless Executive Search

• Borderless Executive Search has a unique approach
  to international executive search. In the
  chemicals and life sciences sectors, we search
  globally for executive talent.
• We recognize that traditional geographic borders
  have little relevance for transnational
  corporations.
• We have developed an extensive global network in
  these sectors, enabling us to identify and source
  talented international executives, no matter
  where they are located.
• More at www.borderlessexecutive.com

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About Shared Xpertise

• The Shared Xpertise is the leading global forum
  for sharing knowledge and experience in business
  transformation
• More than 275,000 professionals worldwide consult
  the Shared Xpertise resources each year, and more
  than 6,500 Associate Members benefit from its
  online and networking initiatives.
• Services
• News and independent commentary on business
  transformation
• Publishing Shared Xpertise Bulletin online, HRO
  Europe Magazine
• Networking and events Shared Xpertise Forums
• Market research services
• Training and education curriculum

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Taking the Lead for you
Andrew Kris,Consultant, Director

• Andrew Kris leads the team at Borderless
  Executive Search. Andrew pioneered our unique
  approach to transnational search in 1997 based on
  his extensive international experience and is the
  driving force behind our distinctively
  service-oriented approach. Since then Andrew has
  found leaders for many of the leading
  corporations in the chemicals and life sciences
  sectors. His earlier experience includes senior
  executive positions on the Management Boards of
  one of the worlds largest industrial companies.
  Andrew led international units in life sciences,
  chemicals, plastics and construction products. He
  has lived and worked in the UK, France, South
  Africa, Switzerland and the Benelux. Andrew was
  nominated by the HRO Association as the 2006 HRO
  thought Leader of the Year. He is the co-author
  of Shared Services mining for corporate gold and
  Shared Services and BPO an executive briefing,
  both published in English and Mandarin by the
  Financial Times. He is Chairman of Advisory Board
  of the Shared Services Business Process
  Outsourcing Association. A Hungarian-born UK
  national, Andrew speaks fluent English, French
  and Hungarian.
• Contact Andrew email andrew.kris_at_borderlessexe
  cutive.com or telephone [phone]

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Further reading and information

• Join the Shared Services and BPO Association
  (SBPOA) hosted at www.sharedxpertise.org
• Read Shared Services Mining for Corporate
  Gold published by the Financial Times ISBN
  0273644556
• Read 'The Executive Briefing on Shared Services'
  published by the Financial Times ISBN
  0273663100
• Search for talented senior executives, shared
  services and business leaders at www.besworld.com
• Attend HRO World Europe 6-8 November 2006, Conrad
  Hotel, Brussels, Belgium