Shared Service Transformation With Technology

Peter Drucker said, “There is nothing so useless as doing efficiently that which should not be done at all”. As shared services evolve more and more towards outcome-based models, there are two major transformations that are being invested in – process re-engineering and process automation. As competition to drive revenue growth becomes fierce, enterprises are continuously looking for ways to bring down the overall cycle time to process and consequently costs, in order to drive improved performance. Digital is increasingly empowering enterprises to do more with less and drive significant transformations. The number of shared service centers (SSC) is significantly increasing. In addition, enterprises are also looking to expand their existing SSC’s to include additional processes. Digital technologies such as robots, intelligent automation, information management, chatbots, and other technologies are enabling to deliver shared service agendas. As per some recent research, 52% of new Global In-house Centres (GIC’s) supported digital services. SSC’s that are ahead in the maturity curve delivered twice as much revenue growth impact via digital initiatives versus the rest. They also delivered a 50% increase in process accuracy and a 35% increase in employee productivity versus the rest.

What has made this change possible? The key success factors are really in the digital agenda that these SSC’s are driving that enables them to generate significant competitive capabilities and consequently enterprise performance. In the last few years, emerging technologies have been at the forefront of this transformation enabling enterprises to innovate in terms of scaling processes, delivering a superior experience to their stakeholders and improving cycle time.

Let us look at some key technologies at the forefront of such change within shared service processes:

Source to Pay (S2P)

S2P leaders are increasingly looking to enhance stakeholder experience and create a wealth of opportunities for top line growth and bottom line efficiency. With access to real-time market trends and deep insights into processes, they’re rethinking the operating models that could enable them to support quick decision making. Strategic sourcing is becoming more predictive. Machine learning could support to categorize and manage spends in real time. These technologies would help categorize unstructured spends and costs and provide alerts on exceptions as well as deliver insights. AI could be used to predict future sources of supply and predict demand for inventories. OCR technologies read unstructured documents such as contracts, invoices, etc. to undertake business processes. Digital technologies enable complete visibility and automation of the process including:

RFP/RFI release
Supplier evaluation and selection process
PO release to vendor
Receipt of invoices and automation of the full invoice posting process
Payment process automation
Visibility to suppliers of the status of invoices, handling FAQ’s, etc

Technologies such as AI, ML, Invoice Automation solutions, AI Chatbot, Supplier Portal work in confluence to make the source to pay process more effective.

Order to Cash (O2C)

The order to cash process is extremely critical for any enterprise. Cash is the lifeblood of any company; managing the O2C process efficiently is therefore imperative. There are possibilities of numerous discrepancies in the invoicing, settlement and reconciliation processes that present room for improvement with emerging technologies. With solutions like smart contracts, visibility to all transactions could be fully recorded and validated in real time, thereby ensuring 100% accuracy and compliance. Any workflows related to these processes could be fully automated with complete audit trails

Automating Credit Management: With solutions such as forms, RPA, and OCR talking to back end applications, the process of credit management could be fully automated thereby ensuring accuracy and automated review and reporting.
Automating Sales order: Sales order could be received via automated channels such as Chatbots, EDI or portal and the order entry process into ERP could be fully automated with solutions such as RPA depending on the channel. In the case of EDI, it would be directly imported.
Automating Order review process would include reviewing versus a pre-set criteria to ensure that any omissions, discrepancies or risks are fully addressed. The solution could compare items or even costs versus the terms of agreed sale without the need for manual interventions. Actions could be taken automatically based on the results so derived such as further clarifications or putting the order on hold until issues are settled.
Automating visibility to goods receipt: Once the billing is done, movement of goods until the client gate could be tracked automatically via digital solutions.
Automating Collection Process include identifying outstanding, sending reminders and dunning letters. Any disputes and related causes could be investigated by the system together with checking audit trails of the transactions and automated management and reporting of the case as required.
Automating Cash application processes with OCR and RPA wherein information from bank advice and statement could be matched with receivables and for posting payments in the ERP.

Record to Report (R2R)

The ultimate objective of any R2R process is to provide the correct representation of the company’s performance with the highest levels of accuracy and within the targeted timelines. The insights received by automating the R2R process enables accuracy, quick decision making and fuels further growth for any enterprise. By bringing down cycle time to financial reporting and providing powerful analytics, solutions such as Blockchain and RPA have enabled enterprises to significantly accelerate and provide transparency in the process. RPA could automate routine tasks such as reconciliations, posting journals, managing tasks and sending alerts based on variances. This could be done throughout the month rather than waiting for the month end peak period, leading to more accurate and real-time balances. The same applies also to inter-company reconciliations with the real-time matching of transactions and resolving discrepancies. With blockchain distributed ledgers, the cycle time and accuracy to reporting would be significantly improved together with ensuring better collaboration between various parties. Automated workflows are especially useful to automate routine processes, providing visibility to closing processes and reducing the cycle time to close. Complete audit trails and audit evidence could be maintained for all periodical closing activities.

Although a true touchless approach is still some time away, most shared services are looking to significantly accelerate their cycle time and provide visibility by adopting digital. Shared services are moving towards outcome-based models that are closer to the strategic agenda to deliver consistent profitable growth. It will be interesting to see how shared services of the future will look as they evolve and adapt to these trends. As a quote goes “It is not the strongest or the most intelligent who will survive but those who can best manage change.” Shared services who get stronger at change management will be leading the wave of this transformation journey.