3. 1 iProcess Value Creation
Approach
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4. The iprocess Approach to Shared Services
1. Current State 2. Options
Assessment Formulation
• Apply appropriate assessment and • Develop options in conjunction with operating
measurement techniques to understand company leadership to transform the cost base
the current portfolio mix in light of
investment parameters
5. Transformation
& Governance
3. Feasibility
• Monitor key performance indicators
derived from initial investment criteria
CUSTOMER Analysis
• Understand and evaluate transaction
merits and exit considerations
• Develop a detailed blueprint for future
state and transition plan from the current
state outlining the financial viability of
4. Low Cost Model proposed projects
Development
• Implement the blueprint – strategic sourcing, shared
services, process integration, physical layout
consolidation, organizational transition etc
• Review performance metrics and refine implementation
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6. Key Objectives
We understand that:
- this project reflects a number of internal and external influences on process
design, placement and ownership;
- the desired approach to Organizing “Business Support Services” is part of a
global vision to develop a shared services model
Strategic
Direction
Outsourcing Business
Potential Philosophy
Organisational
Business
Scale Model
Business
Support
Services
Business Unit Activity
Alignment Scale
Business Activity
Unit Usage Content
Business Unit
Position
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7. Shared Services Structure
In defining the appropriate approach to organizing “Business Support Services”, a
number of criteria can be utilized to assess available options.
In the context of shared services, the Accounts Payable “Business Support Service”
will act as pilot.
Criteria
Approach represents Direct accountability is
strategic consistency Accounts
Accounts reinforced through process
with corporate direction Payable
Payable Check
Check ownership
Purchasing
Purchasing Disbursements
Disbursements
Travel
Travel Process
Services
Services
Payroll
Payroll Approach
Model supports Security
Security supports
creation of a high Services
Services ability
performance
Business
to realize
organization Support service-level
Office
Office Services improvement
Support
Support Technology People
Services
Services
HR
HR
administration
administration
Facilities
Facilities
Management
Management
Structure creates a Model provides
scalable platform to Bank
Bank Events
Events for cost efficient
support future growth Reconciliations
Reconciliations Accounts
Accounts delivery of services
Receivables
Receivables
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9. Vision for an A/P Shared Service Centre
Vision for Accounts Payable – To satisfy the clients/suppliers by paying
Vision for Accounts Payable – To satisfy the clients/suppliers by paying
accurately and on time, as well as resolving issues in a timely fashion:
accurately and on time, as well as resolving issues in a timely fashion:
Supplier
Management
•• Service-oriented processes and scalable infrastructure;
Service-oriented processes and scalable infrastructure;
•• Appropriate accountability to be supported by the management;
Appropriate accountability to be supported by the management;
•• Optimal use of technology and of automation;
Optimal use of technology and of automation;
•• Better communication among all groups (Accounts Payable, Purchasing, internal
Better communication among all groups (Accounts Payable, Purchasing, internal
clients and external clients/suppliers).
clients and external clients/suppliers).
Purchasing
Business Performance Dimensions – Sample of performance metrics for A/P
Productivity Cost Efficiency Quality Customer
Satisfaction
Manual Invoices/FTE Cost/Invoice (manual Days Payable Outstanding % Paid on Time Satisfaction Survey
payment)
Accounts Lost discounts due to late
Full (3 ways-matching) Avg. number of hours to send invoices % calls abandoned
Payable Cost/Invoice (EFT) invoice to SSC
Invoices/FTE
% incorrect invoices
First pass resolution
Evaluated receipts/FTE Average Invoice € Avg. number of hours to enter
Amount/Vendor invoice
First pass yield %
Average Cost/FTE Average hold
Invoices/vendor time
% invoices under €500 Duplicate payments collected
Payments or avoided
24 hour
% procurement Card Process defects by reason resolution
purchases to total purchases code
under €500
% calls answered in less than
3 rings
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10. Why a Shared Services Approach?
Key Benefits Evidence of superior performance
Companies participating in an industry survey reported the
Cost savings (e.g., reduction in headcount, following results regarding their implementation of a SSC:
administrative cost reduction).
On average, a ROI of 27%.
Operational flexibility and customer service (e.g.,
by establishing a SSC, divisions can concentrate Reduction of headcount by 26%.
more on the value-added activities of their core
business). When Elizabeth Arden International moved to a SSC, they
saved:
Improved growth. • 30% on administrative costs.
• 60% reduction in headcount.
• 50% cut in working capital.
Improved service quality.
Cargill consolidated 130 separated accounts payable,
accounts receivable and general ledger systems into its
IT coordination. SSC. This reduced A/P processing by 34% and the cost for
cash application processing by 20%.
Facilitated ERP optimization. AlliedSignal reports a 30-35% savings in accounting costs
since they moved to a SSC.
Tax savings.
Shared Services is a method of organization and operation in which support
processes of an organisation are “centralized” and independently structured.
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11. Alternative Shared Services Models
A variety of factors have an influence on the selection of the appropriate
organisational model for a “Business Support Service”.
Models Related Influences
Centralized Best suited where critical mass is necessary or present and business
model is focused on service levels.
Key influences are business philosophy, content and organisational scale.
Hybrid Appropriate where organisational model is undeveloped and strong
standardization for selected functions is desired.
Key influences are business philosophy, future strategic direction, volume,
and business unit integration.
Distributed Applicable when focus is on business unit autonomy and variability is
significant.
Key influences are business model, content, business unit usage and
business unit integration.
Hosted Relevant where natural organisational ownership is apparent and critical
mass is not necessary.
Key influences are business model, content, volume, business unit usage
and organisational scale.
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12. Alternative Shared Services models
The assessment of the available organisational approaches to “Business Support
Services” provides insight into the applicable structural model.
Illustrative assessment for several “Support Services” is presented below:
Key Characteristics Implications
Purchasing Principally driven by Wholesale business with
substantial volume
Close affinity to single business and
Accounts Payable Directly tied to supply chain with substantial volume natural process flow provide natural
opportunity to concentrate activity
Check Disbursement Linked with supply chain and payroll with substantial
volume
Moderate volume with some activity being conducted at Narrow process scope and natural
Bank Reconciliation
businesses already relationship to cash management
suggests business unit responsibility
Payroll High volume with direct relationship to broader Human Multiple linkages to HR function offers
Client X activities natural aggregation source
Security Services Low volume mixed activity set with partial outsourcing
Travel Lower volume with outsourced providers Infrastructure-related nature provides
natural aggregation source and
Office Support Mixed activity set with very high selected volumes focused management of outsourced
Services relationships
Facilities Management Low volume, mixed activity set with partial outsourcing
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13. Opportunity Analysis Framework
Cost Structure Comparative Management
Segment Analysis
Analysis Analysis Knowledge
Analysis - Where are What do we compare to? Where are costs high Where does
the large areas of cost relative to revenues? management believe
and what are the opportunities exist?
primary drivers?
Major Processes Competition Business Units Interviews
Functional / Internal Comparatives Customer Groups Focus Groups
Organizational
Historical Performance Product Groups Workshops
Line Item
Benchmarks/Best Channels Initial opinion can be
Cost of Management Practices directionally correct
Geographic
Reasonability Treated as a hypothesis,
Standards then tested with facts
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15. Shared Services Approach
Approach for outsourcing There is a spectrum of solutions…
Evaluate
Evaluate
Assess
Assess Solicit and
Solicit and Finalize
Finalize
Supplier
Supplier
Opportunity
Opportunity Evaluate Bids
Evaluate Bids Partnership
Partnership
Universe
Universe
4 Finance 4 Property services 4 Payroll
Define functional Determine Define service Conduct face-to-
“candidates” supplier universe requirements, face discussions
within company specifications with finalists 4 Middle Office 4 IT
Strategy & 4 Operations
Establish and metrics Development
Compare qualification Review final 4 Regulatory 4 IT
functional criteria Develop and proposals and reporting Infrastructure
performance distribute RFP select vendor(s)
with industry Conduct vendor
benchmarks 4 Global 4 Data
interviews, as Manage RFP Develop
required response transition plan procurement processing in
Assess process jointly with Finance
intangibles, such Evaluate vendors vendor
as service, against criteria Evaluate bids
quality to determine and select Begin migration Shared service Service companies Outsourcing
improvements short list finalists and monitor centres
performance
Finalize list of
functions to be
outsourced
Savings can be achieved by…
• Establishing shared service centers for core activities allows organizations to achieve economies of scale.
• Setting-up service companies allows organisations to operate on a more commercial basis and to better understand performance.
• Outsourcing non-core activities allows organizations to focus investment and management attention on more critical issues.
• Provides near-term realization of cost savings and significant scale flexibility, particularly in multi-vendor arrangements.
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16. The Shared Services Assessment Framework
Multiple Multiple
Systems Processes
Rationalize Systems Define Processes
Move to One Commonize Policies
System
Move to One Database Commonize Processes
Shared
ServicesOne Organization
One Location
per Process
Consolidate within Region
Separate from
Consolidate within Country Business Units
Multiple Multiple
Locations Organizations
Major Types Description Sample Processes
Handles routine transaction • Procurement
Center of Scale based processes by leveraging • Accounts Payable
Services economies of scale and • Payroll
standardization. • Travel & Expenses
Concentrates expertise to • ERP COEs
Center of Expertise provide high-value services to • Tax/Treasury
Services internal customers at • Benefits
competitive cost. • Legal
Establishes a partner • Internal Consulting
Business Partner relationship between Services
Services organizational units to achieve • Strategy
common goals. • Reengineering
• Government
Provides a structure to support
Corporate Steward central mission critical
Relations
Services • Compliance
objectives.
• Fiduciary
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17. Future Vision – Other Dimensions
Other design elements – technology, facilities, position definition, and management approach – are key elements that help define the
organization. Assessments of these dimensions to date have uncovered no impediments to achieving this vision.
Technology Facilities
• Current financial and business systems are capable of supporting • We will physically consolidate activities to the maximum extent
the future vision in the Country A possible and practical into four locations
• Single Region A Financial Platform (PeopleSoft) facilitates the • We will maintain a commitment to our existing locations:
implementation of the shared services center components of the
- Location 1
future vision
- Location 2
• Operational accounting is conducted primarily on three business
systems (Bridge, WinBroker, and Project Accounting), and - Location 3
therefore the shared services vision supports a multiple platform
- Location 4
situation
• We will be mindful of selective concessions in centralizing and
• Project is not dependent on upgrade and/or migration technology
consolidating activities into these centers, including retention of
initiatives
key personnel and securing business area buy-in
• Future movement of the organization to one global financial
platform will enhance our ability to share information globally
Position Definition Management Approach
• As-Is Analysis and Detailed Design Phases will help us identify • Accounting Shared Services Leader will need to be identified
the number of positions (e.g., AP clerks, AR clerks, field
- Responsible for management, measurement, control
accounting associates) that can be consolidated in order to
procedures and accounting policies, and quality assurance
facilitate operational flexibility and cross-training opportunities,
within the shared services organization
improved management, and reduced costs
- Instrumental in negotiating and establishing Service Level
• Job descriptions for Regional and Business Area personnel will be
Agreements with the internal clients
carefully defined
- Direct reporting to Finance Controller
- Business Area Financial Planning & Analysis roles will
likely require the greatest clarity • Business Area functions continue to have primary reporting to
Business Area management, with dotted line reporting into the
- Recently updated job descriptions will facilitate this process
accounting organization
• Corporate functions continue to report to Finance Controller
• Continue to outsource payroll
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18. Implementation Approach Guiding Principles
Implementation guiding principles are critical to establishing a common approach amongst management to designing and converting
to an improved organization.
• Balanced Approach – We will design the accounting shared services organization to:
- Support business area strategies and needs
- Balance service quality expectations with control, consistency, and cost considerations
• Strong Business Area Working Relationships – We will actively, but judiciously, engage
finance and accounting management to:
- Create common business understandings and promote buy-in
- Instill a collaborative approach that demonstrates an understanding of business area needs
• Fact-Driven Analysis & Decisions – We will develop a detailed fact base that will enable:
- Design and implementation decisions
- Measurement of financial and operational success
• Minimally Invasive During Close Periods – Design and implementation efforts must be
sensitive to financial close process requirements of accounting areas
• Aggressive But Realistic Timeframes – A successful implementation must proceed
expeditiously to minimize implementation risk
• Staged Implementation Approach – Tackle one business area at a time
• Commitment to Project Management – Get it done right. Mitigate service quality reduction
risk
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19. Implementation High-Level Plan
An aggressive, but realistic, implementation strategy must be affirmed to successfully design and implement the
future vision.
DESIGN
DESIGN IMPLEMENT
IMPLEMENT
Implementation
As-Is Assessment To-Be Design Detailed Design Implementation
Planning
• Formalize a detailed, • Translate vision into • Refine and expand • Develop practical work • Execute operational
Objectives
Objectives
fact-based assessment preliminary design of blueprint for future plans and associated changes in phased
of existing accounting future accounting accounting organization accountabilities to rollout
operations operations; validate implement envisioned • Capture value outlined
with key stakeholders changes in business case
Project Management Office – Regular Communication, Service Level Monitoring, Status Reporting and Problem Resolution
• Baseline/collect • Isolate opportunities to • Refine and expand • Compare existing state to • Implement people, process
operational and financial consolidate, simplify detailed design; tailor to future detailed design to and technology changes
data for existing operations, improve location operations, understand change required to realize
operations: controls, and gain scale including: requirements transformed business
− Cost economies − Process flows linked • Develop change strategy model
− Headcount • Modify existing to systems and roll-out plan • Charter discrete projects
Key Activities
functional designs, − Business and - Select and prioritize that collectively deliver
Key Activities
− Transaction volume
− Service Levels including: financial systems BA roll-out needed change
− Systems − Standard processes linked to processes • Identify timing and • Establish Project
− Standard jobs − Job designs linked to prioritization of required Management Office to
• Identify and evaluate
• Refine high-level business skills IT projects, if any track progress against
inconsistencies among
case • Project P&L for the - Evaluate IT capacity milestones and
area:
• Validate technology business post- given existing project dependencies
− Process flows
readiness: implementation portfolio • Enroll employees in
− Job designs
− Business systems • Identify communication • Develop detailed change efforts through
• Enhance business and communication and
− Financial systems requirements and create implementation plan with
financial systems maps, by training
• Validate To-Be design communication plan clear accountability for all
area
with key stakeholders • Begin negotiating service major milestones
level agreements (SLAs)
Timeline
Timeline
5 months5 5 months5
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Anticipates a November 1, 20XX start; timeline will be challenged as each phase is completed.
20. Project Organization
Enrolling key stakeholders, business area management and Subject Matter Advisors in the project from design through implementation
will be critical to project success.
Roles & Responsibilities
− CFO −Business Head • Provide active, visible and vocal leadership
Steering Committee
Steering Committee − Controller −[HR]
• Champion Business Area buy-in
− Business Area CFO 1 −[IT]
− Business Area CFO 2 −[Tax] • Execute enterprise-wide communications/ recommendations
Project Sponsor − TBD • Serve as main voice for project – change advocate/ opinion leader
Project Sponsor
• Set overall project direction, set priorities and allocate resources
Project Manager
Project Manager − TBD • Responsible for overall engagement execution and management
• Identify issues & risks and ensure escalation/ resolution
Business Area Teams
Business Area Teams Program Management
• Support Team Leads in project planning and delivery
• Track status and manage issue identification and resolution
BU 1
BU 1 • Design and deliver change management programs
Team Rosters:
BU 2
BU 2 − 1.0 Team Lead
Team Leads
• Manage collection and synthesis of data, internal benchmarks, and design elements
− X.0 Business Area Lead
BU 3
BU 3 − X.0 Analysts • Facilitate meetings with key executives, business areas, and functional teams
Program
Program − TBD SMAs • Participate in site visits, planning sessions and development of deliverables
Management Office
Management Office BU 4
BU 4 • Skill set needs: Operational performance improvement; Accounting process redesign;
Benchmarking study design and execution; Implementation planning; Strong oral and
BU 5
BU 5 written skills; Visioning Sessions; and Group facilitation
Business Area Leads
Other
Other • Act as liaison with represented Business Area
Tax Team
Tax Team • Deep business area/ technical knowledge and familiarity with its accounting roles
Human Resources/
Human Resources/ • Participate in data gathering, visioning, and planning
− 1.0 Team Lead
− TBD SMAs Facilities Team
Facilities Team Analysts
− 1.0 Team Lead • Perform selected benchmarking, business case, process & organization analysis
− X.0 Analysts activities
Treasury Team
Treasury Team − TBD SMAs • Assist with deliverable development
− 1.0 Team Lead Subject Matter Advisors (SMAs)
− TBD SMAs Technology Team • Help anticipate, identify and resolve issues
Technology Team • Provide accounting and shared services center subject matter expertise and support,
− 1.0 Team Lead as needed
− X.0 Analysts • Reference applicable best practices
− TBD SMAs
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22. Outsourcing - Approach
4 Performing processes/services utilizing internal human and technology resources
4 Improvements in processes/services leverage techniques such as process redesign, service center implementation,
technology infrastructure improvement and role redesign
Insourcing Enterprise Enterprise Infrastructure &
labor cost
Process, Transition savings
Process
Service or Service or
Function Function
4 Utilizes a combination of insourcing and outsourcing solutions, with a third party vendor providing human and/or technology
resources as an extension of the employer’s resources
4 Business process redesign typically accompanies the transition to a co-sourcing arrangement
4 Additional improvements leverage service center implementation, technology infrastructure improvement and role redesign
Hybrid/Co-
Sourcing Infrastructure &
Enterprise labor cost
Enterprise Service Provider
savings
Process, Process,
Service or Service or
Function Transition
Function
4 Typically, a pure outsourcing arrangement called full outsourcing is the final phase in the transition to an outsourcing strategy
4 Outsourcing is where an organization transitions human and technology resources related to non-core competency
processes/services to a service provider with expertise in administering the particular process or processes
4 New responsibilities emerge for the organization to manage the service levels of the service provider
Total
Outsourcing Enterprise Enterprise Service Provider
Process, Infrastructure Process,
Service or Transition
and labor cost Service or
Function savings Function
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23. Outsourcing – Options Assessment
Technology Typical Functions For Off shoring Deutsche Bank IT Development in Bangalore (JV)
Historical Low
4 Transactional sourcing environment, 4 DB established an IT development centre in 1992
/ Typical C 4 Single transaction technology projects
restricted to specific IT processes / O to provide services across banking and finance
Off T M 4 Application development and
infrastructure E P functions
shoring C L management
E
4 Limited risk profile H
X 4 Infrastructure development and 4 The facility spans 50,000 square feet with 450
Starting I
T
management professionals and is supported with dedicated
Point 4 Maturing global market place Y 4 Full enterprise technology delivery high-speed satellite communication links
High Number of Functions
Illustrative
ABN-AMRO Card Processing in Chennai
Business Process (BP) Typical Functions For Off shoring
(Outsourced)
4 Strategic sourcing opportunity Low 4 ABN outsourced card processing functions as part
Expansio C of a 10 year deal to a facility in Chennai
n Area / 4 Rapidly growing market of O
M
Alternativ
processes to offshore, enabled by P Customer Finance 4 Initially 60 software professionals will manage
maturing service providers, global IT B L application hosting, data and back office
e Starting P E Relation- & Human Card
and telecoms infrastructure X ship processing
Point I Admin- Resource Services
4 Evolving focus for many firms due to T Manage- istration s 4 ABN estimate that they will increase card services
Y ment
the potential for significant cost cost efficiencies by 15-20%
High Number of Functions
savings
Standard Chartered Asia Pacific Hub (Multiple
Hub Possible Structures For Off shoring
Models)
Building
4 Creation of a regional / global 4 SC has developed an extensive hub network
Significan shared services organisation Low within the region, which is managed centrally
t Scale 4 Single function regional hub through a business hub in Singapore
4 Due to their complexity, hubs require C
And / Or O
significant levels of commitment but M 4 The Chennai facility was consolidated in 2002 into
Global 4 Multi-functional regional hub
HP a global multi-functional hub, dealing with both
are potentially the most rewarding U L
Diversity back-office processing and IT development
option B E 4 Multi-functional, multi-entity global
Of X hub requirements
4 Hub strategy can be established as I 4 Multi-hub network with central
Operation T
the aspirational goal towards which Y management control point 4 SC are investing $40 million into a second back-
s
technology and business process High Number of Functions office processing hub in Kuala Lumpur, primarily
strategy can evolve for their Asia Pacific businesses
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24. Outsourcing – Execution Risk Assessment
Split …Or …Or
Here Here Here………....................... Or Lift In Its
Entirety
Advice /
Customer Customer Support
Execution / Operations Technology
Facing Service Services
Transaction
Key Criteria For Off shoring And Organisational Considerations
4 Physical access to clients is required 4 The current resources supporting the
Requires activity are viewed as irreplaceable
Competitive
Physical 4 Physicalaccess to other staff or
Advantage or 4 Currentresources represent a competitive
G
Proximity or departments is required on a regular basis
Irreplaceable advantage to the bank, will not relocate
O Similar Time
4 Physical access to an external entity is Resource and cannot be allowed to go to a
/ Zone
required on a regular basis competitor
N
O 4 Regulatory or compliance statutes dictate 4 Labor pool at new site does not contain a
G
Regulatory or a location for the activity Skill Set regular supply of required skill set AND
O
Compliance 4 Internal audit or risk policy requires (at Deficiency of skill set requires uncharacteristically high
Requirement least given current process) that activity New Site lead time to train, posing an unacceptable
remain in current location level of risk
GO
4 Strategic priorities
C 4 Specialist vs. commodity
O 4 Client interaction channels
4 Short-term vs. long-term
N
4 Product / service mix driven by business
S 4 Internal vs. external
I requirements
D 4 Complimentary roles and skill
Skill Sets & Organizational 4 Mapping of business and technical
E categorisations / combinations
Types of Structure & requirements
R 4 Mix of types of resources / alternate
A Resources Processes 4 Timing of delivery
sources
T
4 Manner of interaction with vendors
I 4 Resource sharing opportunities
O 4 Organisational interdependencies
N 4 Resource costs vs. benefits
S 4 Migration requirements for alternative
4 Flexibility of access
resourcing model
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25. 6 Functional Placement
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26. Future Vision – Functional Placement
In order to determine which accounting functions and activities could be included in a shared services environment, a selection framework
was designed and applied across Company A Country A
Shared Services Selection Criteria
Value to Business Area Applicability
Screen Screen
Client-Centric
Attributes Content Governance High Volume Risk
Strategic Value Specialization Transactional Common
Potential
Accounting Shared
Functions Services
Candidates
•Is the function •Does the function •Is the function •Is the function
Key critical to require unique skills or related to discrete performed by or for
Enablers business and/or knowledge? areas of work? multiple business
business areas with little
area(s)? customization?
•Does the function •Is the function •Are significant •Would the risks of
directly touch the related to policy or volumes of the function execution
client or client stewardship? transactions be increased?
systems in a handled?
material manner?
Is there high-risk
effect on the
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client?
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27. Future Vision – Functional Placement
The degree of consolidation was determined by defining three levels of the envisioned organization and establishing principles to help
determine functional placement.
Levels Functional Placement Principles Implications
• Corporate governance and policy-setting • Global activities remain at a corporate level that
functions serve as a governance or policy-setting entity
• Compliance tracking functions • Some global functions could be “outsourced” to
Corporate
Corporate • External regulatory relationship functions: the regional shared services center
(Global)
(Global) - Reporting & regulatory compliance
- Shareholder relations
• Enterprise-wide financial analysis and planning
• Common, homogenous functions • Consolidation of transactional activities with
• Scalable, transactional processes common processes promote:
• Accounting activities that do not require - Consistent and standardized processes and controls
Regional
Regional intimate client involvement - Higher data integrity
(Country A)
(Country A) - Greater operational flexibility and scalability
- Lower cost structure
• Increased visibility into enterprise-wide
financial information
• Activities that require proximity to client personnel • Reduced focus on low-value transactional
or specialized knowledge of local markets processing increases focus on sales and service
• Activities that produce direct accounting inputs • Increased financial analysis capacity
Business
Business into financials of clients and/or underwriting
Area
Area • Client-centric activities remain close to clients
partners
• Business Area Financial Planning & Analysis
activities
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28. Future Vision – Functional Placement
Accounting activities are divided across five functional groups and classified according to the organization level at which the activities will
be performed (slides 8-9). Activities2 classified as “Regional” are strong candidates for centralization into an accounting shared services
center.
Financial Planning & Client-Centric Non-Client-Centric Financial & Regulatory
Analysis Operational Accounting Operational Accounting Financial Accounting Reporting
• Translate business strategy • Record operational transactions • Record operational transactions • Record general ledger • Prepare accurate, valid
into operational and capital and prepare accounting data and and prepare accounting data transactions at the corporate reporting to meet statutory,
plans for parent company and reports and reports (global) level and at the SEC, and Shareholder needs
Description
Description
business areas • Produce direct accounting inputs • Primarily for internal use; no regional level in shared
• Support operations with into financials and/or access clients rely significantly on service centers
reporting analysis and advice financial systems of clients function for external reporting • Monitor and maintain general
and/or underwriting partners; ledger accounts
key part of sales and service
process
• Possible Shared Services Center All Activities Reside at • Fiduciary Accounting • General Ledger • Specific Business Area Audits &
to support Business Area Business Area Level − Fiduciary Payables − GL Processing Regulatory Reporting, if any
Analysis − Fiduciary Receivables − Journal Voucher Processing
− Client Setup − Shared Facilities & Expense
• Client Receivables Accounting
− Premiums & Claims − GL Maintenance
Receivable − Consolidations
− Premiums & Claims − Tax Documentation
Collections − Non-Trade Intercompany
− Billing Transactions
Regional
− Client Service Time & Expense • Special Events Accounting
Regional
• Revenue Only Accruals & − Mergers & Acquisitions
Commissions • Account Reconciliations
− Revenue Accruals − Account Reconciliations
− Commission Calculations − Non-Trade Accounts Receivable
• General Ledger & Collections
− Trade Intercompany • Cap-Ex Accounting
Transactions − Capital Expenditures
− Journal Voucher Processing − Non-Capitalized Projects
− Business Systems & GL Feeds − Fixed Assets
• Shared Services Centers –
Existing
− Payroll – HR & Benefits
− Vendors Payable
Ramesh Krish Functions mapping and definitions are located in the Appendix.
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29. Future Vision – Functional Placement
Activities3 classified as “Business Area” and “Corporate” will not be consolidated into the accounting shared services center.
Financial Planning & Client-Centric Non-Client-Centric Financial & Regulatory
Analysis Operational Accounting Operational Accounting Financial Accounting Reporting
• Internal Performance Reporting • Fiduciary Accounting All Activities Reside at All Activities Reside All Activities Reside
• Analysis & Forecasting − Fiduciary Payables Regional Level at Regional or at Corporate Level, except
− Planning & Budgeting − Fiduciary Receivables Corporate Levels Specific Business Area Audits
− Client / Broker Profitability − Client Setup & Regulatory Reporting
• Billing & Collection • Client External Reporting
Assistance, as required • Client Receivables
− Premiums & Claims Receivable
Business Area
Business Area
• Overrides from Carriers/ − Premiums & Claims Collections
Suppliers − Billing
• Contingent Commissions from • Revenue Only Accruals &
Carriers Commissions
• Limited Revenue & Accrual − Revenue Accruals
Analysis − Commission Calculations
− Incentive Compensation • General Ledger
− Deferred Revenues − Trade Intercompany
− Bad Debt Allowance Transactions
Reserves − Journal Voucher Processing
− Work in Progress Reserves − Business Systems & GL Feeds
• Quality Assurance
• Internal Performance Reporting All Activities Reside at All Activities Reside at • General Ledger • External Reporting
• Analysis & Forecasting Business Area Level Regional Level − GL Processing • Financial Statement
− Planning & Budgeting − Journal Voucher Processing Preparation
− Client / Broker Profitability − Shared Facilities & Expense
Accounting • Financial Accounting
• Quality Assurance − GL Maintenance Governance
− Consolidations − Financial Accounting
− Tax Documentation Policies & Procedures
− Non-Trade Intercompany − Standards & Reporting
Eliminations Package
• Special Events Accounting − Sarbanes-Oxley
Corporate
Corporate
− Litigation Compliance
− Mergers & Acquisitions
• Account Reconciliations
− Account Reconciliations
− Non-Trade Accounts Receivable
& Collections
• Cap-Ex Accounting
− Capital Expenditures
− Non-Capitalized Projects
− Fixed Assets
• Corporate Financial Systems
• Shared Services Centers – Existing
− Investment Accounting4
Accounting Functions mapping and definitions are located in the Appendix.
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30. 7 Finance & Accounting Process
Design
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31. Accounting Functions
The following is a list of all accounting activities separated into the five functional groups.
Functional Groups
Financial Planning & Client-Centric Non-Client-Centric Financial & Regulatory
Analysis Operational Accounting Operational Accounting Financial Accounting Reporting
•Internal Performance •Fiduciary Accounting •Fiduciary Accounting •General Ledger •External Reporting
Reporting − Fiduciary Payables − Fiduciary Payables − GL Processing •Financial Statement
•Analysis & Forecasting − Fiduciary Receivables − Fiduciary Receivables − Journal Voucher Preparation
− Planning & Budgeting − Client Setup − Client Setup Processing
− Shared Facilities & •Financial Accounting
− Client / Broker •Client External Reporting •Client Receivables Governance
Profitability − Premiums & Claims Expense Accounting
•Client Receivables − GL Maintenance − Financial Accounting
•Billing & Collections Receivable Policies & Procedures
− Premiums & Claims − Consolidations
Assistance, as required − Premiums & Claims − Standards & Reporting
Receivable − Tax Documentation
Collections Package
•Overrides from Carriers/ − Premiums & Claims − Non-Trade Intercompany
− Billing − Sarbanes-Oxley
Suppliers Collections Eliminations
− Client Service Time & Compliance
− Billing
•Contingent Commissions Expense •Special Events Accounting
from Carriers •Revenue Only Accruals & − Litigation •Specific Business Area
•Revenue Only Accruals & Audits & Regulatory
Commissions − Mergers & Acquisitions
•Limited Revenue & Accrual Commissions Reporting, if any
− Revenue Accruals
Analysis − Revenue Accruals •Account Reconciliations
− Commission Calculations
− Incentive Compensation − Commission Calculations − Account Reconciliations
− Deferred Revenues •General Ledger − Non-Trade Accounts
•General Ledger
− Bad Debt Allowance − Trade Intercompany Receivable & Collections
− Trade Intercompany
Reserves Transactions •Cap-Ex Accounting
Transactions
− Work in Progress − Journal Voucher − Capital Expenditures
− Journal Voucher
Reserves Processing − Non-Capitalized Projects
Processing
− Business Systems & GL − Fixed Assets
•Quality Assurance − Business Systems & GL
Feeds
Feeds •Corporate Financial Systems
•Shared Services Centers
− Payroll – HR & Benefits
− Investment Accounting
− Vendors Payable
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32. Business Area Financial Planning & Analysis –
Functional Description
Internal Performance Reporting responsibilities:
Prepare reports comparing budget amounts to actual performance and current period performance to prior periods, reports projecting future
performance, and special or ad-hoc financial and operational reports based on managerial needs
Review established strategic and business performance targets, assess and support business performance reporting, balancing between
internal and external information, historical and predictive (leading) information and financial and non-financial information
Partner with operating management and act as business advisors; regularly attend operational staff meetings
Analysis & Forecasting responsibilities:
Operate and maintain budget tools, set up and populate assumptions, prepare planning guidelines, and produce budgets for review
Prepare strategic (multi-year), operational and capital Budgetary Business Plans (1 year)
Develop rolling forecast, collect and consolidate forecasts, perform reiterations focused on identifying ways to meet operational targets (e.g.,
“what-if” scenarios and sensitivity analyses)
Prepare reports analyzing clients and staff area profitability, as appropriate
Assess opportunities for strategic alliances, acquisitions and divestitures
Overrides from Carriers/Suppliers and Contingent Commissions from Carriers responsibilities:
Monitor and assess commission fee arrangements with carriers and suppliers that are based on previously selected criteria for volume or item
counts and ensure appropriate monthly accruals are recorded on a timely basis based on Company A revenue recognition policies
Monitor and assess commission payments from carriers and suppliers that are based on previously selected criteria for volume and
underwriting results and ensure appropriate monthly accruals are recorded on a timely basis based on Company A revenue recognition
policies; challenge reasonableness of reported underwriting results factor
Limited Revenue & Accrual Analysis responsibilities:
Monitor and assess incentive payment programs for personnel that are based on factors such as revenue and pre-tax income, and ensure
appropriate monthly accruals are recorded on a timely basis based on Company A revenue recognition policies
Analyze revenue and expense recognition for long term service and sales contracts to ensure deferred revenue/ expense reserves are recorded
on a timely and appropriate basis based on Company A policies. Monitor contract for any long term potential profitability deficiencies
Monitor and assess required reserves for Business Area or company receivables and unbilled consulting services
Quality Assurance responsibilities:
Evaluate reasonableness of business area results through variance analysis, discussions, and review of business and financial systems data
and identify unexpected or unusual items
The Business Area’s Financial Planning & Analysis resources will focus on business
area-driven analysis and reporting. The following broadly describes the envisioned
responsibilities of the future FP&A position in the Business Area.
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33. Accounting Functions – Mapping Summary
The following matrix (on slides 20-22) maps all accounting activities to their “future” organizational placements. Those activities listed in
the “Regional” column are the initial targets for a shared services center. All other functionality remains unchanged from current
positioning. Corporate Regional Business
Function/ Activity (Global) (Country A) Area
Internal Performance Reporting + +
Analysis & Forecasting
• Planning & Budgeting + +
Financial Planning & Analysis
Financial Planning & Analysis
• Client/ Broker Profitability + +
Billing & Collections Assistance +
Overrides From Carriers/ Suppliers +
Contingent Commissions From
Carriers
+
Limited Revenue & Accrual Analysis
• Incentive Compensation +
• Deferred Revenue Analysis +
• Bad Debt Allowance Reserves +
• Work in Progress Reserves +
Quality Assurance + +
Fiduciary Accounting
• Fiduciary Payables +
• Fiduciary Receivables +
Operational Accounting
Operational Accounting
• Client Setup +
+
Client-Centric
Client External Reporting
Client-Centric
Client Receivables
• Premiums & Claims Receivable +
• Premiums & Claims Collections +
• Billing +
Revenue Only Accruals & Commissions
• Revenue Accruals Accounting +
• Commission Calculations +
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34. Accounting Functions – Mapping Summary
Corporate Regional Business
Client-Centric Function/ Activity (Global) (Country Area
A)
Client-Centric
Operational General Ledger
Accounting
Operational
Accounting • Trade Intercompany Transactions +
• Journal Voucher Processing +
• Business Systems & GL Feeds +
Fiduciary Accounting
• Fiduciary Payables +
• Fiduciary Receivables +
• Client Setup +
Client Receivables
Operational Accounting
Operational Accounting
• Premiums & Claims Receivable +
Non-Client-Centric
Non-Client-Centric
• Premiums & Claims Collections +
• Billing +
• Client Service Time & Expense
Accounting
Revenue Only Accruals & Commissions
• Revenue Accruals Accounting +
• Commission Calculations +
General Ledger
• Trade Intercompany Transactions +
• Journal Voucher Processing +
• Business Systems & GL Feeds +
General Ledger & Cost Accounting
Accounting
Accounting
• General Ledger Processing + +
Financial
Financial
• Journal Voucher Processing + +
• Shared Facilities & Expense
Accounting
+ +
• General Ledger Maintenance + +
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