Creating The Connected Finance Shared Services Centre

W H ITE PA P E RCreating the Connected FinanceShared Services CentreBy Conor O’KellyThe finance shared services centre (SSC) business model has evolved since it was first utilised in theearly 1980s. Today, more than 8 of 10 Fortune 500 companies support their accounting operationsthrough some sort of SSC, according to Deloitte. They most often deliver accounting and finance,HR, IT, procurement and/or customer service functions. More than half of finance SSCs todayperform at least three corporate functions, with 27% of them being regional or larger businessesthemselves.Shared services models shift to consolidation20152018Global services in one functional unitServices organised by functions2021 (Projected)Centralised operations of servicesDecentralised operations among business unitsSource: KPMG, “State of the outsourcing, shared services, and operations industry 2018”While the shared services business model itself has matured, the maturity of individual centres varies significantly.Many emphasise recruiting and retaining skilled staff in an attempt to move beyond the initial labour arbitrage modelupon which they were founded. They recognise the need to provide further strategic value and deliver new levels ofoperating efficiencies.New connected reporting and compliance solutions have emerged that help address these challenges by improvingconnectivity among accounting systems of record and corresponding systems of work—those systems that areutilised to produce final accounting reports and other outputs.

4 key management and operations challengesThe shared services model faces challenges in thefollowing areas:2. Controlling where processes are performed1. Fulfilling governance structures and service-levelagreements (SLAs)Traditional finance shared services have been based onregional service delivery offerings, with transactionalwork remaining highly manual. However, this approachhas made it difficult for organisations to achievebenefits from standardisation.SSCs operate under increasingly complex SLAs withtheir corporate customers, frequently includingprovisions requiring continuous process improvement.As performance expectations rise and moresophisticated processes are created to meet them,organisations are modernising their governanceapproaches and methodologies.3. Global process deliverySophisticated granular performance metrics tie servicedelivery governance back to delivery functions. Unitpricing is moving away from fixed-rate toward qualitybased approaches. Bonuses reward teams for meetingor exceeding delivery targets, while deductions penalisethem for missing objectives.Rising labour costs across Europe and Asia have erodedthe initial cost advantages of SSCs. Many are respondingby evolving to global process ownership solutionssupported by artificial intelligence (AI), robotic processautomation (RPA) or machine learning (ML) to deliver thenext wave of productivity. This enables management andstaff to shift their attention to higher-value activities.As accountability becomes more structured andcontinuous improvement-driven, management ismodernising governance models. Additional resourcesand time are being invested in process redesign,technology evaluation and training.C-Suites’s critical objectives for shared servicesDrive down operating costsInvest process automation and roboticsto reduce labour relianceAlign middle- and back-office operationsto improve customer experienceCreate real-time data that supportspredictive decision-makingEnable hyper-customisation ofcustomers’ products—%10%20%30%Source: KPMG, “State of the outsourcing, shared services, and operations industry 2018”40%50%60%

4. Talent managementThe intensity of competition in local labour markets continues to put pressure on recruitment and talent managementin the shared services markets. Traditional labour arbitrage cost advantages are eroding.Wages are rising in many of the countries that are popular sites for SSCs. Plus, hiring competition has driven upwages not just in the Asia-Pacific region, but in Latin America and Eastern Europe, too. Additionally, the relatively highturnover rate and demands on their employees make staffing SSCs even more challenging.Approaches many SSCs use to attract and retain staff talent80%60%40%20%—%Relying on brand andreputationOffering job sharingand other flex workpracticesAllowing job rotationoutside of the rmance-basedpayHelping pay forcontinuing educationSource: Deloitte and Association of Chartered Certified Accountants,“Future challenges facing the Shared Services Centre in China and Greater Asia Pacific, 2015”Connectivity offers paths to improvement1. Governance structuresConnected reporting and compliance enables sharedfinance organisations to provide internal clients withvalue-added data and information. Increased dataaccuracy and diverse data sets provide teams withgreater opportunities to reconcile systems of recordto final outputs, offering the level of insight internalclients increasingly demand. They are better positionedto perform regression analyses to pinpoint relationshipsbetween performance and financial outcomes, increasingthe reliability and accuracy of performance-basedmetrics.Connected reporting and compliance further empowersshared finance organisations with increased control andtransparency. A platform connecting existing systems ofrecord with systems of work enables the strengtheningof audit trails across activities all the way back tothe source. It allows teams to institute more granularpermissions and presents new abilities, such as attachingsupporting evidence when needed for audit purposes oritem clarity.Specifically, connected reporting and compliancestrengthens the governance model by making it morefeasible to: Simplify process complexity and audit trails Align service delivery charges back to thebusiness owner Focus on the measure of value delivered

Support process improvement by reducing timecommitments elsewhere Centralising and optimising disclosure managementand accounting notes management Simplify and centralise metadata management tonormalise data from multiple applications Reducing duplicate work across sites andnonstandard processes Implement more structured financial report rostersand controls that eliminate costly ad hoc reports Eliminating redundant financial informationsystems and local/temporary solutions at each site Enhance audit trails, documentation andaccounting policy management and disclosures Expanding best practices and standardisationacross sites Managing support costs—including redundanciesand slow data exchanges between platforms—through centralisation Aligning and managing service levels2. Process standardisation and simplificationConnected reporting and compliance enhances processstandardisation and simplification. Process-driven SSCsare characterised by consistency and standardisationof data, upstream finance systems and ERP anddownstream reporting and data processing. Employeesworking in dispersed locations can work simultaneouslyon accounting outputs and reduce data flow complexityinto templates tied to scheduled reports.3. Transformation in efficienciesTraditionally, the approach to SSC design has beendriven at the regional or the process level. For manyfinance shared services, this frequently resulted in littlestandardisation, structure or process efficiency.Existing systems and processes can be integratedwithout requiring redesign while maintaining servicequality during implementation. Teams are equippedto turn out both scheduled and custom reportsfaster, regardless of the internal client’s department.Connected reporting and compliance empowers teamsto analyse data management processes, eliminatebottlenecks and recommend improvements.SSCs experience continued momentum toward a globalbusiness and services model that emphasises broadgeographic reach and delivery across multiple businessfunctions. Cloud-based collaboration helps scale andleverage connectivity among work groups and datasets. In a recent EY survey, 58 percent of CFOs saidcombining state-of-the-art technology with processimprovements represent a major future focus.In regard to where and how processes are performed,shared services models will experience the evolutionof a touchless virtual operation that minimises directinteractions and maximises automation. While directemployee input will remain important to drivingreliability gains, there are clear benefits in a virtualbusiness model’s abilities to track staff actions andrecord comments, assignments and sign-offs ondocuments.These challenges position today’s SSC as an idealcandidate for an accessible, flexible platform that canunite data consolidation or visualisation tools, ERPprograms and other software. SSCs are set up to handleever-increasing volumes of data and transactions—butwith a more powerful need now to create trust inthat data, so staff are freed, without risk, to providemanagement with deeper insights and analyses.Opportunities will expand to invest in processautomation and robotics. The same can be said for therising opportunities to invest in cognitive technologiesand machine learning, in order to drive more value fromhuman labour.Greater data and process connectivity further supportthe drive for continuous improvement, in addition to thedelivery of quantified results against objectives, through: Centralising dispersed locations and eliminatinglocal administrative offices and staff overlapsCloud-based platforms offer a level of worldwidecollaboration among people, offices and data stored indifferent systems—with interfaces and tools designed forfinance staff and processes.Connected reporting and compliance leads to greaterautomation. It supports big data initiatives and morecomplex data-mining analysis, as it works with softwarethat effectively straddles existing finance ERPs andreporting processes. A single platform that unitessystems and their data means greater utilisation, fewerinefficiencies and unnecessary operating steps andminimised risks and mistakes.