The range of options businesses have for transforming their processes and business administration to improve service while reducing costs has grown over the past decade. A best practice for finance departments is managing to operate at a 50 percent lower cost than their peers – a significant cost savings that translates to better margins. One model that businesses using SAP systems are increasingly adopting for finance to help the chief financial officer (CFO) deliver on these goals is shared services supported by software automation tools. But how do managers decide which activities and processes should be moved to shared services? Choosing incorrectly can have significant consequences for the success of the shared services transformation.

3 Ways to Use Automation to Support Finance Organizations

In recent years, automation has become a routine next step in shared services transformations, following the initiation of the shared service organization and initial labor pool optimizations. Automation means using software tools to support shared services operations. There are three main ways managers can use software to offer high-quality, flexible support to the finance organization.

Support Agents

The first option is applying an optimized services delivery infrastructure to increase the productivity of each individual agent, who is a person working in the shared services department or call center. This infrastructure includes a common user interface, or workplace, and organizes the collaborative participation in the service delivery process.

It provides telephone and email or chat integration. It documents and tracks each service event with a service ticket. The tickets are automatically prioritized in an inbox based on rules and support service-level analytics. This functionality is standard in companies that have chosen a help desk user interface for their initial stage of shared services adoption. However, these help-desk interfaces usually cannot support the delivery of end-to-end processes, owing to their lack of integration with the back-end transactional business systems.

Agents need to serve multiple business units, sometimes with a hodgepodge of legacy transactional systems. The business units serviced may also be continuously changing, as companies expand and divest according to their strategy and market conditions. A state-of-the-art service delivery infrastructure needs to eliminate the need to keep track of which back-end system is relevant for which business partners or legal entities; back-end systems are automatically determined. For example, if a customer from a particular country is calling the service center regarding an invoice it has received, the agent often first asks the customer to wait while they identify which ERP system is relevant for that country – in today’s world of constant business restructuring, this is no easy task.

The SAP Shared Service Framework for Finance could identify which back-end system is relevant automatically, via the telephone number calling, and could pre-select the correct invoicing data in the system automatically without asking the customer to wait.

This infrastructure also provides agents with access to a key knowledge database or training documents. Instead of having four windows open on the desktop (telephone/call center window, knowledge database, ticketing window, and ERP transaction), the SAP Shared Service Framework for Finance is a single cohesive, structured working environment. There is no need to copy and paste data into additional windows and systems; data is transferred automatically, eliminating an annoying source of errors and redundant manual work. Operational business transactions are pre-filtered based on the relevant business context. If a customer is calling regarding an invoicing issue and the agent selects a view of the customer’s open items, only the relevant invoices for that customer are displayed in the correct source system – without any further log-ins or searching necessary.

Automate Business Processes

The second way finance managers can use the shared service operating model is for implementing financial accounting software engines that automate finance business processes that exist around core financial accounting. These processes are focused on managing master data and dealing with all types of exception handling. Process automation reduces cycle times, the risk and cost of errors, and the dependence on large, inexpensive labor pools. Finally, automated and standardized business processes are easy to scale to higher and lower volumes. They use tools, such as workflow, with escalations to accelerate task processing. Standardized processes are faster to roll out to new countries as business needs change, less training is required, and they are easier to audit because they usually have a single database that includes all relevant information and business documents.

Incorporate Self-Services

The third way to provide high-quality support to a finance organization is by incorporating self-services for repetitive interactions and standard queries with the FI back office and business partners. This strategy further reduces cost and puts the service in the hands of the person requesting services, whether these people are within your organization or external to your company, whenever these services are required at any time of day and any day of the week. Easy-to-use, intuitive self-services with up-front logical checks and data vetting can improve the service requestor’s service experience and simultaneously decrease the workload in the service center.

Choosing Processes

Selecting which processes can be deployed in a shared services model is an important part of any shared services implementation path. If companies make the wrong choices in determining which services or processes to offer, the result can have dire consequences for the entire shared services project – one that is usually a multimillion-dollar investment. For example, there could be a lack of acceptance by internal employees for the shared services operating model, poor external customer satisfaction ratings leading to a lack of repeat business, or increased supplier turnover. How should finance managers decide which business processes are good candidates for a shared services deployment?

Internal Processes

To deliver a low-risk, quick win for the shared service model, managers could first move some finance-internal processes to shared services. Because the tasks stay within the group and broad end-user adoption is not required, this could be a good way to gain experience using the model.

These processes include IT-related batch processes and the associated error resolution activities. Many calculation job runs, such as for payments or gross-to-net payroll, are processed in large batches. If an error occurs, someone must manually scan the technical log files and follow up on error resolution. If you move this responsibility to shared services, not only is the expertise to resolve the errors shared, but the error resolution is tracked according to shared service standards.

Process automation tools are delivered as a part of the SAP Shared Service Framework for Finance that can automatically notify the shared service center about errors that have been identified during the execution of batch processes. These errors are automatically documented in service tickets, which include a link to all relevant business objects for speedy clarification – and errors with the same root cause can be automatically bundled into a single ticket. An added benefit is that future errors can be reduced, or even eliminated, because these occurrences are documented when resolved.

The Next Step

Once the benefits of automation and collaboration have been realized for these processes, the next step is to move to processes that involve non-finance and accounting (F&A) business partners, such as providing sales executives with financial information about the invoice payment behavior of their customers. There is slightly more risk, because you have to overcome certain preconceptions related to shared services, but the risk is mitigated with the lessons learned from the initial internal use cases.

The first process candidates in this group include highly repetitive supporting processes that are considered to be priority B or less critical topics. Highly repetitive processes are good candidates because you benefit from scale and learning effects. Attacking priority B issues is useful because if there are growing pains or difficulties with the services, you do not hurt the reputation of the shared service center or permanently hurt user adoption. Some examples of this process type include accounts receivables-related activities, such as billing inquiry resolution, dispute management, and collections, as well as accounts payables and travel expense management. A high degree of standardization can be obtained for these processes; this is usually a prerequisite for deployment in the shared services model.

Let’s take the process of dispute management and resolution as an example. Managed locally, a customer who happens to reach a particularly amenable accountant may receive a fast, advantageous resolution to the issue. However, a customer who reaches an agent without particular expertise or goodwill may not receive equally advantageous service. Certain locations may have a culture of dealing with customer disputes in a way in which senior management does not approve.

Data about the particulars of the dispute may not be captured, which means the operations team cannot benefit from root-cause analysis to improve their pricing, production, quality, or logistics processes. Standardization that is regimented in an automated software tool and the process acceleration and routing provided by SAP Business Workflow ensure all business partners receive the same high-quality treatment.

One common objection to process standardization is cultural differences in dealing with business partners. Consider the example of collecting on overdue bills from customers. In this example, software automation tools can take these differences into account. Customers can be segmented into groups (for example, those that receive dunning letters or those that expect telephone calls only after particularly long delays) reflecting the collected rules and strategies agents use on outbound customer calls. The tools can suggest resolutions and even sample texts that can be used to communicate solutions to speed communication.

To the extent that simplified self-services can be deployed for internal and external service requestors, and that initial informational gathering can be automated, your service agents can focus on exception handling. Benchmarks show that moving receivables processes to shared services has delivered improvements to companies in day sales outstanding (DSO) and customer satisfaction, because process cycle times have accelerated. Customers do not have to call into a service hotline to ask for an additional copy of an invoice or to ask a question about a particular bill. Customers can be provided self-service access to billing documents online, where they can download bills, review master data, and make an inquiry or start a dispute on a particular bill.

Because the system ties the inquiry or dispute to the particular bill the customer has selected online, the service ticket can be automatically generated containing all the relevant information needed to ensure a speedy resolution – without worrying about agent time zones. Similarly, having a shared service center control the invoice-to-pay cycle helps to improve days-payable outstanding (DPO) and turn your company into a predictable, easy-to-deal-with business partner for your suppliers.

Research shows that moving the parked invoice inquiry into shared services with process automation can reduce processing time from 10 minutes to four minutes. Getting your business partners and employees to contact the shared service center for their needs, instead of wanting to revert to the old localized service, is accelerated by simplifying the access to information and support – eliminating the prejudice that shared service processes are complex and time-intensive.

Other Processes to Consider Moving to the Shared Services Model

Other business processes that are also aggressively being adopted by shared service centers today are found within the procurement area. Supplier identification, vetting, and onboarding are some examples of processes that can leverage scale and centralization. An additional benefit to centralizing all incoming invoices in a shared service center is getting a more complete view of spend on a global level that could be used for ongoing negotiations with suppliers. Finally, the centralization has the additional benefit of improved cash management and liquidity planning.

The financial operations processes described above in this first wave of adoption are the typical operational processes. The cost savings that can be reached via the integration and automation aspects are significant – based on the advantages of faster processing times, fewer errors, and reduced training costs (Table 1).

Table 1

The value of moving to shared services

Source: ASUG Benchmarking; Hackett Group, 2011

Bringing Closely Related Activities to the Shared Services Model

Once these processes have been brought into the shared service organization, the next group of process candidates consists of those that require coordination within and among business units. Examples here include month-end and quarter-end closing, intercompany reconciliation, and ledger maintenance.

These activities benefit from the improved shared visibility into the business systems and coordination and synchronization of closing schedules that a shared services infrastructure can provide. In many instances, closing schedules and activities are still documented in a Microsoft Excel spreadsheet. Leveraging SAP Business Workflow and automated task scheduling and execution tools, you can accelerate the process to take advantage of round-the-clock support from agents in a follow-the-sun setup.

In the instance of certain posting errors that occur because of closed periods, the shared service software can automatically generate a service request for the user. This service request is automatically routed to the experts with appropriate authorizations, and it can include a screenprint that includes the error message. This process ensures that service agents have a clear understanding of the business context of the problem they are trying to solve, without the user having to describe the screen details. In addition, this document attachment provides context for other employees who may be included in the workflow-based process resolution chain. They are never more than a single click away from the relevant detail without having to navigate through a series of transactions. Agents with the relevant accounting expertise can be deployed across countries or lines of business for improved consistency.

One aspect that has to be balanced in moving these closely related activities to a shared services model is ownership. Local CFOs must be included in the process design to have complete confidence that the period-end figures are correct. In these situations, the process monitoring, additional documentation, and simplified auditability provided by shared services can help provide comfort.

In some cases, there is an initiative to move sensitive or higher fraud risk processes to shared services to provide an additional level of control or governance. Imagine a situation in which a legal entity has just one or two accountants, and a key supplier’s bank details need to be updated. Because of the small staff size, the GRC principle of dual control cannot be realized. These business processes and transactions can be configured to automatically generate a service request with the complete business context. Then, an agent in the shared service center could perform the transaction for that individual. This would serve as an automated, preventive control and fraud potential would be minimized.

When thinking about which finance processes could be deployed in a shared services framework, managers need to evaluate all their internal operational finance processes. The focus should be on the ones that can deliver standardized services to key business partners and stakeholders, whether internal or external to the business.

Katharina Reichert

Katharina Reichert is part of the Finance Solutions team at SAP SE, located in Walldorf, Germany. As the solution owner for receivables management, she focuses on applications for customer credit management, customer billing, dispute resolution, and collections management.

You may contact the author at katharina.reichert@sap.com.

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