Published: April 01, 2008
The success of the SSG and its ability to satisfy the SLA was as much about the people as our systems and processes.
Cable & Wireless was first established 130 years ago and is now a FTSE-100 company with a global presence. The past few years have seen their ups and downs, resulting in substantial developments both in how the company conducts its business externally and our business practices internally. In particular, a major catalyst for change was in November 2005 when Cable & Wireless acquired Energis, the UK’s third largest fixed telecoms operator in the UK. The company’s share price fell to below £1 per share and the company dropped out of the FT-100. To recover from this, we knew we had to change the way we operated, not only in how we marketed our products and services, but internally, to become a highly competitive and efficient organisation, ready to withstand the changing market pressures. We therefore launched a company-wide programme with a view to integrating, recovering and transforming our business.
One of the outcomes of this programme was the formation of a shared services group (SSG), operating out of UK and India to support UK and European financial operations. The offshoring programme first started in August 2006 which was soon followed by an evaluation of potential business partners to support the SSG. Between January and May 2007, we transitioned our transaction processing to the SSG and from April to October 2007 our Reporting & Planning function.
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The SSG is made up of two parts: the shared services teams and the Reporting & Planning team. There are shared services teams which cover each of the major functions within the SSG: Accounts Payable; Cash Receipts; Bank Account Management; Expenses and Collections, totalling 38 people. As well as developing processing efficiency in the SSG, it was important to Cable & Wireless to implement effective controls over our financial processes, key performance indicators to assess the effectiveness of our activities and ensure visibility over our operations through transparent and timely reporting and analysis. These roles are managed by the Reporting and Planning team, which comprises seven people across two functions: Reporting and Controls & Compliance. In Reporting, the team provides:
In Controls & Compliance, the team delivers:
The migration of the Reporting & Planning team from UK to India started with a two month period of knowledge transfer, at which stage the offshore entity took over day to day responsibility for these functions. For the next three months, the UK team effectively worked in parallel, providing close support to the team in India followed by another three month period of secondary support, at which time the offshore entity was operating in a steady state.
The number of accounts payable queries has reduced dramatically.
One way in which we ensured that our vision for an offshore SSG would be well received was to set up a service level agreement (SLA) between the businesses and the SSG. We knew that we would not gain buy-in unless there was a clear commitment to delivering not only an equivalent service to our existing financial operations but a marked improvement on them. Cable & Wireless’ offshore SSG SLA includes detail on operating procedures, to provide transparency over the way that processes are managed, and quantitative metrics to measure the completeness, accuracy and timeliness with which transactions are processed.
In an organisation where all processing is identical, achieving service levels could be a matter of ensuring that the right systems and processes are in place, but for Cable & Wireless, we needed to support ad hoc as well as normal day-to-day requirements. Consequently, the success of the SSG and its ability to satisfy the SLA was as much about the people as our systems and processes. We identified the skills requirements which we needed in each of our shared services teams, and interviewed staff to ensure that we matched individuals’ skills, experience and aspirations to our business needs. Finally, we incentivised staff to ensure that we were in a position to make the transition to an offshore SSG effectively.
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Both the transition of Transaction Processing and Reporting & Planning have been successful and we have managed to migrate our processes to deliver a better standard of financial processing with lower overheads. The SSG team is highly motivated and we have both implemented and ‘bedded down’ the SSG without staff turnover. Productivity has improved and our processes and reporting have become more streamlined. Furthermore, not only have we improved the timeliness and accuracy of our processes and reporting, but the quality and range of outputs from the SSG has also improved. For example, with better visibility and predictability over our financial information, FX forecasting is more accurate, which enables the company to hedge more effectively. On the working capital side, regional debtors reporting has been enhanced, so the company can be more commercial about the terms it offers to its customers.
A project of this scale and diversity is never without its challenges and the SSG migration has been no exception. One challenge was to ensure that the onshore and offshore teams were all working to the same objectives. For example, we found that the improvements in quality we were seeking had to be driven by the onshore team, which had the most experience in managing service delivery under the terms of an SLA as well as experience of how the company worked. We had to focus therefore on communicating the same objectives and transferring skills to the offshore team to ensure that there was a common understanding of our strategy and what needed to be done to deliver that strategy. This was inevitably exacerbated by the difficulty of arranging face-to-face meetings, so we organised cascade training to encourage common business cultures and working practises and arranged video team meetings.
Implementing the SSG has brought tangible and quantifiable benefits to the business. The number of accounts payable queries has reduced dramatically, leading to better relationships with our customers, which is both an administrative and commercial advantage. We can also better identify and prevent duplicate payments, avoiding the administrative and reputational damage which could result. Debit balances on vendor accounts have been recovered and unapplied cash has been reduced, which assists in our working capital management, maximises the level of cash available for investment and reduces the need for external borrowing. [[[PAGE]]]
With any project of this type, of which few people have direct experience, there are inevitably lessons to be learnt along the way. Having the right people as part of the project is imperative, both from the point of view of skills and expertise and a commitment to the same goals and objectives. Implementing a SSG involves changes to the rest of the organisation, including people’s roles, responsibilities and business interactions. Clear communication is key to this, with business managers understanding the changes and helping their teams to adapt. When offshoring parts of the business, the new entity remains part of the group and therefore needs to embrace the same business culture. It is more difficult to change a culture later than to instil it from the beginning, so this is an important consideration for any new part of the business, whether onshore or offshore. Finally, while processes and systems are important elements of a shared services centre, the commitment, skills and energy which individuals dedicate is key to its success. It is therefore vital to acknowledge and reward behaviour which contributes to the value which the SSG adds to the business.
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