A recent article over on the Shared Services & Outsourcing Network addressed the top 10 mistakes when implementing shared services pointed out some common services mistakes that you need to avoid if you are considering a move to shared services. And even if you aren’t considering a move, these tips are quite helpful if you want to get your house in order.
- Not measuring costs or service levels.
You can’t manage what you don’t measure and you can’t improve without a baseline to improve against. This is as true for services as it is for products. How long is it taking? How much is it costing? How do you compare to published industry average and best-in-class metrics?
- Not documenting processes and work streams.
If you don’t know how things are supposed to be working, how do you know whether or not they’re even accomplishing their goals? How do you train new employees? How do you identify opportunities for improvement?
- Not appointing a full-time head honcho early.
A services centre needs a strong, solid team with a strong, solid leader. Even if services are a secondary focus for your business, you should still have a senior executive in charge of their execution who is responsible for overall performance and budget expenditures.
- Not focussing sufficiently on the transition period.
Even if you plan to keep all of your services internal, if you want to improve them, you have to include good change management in your planning, which dictates a sufficient amount of training and a sufficient transition period where your employees move off of the old process and onto the new process.
- Not having a robust project plan clarifying resource needs.
You need to understand what’s required to execute your service processes and how many employees will be needed for the volume you need to handle, or something bad will happen. Quality will slide, balls will be dropped, and key filings won’t get made … and all of a sudden customs is seizing your shipment for lack of paperwork.
- Fighting yesterday’s battles instead of tomorrow.
For better or worse, yesterday’s gone … and it’s probably already too late to win the battle today. So focus on what you’re going to need to win tomorrow … and make sure you have it before today ends.
- Becoming bogged down standardizing technology and processes pre-implementation.
While you need to have your processes well defined and your platform needs to be designed before you can start making improvements, you can’t cross every i and dot every t until the e-paper is in front of you. Besides, once the system is implemented, you might find that some processes need to be modified slightly either because of configuration or because of additional improvements you identified during implementation. Remember the 80/20 rule.
- Believing that “it’s already centralized – it can’t be better”.
You can centralize a crappy process just as easy as you can centralize a worthy process. Centralization in-and-of itself does not make something good or efficient. Centralization just means that everything is done in one place. (So if you don’t analyze your processes, instead of creating a Center Of Excellence of Unified Processes, you might be creating a Center of Crap Upwind, or COC-UP.)
- Having no, or (woefully) inadequate, risk management and/or monitoring.
How do you know things are being done right at the right level of efficiency if you don’t monitor? What if the actual efficiency is only 80% of expected and your overworked staff is only processing 80% of purchase orders on time and costing you millions of dollars in negotiated discounts and rebates? What if they don’t notice that an evergreen contract signed 3 years ago at all time market highs is about to automatically renew when you could re-source at 40% less? What if they fail to get the order out on time and your entire (Chapek 9) production line shuts down for want of a lug nut!
- Omitting the “make vs. buy” or “in-house vs out-of-house” equation.
How much is your service (centre) costing you? Would it really be more cost effective to move it out of house? Is the economy of scale really there? Will the savings still be there after you account for the management costs (you will need people to manage the relationship), communication, and travel costs?