We’re starting to see some real changes in the Shared Services industry. Whilst the earlier focus on delivery cost remains important, the all-in cost to the enterprise is more in focus. SLAs are becoming less important as users are realising that green SLAs don’t feel green, cheap does feel cheap, and the lack of the ‘right’ service is spawning an increase of shadow services across the enterprise eating into the initial estimated business case benefits.
The earlier solution to cost pressures through increased scale is facing into the reality that there are two curves at work – benefits of scale versus cost of complexity, and as you scale out across processes the added complexity can cause your benefit case to turn negative.
There is a need to look at this again, and this time from a different direction; the customer perspective, rather than purely from a cost and efficiency perspective. For the cost element, Shared Services need to be looking to manufacturing to learn new tricks. Whilst lean has been a buzzword for years, the new focus on lean in the context of a component based service delivery model is gaining ground.
“View every process as if you’re a customer, and then apply learning from the manufacturing industries – when you start doing this you start moving your services away from products and to a customer centric process.” Explained Simen Munter, Group General Manager of Global Shared Services at ANZ when I recently caught up with him to discuss the changing nature of ANZ’s business.
Five years ago, ANZ embarked on a strategic transformation which recognised there was a unique opportunity to create value for shareholders by broadening its presence in Asia, whilst leveraging its strong foundation in Australia and New Zealand, to become a super regional bank. The move recognised that a once-in-a-century shift was underway in the global economy as growth opportunities moved from the developed economies of the West to the Asia Pacific region.
“Instead of running 33 different banks, we want to be able to gain scale benefits and run as one bank across the 33 markets in which we operate. To do this we have significantly invested in our operations network across the region.
Our hubs network is expanding ANZ’s operations capability to support business growth in a way that is sustainable and cost effective. As a part of our super regional growth strategy we have operations in Australia, New Zealand, Manila (the Philippines), Chengdu (China), Bangalore (India) and Suva (Fiji).”
In Shared Services we aspire to operate through a set of processes which are globally consistent, but able to handle local variations. We work to have the right people in the right locations to offer the best service to our customers.
Simen explained: “Specialist hubs help us build a super regional workforce, giving us access to capabilities that may be limited in our domestic markets. The Manila hub, for example, is a centre of excellence in voice based work. Our hubs are built around local talent pools and expertise.”
“Capability and capacity are the main drivers of a customer centric operating model. Staff in operating hubs provide additional capability to deal with increased volumes and allow in-country teams to focus on other activities that support business and customer outcomes. We work towards sharing products, platforms and processes across our geographies to give us the ability to build a ‘single production line’ and maximise re-use wherever possible.
“A key benefit of our approach is the ability to access ‘been there and done that’ talent, enabling us to leverage experience gained elsewhere. Take things like payroll and accounts payable, we have 33 markets to run this for. To find people who are experienced at running that kind of complexity is very difficult in Australia, whereas some global companies have done this for years. By being able to tap into a wider pool of skillsets across multiple locations we can leverage these learnings and operate more efficiently.“
“There is a real opportunity through blending highly skilled employees with low cost delivery so that we can be both locally competitive and cost effective. Nowhere is this as important as when you are competing in low cost locations.”
Looking for the extra edge
Looking at what you do from a customer perspective is challenging, as current best practice has been focused on SLAs and not based around the moving target of providing excellent customer service. SLAs are typically set at the worst outcome your customer is willing to accept – meeting that consistently is hardly a good measure of success.
Simen explains: “The focus cannot be on these types of measures, the focus must be on solving the issue for your customer. My approach to shared services leverages skill and expertise across our regions to design, build and deliver services with the customer in mind.
“You’ve really got to focus on quality, as bad quality is a driver of resource requirements. The other focus is to ensure that the work being done is worth doing or is it work which exists as a result of failure in other processes. We are seeing substantial opportunities in ‘turning off’ volumes by fixing things at source by looking beyond the current process and into what would have been ‘perfect’.
“We have seen a significant uptake in both external customer satisfaction and internal customer satisfaction over recent years. It’s something we’re spending a lot of resources on as we see that as critical for our long term success.
“We focus on getting the customer service right and embed this in our processes.
Also, when you have satisfied customers it gives you the room you need to further innovate and improve. If you are on the backfoot with quality you are spending all your time firefighting. I don’t want great firefighters, I want superb ‘fire prevention officers’ – the people whom are able to look at things which are ‘not perfect’ and change them prior to issues becoming real service issues.”
For outsourcers, these changes in approach can be quite complicated. Previously a product or transaction based approach was the norm, and you could meaningfully quote for particular parts of a business. In a component based enterprise, the ‘end to end’ products disappear as many processes are identical across products and there is a new need to offer value beyond undertaking a particular type of ‘set in concrete’ work.
“This is similar to what happened in manufacturing decades ago, you can’t just aim to deliver to outdated SLAs, you have to own the outcomes in a very different way, as your element is integrated into the overall service delivery in a much more holistic manner. The outsourcer needs to make sure they drive the innovation within their area, it isn’t only about the ‘run’ and meeting SLAs anymore.
“You need a competitive advantage beyond offshoring. Outsourcers really need to bring something which adds value beyond the added complexity of engaging with them, demonstrating they know what a business wants, they know what good output looks like and they know how to do it effectively.
“Overall, we’re seeing a strong growth in the industry towards work going to captives as they have proven to be more effective in driving adaptive change – it is difficult to outsource change. However, as organisations are increasingly process oriented, there’s a huge opportunity for outsourcers to provide large scale processes offering standardization while leveraging capabilities across multiple customers.” said Simen.
“I continue to see Global Shared Servicesas a key growth area in the corporate world, and an exciting area of opportunity for talent. The specialist skill-sets required to effectively use a global delivery model, optimise skill-sets across talent pools and locations, automation, organisation, production management is valued and there is a level of excitement about how the world of service delivery is changing.
“We are also seeing real opportunities in other areas, for instance, reporting and analytics is an important area for us. We see that as a huge growth area, both in terms of offering the service to others across ANZ, but also in terms of using those insights into operating more effectively ourselves.
“There are two golden rules: quality cannot go down and price cannot go up. We don’t believe we need to compromise on quality to get the cost benefit when we do this right.
“Our customers need consistency, effectiveness and efficiency and that is what we aim to deliver,”said Simen.
“If you look at what’s successful from our perspective there’s only two metrics which really matter: customer satisfaction and cost.”
Join Simen during Shared Services & Outsourcing Week 2014 where he’ll be delivering the presentation Driving out Costs while Improving Internal Customer Service Delivery.