Working together A decade of effective business transformation through shared services

Transcription

1 Working together A decade of effective business transformation through shared services Diageo plc

2 Business background Diageo is the world s leading premium drinks business with an outstanding collection of international and iconic spirits, wine and beer brands. It is a business which constantly evolves to meet new consumer tastes. Trading in approximately 180 markets, with 20,000 employees throughout offices in 80 countries, Diageo has manufacturing facilities across the globe including Great Britain, Ireland, United States, Canada, Spain, Italy, Africa, Latin America, Australia, India and the Caribbean. The company declared a Net Sales Value of 9.3bn and an operating profit of 2.6bn in Working together

3 Diageo: pioneering the concept of Shared To support its world-class sales and manufacturing, Diageo s finance function has established equally first-rate processes and systems. In 2001, after an extended period of growth and consequent burgeoning of financial operations and technology, an idea emerged that would strategically root out duplication and drive efficiency through standardisation. The idea was Shared. As Diageo s adoption of Shared approaches the end of its first decade,, Global Shared Director, presented the results of this transformational global initiative at a recent PwC breakfast briefing. PwC collaborated with Diageo at the inception of the project when Diageo s aspirations for Shared were considered extremely forward thinking. Carolyn, was clear about the enormity of the challenge. We have come an extremely long way and overcome many significant challenges particularly managing people through the change curve required to create our global, hybrid Shared operation Diageo Business (DBS). Working together 3

4 Establishing the principles of Shared Diageo has successfully created a hybrid Shared model - combining internal or captive service centres with outsourced services. This balance of internal and outsourced services has evolved over the past nine years, as the finance team proved that consistent, standardised processes run over a single platform can reduce cost, but also offered excellent services levels with enhanced business controls and compliance. In 2001 when the finance team initially explored Shared, reviewing the array of financial processes and systems that existed within Diageo, the first question they asked was is it transactional? They were confident that identifying and consolidating standard transactional processes was the first step to proving the economies and value of Shared. The finance team then worked to develop standard rules and processes driving the accuracy, speed and timeliness of activities such as financial and management reporting, reconciliation and accounting activities, customer order management and purchasing. Diageo established its first Shared Centre in Budapest during 2001, which initially served Europe and then the USA. The success of this centre enabled Diageo to move closer to global adoption of Shared and to progress beyond transactional processing to offer more specialist, complex services such as tax, internal audit and treasury. As we developed in confidence with our Shared model, we successfully included processes which require specialist knowledge and degrees of flexibility. By pooling knowledge and applying Diageo standards, we have enjoyed economies of scale whilst retaining high levels of expertise and knowledge of our business. 4 Working together

5 Moving to a hybrid Shared model As Diageo evolved its hybrid model it added additional outsourced service centres in Prague, Shanghai, Manila and Bucharest. This enables Diageo to offer language and time zone cover to the business, through a combination of outsourced and captive centres. As the outsourcing market matured we began to consider whether there were economies to be gained from a third party running selected transactional processes. Was it possible to release us from the day-to-day aspect of this and focus instead on added value and maintaining the appropriate levels of control, consistency and compliance, says. Having selected an outsourcing partner, Carolyn was eager to counsel her audience that the balance of captive and outsourced services should be continually under review that it was important to have the flexibility to move services from outsourced to captive as necessary. Drivers for Shared Cost reduction is central to the ongoing efficiency of Diageo Business, but cost was not the only consideration in The business drivers for Shared were: 1. Global processes that fitted with the global aspirations of the company 2. Continuity, efficiency and standardisation across systems and processes. This would enable consistent service delivery and comparative analysis 3. Process standardisation would enable decisions around where and how to deliver services 4. Clearly defined processes and a unified approach that would enable the business to identify anomalies, evaluate risks, establish controls and compliance The finance team was also aware that the returns from Shared would not be equally distributed with more established areas of the business driving greater economies than emerging markets but that emerging markets would benefit from the process improvements. Although cost saving, as we have seen, was not central to the early decision making, the finance team broke the project into tasks and established clear return on investment and shared service benefits for each element. Cost reduction was not foremost in our minds when we started the Shared initiative. We needed to prove that the concept would work for the business and evolve a set of principles to identify the right areas in which to apply the shared services model. Working together 5

6 Building a single platform for Shared Diageo has standardised on SAP technology to run, optimise and analyse its business. This global solution also enables local businesses to run specialised applications from the same platform. The push to continually evolve the SAP system has had an interesting cultural effect. The finance team never underestimated the impact of wholesale changes in technology on the businesses and their staff. They wanted to work with business managers as partners, making the benefits of each change clear and listening to local concerns. Diageo Shared Timeline With the growing awareness that investment was being made in new front end systems such as Business Process Management, businesses wanted to have the right foundation development Diageo Business Growth of Shared Establishing a Global established Established hybrid Hybrid model Model Identified and initiated standard financial processes and technology platform. Opened Diageo s first captive service centre in Budapest for core financial processes. Budapest operation expanded in scale and scope. Performs higher value and more complex activities. More geographies included to create global network Introduced outsourcing for transactional processes alongside captive centres for more sophisticated transactions to create hybrid model 6 Working together

7 Creating a culture of Shared Creating a culture that would accept such a shift in working practices and implementing a single technology platform was supported at the most senior levels of the business. Of course the finance team became familiar with the but my business is different argument but unless there were legal or regulatory reasons to deviate from a defined process consistency and standardisation were maintained. The success within the larger markets, as Shared demonstrated the value of consistency, enabled the finance team to promote this is where we are aiming to the rest of the business. The team was also keen to take what they had learned from early successes and apply this as the project advanced not re-inventing the wheel at each stage. Establishing Diageo Business still requires the organisation to retain strong management structures - Shared does not mean delegated accountability. To provide the right levels of communication and control with the businesses, Diageo has established the following management roles: Service Management This provides a high level interface between markets / regions and the DBS across all processes for both captive and outsourced operations. Is responsible for meeting all agreed SLAs, metrics and expectations. Process Governance This role provides process ownership and governance across all DBS sites and monitors overall process performance. Is also responsible for the ongoing optimisation and implementation of operational improvements. Service Delivery This role is responsible for each site and the process-specific delivery of day-to-day operations. Having senior level support is critical to the success of a project of this scale and business impact... The whole programme also required finance to act as business partners with other areas of Diageo, engaging them in the process. 7 Working together

8 Contacts Mike Cowan +44 (0) Simon Seymour +44 (0) This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it PricewaterhouseCoopers LLP. All rights reserved. In this document, PwC refers to the UK member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see for further details RB-OS Working Working together together April 2011