Shared Services Leaders: How Important is Process Standardization?

By Abid Mohammed on Jul 26, 2017

In recent months I’ve had the opportunity of working with 8 of the world’s largest and in my opinion most admired shared services organizations. These companies are spread across 5 cities in 3 countries – India, China, and the Philippines. They’re present in 7 different industries: Logistics, Life Sciences, Automotive, Industrial, Automation, Food & Beverages, and IT services and handle 5 processes: procure to pay, order to cash, record to report, hire to report and master data.

There is a striking commonality in what keeps them busy, and here are a few examples of what they’ve said:

‘We have a goal to reduce FTE count in our operations team by 3 this year’ – Process Expert

‘The business expects us to look ahead, and recommends processes and tools to improve efficiencies’ – HRIS Manager

 ‘We are embarking on a Robotics Process Automation (RPA) journey later this year. It’s a pilot to integrate Salesforce.com and SAP’ – Operations Excellence Manager

‘Processes from new countries are migrating to our shared services center. This is an important time to showcase our success’ – Director R2R process

These align with the short term goals of most shared service leaders across different industries. There is always razor focus on efficiency improvements and a sense of urgency. Their goals aren’t often one time projects, they continue year after year, and the biggest difference between now and 3-5 years ago is technology. With the emergence of several automation technologies, there has been increased pressure on reducing transaction costs while maintaining high accuracy. If organizations don’t follow suit, their competition will, and walk away with the competitive advantage.

In this pursuit of productivity improvements, shared services teams are discussing and experimenting technologies like RPA. These are new, risky, and demand time and money. What baffles me is that little attention is given to a relatively easier automation alternative – process standardization.

process standardization

To understand standardization, let’s use a simple analogy of parking your car in an apartment complex. All resident cars enter through a single security gate and travel the same designated direction to enter the garage and park in their designated spot. This is a standard way to avoid chaos.

In the realm of data management and shared services, process complexities can be high; but there is always a scope of standardization.

The main objectives for process standardization include:

  • Simplified user experience
  • Improved process visibility
  • Reduced cycle times

For example, a section manager at a manufacturing plant in Bangkok needs a new material for production. They send a request via email to the shared services team to create the material in ERP. The information is not sufficient, so there is a few back and forth iterations before the request is accepted. It’s also possible that a duplicate material is created because there is no standard framework for material definition and classification. This brings up the need for data governance. What is this clumsy process costing the organization?

  • Frustrating experience for users
  • Potential production delays
  • Missed deadlines on new launches
  • Lost competitive advantage
  • Higher inventory costs
  • Higher cost per transaction
  • Poor data quality

A vast majority of our customers are still living in this situation. Is your organization one of them? Have you ever thought about quantifying the costs above and presenting them to management? If not, this should be a priority. You’ll be surprised by the potential efficiency improvements.

Implementing standardization

Incoming data from stakeholders, suppliers, customers, banks, machines etc. comes in in different formats and is likely unstructured. Explore the possibilities of standardizing these formats – like vendor creation. Ask the vendors to send data in a predefined template that already has automation built in. These changes can lead to significant efficiencies.

For anything complex, the latest RPA technologies can add value. But don’t jump into RPA just because it’s trending; start with something small and simple.

Process standardization can be achieved by following the steps listed below:

  1. Simplify user experience – Use an intuitive, easy and standard UI for section mangers to submit a request, check for duplicates, or submit to other departments for data collection
  2. Improve process visibility – Track the progress of a request through simple escalation mechanisms, and use dashboards on various data requests from your team
  3. Reduce cycle times – Data validation rules allow you to eliminate manual intervention wherever possible e.g. auto posting to ERP

All of this can be achieved using lean IT solutions. With minimal investment and risk, you can go live in just a few weeks. Once you start seeing results,  you can iterate the same steps for a different process. This is the beauty of marrying standardization with lean solutions. I have seen many organizations implement solutions like Service Now, Zendesk, JIRA, Salesforce, etc. for step 2; But beware without steps 1 and 3, you will receive minimal value from step 2!

Process standardization projects are always cross functional, and success lies in the close collaboration between the business, shared services organizations, and IT. Executive sponsorship and communication are paramount for effective change management. As author Simon Sinek says in his bestseller, Start with Why:

“When you start by telling people WHY you are doing WHAT you are doing, remarkable things happen.”

Aiming for FTE reduction in isolation without looking at the bigger picture will not lead shared service leaders far in their cost reduction journey. They need to clearly communicate the WHY with their business counterparts and discuss long term benefits of process standardization. Shared services teams will be agile and prepared to take on more work, resulting from mergers and acquisitions, new market entries, new product introductions, etc.

How much attention have you given to process standardization?

About the author

Abid Mohammed

The Winshuttle blog is written by professional thought leaders who are dedicated to providing content on a variety of topics, including industry news, best practices, software updates, continued education, tips and techniques, and much more.

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