Grant Farrell, Managing Director of Chazey Partners US - Consolidating Back Office Functions Across...

North America | Latin America | Europe | Middle East | Asia-Pacific North America | Latin America | Europe | Middle East | Asia-Pacific

Association of Academic Health Centers Senior Administrative Officers/Fiscal Officers

2013 Annual Meeting | July 26, 2013 | Santa Fe, NM


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Who We Are Definitions & Trends Lessons Learned


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Global Offices Flexible Resource Model

Presentation handout is appended with more information on Chazey Partners


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What is the back office?


Remote from business

Unresponsive and inflexible

No Business/ Operational control over costs

Viewed as central overhead

Prevalence of shadow operations

Centralized

Challenges

Disparate processes

Multiple standards

Duplication of effort

Different control environments

High cost and costs unclear across the business

Not scalable

Decentralized

Challenges

Responsive to Business and Operational needs

Business/ Operations control decisions

Customized solutions to meet Business/ Operational requirements

Benefits Shared

Highly client focused

Commercially driven

Service Partnership Agreements

Clear unit costs

Flexible delivery

Clear understanding of drivers and activities

Common systems and support

Consistent standards and controls

Tight control environment

Economies of scale

Benefits

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Attribute Shared Services Centralization

Accountability Business Unit Corporate

Key Performance Target

Service excellence and continuous improvement

Cost reduction and central control

Service Partnership Agreements

Widespread Rare

Classification An independent unit Another corporate function

Responsibility Partnership Demarcation

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North America | Latin America | Europe | Middle East | Asia-Pacific

Shared Services is the organization that…

Providing services that are…

Achieve by leveraging…

Employs a specialist team

Geographically unconstrained

Client-focused

High quality Non-core Mission critical

Repetitive or professional Lower cost High efficiency

Organizational realignment

Technology

Standardization

Best Practices

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Higher Quality

Lower Costs

Improved Control


Recession’s impact on funding

Increasing student fees not enough

Efficient/Effective back office is prerequisite

Several Shared Services examples in higher education sector

Next wave of Shared Services: broader scope, moving up value chain

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Strategic

• No longer a radical idea in the public sector

• Moving from an opportunity to a necessity

• Make It Mandatory and High Profile

• Can Work Across a Large Geography and Multiple Jurisdictions

• Opportunities are “Borderless”

• Core Challenges Unchanged

• Not Just Transactional

• End-to-End, Not Functional

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Structure

• Independence is Important

• Governance Matters

• Create Durable Structures

Business Cases

• Prepare Business Cases

• Recognize Need for Funding

• Infrastructure can be Enabler and Barrier

• Taxes Matter

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Implementation

• Get control of the budget

• Identify quick wins & strategic opportunities

• Co-Locate Staff

• Client-focused operating model

• Adapt rather than Adopt

• Changing Culture is challenging

• Multifunctional Enabled by New Technologies

• Outsourcing a Mess Doesn’t Clean It Up

• Delivery of Shared Services is Not a Core Government Skill

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Grant Farrell

Managing Director, Chazey Partners United States

[email protected]

Mobile: 408-767-1285

Toll-Free: 1-855-5-SHARED

Chas Moore

Managing Director, Chazey Partners Canada

[email protected]

Mobile: 250-469-4168

Toll-Free: 1-855-5-SHARED

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mailto:[email protected]

mailto:[email protected]


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Spring 2008: Mandate to transform the back office to provide 21 Common Services to general government, healthcare & education

Characteristics of Common Services before transformation:

Antiquated payroll system on brink of failure

Significant reduction in workforce through demographics in 5 years

Conservative 25% inefficiency rate in accounts payable and payroll

Decentralized

Multiple information technology data sites

Manual processes

Lack of self service options

Intersol and Chazey Partners hired to provide specialist expertise


In 2008, undertook prioritization exercise to determine which of initial 21 services were best candidates for transformation

In 2011 undertook second round of strategic prioritization to assess the next round of opportunities to prioritize

2 new functions

4 new services that were extensions of existing functions

3 out-of-scope opportunities that could be supported by NBISA

Engaged broad cross-section of stakeholders

11 weighted criteria in four categories (financial, strategic, implementation, impact) were assessed & scored

Tools used included workshops, Activity Based Analysis, interviews, and benchmarking


Developed initial scenarios for conceptual design

Based on moving towards leading practices

Considering suitability and do-ability for NBISA

Models considered: Shared Services agency, crown corporation, special agency, new department, distributed, clusters, status quo

Key tools and activities:

Leading practices diagnostics

End-to-end process design workshops

High level organizational design

Service delivery framework

High-level KPIs & metrics


Savings of $8.8m annually ($32.1m over six years) net of investments

Other budgets $6.5m

IT Service Desk $2.0m (50%)

Accounts Payable and Payroll

$2.3m (30%)

New support structure $2.0m

Net Ongoing Savings $8.8m

Savings Investment Net


KPIs continue to be monitored to drive continuous improvement

Volume of transactions processed

Performance against targets

Quality measures (eg. time to answer calls, abandonment rates)

Customer satisfaction rates

Sample observations

Backlogs in payables measured, explained, and addressed; resulting in 2x proportion paid within terms (average Nov-11 to Jan-12 vs Feb-12)

Working with departments/supplies to address delay between invoice date and receipt of invoice by NBISA

Client satisfaction trending upwards


Consistent standards of service delivery

Economies of scale, including group purchasing

Sector-wide strategies, enhanced decision making

Organizational improvement and innovation

Opportunities for staff development and career advancement

Improved staff retention and recruitment

Better access to a pool of scarce or specialist skills & resources

* Adapted from Government of New Brunswick document, Government

Renewal – NBISA Workplan, Spring 2011


New Brunswick is one of Canada’s three Maritime Provinces with a population of 750,000, supported by a provincial government annual budget of $8 billion. The Government of New Brunswick engaged Chazey Partners to develop the business case and implement shared services for several of their administrative functions. The result was the creation of the New Brunswick Internal Services Agency (NBISA), which initially included four service lines: Accounts Payable, Payroll and Benefits, IT Services Desk, and IT Operations. The project started in 2009, lasting three years.

Testimonial from Andrea Seymour, Vice President and COO, GNB “Phil Searle and the Chazey team has been helping is with our Shared Services program for the last two years and their support continues today. Chazey Partners initially validated the approach that we were taking in the summer of 2009, as we embarked on this exciting change and value-adding program for Government. They have since been actively and directly involved in planning, design, testing and implementation.

The initial 4 services deployed were Accounts Payable, Payroll and Benefits, IT Services Desk and IT Operations. The Chazey team (including Phil, John Martin, Grant Farrell and others) has brought process and domain expertise, as well as some level of passion for our success. The expert advice and support from Phil has been a major contributor to our success and the team from Chazey has really become part of our team and has performed a number of critical support and deployment roles, including comprehensive knowledge transfer. Phil has also been involved with advising us with our Enterprise Resource Planning initiative and his advice and counsel has been very important to us.

I would personally highly recommend Chazey Partners from my own experience with their team. Indeed, we still actively use their support today in a number of areas, and as we look to expand the scope of our New Brunswick Internal Services Agency.”

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We provide advice, guidance, support and implementation expertise, covering strategy setting, business case production, program management, outsourcing assessment, process optimization, technology enablement, training and change management.

Our functional breadth of experience includes the “big four” of HR, Finance, IT and Procurement, plus other support services such as Facilities, Real Estate, Legal, Communications, etc.

Example clients include Coca Cola Hellenic, Coca Cola Enterprises, Government of New Brunswick, Agrium, May Gurney, Gilead Sciences, Interior Health, Northern Health, Lawrence Berkeley Laboratory, FormFactor, National University of Ireland, Bridgestone, Gerdau, and many others.

Because we are passionate business people and Shared Service practitioners, we care about your success and deliver solutions relevant to your organization.

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We have serviced a great variety of clients across many industries and countries, covering Shared Services and Outsourcing, Business Transformation and Technology Enablement.

Due to the unique nature of working within the Public Sector and with Non-Profits, we wanted to specifically highlight the following organizations and experience below:

New Brunswick Internal Services Agency, New Brunswick, Canada Lawrence Berkeley National Laboratory, Berkeley, California Interior Health and Northern Health, British Columbia, Canada Stanford University University College Galway in Ireland, Ireland The World Wildlife Fund The International Baccalaureate National Health Services (NHS), UK Health Service Executive (Ireland) Non-Departmental Public Bodies (NDPBs) Ministry of Defense (MOD) South Yuba River Citizens League Outsourced Services to Local Authorities 28


Phil Searle, Grant Farrell, Chas Moore and Janey Jux have chaired, arranged, presented at and facilitated workshops at a number of Public Sector Shared Services events, including the following:

• Shared Services in the Public Sector at the Queen Elizabeth II Conference Centre in London

• Chaired, presented at and help organize the Shared Services and Outsourcing Network‘s first North American Public Sector shared Services Conference, held in Chicago in November 2011

• Presented at and helped organize the Shared Services and Outsourcing Network’s second North American Public Sector Shared Services Conference, held in Chicago in November 2012

• Delivered a master class at the “Managing Change – Transforming the Public Sector” conference at the Barbican Centre, London 2011

• Chaired and presented at the 2012 “Power of Collaboration” conference for financial professionals in BC Healthcare at Vancouver, Canada

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Public Sector Shared Services and “Collaboration vs. Sharing”. Phil Searle, CEO Chazey Partners

What might be the Impact of the 2012 Presidential Election on Shared Services and Outsourcing in the US Public Sector? Phil Searle, CEO Chazey Partners

Are you getting the SPA treatment? Chas Moore, Managing Director, Canada

From front to back office. Grant Farrell, Managing Director, United States

Proactively managing your stakeholders. Janey Jux, Head of EMEA Public Sector Practice

Make or Buy Decision. Phil Searle, CEO Chazey Partners

What are Shared Services Best Practices? Phil Searle, CEO Chazey Partners

When is Shared Services not really Shared Services? Janey Jux, Head EMEA Public Sector Practice

Business Continuity Planning. Grant Farrell, Managing Director, United States

Client Relationship Management Framework. Grant Farrell, Managing Director, United States

Deploying Shared Services. Grant Farrell, Managing Director, United States

Developing the Business Case. Chas Moore, Managing Director, Canada

Shared Services Optimization. Phil Searle, CEO Chazey Partners

Technology Enablement. Grant Farrell, Managing Director, United States 30


Business Transformation

We help clients to transform their support functions to realise significant benefits (lower costs, optimised working capital and improved performance) through best practice process development and roll out of optimal organisation, support and delivery structures.

Functional scope covering Finance, HR, IT and Procurement

Identify and target opportunities, and produce powerful business cases to reflect the opportunity and gain organisational buy in

Implement and support approved transformation initiatives rapidly to drive maximum ROI

Effective acquisition integration and business divestitures

Powerful project and change management, focussing on delivery and outcomes

Chazey Partners’ Profile • What We Do

Shared Services

Planning for, resourcing and implementing global and regional Shared Service Organisations (SSOs) covering a wide ranges of functions and processes including offshore solutions

Turning round sub optimal or failing SSOs

Statutory and Fiscal compliance delivered by SSOs for multiple countries and legal jurisdictions

Independent of any outsourcing providers, we offer impartial sourcing advice and support covering both internal and external options, to ensure that the best solutions for your business are found

Training and development for Shared Service practitioners and Shared Service customers

Technology Enablement

Implement and optimise ERP and other technology enablement solutions to maximise return on investment and in quick time.

Focussing on needs and value to the business, we view technology as an enabler and not an end in itself.

Resource technology projects to enhance chance of success through an optimal mix of IT, Business Systems Analysts, Business Process Integration, Business Process Owners, and Users

State of the art additional technology enablement where required

Effective training and support

Experience includes SAP, Oracle, JD Edwards, BAAN, Siebel, Peoplesoft, COINS and many others

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AS-IS

Carry out multiple site visits and

workshops

Review and catalogue any

existing process & sub

processes

Review a catalogue technology

landscape

Complete Activity based

Analysis

Finalise stakeholders interviews

Review existing reporting tools

and mechanisms 2 to 4 weeks

Current State Analysis:

Summary of Key Findings & Gap

Analysis

Proposed

Complete best Practice

diagnostics

High level process design

High level org design

Service delivery

framework

Define high level KPIs and

Metrics

Develop high level

operating model

Finalise Technology

assessment 4 to 5 weeks

Operating Model : To Be Processes & Organisational

Design

DESIGN, BUSINESS

CASE,

RECOMMENDATION

5 to 6 weeks

Opportunity Matrix

Business Case Evaluation

Location

Recommendations(s)

Recommend Governance

Framework

Implementation Plan

Change management Plan

Identification of next steps

Recommendation, Business Case & Implementation

Plan

Checkpoints with key stakeholders:

Project Board Steering Group

Ke

y

De

live

rab

les

BASELINE &

BENCHMARK

Project kick off &

mobilisation

Establish detailed plan,

timelines, key deliverables

etc. for this stage

Review output from work to

date

Initial Communications

Review and update baseline

Calculations

Complete Further

Stakeholder interviews

Ke

y A

cti

vit

ies

Wo

rk s

tep

0 to 2 weeks


As-Is (4.0)

Considered finance function, not part of procurement

Manual invoices

All payments in through single SAP ERP

Accounts payable responsibility centralized

Weekly cheque runs plus ad hoc

No statistical review of small invoices

Manual cheques infrequent

Achieve 50% of available vendor discounts

EFT not used

To-Be (8.0)

Achieve leading practices except:

Continue with manual invoices (initially no funding for document management/scanning solution)

EFT only possible for 30% of vendors

Is part of an end-to-end purchase-to-pay process with front end transactional processes designed to minimize own stream error correction

Scan and route 100% of invoices when received by accounts payable processing center

Process all payments through a single system.

Centralized accounts payable responsibilities across the organization

Optimize number of check runs each month.

Review 100% of large dollar invoices and statistically sample the remainder

Eliminate manual cheque request generation.

Maximize vendor discounts

Utilize EFT for payment to eliminate use of paper cheques

0 4 10 2 6 8

Diagnostic Rating Scale:

• 1 = Leading Practice is not adopted

• 10 = Leading Practice is adopted in full

Score in Range 1-4

Score in Range 5-7

Score in Range 8-10

Current Future

Leading Practice Observations


Balanced Scorecard

Creation of Service Partnership Agreements

Delineation of roles and responsibilities

between SSO and other functions / local regions / businesses

Standardised processes and sub-processes across all functions

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Beliefs Behaviours

CustomerFocus

“Byunderstandingtheneedsofmycustomers,I

canimprovetheserviceIofferthem’’

· Knowwhoourcustomersareandwhattheyneed

· Seethingsthroughourcustomerseyes· Gooutofourwaytodeliverwhatourcustomerswant

Accountability“Myactionsandperformancedirectlyimpact

theperformanceofothers”

· Givesandreceivesfeedbackopenly· Performstaskseffectively,evenundertimepressure

· Understands,andactstosupport,widerbusinessobjectives

TeamCommitment

“Everyoneintheteamhassomethingvaluable

tocontribute”

· Takescollectiveresponsibilityratherthanattributesindividualblame

· Supportsthosewhosurfaceproblems

Innovation

“Everythingwedoisopentochallengeand

improvement”

· Demonstratesabilitytoidentifyopportunitiesforprocess

improvements· Providessolutions,notjustissues

Flexible ‘’Mywayisnottheonlyway’’

· Seeschangeasanopportunityandnotathreat

· Opentoalternativeapproachesandworkingstyles

· Openlysharesknowledgewithinthegroup

Organised“PrioritisationensuresthatIdelivermyworkloadandstillgetinvolvedinotheractivities”

· Seeseachjobthroughtocompletion· Completesprocessinginanefficientandeffectivemanner· Recognisesthecostimplicationsofallactions

Learning“Myproficiencydirectlyimpactstheabilityof

theSStodeliver"

· Ismotivatedtotakeonnewchallengesanddevelopnewskills

· Sharesskillsandexperiencetobuildteamcapacity

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