Beyond the playbook, five principles adopted by practitioners as they build and mature their shared services
WHITEPAPER BY MR. RICHARD ALVARES,
AVP, Head Program & Business Transformation Shared Service
Ultratech Cement Limited.
Disclaimer: The views expressed here are of the author and do not represent his company’s views.
The shared services industry, be it captive, outsource, or hybrid, has evolved for over three decades now and there are established frameworks and methodology to help enterprise build their center and see it mature. While these playbooks are good, usually there are specific principles that most successful enterprises may have adopted. The top 5 important ones I follow are:
Stakeholders identification and being in constant alignment with them is key. There would be some who need to be consulted while some need to be approached for approvals. These could represent the various functional organization to the extent they are impacted, or they are expected to contribute. For example, Retained finance, Commercial, CIO’s, CHRO’s, Procurement, Sales & Marketing, Manufacturing, etc.
Digitization and Digitalization have been the main conversation at many leadership forums. These are sometimes used interchangeably, though it could be right to say that the first one is static and the other flowing.
The former refers to creating a digital representation of physical objects or attributes. For example, we scan a paper document and save it as a digital document. While the latter, as per Gartner, makes use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business. The ride-hailing and food ordering apps do resemble this. While this is at the highest level, other organizations could simply be using analytics and deriving actionable insights.
Digital technology must be key in any work that moves to the center. Period. It could be a lift and shift model, but having a plan agreed on digitization is important. Automation to bring in efficiency could be part of that plan.
All activities must be digitized to ensure that they can be tracked, measured, and improved. If the move of the process is without an agreed plan for digitization, then that is a sure recipe for a disaster. Caveat emptor, but this time it is for the service provider.
- People, at the center of the center , is the most important aspect of any organization; however, the importance of it somewhere gets lost. The response to some of the below important questions could help us understand this better.
- Are we building enough trust with people that they perceive there is fairness and that they have enough opportunities to grow?
- Are we giving people the core respect demonstrated through our actions?
- Are we going the extra mile for the people to support them in their times of personal turbulence?
- Are we also taking consistent and tough decisions, including performance?
- Are we able to make exceptions as leaders and face the consequences?
- Governance and its importance cannot be emphasized enough, and these are usually very well defined when it comes to outsourcing. But in the case of a captive, there are good chances that this is not institutionalized, and the reason could be many.
- Relevance of the center to the organization, the way they are today, needs to be continuously challenged. Are we aligned to the organization’s objective i.e.
- Are we focusing on the customer needs?
- Are we competitive?
- Most importantly, are we creating value?
The maturity of the stakeholders and their ability to accept change is also key. People keep on moving and new people hold the positions from the stakeholder’s point of view, therefore need to connect, understand, and align them to common goals. If this is done correctly you save 50% of the change management effort else, you spend 200% effort in bringing the change.
The above are levers and not necessarily linear. This means there needs to be constantly balanced as in the case of the last two points – consistent decisions and exceptions. The playbook is only that – a guide, and if it were so simple then we could have automated this. So as leaders, the ability to take people’s decisions that are judgemental is critical to ensure people remain at the center of the center.
Having a strong governance structure with a wide representation of the people being serviced or supporting is very essential. Having someone from outside (maybe from the group companies) also helps to bring in new ideas. They will
constantly challenge the status quo while supporting the center fully to drive any critical changes.
This calls for transparency and holding to account. But all this also needs maturity and being current in the thought process on both sides. As mentioned in the earlier section on stakeholders, if they are not aligned to the center’s model itself, then it is more likely that the governance structure is not institutionalized. If the governance structure is not in place, it is a clear indication that the center is person-dependent and can collapse if that person moves out of the centres influence.
Organizations constantly change and grow. Their customers and sometimes the business model also changes. They acquire companies, products, and new markets. They face crises either cyclical or existential or the likes of the current pandemic. Overall, as a service center, do we need to exist in the form that we are, or do we need to change.
This leads us to the concept of Creative Destruction. The center itself is based on this concept of creative destruction wherein the decentralized model is destructed to create a new Finance Organization consisting of a transaction-based service center and a retained organization for business partnering.
While it is easy to destruct and create if “me, we, or us” are not impacted, the key is to be ready for self-destruct. Therefore, seldom the center reviews its existence and if required destruct the form to create a new one. For example, from captive to hybrid to outsourcing and unlocking the valuation (more on it some other time). Good to be leading it, it must be done anyway.