A
recent conversation with the EVP for Global Shared Services of a major CPG
company went down an interesting line of reasoning that I thought worthy of
sharing. It’s all about the increased
cycle-time for planning.
Like
many large global companies, this one operates a Shared Services entity that comprises
all of the common back-office functions.
Further, there is a fair amount of outsourcing being managed as part of the
service strategy. A sign of maturity,
there are global process owners in place who carry responsibility for demand
management and services architecture, through to service performance
management. The outsourcing arrangements were constructed using then-current industry best practices and are yielding favorable cost performance.
With that backdrop, here are the top planning-related concerns that the EVP for Shared Services outlined for me:
1) The original economic
equation that supported outsourcing comprised broad scope of services to a
small number of providers under long-term contracts; does this strategy still
apply in a world of service-level arbitrage?
In other words, would we be better served by contracting with several
providers for essentially identical functionality, and select between them on a
much more frequent cycle?
2) How early in advance
of the expiration of my ERP license agreements should I develop the tradeoffs
between renewal and migration to best-of-function SaaS platforms? Are BPaaS options available as internally- or
externally-sourced alternatives? What
sort of services integration strategy works best in this situation?
3) C-suite executives are
looking for agility as the highest-priority commitment. They need confidence in our ability to scale
up and scale down in response to both marketplace trends and changes to our corporate
structure (e.g., acquisitions and divestitures). How do I gauge the agility of our shared
services functions, and what form of planning model is considered best practice
to accommodate such shifts?
4) Should the shared
services scope of operation reach forward to the middle- and front-office
functions of the company by applying the lessons of back-office optimization?
As
we discussed each of those situations, one reality became increasingly
obvious. The planning cycle for the
shared services organization needed to change dramatically. As is common, this organization utilized an
annual process for assessing business demands and service performance. The EVP concluded that she needed a
persistent tempo of service planning … a capability and a symbol of the shift
towards a utility-oriented model of operation.
The
implications of this form of planning – with forward-looking indicators driving
decisions around such things as capital investments, services contracting,
integration architectures, and so much more – were far-reaching. In fact, one of the first steps to be taken
was to engage Supply Chain leadership around the fact that “What we buy, from
whom we buy, and how we buy all must change.”
That
fact frames the opportunity and threat of the shift to an “As A
Service” economy.
Peter
