Strategic Planning for Shared Services

How SSOs that have come through the 'build and implement' stage can continue
to contribute value

By: Samuel T. Poston

(Issue Details: Volume 8, Issue 1, February 2006).

The question of continued value contribution is a constant one for shared services
organizations (SSOs) that have come through the ‘build and implement’ stage.
With today’s SSO leaders having a more significant business background and
being accustomed to developing and utilizing a strategic plan, we can expect to
witness more strategic planning for SSOs.

Over the past few years, corporations with existing SSOs have been challenged to
develop a strategic plan that supports the needs of the SSO and their companies.
One driver for these plans is a result of these companies moving from the build
and implementation stage and now asking, “what's next?” This question of
continued value contribution comes internally from within the SSO and externally
from the customers and sponsors. Additionally, the SSO leaders of today have a
more significant business background and are accustomed to developing and
utilizing a strategic plan. As we assist in planning and facilitating these sessions,
it certainly sends a message that SSOs are in place long-term!

Strategic Planning as a Process

Unfortunately, most of us have participated in a strategic planning session that

resulted in the plan sitting on the shelf, only to be revisited at next year's session.

A positive trend, however, is the desire by most SSO leaders for a meaningful,
useful and flexible document from which to work. It is our experience that the
value question for SSOs never seems to go away. The SSO squanders time either
defending its position to business units and executive management or being
asked to contribute more in terms of quality and cost reduction. The better-
performing SSOs understand this continued challenge and have responded by
leveraging the strategic plan to define its value, document its case and clearly
communicate to its stakeholders. Let's take a minute and review a simple
approach to strategic planning.

The first step in the process is to conduct an external scan of the SSO's
environment in order to develop planning assumptions. Typically included in the
scan are customers, employees, competitors, the company and its industry and
corporate expectations. The idea is to brainstorm and subsequently verify the
current and future expectation of these constituents. By asking a few simple
questions about each stakeholder, you begin to develop an understanding of the
potential issues facing the future of the SSO.

Subsequent to developing planning assumptions, you define the key components

of the strategic plan, including the mission (why we exist), the vision (where we
are headed in the next two to five years), the value proposition (how we add
value to the company), the critical success factors (what we need to be
successful), the key performance indicators (how we are to be measured against
our vision and value proposition), the goals (specifically, what we are going to
achieve), and finally, the strategic initiatives (what three to five major actions we
are going to take to achieve our goals).

The strategic planning process described above is but one simple means to
deliberately focus the SSO on a forward path. This is critical to success. We
believe it is imperative for the SSO to be focused and take control of its destiny.

Common Themes Coming From the Strategy Sessions

When we reflect upon the strategy work we've managed in recent years, there
are a couple of basic themes that emerge for operating successful SSOs. They
are:

o importance of a strategic plan

o balance of cost and quality
o expansion capability

Importance of a Strategic Plan

Our clients have expressed many valuable uses for a well-developed, solid
strategic plan beyond the obvious value of guiding the SSO over the next few
years. First, all of our clients tell us that the plan continues to have unexpected
value in terms of improved communication within the organization, primarily
because the SSO leaders now have one consistent and solid story to tell so that
they are able to fan out and reach many more stakeholders. Second, the strategic
plan becomes the historical document that highlights the reasons for the actions
taken within the SSO. As business leaders change chairs or new leaders join the
company, the SSO is able, consistently, to tell its story over time and demonstrate
the continued value proposition. This has proven to be extremely useful for
companies in acquisition mode that are trying to absorb the shared service work
of the newly acquired company efficiently. The strategic plan has also become a
critical tool for fighting off competitors for the SSO's work. Competitors come in
many guises, and the strategic planning process works to uncover who they are,
figure out their real added value and understand how they threaten the SSO.

Balance of Cost and Quality

The challenge of balancing the cost of service with the quality of service is a
dilemma that every business operation faces. For the SSO, it is no less
challenging. The leading SSOs seem to have taken the management of this
dilemma to another level by leveraging their data and management information
and then rolling it back into their strategic plan. These leading SSOs have a clear
understanding of their cost of service, their price of service and in particular, their
customer's usage and buying patterns. By leveraging this information, the SSOs
are able to review their service offerings, determine how to adjust or improve
their offerings and stop delivering non-profitable services.

This information is also extremely useful in determining technology investment

for the future. In fact, this is a critical element of the strategic plan. Product and
service cost information, customer usage and buying patterns and technology
tools appear to be the key ingredients of effectively and efficiently managing the
balance between cost and quality. The key element here is the timeline. When to
do what, with whom, and with what technology are key components of a strategic
plan.

Expansion Capability

Those SSOs that have been operating for a longer period of time all seem to be
struggling with expansion questions. How best to serve the global company after
beginning as a domestic SSO is a common question. Sarbanes-Oxley compliance
has been well served by SSOs. As the SSOs become experts for the company in
compliance and risk management, executives are demanding that they take on
more work because they provide comfort.

The questions now being asked of SSOs come in many forms:

o Why do we have all these independent shared services operations throughout

our company?
o Can we get efficiencies by putting them together?
o How do we take on or get the work that still remains in the business unit
(work the business units were unwilling to give up the first time around but
which belongs in a shared services environment)?
o How do we prepare ourselves to take on work from a newly acquired
company, efficiently and effectively, without adding staff?

Few SSOs are currently asking themselves how to sell their services outside the
company, but the question lingers. Imbedded in the expansion question is the
sourcing question, which is endemic in all elements of a strategic plan. The
question regarding expansion is, how can I continue to find more efficient means
of sourcing the work so I can expand my service and continue to satisfy my value
proposition? We see the expansion question as an increasing concern that
comprises a significant part of the strategic plan for most companies.

Summary

SSOs have an obligation to all of their constituents to thoroughly plan for the
future. In the past few years, we've witnessed a concerted effort by our clients
and other SSOs to develop such a strategic framework. We encourage all SSOs,
even those that are just in the implementation phase, to step back and take a
deliberate approach to taking control of your own destiny. You'll have more
success and fun!
About the Authors

Samuel T. Poston
Senior Vice President, Shared Service Practice
ScottMadden, Inc
stposton@scottmadden.com

Sam Poston is head of the firm's shared services practice and has been a
management consultant for more than 20 years. He has worked both as a
consultant and a line manager in the utility industry since 1979. He specializes in
linking internal shared services delivery systems to corporate strategies and
goals.

Karen Hilton
Manager, Shared Service Practice
ScottMadden, Inc
karenhilton@scottmadden.com

Karen Hilton has consulted with ScottMadden since 1995 and has focused on
process improvement, organizational design and restructuring and cost reduction
analysis. Within shared services, she has expertise in human resources and
service center design and implementation.

Copyright © 2008 SSON. All Rights Reserved.

More Articles: Want to receive more articles like this? Have a tip, learning
or case study you want to share?
Join our growing community of shared services and Outsourcing professionals.
Sign up to our eNewsletters and ensure you receive the latest news, articles and
features from our growing global community. For more information email
enquire@ssonetwork.com