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CUSTOMIZING THE SERVICE MODEL TO ALIGN WITH ORGANIZATION OBJECTIVESCNI’s Journey, Mistakes, and Lessons Learned
Kenny OngCNI Holdings Berhad
Contents:
A. Before we start…B. Identify Business ObjectivesC. Align Service ModelD. Internal Customer IndicatorsE. Notes, Problems, IssuesF. Starting Up
Intro: CNI
1. 18 years old2. Core Business: MLM3. Others: Contract Manufacturing,
Export/Trading, eCommerce4. Malaysia, Singapore, Brunei, Indonesia, India,
China, Hong Kong, Philippines, Italy, Taiwan5. Staff force: ± 5006. Distributors: 250,0007. Products: Consumer Goods and Services
Intro: CNI
CNI’s Shared Services background• CNI Malaysia
• CNI Global
• Key Elite
A. Before we start…
“…in the past 18 months, we have heard that profit is more important than revenue,
quality is more important that profit, people are more important than profit,
customers are more important than our people, big customers are more important than small customers, and that growth is the key to our success. No wonder our
performance is inconsistent"CEO, Anonymous
Before we start…
In the old days of HR…• Average training hours per staff• % of staff attending training• # of training programs• % of training programs conducted• Training needs analysis conducted• Competency models developed• Training budget as % of payroll
What’s wrong with this picture?
Before we start…
Moral of the story…1. Innovation:
– Business models– Products– Services
2. Market Leadership3. Competitive differentiation
Get the picture?
“What is the moral of the story?”
B. Understanding the Business Objectives
Strategy and Intent
Operational Excellence(low cost producer)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
Product Leadership(best product)
Customer Intimacy(best total solution)
Strategy: Value Disciplines
Operational Excellence
• Competitive price
• Error free, reliable
• Fast (on demand)
• Simple
• Responsive
• Consistent information for all
• Transactional
• 'Once and Done'
Customer Intimacy
• Management by Fact
• Easy to do business with
• Have it your way (customization)
• Market segments of one
• Proactive, flexible
• Relationship and consultative selling
• Cross selling
Product Leadership
• New, state of the art products or services
• Risk takers
• Meet volatile customer needs
• Fast concept-to- counter
• Never satisfied - obsolete own and competitors' products
• Learning organization
Strategy: Value Disciplines
Sample KPIs for Each Discipline
Operational Excellence
• Price• Selection• Convenience• Zero Defects• Growth
Customer Intimacy
• Customer Knowledge
• Solutions Offered• Penetration• Customer Data• Customer-success
focus
Product Leadership
• Marketing• Functionality• # of Successes• # of Failures• Learn from key
users• Interdisciplinary
teams• Pipeline
• Operational Excellence• Move know-how from top performing
units to others• Benchmark against best in class• Ensure operations training for all
employees• Use disciplines like TQM for continuous
learning to reduce costs and improve quality
Strategy: Value Disciplines
Strategy: Value Disciplines
• Customer Intimacy• Capture knowledge about customers• Understand customer needs• Empower front line employees• Ensure that everyone knows the
customer• Make company knowledge available to
customers
• Product Leadership• Reduce time to market• Commercialize new products fast• Ensure that ideas flow• Reuse what other parts of the company
have already learned• Ensure there are multiple sources of
funding
Strategy: Value Disciplines
The McPlaybook*
Make it easy to eat• 50% drive-thru• Meals held in one
hand
Make it easy to prepare• High Turnover• Tasks simple to learn
& repeat
Make it quick• “Fast Food”• Tests new products
for Cooking Times
Make what customers want• Prowls market for new
products• Monitored field tests
*Adapted from: Businessweek , Februrary 5th 2007
Operational Excellence(low cost producer)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
Product Leadership(best product)
Customer Intimacy(best total solution)
Strategy: Value Disciplines
Operational Excellence(low cost producer)
Ref: The Discipline of Market Leaders, Michael Treacy & Fred Wiersema; 1995
Product Leadership(best product)
Customer Intimacy(best total solution)
Strategy: Value Disciplines
Financial Shared Services
• Strategy and Intent of the Business?
• FSS role in the strategy?
• FSS Strategy and Intent?
• Objectives of FSS?
• FSS Service Model?
C. Aligning the Service Model
Aligning Service Model
1. Role of FSS2. Objectives of FSS3. 4-Wheels
Alignment: 4-Wheels Service Model
Principles
Corporate
ObjectiveFSS Role & Objectives
StructureResources
Leadership
Person
FSS Role?
Financial Shared
Services
SBUs, Divs, Depts
Corporate Center
Strategy
Results
Request
Service
Policies
Service
FSS Objectives?
TransactionalCost reduction, Efficiency, Agility, Fast Copy
AP, General Ledger, B/S analysis, Accounting, Fixed Assets, AR, Facilities
Value-addedBudgeting, Reporting, Financial Analysis, Forecasting, Tax, Legal, Treasury
Consistency, Analysis, Value creation, customization
Systems, Standardize, Benchmarking, ERP, Streamlining, Automation, Governance
Best PracticesProcess improvement, service innovation, secondary KPIs, internal customers
TransformationMarket Leadership, Competitive Differentiation, Business model, M&A, CSI
Direct Business Impact, primary KPIs, external customers
Open & Hidden Objectives
1. Eliminate redundancies2. Remove no value-adding
activities3. Cost Savings4. Focus on Core5. Economies of Scale6. Compete with external
vendors7. Specialized skill sets 8. Move from staff to line9. Salary Band10.Career Path
11.Manage external vendors
12.B.U.s appreciate services
13.Additional revenue w/o interfering core
14.Divestment/IPO15.MSC tax break16.Make accountable to
SBU vs. HQ17.Undertake large infra
projects
Alignment: Framework
• Price Transparency• Business Management• Market Responsiveness• Best Practice • Process Standardization• Service Culture
Principles
Alignment: Framework
• Org Structure• Job Design• Policies & procedures• Governance• Management Systems• BSC and KPIs• Benchmarking• A.B.C.
Structure
Alignment: Service Structure
Corporate Center
Financial Shared
Services
One Internal
Customer
Multiple Internal
Customers
External & Internal
Customers
In-sourcing
Co-sourcing
Joint-Venture
BPO
Alignment: Internal Structure
FSS
Transition Management
Fulfillment & Service Delivery
Business Development
Alignment: Internal Structure
FSS
Transition Management
Migrate processes to standard platforms, scaled migration, joint-process ownership
Alignment: Internal Structure
FSS
Fulfillment & Service Delivery
SLAs, Audit Compliance, Business Controls, records Management, service request processing, digitization
Alignment: Internal Structure
FSS
Business Development
identify processes to migrate, customer relationships, value
migration, CS interviews, performance evaluations
Alignment: Framework
• Tools• ICT Systems• Digitization• Self Service• Workflow• Physical
facilities
Resources • In-source?• Co-source?• JV?• BPO?
Strategy: Framework
• Customer focused• Attentive to market standards• Costs• Service• Best practices• Accountable for SLAs, ISLIs• Build relationships with BUs• Bottom line management• Tradeoff between Cost vs. Value
Leadership
Alignment: Framework
• Specialist Career Ladders
• Staff -> Frontline• Team-based• Duplication• Standard or
Creative?• SS vs. Staff mindset• Sourcing• C&B, Retention
Person • In-source?• Co-source?• JV?• BPO?
Alignment: Framework
Principles
Corporate
ObjectiveStructureResources
Leadership
Person
FSS Role & Objectives
D. Internal Customer Indicators
Measurement & Satisfaction
“In business after business, 60% to 80% of lost customers reported on a survey just prior to defecting that they were satisfied or very satisfied.”
HBR March/April 1996
Financial
“To satisfy our stakeholders, what Financial objectives must we accomplish?”
Internal Process
“To satisfy our customers, in which internal business processes must we excel?"
Customer
“Who are our target customers?
What is our value proposition?”
Learning & Growth
“What capabilities and tools do our employees require to help them execute our strategy?
Corporate-level BSC
Corporate Objectives
FSS Strategy
Customer
Who do we define as our customer? How do we create value for our customer?
How do we enable ourselves to grow and change, meeting ongoing customer needs
Employee Learning and Growth
Internal Process
To satisfy customers while
meeting budgetary
constraints, at what business
processes must we excel?
Financial
How do we add value for customers
while controlling costs?
FSS-level BSC
ISLI
ISLI = Internal Service Level Index.
Services and Levels
Expectations, Priorities, Improvement Plans
Service Costs
Relationship = Expectations
ISLI Matrix
Customer Intimacy
Product Leadership
Operational Excellence
TransactionalValue-added
Best Practices
Transformation
Standard
ISLI
TransactionalCost reduction, Efficiency, Agility, Fast Copy
Value-added
Best Practices
Consistency, Analysis, Value
Process improvement, service innovation, secondary KPIs, internal customers
TransformationDirect Business Impact, primary KPIs, external customers
TimeCostQuantityQuality
ISLI
TransactionalCost reduction, Efficiency, Agility, Fast Copy
Value-added
Best Practices
Consistency, Analysis, Value creation, customization
Process improvement, service innovation, secondary KPIs, internal customers
TransformationDirect Business Impact, primary KPIs, external customers
TimeCostQuantityQuality
InnovationService
ISLI
TransactionalCost reduction, Efficiency, Agility, Fast Copy
Value-added
Best Practices
Consistency, Analysis, Value
Process improvement, service innovation, secondary KPIs, internal customers
TransformationDirect Business Impact, primary KPIs, external customers
TimeCostQuantityQuality
InnovationServiceKPI
ISLI
TransactionalCost reduction, Efficiency, Agility, Fast Copy
Value-added
Best Practices
Consistency, Analysis, Value
Process improvement, service innovation, secondary KPIs, internal customers
TransformationDirect Business Impact, primary KPIs, external customers
TimeCostQuantityQuality
InnovationServiceKPIImpact
E. Notes, Problems, Issues
Notes, Problems, Issues
1. FSS viewed as simply Cost Cutting
2. No change in C&B structure
3. “Shadow” services at BUs
4. Incongruent with Company Strategy
5. HO allocation6. Just consolidate, no
Redesign7. Complicated, Legal-
jargon SLAs
8. FSS leadership turnover9. FSS staff < competent
than BU staff10.Who should bear
external party costs?11. Infra ownership12.SLA yes, but ISLI no13.Staff unwilling to go to
FSS14.FSS taking orders from
Big Boss vs. BUs
F. Starting Up
Starting Up
• Strategy and Intent of the Business?
• FSS role in the strategy?
• Objectives of FSS?
• FSS Service Model?
Thank You.
soft copy of slides: www.totallyunrelatedrandomanddebatable.blogspot.com
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