When you know what you Need, then you know how to Lead- Key factors & Indicators....

Transforming Saga of Shared Service Centers-2: When you know what you Need, then you know how to Lead.

?*Service delivery models like Shared Service Centers (SSCs), Global In-house Centers (GIC) and Global Business services (GBS) are referred as “Value Center” on this compilation.

Value centers are now undergoing a transition wherein it’s no more only a cost center but turning into a Center of Excellence (CoE). It would be certainly a key need of thought process upgrade on performance management for Shared Service Center professionals.

Critical Success Factor (CSF), for any service delivery model is an element that is necessary for an organisation to achieve its mission. To achieve goals , organisations need to be aware of each?Key Success Factor?(KSF) ,?Key Result Area?(KRA), define relevant Key Performance Indicators (KPI) and?ensure monitoring them time to time.

Irrespective of service model of the organisations, there are few Key Success Factors those are to be monitored to ensure, whether organizational journey towards its mission is on the right path or not.

Here are they but not limited to, Strategic Focus (Leadership, Management, Planning), Customer Experience (Customer Relations,?Responsiveness), Operational Execution (Processes, Work),?Obligation’s adherence (Statutory/Good to comply social obligations like CSR, ESG) People Perspective (Personnel, Staff, Learning, Development). While various other emerging?factors which are?also to be considered as?icing on the cake includes Global Orientation, Innovation Culture and Market benchmarking etc. ?

“If it cannot be measured,?it cannot be managed”.?Moving beyond cost arbitrage and delivering value adds’ has often been used as a preface in every kind of discussion about “Value Center” industry, but surely there exists a certain ambiguity around the term, Value.

Quite often, it’s construed as an indication of cost optimization efforts and rarely does correspond to actual positive impact in productivity or superior customer service.

The performance dashboards presented at board meetings depict presumed value-adds which the “Value Center”?organizations interpret as a sign of satisfactory and agreeable service. However, it may not be necessarily relevant to what the executive board cares about.

Nevertheless, there seems a marked difference between the perception of Home-Office teams (HQ/customers) and of “Value Center”?teams on various aspects of Value.

Key Metrics @ Value Centers: Performance gets measured in terms of Cost, Quality, Time and sustainability-based parameters.

@ Value center level : Effectiveness & Efficiency, Achieving Business Goals, Cost Objectives, Benchmarking with peer centers.

@ Individual & Team levels: Customer Satisfaction Ratings, Performance against KPIs, FTEs savings with automation, Value Adds and Innovation

@ Service Delivery Level: Service Delivery Outcomes, Quality of Deliverables, Productivity Levels, Meeting Service level and Operational Level agreements.

Key Performance Metrics (KPIs) : For years, “Value Centers” have been using traditional metrics like SLAs, OLAs & other organization specific KPIs to showcase its performance.

Mid-level management teams are required to spend a significant amount of time and effort in defining the metrics, tracking the performance against set expectations, and projecting it to appropriate stakeholder groups.

Even though it symbolizes a well-intended approach and honest efforts, the meticulously articulated metrics may not be at all applicable to the business priorities. Inadvertently, the 80-20 rule seems to apply here as well, wherein the delivery teams think they have met 80% of the success criteria while the customers or stakeholders may only see 20% of the benefits case realized in their larger scheme of things. Perhaps, this could be one of the reasons for Offshore “Value Center” s to receive low NPS (Customer loyalty) ratings.

Most of the metrics should ideally be linked to executive goals or overall enterprise priorities. However, not every level of staff has an equal understanding of how it translates into creating value, resulting in a lack of motivation to refine an existing set of metrics.

The roots for this approach sometimes lie in the past experiences of the managers, maybe someplace in the outsourcing industry where the billing for services is directly proportional to the time spent by an FTE on a particular activity.

That’s where the need arises to spread “Value Center”?education amongst all staff, particularly about its operating models. When a team member is asked to pull out a specific report, they need?to recognize how those reporting figures and data could impact broader organization’s outcomes.

01.Organizational & Business Impact - Revenue Growth, Service Expansion, Reduced Time to Market, Employer of Choice Ratings

02.Costs Management - Maintaining cost Arbitrage, Costs and Revenue per FTE, Service Cost per function or unit, Pricing Markups and Margins.

03.Operations & Efficiency Management - Transactions Volume per FTE/Day, Response & Resolution Times, Process Performance, Productivity Improvements

04.Delivery Excellence & Quality -Meeting Service Standards, Adherence to Service or Operational Level agreements, Service Reliability, Business Continuity assurance, Cost of Non-Compliance.

05.Customer/Stakeholder Experience - Customer Satisfaction Ratings, Net Promoter Score, Repeat Business Prospects, Scalability and Reach Out.

06.Workforce Engagement -Talent Utilization, Employee Satisfaction Index, Employee Turnover Rate, Training & Capability development, Succession Panning

07.Value adds - Analytics & Business Intelligence, Refined tools and processes.

Here are few metrics Value Service centers are keen to capture during 2022 ( As per Benchmarking survey conducted by SSON):

i. General Finance :?Cost of finance function roles in SSC as a percentage of revenue, Finance & accounting personnel cost as a percentage of revenue

ii. HR & Talent : Percentage of succession plans in place,?Employee Turnover rates

iii. IT : Supportability (hours),?Total ICT cost per end user (USD)

iv. Order to Cash (O2C) : Average time in days to apply cash, Bad debt as a percentage of total A/R , Number of FTEs for the O2C process per $1 billion revenue ,?Total Working Capital

v. Payroll : HR payroll personnel cost per employee paid (USD), Payroll accuracy rate (electronic),?Payroll accuracy rate (manual)

vi. Procure to Pay (P2P) Cost per e-invoice (USD), Cost per manual invoice (USD), Number of FTEs for the process accounts payable and expense reimbursement” per $1 billion revenue,?Personnel cost per FTE handling the accounts payable process (USD)

vii. Record to Report (R2R) : Number of active general ledger accounts, 18. Reporting cycle time in days (External Reporting)

viii. Treasury : Cycle time in mins/hours to develop a short-term cash flow forecast, Number of FTEs for treasury operations per $1 billion revenue

Opportunity for Service Differentiation : “Value Center” s frequently get feedback to align its operations in a way to generate more scope and maximize customer trust. Here, “Value Center” s have an opportunity to distinguish themselves against third-party service providers firms by being clear as crystal and transparent about disclosing its FTE time/effort’s calculation.

What needs to be changed?

The conventional metrics that are being used at “Value Center” s today, don’t always show any corresponding business outcome. Moreover, with an increased level of expectations from parent firms – Going forward, inadequate depiction via old-school reports and balanced scorecards won’t be enough to preserve “Value Center” s unique value for the parent enterprise. Instead, identifying and projecting direct business impact would enable “Value Centers” to find a place of mention in the enterprise’s balance sheet, as a step to move forward.

“Stops focusing on traditional cost saving metrics. Instead, realize more on sustainable benefits and impact on the business”.

*Showcase real impact with innovative approach towards metrics

?-Stop focusing on bygone parameters like cost savings (given that, very much existence of the “Value Center”?is based on cost arbitrage)

-Identify the right audience within stakeholders and customer units for unveiling applicable business benefits

-The reporting methods and techniques should be engaging enough for the stakeholders rather than just offering another view of periodic templates with updated data points.

-Model the reports in a way with predictive cursors to suggest future trends

-Create visibility for each individual process and how it results in achieving some form of business outcome

-Emphasis on establishing a connection between 100% process compliance to delivering tangible business value

-Extract business intelligence from metrics reported in the past and perform data analysis to generate meaningful insights for the audience

Portraying performance in a meaningful way could offer a remarkable prospect for "Value Centers" to demonstrate their worth and continue safeguarding its value proposition for the parent enterprise.

“Generate Metrics those provide actionable insights to stakeholders”