Hackett Study: Finance Shared Services Now Standard Approach; Shared Services as a Cost-Cutting Tool Shows Dramatic Expansion

World-class SSOs move to higher-value work, focus on strategic business process sourcing


Case Histories: H-P and Royal Philips Electronics

Over the past 15 years, Hewlett-Packard has developed an extensive shared services network, which now has 11 global delivery centers. "We began with the basics, such as payables, receivables, T&E, and general ledger work. What we've done more recently is find ways to bring higher-value activities such as financial analysis into our centers," said John Schlueter Hewlett-Packard BPO director of Record-to-Report.

"There have been obstacles to overcome, including building the necessary staff skills and getting the business units themselves used to the idea that the work would be done by people that were in another part of the world," said Schlueter. "One key to our success has been carefully coordinated role sharing. For higher-value work, we can handle parts of the job that can easily be broken down, like transactional work, data extraction and trend analysis, then hand things off to the business unit for activities that are high-judgment and high-impact, such as setting strategy."

Royal Philips Electronics leverages shared services and business process outsourcing through three global captive centers in Poland, India and Thailand. While its internal SSOs delivered considerable cost savings and performance gains, the company was concerned about the long-term prospects for both additional value creation and employee morale. To address these, Philips decided in 2007 to transfer 1,400 SSO employees to Infosys, an Indian business process and IT outsourcing provider, as part of a seven-year, $250 million contract.

"We look beyond SSOs at strategic sourcing from a broader perspective, and as a result we've generated substantial value at each stage of the process," said Philips Global Shared Business Services Finance General Manager Rens Blankers. "At this point, Infosys has the scale and automation to handle things more efficiently than we could internally, generating improvements we could not have made on our own. Our finance teams have shifted their priorities, so they're now focused on strategies for relationship management with Infosys and long-term optimization."

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