Why can’t we ask for more efficient solutions, so that tax payers are benefited, businesses held more accountable and organizations become more streamlined and productive so that the slow crawling but deadly inefficiencies created to manage other inefficient processes are permanently eliminated.

Cost cutting measures must be optimized for the long term, not just treated as band-aid solutions to current problems and as dress-up solutions to strengthen one’s quarterly and annual reports.

The Shared Services route ensures high quality service delivery and process automation. It is all about bringing together common administrative functions carried out across the organization in multiple groups or departments under a single delivery unit such that consolidation and standardization process across the organization is more efficient and effective.

Organizations, governments, municipalities, towns, businesses, etc. can all benefit exponentially by streamlining operations and eliminating unwanted wastes within the organizational work flow.

But where do we begin?

For starters, opportunity assessment could commence with evaluation across the finance, accounting , HR, IT, legal and procurement functions. Consolidations in these areas should be the top management’s priority.
For e.g. for discussion purposes, if the F&A (finance & accounting) function were to take the lead, then some of the business focus would include developing consolidated and centralized solutions around;

1) Revenue Accounting and Accounts Receivable management
• Invoice management ( generation and delivery)
• Revenue accounting
• Collection management
• Account reconciliation

2) Accounts Payable
• Vendor invoice processing
• Invoice accounting
• Payment processing and accounting
• Account reconciliation

3) Expense Claims Management
• Claim verification and approval

4) Financial Planning and Analysis
• Developing forecasts where financial metrics i.e. budget forecasts, revisions, reports and analyses to support resource allocation and decision-making
• Utilizing technologies and tools to improve timeliness and accuracy of financial analyses, budget planning and development, and management reporting &

5) Enterprise Assurance
• Process Mapping, Periodic Internal Audits
• Due Diligence Audits
• SOX engagements

Though this is by no means a detailed view, it highlights some of the opportunities or reasons behind moving forward towards creating a shared services center aimed at taking the initial steps to become more efficient.
Careful evaluation is a must and all initiatives must be undertaken with due consideration to Business Process Reengineering, Organization Design, Technology Assessment and Enterprise Risk Management and Internal Controls.

The value a Shared Services Center brings (if implemented right) includes;
• Substantial cost reduction
• Standardized and improved quality of service
• Intelligent resource optimization – people, process and technology
• Increased ability to analyze and identify potential and actual inaccuracies
• Corporate Governance

Come talk to us, and let us help you get started and provide you the assistance you need to evaluate your shared services options. Getting it done right is not an option, it is essential.

It is the route to gaining competitive advantage. It impacts performance and is beneficial for consumers, investors and society as a whole. (That’s another debate. Let’s revisit that at a later time).

To being a profitable entity necessitates not only a 360⁰ view into the organization to realize cost, quality and delivery efficiencies. Profitability must be studied and analyzed in conjunction with a global outlook or a global perspective to realize the full potential.

The game has changed. Global competition is taking on a whole new meaning and maintaining competitive dominance requires a new look into the efficiencies of integrating “Global Sourcing” into organizational strategy.

For a definition on global sourcing, I think a quick read at our infamous Wikipedia should do justice. So here’s the link. Global Sourcing. Thanks Wikipedia. (The best free educational resource)

Global sourcing if executed well will prove to be a guaranteed path for organizations to generate immediate gains (or savings) in material and service costs.  Given the recessionary climate and the recent stall in business growth, organizations are under immense pressure to achieve cost reduction. Where else, but the sourcing aspect be the point where maximum gains be realized without disruptive and drastic cost cutting measures like workforce reduction, etc. In fact, just this exercise will make transparent or allow organizations to better understand prices, contracts, lead times, etc. all which allows for better negotiation with existing suppliers.

Research indicates that sourcing from emerging markets or LCC (Low Cost Countries) can help bring price reduction in as much as 12-20% right of the bat. In spite of the wealth of opportunities, organizations have been slow on the uptake. With all due respect, I do share sentiment around quality, safety, supply disruption, exchange rates, service level agreements, etc.  But, that’s no excuse for not being open to the opportunities.

I am not an advocate for tariffs and trade barriers but support the workings of real economic forces. I believe that value will be derived from reduced costs, new markets and repatriated profits as they all will play a part to ultimately benefiting society and all its consumers alike. My disappointment lies in organizations maintaining the status quo (let sleeping dogs lie) where they fail to recognize that the view of buying locally is best for the economy and country. In most cases this is distorted as many of their local suppliers from whom they purchase their products or services have exploited the wealth of opportunities in global markets and have incorporated foreign goods into their operations through international procurement. If you want to navigate the seas of global competition and continue to improve performance and maintain competitive advantage then you have got to think GLOBAL because global players are entering our turf.

Though this may seem like a rather simplistic view into the global sourcing arena, my intention here is to bring to light few insights;

• that firms who buy their products locally and regionally don’t realize that their suppliers from whom they procure their products and services may be well entrenched into having an international sourcing supply chain. Which means, your acquisition price for products and services aren’t optimal and you’ve yet to recognize additional performance gains. How are you maintaining a competitive advantage? I’d like to know.
• do not fear your lack of expertise in global sourcing and navigating the global markets to giving the idea a fair chance.  Help is always available. In fact when organizations are faced with competition from new entrants and international players the only alternative may be to evaluate the potential of integrating global suppliers into their procurement process.
• even if you already source or plan to source from global markets, it is critical to protect yourself from the various complexities (which I will cover during our next discussion) and responsibly manage the process with due consideration into participants, alliances, & technology and their capabilities, support and quality standards.

A well defined and integrated sourcing approach is a must and critical to yield successful outcomes.

In the coming days, I will do my best to address topics such as current trends in the global sourcing, creating roadmaps for strategic sourcing, spend management, performance management, building strategic alliances, service level agreements, and supplier relationship management.

Please feel free to drop in your comments and I welcome working with organizations who are exploring ways to bring about efficiencies in their sourcing work flow and processes.

OPENINTEL helps organizations navigate the flat world by providing breadth and depth expertise in the areas of global strategy; global sourcing & cross border M&A. We help develop tactical roadmaps to manage strategic alliances, vendors, supplier relationships, outsourcing arrangements, service level agreements (SLAs), contract negotiations and performance management.

Where else, but the supply chain, be the immediate point where focus is targeted to maximize gains without disruptive and drastic cost cutting measures like workforce reduction, divestments, etc. 

Before I delve into the discussion, I’d like to role in the concept of what Enterprise Risk Management (ERM) is, and how important it is for an organization’s survival.

Wikipedia, the world’s free encyclopedia lays it out quite well.  Click here : Enterprise Risk Management.  

It is clear that in order for organizations to achieve their strategic objectives, they would have to manage the risks associated with the business well very well (if they hope to be in business for the long term). ERM allows enterprises to evaluate and manage risks associated with their financial objectives (performance), market objectives (customers, partners, suppliers, competitors and regulators) & operational objectives (people, processes and systems).

In keeping our discussions in line with the importance of ERM in building integrated alliances, it can be best understood when discussed in reference to the consequences of not incorporating ERM in building alliances. Evidence has shown that the risks posed in this area as a result of poor ERM include;

• the failure in designing well aligned business processes.
• the potential loss on investment as a result of a breakdown in the relationship.
• the inability to procure or produce products or services efficiently as initially anticipated, resulting in downstream supply chain failure.
• the failure in addressing information, security, reputation, quality assurance and regulatory requirements.
• the increased probability of failure as a result of the inability to deal with changing market & economic conditions.
• a poorly designed alliance network, facility and IT infrastructure…………and so on.

So how do we mitigate such risks associated with integrating alliances and relationships?

At a bare minimum, I’d say

• Conduct an Organizational Assessment: Identify the critical risk factors that could impact your business. Is your organization competent  at orchestrating the reengineering of business processes? Develop the ability to clearly understand the organizational capabilities and constraints with regard to strategy alignment, alliance, partner search and negotiation. Put in place the structure to continuously monitor the relationship and the overall strategic goal….given that there are constant pressures to adjust operations to changing market conditions.  The dynamics of the overall business change with time and competition.
• Develop an Alliance or Partner Blueprint:  You’ve got to see the forest through the trees. The Big Picture. Not just project specific but from an angle on what efficiencies a relationship or potential alliance will bring… LONG TERM. Careful thought must be given on the selection criteria (differing and complementary capabilities, management, technology capabilities, cultural differences, work ethics, quality, etc.), overall alliance structure (short-medium-long term contracts, equity partnerships, minority-majority stake, incentives, performance, costs, etc.), extended networks if dependencies exist, and how changes in the relationship will be handled. All these pieces have a level of risk, so one must have a clear understanding on each participant’s limitations.
• Understand and Comply with Legal Requirements:   undertake detailed government negotiations where needed and adhere to legal requirements and develop governance controls over agreement compliance, regulatory compliance, privacy, IP, security, personnel, etc.
• Define Cost & Benefit Tradeoffs: conduct a detailed cost benefit analysis with regard to your investment; what potential new markets hold, technology, resources, competition, control, etc.
• Develop Back up and Alternative Plans:  be prepared with backup strategies to deal with continuity planning, product shortages, insurance, contingency plans, reserves, environmental risks, customer acceptance risks, etc.      

Though this is by no means a detailed and extensive list of all the ways organizations can mitigate risk at the enterprise level, it does showcase the complexities within the bounds of a partnership or alliance.

Approach alliances and relationships cautiously!

I welcome your comments on this subject and will be more than happy to help organizations navigate the myriad of complexities, in making sure alliances work in your best interest.

OPENINTEL works with organizations of all sizes to help secure alliances provide market insights and transition both business and knowledge processes to achieve cost efficiencies, improve productivity, reduce operational risk, reach global markets and capture market share.

It’s only been a few months since launch and we’ve loved the support and opportunities extended to us in such a short time.

I hope to use this blog to showcase our interests, our expertise, business ideas and commentary on key subjects that continue to challenge businesses today. I hope to address wider issues such as those pertaining to technology, globalization, new markets, strategy, leadership and collaborative efficiency and effectiveness. I want to communicate and build discussion around taking approaches that all-in-all have and bring POSITIVE IMPACT!

I welcome comments and questions from everyone, so please let us know anything that you think may benefit us or our blog readers.
We have a great team here and each of us would be more than happy to provide you guidelines and tips to help you start, run, and grow your business.

Rakesh