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Advisory Services
Shared Services: A realistic concept for the regional telecommunication companies
CANTO 2005 Annual Telecommunications Conference and Trade Exhibition, St. Kitts, June 2005
Patrick Newton
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Telecom companies need to respond to the issues and trends affecting them
Industry Overview
Key Industry Trends
•Globalization
•Rationalization, M&A
•Deregulation, Privatization
•Cost Reduction
•Technology innovation
•Information to Knowledge Transformation
•Risk Management
•Government Regulations
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These external and internal factors lead to a refocus in the way we manage our business
Higher internal demandsExternal factors
Need for business management refocus
• Higher quality support• Higher reliability of delivery• Lower vulnerability • Standardization
• Need for cost reduction• Technology opportunities• A more demanding client• Efficient and effective work
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What is Shared Services?
We can define Shared Services Center (SSC) as follows:
The joining of similar processes spread over several organizational units or departments with the objective to render services in an efficient and effective way to other internal organizational units or customers.
Characteristics SSC
•An innovative approach to standardizing and streamlining the delivery of common processes in one or several physical locations
•These processes are traditionally transaction oriented and have common characteristics across business units
• It will lead to economy of scale because of standardization and a more simplified process, a more integrated ICT infrastructure and because of a reduction of overhead costs
•Leads to a clearer (internal) customer relationship because of having a well defined service level agreement
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Adds value by:B
usin
ess
Orie
nta
tion:
Characteristics of each Quadrant:
Made up of different skill sets
Must be managed and motivated differently
Has different set of objectives, goals and vision
What processes are best suited Shared Services?
EnterpriseGeneric
BusinessUnique
Technical Skill Low Cost Producer
Corporate Controland Strategic
Planning
SharedServices
Business Unit Analysis
Business Unit Transaction Processing
Shared Services
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HUMAN RESOURCES
BenefitsRecruiting
PayrollTraining
Career Planning
FINANCE &ACCOUNTING
General AccountingAccounts Payable
Accounts ReceivableFixed Assets
Financial ReportingTax AccountingTax ComplianceBilling/InvoicingLoss Prevention
MERCHANDISING
Order ManagementReplenishment
InventoryLogistics
Point-of-Sale
PROCUREMENT
Strategic ServicesTactical Purchasing
REAL ESTATE
Lease AdministrationProperty ManagementConstruction Services
INFORMATION TECHNOLOGY
Data Center OperationsCommunications Operations
Network Support
Second Generation Shared Services
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Concentration of management means:
Joining similar processes which are spread over several organizational units or several departments within one organizational unit into a shared service center, with the objective to deliver more efficient and effective services to internal units or customers.
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Organizational management models
Degree of standardization
Degree of centralization
Decentralized
Coordinated decentralized
Concentrated(Shared Services)
Joined SSC(possibly outsource)
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Decentralized model
MT
Unit Unit Unit
Dept. Dept. Dept.
Management
Management
• Every unit or department has its own services management
• Advantage: close to core processes and customization possible
• Disadvantage: difficulty to manage efficiency and quality from an enterprise perspective
ManagementManagement
ManagementManagement
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Coordinated decentralization model
• Management of services is done on unit level
• Advantage: close to core processes, customization possible, clear on quality standards per unit level
• Disadvantage: difficult to manage efficiency and quality from an enterprise perspective
MT
Unit Unit Unit
Departments Departments Departments
Management ManagementManagement
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Concentration model
MT
Unit Unit Unit
Shared service center
• Management through MT
• Advantage: enterprise focused on efficiency and effectiveness
• Disadvantage: standardization and distance from core processes.
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Joined shared service center (possibly outsourced)
MT
Department Department Department
MT
Department Department Department
Shared service center
• Management trough a Joint Venture
• Advantage because of economy of scale
• Disadvantage: distance from core processes, possible standardization issue
Organization 1 Organization 2
Joint Venture
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“Establish relationships and terms & conditions with identified suppliers based on defined requirements”
“Determine the need for and availability of materials, goods and services”
“Manage supplier relationships over time”
“Commit with supplier for purchase of materials, goods or services”
“Verify physical receipt of materials, goods and services”
“Strategic Work” “Transactional Work”
“Determine appropriate supplier for delivery of required materials and/or services”
“Define and establish purchasing strategies and tactics, including commodity level strategies”
Materials &Services Receipt
StrategyDevelopment
Negotiation& Contracting
Monitoring &Management
Requisitioning SourcingOrder
Placement
Purchasing Fundamental Business Purpose“Ensure the acquisition of, payment for and management of materials, goods and services which
satisfy on-going business requirements at lowest total cost and in a way which is aligned with company and operational goals and objectives”
InvoicePayment
“Confirmacceptable supplier performance and pay for materials & services received”
Integrated Technology Enablement
Shared Services Business Case : the Purchasing process
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Leveraging the Internet – the E-Business Landscape
B2C = Business2ConsumerB2B = Business2BusinessB2W = Business2Workforce
Internet Computing
Model
eStorefrontClick&mortar
eServicesB2C B2B
B2W
eDataeBackoffice
eHR
eFinance
ePurchasing
eChain eSales|Service
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B2B Solutions – The Digital market place
E-MarketResearch|Quote|Buy|Sell|
Deliver| Service
CustomerMarketplace
Customer.com
SupplierMarketplace
Supplier.com
Service.com
Knowledge Management
Telephony Media ERP|CRM|SCM
Portal
Supplier KnowledgeCustomer
Knowledge
Corporate.com
Web
CustomersSuppliers
Portal
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The digital market place model consists of the above core components.
B2B Solutions – The Digital market place
DemandManagement
Logistics
SupplierIntegration
BuyingServices
Auction ExchangeRFQ
Catalog Configuration Management
Content Management
Credit ManagementTransactional Accounting
Data Management
Digital Marketplace
CustomerRelationshipManagement
ProductData
Management
OnlineSales
SellingServices
Customers
Designers
Sstem Integrators
Distributors
OEMs
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Cost reduction due to shared services per function
20-50%
20-40%
25-35%
20-30%
10-25%
5-20%
5-20%
5-20%
10-20%
5-15%
5-15%
0 5 10 15 20 25 30 35 40 45 50
Human Resources
Facilities and Services
Accounts Payable/Receivable
Information Systems
Environment, Health and Safety
Legal
Tax
Procurement
Planning/Financial Analysis
Treasury/Risk Management
Public Affairs
Savings %
Source: Booz-Allen & Hamilton
TransactionBased
Services
Expertise-Based
Services
Cost reduction with SSCbetween 25% - 40% withROI between 1-3 years
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Management and Organizational restructuring will ask for an integrated approach
Humans Resources and CultureHumans Resources and Culture
Organization and ManagementOrganization and Management
Processes and ProceduresProcesses and Procedures ICTResultResult