Customizing the Finance Shared Services Model to align with Organization Objectives - ABF Financial...

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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

Sample KPIs for Each Discipline

• Price• Selection• Convenience• Zero Defects• Growth

Customer Intimacy

• Customer Knowledge

• Solutions Offered• Penetration• Customer Data• Customer-success

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

• 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

The McPlaybook*

Make it easy to eat• 50% drive-thru• Meals held in one

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

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

• 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

Alignment: Internal Structure

Transition Management

Fulfillment & Service Delivery

Business Development

Transition Management

Migrate processes to standard platforms, scaled migration, joint-process ownership

Fulfillment & Service Delivery

SLAs, Audit Compliance, Business Controls, records Management, service request processing, digitization

Business Development

identify processes to migrate, customer relationships, value

migration, CS interviews, performance evaluations

• 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

• 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?

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 = Internal Service Level Index.

Services and Levels

Expectations, Priorities, Improvement Plans

Service Costs

Relationship = Expectations

ISLI Matrix

Customer Intimacy

Product Leadership

TransactionalValue-added

Best Practices

Transformation

Standard

Value-added

Best Practices

Consistency, Analysis, Value

Process improvement, service innovation, secondary KPIs, internal customers

TransformationDirect Business Impact, primary KPIs, external customers

TimeCostQuantityQuality

Value-added

Best Practices

Consistency, Analysis, Value creation, customization

InnovationService

Value-added

Best Practices

InnovationServiceKPI

Value-added

Best Practices

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