Shared Services
As organizations – and CFOs in particular – come under increasing pressure to maximize their achievements while minimizing both costs and resources, many are turning to shared services as the way forward.
Getting the right business systems in place is critical for a shared services center (SSC); the right choice will enable a fast set up, make bringing new divisions or customers on board a straightforward task, and will support the ability to cope with changing business requirements.
CODA Financials is ideally suited to handle these challenges. It is a best-of-class, international finance system that offers straightforward integration with multiple existing systems that customers may have in place. Used across all sectors, its ability to handle even the most complex and fast-changing multinational accounting is widely recognized. CODA is at the heart of many shared services operations worldwide, particularly where there are many different operational systems in place that must be linked into a central, global finance platform.
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The drive towards shared services
CFOs face the triple challenge of creating an administration that:
- adds value
- deploys consistent high quality global business processes
and
- provides business transaction processing at increasingly low unit costs – typically at less than 0.5% of total revenue.
Since the “credit crunch” and subsequent global financial crisis, those pressures have intensified as firms look to become more cost-effective to ride out the economic downturn and emerge a leaner, more efficient and effective organization. As a result, CFOs are turning to shared services.
At its most basic, the move to financial shared services involves centralizing transactional processing and administrative work, such as accounts payable, payroll and general accounting. This trend towards consolidation is widely accepted in global companies with multi-site operations and increasingly now in the public sector also.
Cost savings and more…
Organizations have demonstrated typical savings from shared services in the 25-30% range rising to 50% in some cases. Research by Deloitte Consulting shows a wide number of cost-saving factors. More than half of respondents in the consulting firm’s 2009 Global Shared Services Survey said they had achieved more than 10% headcount savings within the first 12 months of implementation. In excess of 90% indicated they had achieved consistent annual productivity improvements from their SSCs (Shared Services Centers) while around 70% said they achieved at least 5% improvement each year. Additionally, nearly 80% said that SSCs reduced the cost of compliance. Half said they were planning to increase the number of SSCs – a 41% increase over 2007.
However, cost savings are rarely the only driver nor are they the only benefit from adopting a shared services approach. Of equal and sometimes greater importance is the improvement in service to internal business units. In addition to a healthy ROI, companies in Deloitte’s study reported additional benefits including a significant improvement in process efficiency, process quality, data visibility, improved service levels, platform to support growth, focus on core business and customer satisfaction.
Financial system requirements for shared services
Because of the scale and sheer diversity of operational needs, which a shared services operation must encompass, the financial system to support this environment must be both functionally rich and multi-threaded. That is, the system must be able to handle many diverse requirements simultaneously.
Here is a sample of the specialized functionality required for shared services.
- Multi-everything
By definition, a shared services environment implies a single, centralized system to support multiple organizations. This means the system must have the flexibility to support a wide-ranging portfolio of companies and a variety of needs, such as different languages, currencies, tax rates, period-close calendars, reporting requirements etc.
Learn more about how CODA Financials delivers “multi-everything” accounting.
- Flexible chart of accounts: think global – act local
A shared services accounting system needs to accommodate multiple chart of account configurations. The trick is to provide commonality at the higher levels to facilitate consolidations, but allow individuality at lower levels to support specific management reporting. For instance, a manufacturing organization might need a very different chart of accounts numbering scheme (particularly at the sub levels) than a project-oriented organization i.e. “costs by manufactured product #3456” vs “costs by project task #654XYZ”. The financial system needs to handle this varied environment without having to impose a common chart of accounts on all the entities, particularly at the lower levels. Chart changes can be a daunting task and knock a shared services project off the rails.
Learn more about how CODA Financials handles multi-multi environments and provides unrivalled chart of accounts flexibility.
- Multi-everything… …at the same time… …on the same instance
Nearly all financial software products can support some kind of “multi-company” environment, but not all can handle a diverse environment simultaneously from a single software instance. This is, after all, one of the main points of shared services – to consolidate and get economies of scale on a central system.
In this regard, not all financial software applications are the same. Some systems can’t handle multiple languages on the same software installation (one instance). Others require additional ledger installations if the chart of accounts, accounting calendars or currencies are different. Still others can’t process an intercompany transaction if the charts, currencies or accounting calendars aren’t in sync. Multiple instances create many problems including multiple logons, redundant master records to synchronize, fragmented reporting etc. which should be avoided at all costs. - Read more about the trend towards minimizing the number of instances of enterprise software, in our white paper: "Beyond Governance - Single Instance"
- An integration melting pot
To work across a broad expanse of companies, a shared services system must have the ability to coexist with a variety of operational systems. These can be packaged or homegrown applications, running on any number of databases, operating systems or hardware platforms. These systems might be coded using the latest programming languages or older languages such as Cobol or RPG found in legacy applications. A shared services finance system needs to be amenable to working with all these environments.
Learn more about CODA Financials’ unrivalled integration capabilities.
Best-of-Class vs ERP
Unfortunately, accommodating technical and application diversity is the antithesis of most ERP platforms available today. This doesn’t jive with the real world of a shared services environment, which is technologically diverse by definition. Big ERP systems come with their own architectures and are insular in nature. The proprietary and inward focus of an ERP platform architecture can be difficult to intermingle with other applications, without extensive and expensive modifications. ERP was designed to propagate across an entire organization as an end-to-end solution, rather than co-exist with other applications. Furthermore, shared services operations don’t usually need the wide mix of applications provided by an ERP platform, so the underlying platform itself is nearly useless in shared operations. While ERP platforms have merit in certain instances, they are not the best choice for shared services environments.
On the other hand, best-of-class financial systems are ideal for shared services environments. They are built at the onset to integrate into a variety of environments. They expect constant change to system interfaces and are designed to operate in heterogeneous environments. Furthermore, best-of-class applications such as CODA Financials from UNIT4 CODA are 100% focused on providing the very specialized accounting applications a shared service environment requires. Research and development resources are not diverted into far-flung technologies and operational applications, so they remain functionally rich in the areas you need.
Learn more about UNIT4 CODA’s best-of-class software approach.
Controls across people, processes and systems
The conventional wisdom about shared services is that everything becomes centralized. While this is true to a great extent, some parts of a process remain in the field. In fact, shared services operations inject a need for more collaboration between the shared services center and field organizations. For instance, approval processes, typically still lie with the field organizations, but those need to be interwoven with centralized processes.
The period close process in particular requires more collaboration in a shared services environment. Processes to close out, coordinate and reconcile field systems need to be established and automated across a large number of systems and personnel. Oftentimes, these close processes require analysis, steps in spreadsheets, approvals etc. that exist offline. Nevertheless, a shared services financial system must have a way to encompass both online and offline processes into a controlled workflow that is visible, repeatable and efficient.
Learn more about how CODA Financials automates and controls processes across a mixed environment.
UNIT4 CODA and Shared Services
UNIT4 CODA has a 30-year history of helping medium and large organizations around the world to improve their financial processes, automate operations and deliver greater value.
- Our international finance application, CODA Financials, is specifically designed for single-instance implementations.
- It offers world-class multi-company, multi-lingual and multi-currency support within a single version of the application, allowing it to accommodate the multiple legislative and cultural differences inherent in running different national companies within the same system.
- An unrivalled account code structure allows CODA Financials to cope easily with multiple corporate and reporting structures, and give ultimate flexibility.
- A full browser-based interface allows users to use and administer the finance system from any location.
- CODA Financials also comes with a control framework, which ties other systems, manual processes, and authorizations into one visible and auditable process flow – an ideal capability for shared services.
This design, combined with its unified single ledger approach, makes UNIT4 CODA an ideal partner for Shared Services. Among UNIT4 CODA’s 2600 clients are a whole spectrum of examples of those that have implemented CODA Financials as the basis for Pan-European and global shared services. Some have opted for centralized implementation as a path to outsourcing of core administrative functions, while others have managed their applications centrally with international roll-out to support core business processes and remote operations more effectively and cheaply.
Learn more…
Here is a selection of recent reports, white papers and releases covering the issues and recent developments in the field of Shared Services.
- Planning and Implementing Shared Services
- Beyond Governance – Single Instance Value and Control
- www.ssbenchmarking.org - The website of the Shared Services Benchmarking Association
- www.ssonetwork.com The Shared Services Outsourcing Network