Shared Service Centers (SSC) continue to deliver greater value year over year. In Deloitte’s 2017 Global Shared Services Survey, 3 out of 4 respondents saw productivity increases of 5% or more in the past year. Due to the success of SSCs, companies tend to expand the scope of shared service initiatives, integrating increasingly more knowledge-based processes alongside transactional processes, and folding more functions into SSCs. With the rise of Robotic Process Automation (RPA), digital technology has become a core pillar of SSCs, shifting the focus of SSCs from manual execution to a digital-driven technology hub.
The future looks bright for companies that are successful in building out their SSCs, and even brighter for companies who choose to digitize them. Improved process efficiencies and reduced costs provide better value to the business and become a competitive edge in the market.
Digital transformation is a critical task for SSCs in the modern era. In this article, we’ll go over three key strategies for digitizing your shared services to deliver better and more efficient results.
1: A Digital Approach to Standardization
Process complexity is a major driver of process costs within businesses. Inconsistent process are difficult to teach, slow to execute, and expensive to maintain. Furthermore, governing compliance for these processes is difficult to establish and monitor, especially as regional variations push up against global standardization. Consequently in SCCs, standardizing inconsistent processes contains significant potential. In fact, according to Deloitte, 85% of companies begin to standardize their processes during or after the migration to a SSC. Hence, SSCs often inherit complex processes and are tasked with standardization.
Complex processes used to be a familiar problem for global telecom giant Vodafone. Although Vodafone has maintained a SSC for their Finance and Procurement departments for many years, they were challenged by inconsistent processes, regional markets with varying objectives, and an overall lack of conformance. It was clear to management that there was more that could be done to maximize the value of their SSC operations.
Faced with this challenge, they turned to a new field of big data analytics technology called Process Mining to address the root causes of their issues. Process Mining uses the digital event logs of all activities that are executed by the SSC to reconstruct the as-is process. Based on this data-driven process transparency, Vodafone was able to quickly and easily identify the main drivers of process complexity: manual rework in their purchasing processes increased the cost of each PO, and rejected invoices with multiple blocks drove up costs in their Accounts Payable process. Leveraging the proactive analytics of Process Mining, Vodafone was able to standardize processes and reduce complexity, ultimately increasing the percentage of perfectly executed purchase orders up to 87%.
Tackling the traditional challenges to standardize processes by using digital technology like Process Mining has proven beneficial for organizations – both for short-term projects and larger initiatives to build the data-driven foundation of the future. Conversely, lacking an analytical company culture comes with clear risks: if your SSC is not good at analytics, it is not ready for AI and advanced Robotics.
2: A Targeted Approach to Automation
Automation and Robotic Process Automation (RPA) are quickly becoming a must-have initiative for modern businesses. According to a recent study from the Process Excellence Network (PEX), nearly 60% of surveyed companies are either implementing or currently running RPA programs to transform internal processes like Accounts Payable, Purchase to Pay, and Order to Cash, all with the expectation of saving up to 60% on process costs. RPA has significant time and money saving potential, but there are equally significant challenges to maximize that potential. In fact, according to Ernst and Young, half of RPA implementations fail due to lack of adoption, and the cost of training robots can surpass 10x the cost of the robots themselves.
Assess the maturity of your processes
Before undertaking process automation, it’s absolutely critical to take a step back and assess whether your current processes are efficient and scalable, since deploying robots to run your processes is pointless if there are no standard processes to follow. Replicating a complex process with numerous variants using RPA is tedious and requires a significant investment. Moreover, the cost of maintaining and servicing your robots could outweigh your savings.
Prioritize your automation potential
Once your processes are standardized, it is time to identify where you have the most potential for automation. Most systems have some form of automation already in place, so looking at current automation rates within your processes is a crucial step to define your targets. Furthermore, there might be specific cases, by geography, vendor, material, etc where manual work is widespread. By comparing automation rates, you’ll be able to undercover low-hanging fruit where automation could have a substantial impact.
Build the business case
Evaluating your current processes and prioritizing automation potential not only helps save time and maximize benefits of RPA initiatives, but also tackles one of the key challenges of every RPA initiative: getting the organization behind the project and securing management buy-in. According to a recent study by PEX, a lack of internal alignment is the most common reason that RPA initiatives fail. Senior management teams are unsure of the value of RPA, and RPA project members pursue different priorities during the RPA implementation. So how do you make sure you get the right people behind the project? By building a business case. Using current automation rates and benchmarks, it’s possible to create a forecast of cost and time savings from a RPA initiative. And by prioritizing your RPA potential, you can better scope out the project and align your team.
In one case study with a large American financial service provider, the company calculated the potential for RPA and hired an external team of automation experts to drive RPA initiatives. According to the team lead, “It was like being dropped in the ocean and given the task of finding gold. Sure, there is a lot of gold in the ocean, but where to start looking is the huge challenge.”
Using process mining, the team was able to identify processes within their Claims Handling department with low complexity that were robot-ready. By analyzing current automation, the team was able to understand the root causes of manual intervention and pinpoint where they wanted to focus their RPA robots. By the end of the project, the company was able to deploy more than 50 RPA robots and decrease both process costs and throughput time.
When it comes to leveraging technology in SSCs, it is vital to focus on the low-hanging fruit at the start to build the trust within the organization. A targeted approach to automation has proven to be a key success factor on the digital journey of a SSC.
3: An Operating Model Which Encourages Ownership of Process Outcomes
A successful digital transformation does not depend solely on technology to solve the problems at hand. It is also essential to build an operations and governance model which establishes accountability for process outcomes, and which builds a bridge towards the business unit and its functions.
A typical governance model to serve these needs is the introduction of process owners. According to Deloitte, over half of the respondents in their Global Shared Services 2017 Survey Report have already established regional or global process owners as part of their governance model. Process owners focus on driving end-to-end efficiency and effectiveness in their respective processes.
For process owners, Process Mining provides capability to continuously monitor processes and to be proactive about process excellence. Starting from the top, process owners monitor performance metrics and are guided towards the most pressing issues. When they initiate the redesign of processes, they can easily spot the impact of their measures and can track the result of the changes in real-time.
Despite the increase in automation, people remain the key driver of the success of SSCs. Establishing an operating model that encourages ownership of process outcomes sets the right incentives for SSCs to generate sustainable and continuous savings for their organization.
Pulling It All Together and Realizing Benefits of Your Shared Service Center
The success of digital transformation of Shared Service Centers is built on three strategies:
- A digital approach to standardization
- A targeted approach to automation
- An operating model that encourages ownership of process outcomes
The ability to successfully digitize a SSC will directly impact the scale and role of shared services within an organization. For SSC stakeholders and process owners, the time has never been better to maximize offerings and expand the scope of shared services within their organizations. Sophisticated technologies like RPA and Process Mining have created new opportunities for higher profitability, and continuous improvement has gathered momentum in both thought and practice. With the right approach, successful digital transformation of shared services is achievable–and within reach.