Framework for shared services

1. 1. iprocess creating intelligent and cost conscious processes for shared services
2. 2. Contents 1 iProcess Value Creation Approach 2 Shared Services Vision 3 Shared
Services Rationale 4 Shared Services Deployment 5 Alternate Shared Services Models 6 6
Functional Placement 7 Finance & Accounting Process Design 8 Risk Assessment 9
Organizational Design & Governance Ramesh Krish Proprietary and Confidential P1
3. 3. 1 iProcess Value Creation Approach Ramesh Krish Proprietary and Confidential P2
4. 4. The iprocess Approach to Shared Services 1. Current State 2. Options Assessment
Formulation • Apply appropriate assessment and • Develop options in conjunction with
operating measurement techniques to understand company leadership to transform the cost
base the current portfolio mix in light of investment parameters 5. Transformation &
Governance 3. Feasibility • Monitor key performance indicators derived from initial
investment criteria CUSTOMER Analysis • Understand and evaluate transaction merits and
exit considerations • Develop a detailed blueprint for future state and transition plan from the
current state outlining the financial viability of 4. Low Cost Model proposed projects
Development • Implement the blueprint – strategic sourcing, shared services, process
integration, physical layout consolidation, organizational transition etc • Review performance
metrics and refine implementation Ramesh Krish Proprietary and Confidential P3
5. 5. 2 Shared Services Vision Ramesh Krish Proprietary and Confidential P4
6. 6. Key Objectives We understand that: - this project reflects a number of internal and
external influences on process design, placement and ownership; - the desired approach to
Organizing “Business Support Services” is part of a global vision to develop a shared
services model Strategic Direction Outsourcing Business Potential Philosophy
Organisational Business Scale Model Business Support Services Business Unit Activity
Alignment Scale Business Activity Unit Usage Content Business Unit Position Ramesh Krish
Proprietary and Confidential P5
7. 7. Shared Services Structure In defining the appropriate approach to organizing “Business
Support Services”, a number of criteria can be utilized to assess available options. In the
context of shared services, the Accounts Payable “Business Support Service” will act as
pilot. Criteria Approach represents Direct accountability is strategic consistency Accounts
Accounts reinforced through process with corporate direction Payable Payable Check Check
ownership Purchasing Purchasing Disbursements Disbursements Travel Travel Process
Services Services Payroll Payroll Approach Model supports Security Security supports
creation of a high Services Services ability performance Business to realize organization
Support service-level Office Office Services improvement Support Support Technology
People Services Services HR HR administration administration Facilities Facilities
Management Management Structure creates a Model provides scalable platform to Bank
Bank Events Events for cost efficient support future growth Reconciliations Reconciliations
Accounts Accounts delivery of services Receivables Receivables Ramesh Krish Proprietary
and Confidential P6
8. 8. 3 Shared Services Rationale Ramesh Krish Proprietary and Confidential P7
9. 9. Vision for an A/P Shared Service Centre Vision for Accounts Payable – To satisfy the
clients/suppliers by paying Vision for Accounts Payable – To satisfy the clients/suppliers by
paying accurately and on time, as well as resolving issues in a timely fashion: accurately and
on time, as well as resolving issues in a timely fashion: Supplier Management •• Service-
oriented processes and scalable infrastructure; Service-oriented processes and scalable
infrastructure; •• Appropriate accountability to be supported by the management; Appropriate
accountability to be supported by the management; •• Optimal use of technology and of
automation; Optimal use of technology and of automation; •• Better communication among
all groups (Accounts Payable, Purchasing, internal Better communication among all groups
(Accounts Payable, Purchasing, internal clients and external clients/suppliers). clients and
external clients/suppliers). Purchasing Business Performance Dimensions – Sample of
 performance metrics for A/P Productivity Cost Efficiency Quality Customer Satisfaction
Manual Invoices/FTE Cost/Invoice (manual Days Payable Outstanding % Paid on Time
Satisfaction Survey payment) Accounts Lost discounts due to late Full (3 ways-matching)
Avg. number of hours to send invoices % calls abandoned Payable Cost/Invoice (EFT)
invoice to SSC Invoices/FTE % incorrect invoices First pass resolution Evaluated
receipts/FTE Average Invoice € Avg. number of hours to enter Amount/Vendor invoice First
pass yield % Average Cost/FTE Average hold Invoices/vendor time % invoices under €500
Duplicate payments collected Payments or avoided 24 hour % procurement Card Process
defects by reason resolution purchases to total purchases code under €500 % calls
answered in less than 3 rings Ramesh Krish Proprietary and Confidential P8
10. 10. Why a Shared Services Approach? Key Benefits Evidence of superior performance
Companies participating in an industry survey reported the Cost savings (e.g., reduction in
headcount, following results regarding their implementation of a SSC: administrative cost
reduction). On average, a ROI of 27%. Operational flexibility and customer service (e.g., by
establishing a SSC, divisions can concentrate Reduction of headcount by 26%. more on the
value-added activities of their core business). When Elizabeth Arden International moved to
a SSC, they saved: Improved growth. • 30% on administrative costs. • 60% reduction in
headcount. • 50% cut in working capital. Improved service quality. Cargill consolidated 130
separated accounts payable, accounts receivable and general ledger systems into its IT
coordination. SSC. This reduced A/P processing by 34% and the cost for cash application
processing by 20%. Facilitated ERP optimization. AlliedSignal reports a 30-35% savings in
accounting costs since they moved to a SSC. Tax savings. Shared Services is a method of
organization and operation in which support processes of an organisation are “centralized”
and independently structured. Ramesh Krish Proprietary and Confidential P9
11. 11. Alternative Shared Services Models A variety of factors have an influence on the
selection of the appropriate organisational model for a “Business Support Service”. Models
Related Influences Centralized Best suited where critical mass is necessary or present and
business model is focused on service levels. Key influences are business philosophy,
content and organisational scale. Hybrid Appropriate where organisational model is
undeveloped and strong standardization for selected functions is desired. Key influences are
business philosophy, future strategic direction, volume, and business unit integration.
Distributed Applicable when focus is on business unit autonomy and variability is significant.
Key influences are business model, content, business unit usage and business unit
integration. Hosted Relevant where natural organisational ownership is apparent and critical
mass is not necessary. Key influences are business model, content, volume, business unit
usage and organisational scale. Ramesh Krish Proprietary and Confidential P10
12. 12. Alternative Shared Services models The assessment of the available organisational
approaches to “Business Support Services” provides insight into the applicable structural
model. Illustrative assessment for several “Support Services” is presented below: Key
Characteristics Implications Purchasing Principally driven by Wholesale business with
substantial volume Close affinity to single business and Accounts Payable Directly tied to
supply chain with substantial volume natural process flow provide natural opportunity to
concentrate activity Check Disbursement Linked with supply chain and payroll with
substantial volume Moderate volume with some activity being conducted at Narrow process
scope and natural Bank Reconciliation businesses already relationship to cash management
suggests business unit responsibility Payroll High volume with direct relationship to broader
Human Multiple linkages to HR function offers Client X activities natural aggregation source
Security Services Low volume mixed activity set with partial outsourcing Travel Lower
volume with outsourced providers Infrastructure-related nature provides natural aggregation
source and Office Support Mixed activity set with very high selected volumes focused
management of outsourced Services relationships Facilities Management Low volume,
mixed activity set with partial outsourcing Ramesh Krish Proprietary and Confidential P11
13. 13. Opportunity Analysis Framework Cost Structure Comparative Management Segment
Analysis Analysis Analysis Knowledge Analysis - Where are What do we compare to? Where
are costs high Where does the large areas of cost relative to revenues? management
believe and what are the opportunities exist? primary drivers? Major Processes Competition
Business Units Interviews Functional / Internal Comparatives Customer Groups Focus
Groups Organizational Historical Performance Product Groups Workshops Line Item
Benchmarks/Best Channels Initial opinion can be Cost of Management Practices
directionally correct Geographic Reasonability Treated as a hypothesis, Standards then
tested with facts Ramesh Krish Proprietary and Confidential P12
14. 14. 4 Shared Services Deployment Ramesh Krish Proprietary and Confidential P13
15. 15. Shared Services Approach Approach for outsourcing There is a spectrum of solutions…
Evaluate Evaluate Assess Assess Solicit and Solicit and Finalize Finalize Supplier Supplier
Opportunity Opportunity Evaluate Bids Evaluate Bids Partnership Partnership Universe
Universe 4 Finance 4 Property services 4 Payroll Define functional Determine Define service
Conduct face-to- “candidates” supplier universe requirements, face discussions within
company specifications with finalists 4 Middle Office 4 IT Strategy & 4 Operations Establish
and metrics Development Compare qualification Review final 4 Regulatory 4 IT functional
criteria Develop and proposals and reporting Infrastructure performance distribute RFP
select vendor(s) with industry Conduct vendor benchmarks 4 Global 4 Data interviews, as
Manage RFP Develop required response transition plan procurement processing in Assess
process jointly with Finance intangibles, such Evaluate vendors vendor as service, against
criteria Evaluate bids quality to determine and select Begin migration Shared service Service
companies Outsourcing improvements short list finalists and monitor centres performance
Finalize list of functions to be outsourced Savings can be achieved by… • Establishing
shared service centers for core activities allows organizations to achieve economies of scale.
• Setting-up service companies allows organisations to operate on a more commercial basis
and to better understand performance. • Outsourcing non-core activities allows organizations
to focus investment and management attention on more critical issues. • Provides near-term
realization of cost savings and significant scale flexibility, particularly in multi-vendor
arrangements. Ramesh Krish Proprietary and Confidential P14
16. 16. The Shared Services Assessment Framework Multiple Multiple Systems Processes
Rationalize Systems Define Processes Move to One Commonize Policies System Move to
One Database Commonize Processes Shared ServicesOne Organization One Location per
Process Consolidate within Region Separate from Consolidate within Country Business Units
Multiple Multiple Locations Organizations Major Types Description Sample Processes
Handles routine transaction • Procurement Center of Scale based processes by leveraging •
Accounts Payable Services economies of scale and • Payroll standardization. • Travel &
Expenses Concentrates expertise to • ERP COEs Center of Expertise provide high-value
services to • Tax/Treasury Services internal customers at • Benefits competitive cost. • Legal
Establishes a partner • Internal Consulting Business Partner relationship between Services
Services organizational units to achieve • Strategy common goals. • Reengineering •
Government Provides a structure to support Corporate Steward central mission critical
Relations Services • Compliance objectives. • Fiduciary Ramesh Krish Proprietary and
Confidential P15
17. 17. Future Vision – Other Dimensions Other design elements – technology, facilities, position
definition, and management approach – are key elements that help define the organization.
Assessments of these dimensions to date have uncovered no impediments to achieving this
vision. Technology Facilities • Current financial and business systems are capable of
supporting • We will physically consolidate activities to the maximum extent the future vision
in the Country A possible and practical into four locations • Single Region A Financial
Platform (PeopleSoft) facilitates the • We will maintain a commitment to our existing
locations: implementation of the shared services center components of the - Location 1
future vision - Location 2 • Operational accounting is conducted primarily on three business
 systems (Bridge, WinBroker, and Project Accounting), and - Location 3 therefore the shared
services vision supports a multiple platform - Location 4 situation • We will be mindful of
selective concessions in centralizing and • Project is not dependent on upgrade and/or
migration technology consolidating activities into these centers, including retention of
initiatives key personnel and securing business area buy-in • Future movement of the
organization to one global financial platform will enhance our ability to share information
globally Position Definition Management Approach • As-Is Analysis and Detailed Design
Phases will help us identify • Accounting Shared Services Leader will need to be identified
the number of positions (e.g., AP clerks, AR clerks, field - Responsible for management,
measurement, control accounting associates) that can be consolidated in order to
procedures and accounting policies, and quality assurance facilitate operational flexibility and
cross-training opportunities, within the shared services organization improved management,
and reduced costs - Instrumental in negotiating and establishing Service Level • Job
descriptions for Regional and Business Area personnel will be Agreements with the internal
clients carefully defined - Direct reporting to Finance Controller - Business Area Financial
Planning & Analysis roles will likely require the greatest clarity • Business Area functions
continue to have primary reporting to Business Area management, with dotted line reporting
into the - Recently updated job descriptions will facilitate this process accounting
organization • Corporate functions continue to report to Finance Controller • Continue to
outsource payroll Ramesh Krish Proprietary and Confidential P16
18. 18. Implementation Approach Guiding Principles Implementation guiding principles are
critical to establishing a common approach amongst management to designing and
converting to an improved organization. • Balanced Approach – We will design the
accounting shared services organization to: - Support business area strategies and needs -
Balance service quality expectations with control, consistency, and cost considerations •
Strong Business Area Working Relationships – We will actively, but judiciously, engage
finance and accounting management to: - Create common business understandings and
promote buy-in - Instill a collaborative approach that demonstrates an understanding of
business area needs • Fact-Driven Analysis & Decisions – We will develop a detailed fact
base that will enable: - Design and implementation decisions - Measurement of financial and
operational success • Minimally Invasive During Close Periods – Design and implementation
efforts must be sensitive to financial close process requirements of accounting areas •
Aggressive But Realistic Timeframes – A successful implementation must proceed
expeditiously to minimize implementation risk • Staged Implementation Approach – Tackle
one business area at a time • Commitment to Project Management – Get it done right.
Mitigate service quality reduction risk Ramesh Krish Proprietary and Confidential P17
19. 19. Implementation High-Level Plan An aggressive, but realistic, implementation strategy
must be affirmed to successfully design and implement the future vision. DESIGN DESIGN
IMPLEMENT IMPLEMENT Implementation As-Is Assessment To-Be Design Detailed Design
Implementation Planning • Formalize a detailed, • Translate vision into • Refine and expand •
Develop practical work • Execute operational Objectives Objectives fact-based assessment
preliminary design of blueprint for future plans and associated changes in phased of existing
accounting future accounting accounting organization accountabilities to rollout operations
operations; validate implement envisioned • Capture value outlined with key stakeholders
changes in business case Project Management Office – Regular Communication, Service
Level Monitoring, Status Reporting and Problem Resolution • Baseline/collect • Isolate
opportunities to • Refine and expand • Compare existing state to • Implement people,
process operational and financial consolidate, simplify detailed design; tailor to future
detailed design to and technology changes data for existing operations, improve location
operations, understand change required to realize operations: controls, and gain scale
including: requirements transformed business − Cost economies − Process flows linked •
Develop change strategy model − Headcount • Modify existing to systems and roll-out plan •
Charter discrete projects Key Activities functional designs, − Business and - Select and
 prioritize that collectively deliver Key Activities − Transaction volume − Service Levels
including: financial systems BA roll-out needed change − Systems − Standard processes
linked to processes • Identify timing and • Establish Project − Standard jobs − Job designs
linked to prioritization of required Management Office to • Identify and evaluate • Refine high-
level business skills IT projects, if any track progress against inconsistencies among case •
Project P&L for the - Evaluate IT capacity milestones and area: • Validate technology
business post- given existing project dependencies − Process flows readiness:
implementation portfolio • Enroll employees in − Job designs − Business systems • Identify
communication • Develop detailed change efforts through • Enhance business and
communication and − Financial systems requirements and create implementation plan with
financial systems maps, by training • Validate To-Be design communication plan clear
accountability for all area with key stakeholders • Begin negotiating service major milestones
level agreements (SLAs) Timeline Timeline 5 months5 5 months5 Ramesh Krish 5
Proprietary and Confidential P18 Anticipates a November 1, 20XX start; timeline will be
challenged as each phase is completed.
20. 20. Project Organization Enrolling key stakeholders, business area management and Subject
Matter Advisors in the project from design through implementation will be critical to project
success. Roles & Responsibilities − CFO −Business Head • Provide active, visible and vocal
leadership Steering Committee Steering Committee − Controller −[HR] • Champion Business
Area buy-in − Business Area CFO 1 −[IT] − Business Area CFO 2 −[Tax] • Execute
enterprise-wide communications/ recommendations Project Sponsor − TBD • Serve as main
voice for project – change advocate/ opinion leader Project Sponsor • Set overall project
direction, set priorities and allocate resources Project Manager Project Manager − TBD •
Responsible for overall engagement execution and management • Identify issues & risks and
ensure escalation/ resolution Business Area Teams Business Area Teams Program
Management • Support Team Leads in project planning and delivery • Track status and
manage issue identification and resolution BU 1 BU 1 • Design and deliver change
management programs Team Rosters: BU 2 BU 2 − 1.0 Team Lead Team Leads • Manage
collection and synthesis of data, internal benchmarks, and design elements − X.0 Business
Area Lead BU 3 BU 3 − X.0 Analysts • Facilitate meetings with key executives, business
areas, and functional teams Program Program − TBD SMAs • Participate in site visits,
planning sessions and development of deliverables Management Office Management Office
BU 4 BU 4 • Skill set needs: Operational performance improvement; Accounting process
redesign; Benchmarking study design and execution; Implementation planning; Strong oral
and BU 5 BU 5 written skills; Visioning Sessions; and Group facilitation Business Area Leads
Other Other • Act as liaison with represented Business Area Tax Team Tax Team • Deep
business area/ technical knowledge and familiarity with its accounting roles Human
Resources/ Human Resources/ • Participate in data gathering, visioning, and planning − 1.0
Team Lead − TBD SMAs Facilities Team Facilities Team Analysts − 1.0 Team Lead •
Perform selected benchmarking, business case, process & organization analysis − X.0
Analysts activities Treasury Team Treasury Team − TBD SMAs • Assist with deliverable
development − 1.0 Team Lead Subject Matter Advisors (SMAs) − TBD SMAs Technology
Team • Help anticipate, identify and resolve issues Technology Team • Provide accounting
and shared services center subject matter expertise and support, − 1.0 Team Lead as
needed − X.0 Analysts • Reference applicable best practices − TBD SMAs Ramesh Krish
Proprietary and Confidential P19
21. 21. 5 Alternate Shared Services Models Ramesh Krish Proprietary and Confidential P20
22. 22. Outsourcing - Approach 4 Performing processes/services utilizing internal human and
technology resources 4 Improvements in processes/services leverage techniques such as
process redesign, service center implementation, technology infrastructure improvement and
role redesign Insourcing Enterprise Enterprise Infrastructure & labor cost Process, Transition
savings Process Service or Service or Function Function 4 Utilizes a combination of
insourcing and outsourcing solutions, with a third party vendor providing human and/or
 technology resources as an extension of the employer’s resources 4 Business process
redesign typically accompanies the transition to a co-sourcing arrangement 4 Additional
improvements leverage service center implementation, technology infrastructure
improvement and role redesign Hybrid/Co- Sourcing Infrastructure & Enterprise labor cost
Enterprise Service Provider savings Process, Process, Service or Service or Function
Transition Function 4 Typically, a pure outsourcing arrangement called full outsourcing is the
final phase in the transition to an outsourcing strategy 4 Outsourcing is where an
organization transitions human and technology resources related to non-core competency
processes/services to a service provider with expertise in administering the particular
process or processes 4 New responsibilities emerge for the organization to manage the
service levels of the service provider Total Outsourcing Enterprise Enterprise Service
Provider Process, Infrastructure Process, Service or Transition and labor cost Service or
Function savings Function Ramesh Krish Proprietary and Confidential P21
23. 23. Outsourcing – Options Assessment Technology Typical Functions For Off shoring
Deutsche Bank IT Development in Bangalore (JV) Historical Low 4 Transactional sourcing
environment, 4 DB established an IT development centre in 1992 / Typical C 4 Single
transaction technology projects restricted to specific IT processes / O to provide services
across banking and finance Off T M 4 Application development and infrastructure E P
functions shoring C L management E 4 Limited risk profile H X 4 Infrastructure development
and 4 The facility spans 50,000 square feet with 450 Starting I T management professionals
and is supported with dedicated Point 4 Maturing global market place Y 4 Full enterprise
technology delivery high-speed satellite communication links High Number of Functions
Illustrative ABN-AMRO Card Processing in Chennai Business Process (BP) Typical
Functions For Off shoring (Outsourced) 4 Strategic sourcing opportunity Low 4 ABN
outsourced card processing functions as part Expansio C of a 10 year deal to a facility in
Chennai n Area / 4 Rapidly growing market of O M Alternativ processes to offshore, enabled
by P Customer Finance 4 Initially 60 software professionals will manage maturing service
providers, global IT B L application hosting, data and back office e Starting P E Relation- &
Human Card and telecoms infrastructure X ship processing Point I Admin- Resource
Services 4 Evolving focus for many firms due to T Manage- istration s 4 ABN estimate that
they will increase card services Y ment the potential for significant cost cost efficiencies by
15-20% High Number of Functions savings Standard Chartered Asia Pacific Hub (Multiple
Hub Possible Structures For Off shoring Models) Building 4 Creation of a regional / global 4
SC has developed an extensive hub network Significan shared services organisation Low
within the region, which is managed centrally t Scale 4 Single function regional hub through a
business hub in Singapore 4 Due to their complexity, hubs require C And / Or O significant
levels of commitment but M 4 The Chennai facility was consolidated in 2002 into Global 4
Multi-functional regional hub HP a global multi-functional hub, dealing with both are
potentially the most rewarding U L Diversity back-office processing and IT development
option B E 4 Multi-functional, multi-entity global Of X hub requirements 4 Hub strategy can
be established as I 4 Multi-hub network with central Operation T the aspirational goal
towards which Y management control point 4 SC are investing $40 million into a second
back- s technology and business process High Number of Functions office processing hub in
Kuala Lumpur, primarily strategy can evolve for their Asia Pacific businesses Ramesh Krish
Proprietary and Confidential P22
24. 24. Outsourcing – Execution Risk Assessment Split …Or …Or Here Here
Here………....................... Or Lift In Its Entirety Advice / Customer Customer Support
Execution / Operations Technology Facing Service Services Transaction Key Criteria For Off
shoring And Organisational Considerations 4 Physical access to clients is required 4 The
current resources supporting the Requires activity are viewed as irreplaceable Competitive
Physical 4 Physicalaccess to other staff or Advantage or 4 Currentresources represent a
competitive G Proximity or departments is required on a regular basis Irreplaceable
advantage to the bank, will not relocate O Similar Time 4 Physical access to an external
 entity is Resource and cannot be allowed to go to a / Zone required on a regular basis
competitor N O 4 Regulatory or compliance statutes dictate 4 Labor pool at new site does
not contain a G Regulatory or a location for the activity Skill Set regular supply of required
skill set AND O Compliance 4 Internal audit or risk policy requires (at Deficiency of skill set
requires uncharacteristically high Requirement least given current process) that activity New
Site lead time to train, posing an unacceptable remain in current location level of risk GO 4
Strategic priorities C 4 Specialist vs. commodity O 4 Client interaction channels 4 Short-term
vs. long-term N 4 Product / service mix driven by business S 4 Internal vs. external I
requirements D 4 Complimentary roles and skill Skill Sets & Organizational 4 Mapping of
business and technical E categorisations / combinations Types of Structure & requirements
R 4 Mix of types of resources / alternate A Resources Processes 4 Timing of delivery
sources T 4 Manner of interaction with vendors I 4 Resource sharing opportunities O 4
Organisational interdependencies N 4 Resource costs vs. benefits S 4 Migration
requirements for alternative 4 Flexibility of access resourcing model Ramesh Krish
Proprietary and Confidential P23
25. 25. 6 Functional Placement Ramesh Krish Proprietary and Confidential P24
26. 26. Future Vision – Functional Placement In order to determine which accounting functions
and activities could be included in a shared services environment, a selection framework was
designed and applied across Company A Country A Shared Services Selection Criteria
Value to Business Area Applicability Screen Screen Client-Centric Attributes Content
Governance High Volume Risk Strategic Value Specialization Transactional Common
Potential Accounting Shared Functions Services Candidates •Is the function •Does the
function •Is the function •Is the function Key critical to require unique skills or related to
discrete performed by or for Enablers business and/or knowledge? areas of work? multiple
business business areas with little area(s)? customization? •Does the function •Is the
function •Are significant •Would the risks of directly touch the related to policy or volumes of
the function execution client or client stewardship? transactions be increased? systems in a
handled? material manner? Is there high-risk effect on the Ramesh Krish client? Proprietary
and Confidential P25
27. 27. Future Vision – Functional Placement The degree of consolidation was determined by
defining three levels of the envisioned organization and establishing principles to help
determine functional placement. Levels Functional Placement Principles Implications •
Corporate governance and policy-setting • Global activities remain at a corporate level that
functions serve as a governance or policy-setting entity • Compliance tracking functions •
Some global functions could be “outsourced” to Corporate Corporate • External regulatory
relationship functions: the regional shared services center (Global) (Global) - Reporting &
regulatory compliance - Shareholder relations • Enterprise-wide financial analysis and
planning • Common, homogenous functions • Consolidation of transactional activities with •
Scalable, transactional processes common processes promote: • Accounting activities that
do not require - Consistent and standardized processes and controls Regional Regional
intimate client involvement - Higher data integrity (Country A) (Country A) - Greater
operational flexibility and scalability - Lower cost structure • Increased visibility into
enterprise-wide financial information • Activities that require proximity to client personnel •
Reduced focus on low-value transactional or specialized knowledge of local markets
processing increases focus on sales and service • Activities that produce direct accounting
inputs • Increased financial analysis capacity Business Business into financials of clients
and/or underwriting Area Area • Client-centric activities remain close to clients partners •
Business Area Financial Planning & Analysis activities Ramesh Krish Proprietary and
Confidential P26
28. 28. Future Vision – Functional Placement Accounting activities are divided across five
functional groups and classified according to the organization level at which the activities will
be performed (slides 8-9). Activities2 classified as “Regional” are strong candidates for
centralization into an accounting shared services center. Financial Planning & Client-Centric
 Non-Client-Centric Financial & Regulatory Analysis Operational Accounting Operational
Accounting Financial Accounting Reporting • Translate business strategy • Record
operational transactions • Record operational transactions • Record general ledger • Prepare
accurate, valid into operational and capital and prepare accounting data and and prepare
accounting data transactions at the corporate reporting to meet statutory, plans for parent
company and reports and reports (global) level and at the SEC, and Shareholder needs
Description Description business areas • Produce direct accounting inputs • Primarily for
internal use; no regional level in shared • Support operations with into financials and/or
access clients rely significantly on service centers reporting analysis and advice financial
systems of clients function for external reporting • Monitor and maintain general and/or
underwriting partners; ledger accounts key part of sales and service process • Possible
Shared Services Center All Activities Reside at • Fiduciary Accounting • General Ledger •
Specific Business Area Audits & to support Business Area Business Area Level − Fiduciary
Payables − GL Processing Regulatory Reporting, if any Analysis − Fiduciary Receivables −
Journal Voucher Processing − Client Setup − Shared Facilities & Expense • Client
Receivables Accounting − Premiums & Claims − GL Maintenance Receivable −
Consolidations − Premiums & Claims − Tax Documentation Collections − Non-Trade
Intercompany − Billing Transactions Regional − Client Service Time & Expense • Special
Events Accounting Regional • Revenue Only Accruals & − Mergers & Acquisitions
Commissions • Account Reconciliations − Revenue Accruals − Account Reconciliations −
Commission Calculations − Non-Trade Accounts Receivable • General Ledger & Collections
− Trade Intercompany • Cap-Ex Accounting Transactions − Capital Expenditures − Journal
Voucher Processing − Non-Capitalized Projects − Business Systems & GL Feeds − Fixed
Assets • Shared Services Centers – Existing − Payroll – HR & Benefits − Vendors Payable
Ramesh Krish Functions mapping and definitions are located in the Appendix. 2 Accounting
Proprietary and Confidential P27
29. 29. Future Vision – Functional Placement Activities3 classified as “Business Area” and
“Corporate” will not be consolidated into the accounting shared services center. Financial
Planning & Client-Centric Non-Client-Centric Financial & Regulatory Analysis Operational
Accounting Operational Accounting Financial Accounting Reporting • Internal Performance
Reporting • Fiduciary Accounting All Activities Reside at All Activities Reside All Activities
Reside • Analysis & Forecasting − Fiduciary Payables Regional Level at Regional or at
Corporate Level, except − Planning & Budgeting − Fiduciary Receivables Corporate Levels
Specific Business Area Audits − Client / Broker Profitability − Client Setup & Regulatory
Reporting • Billing & Collection • Client External Reporting Assistance, as required • Client
Receivables − Premiums & Claims Receivable Business Area Business Area • Overrides
from Carriers/ − Premiums & Claims Collections Suppliers − Billing • Contingent
Commissions from • Revenue Only Accruals & Carriers Commissions • Limited Revenue &
Accrual − Revenue Accruals Analysis − Commission Calculations − Incentive Compensation
• General Ledger − Deferred Revenues − Trade Intercompany − Bad Debt Allowance
Transactions Reserves − Journal Voucher Processing − Work in Progress Reserves −
Business Systems & GL Feeds • Quality Assurance • Internal Performance Reporting All
Activities Reside at All Activities Reside at • General Ledger • External Reporting • Analysis
& Forecasting Business Area Level Regional Level − GL Processing • Financial Statement −
Planning & Budgeting − Journal Voucher Processing Preparation − Client / Broker
Profitability − Shared Facilities & Expense Accounting • Financial Accounting • Quality
Assurance − GL Maintenance Governance − Consolidations − Financial Accounting − Tax
Documentation Policies & Procedures − Non-Trade Intercompany − Standards & Reporting
Eliminations Package • Special Events Accounting − Sarbanes-Oxley Corporate Corporate −
Litigation Compliance − Mergers & Acquisitions • Account Reconciliations − Account
Reconciliations − Non-Trade Accounts Receivable & Collections • Cap-Ex Accounting −
Capital Expenditures − Non-Capitalized Projects − Fixed Assets • Corporate Financial
Systems • Shared Services Centers – Existing − Investment Accounting4 Accounting
 Functions mapping and definitions are located in the Appendix. 3 Ramesh Krish 4
Investment Accounting is already in a shared services center. Proprietary and Confidential
P28
30. 30. 7 Finance & Accounting Process Design Ramesh Krish Proprietary and Confidential P29
31. 31. Accounting Functions The following is a list of all accounting activities separated into the
five functional groups. Functional Groups Financial Planning & Client-Centric Non-Client-
Centric Financial & Regulatory Analysis Operational Accounting Operational Accounting
Financial Accounting Reporting •Internal Performance •Fiduciary Accounting •Fiduciary
Accounting •General Ledger •External Reporting Reporting − Fiduciary Payables − Fiduciary
Payables − GL Processing •Financial Statement •Analysis & Forecasting − Fiduciary
Receivables − Fiduciary Receivables − Journal Voucher Preparation − Planning & Budgeting
− Client Setup − Client Setup Processing − Shared Facilities & •Financial Accounting −
Client / Broker •Client External Reporting •Client Receivables Governance Profitability −
Premiums & Claims Expense Accounting •Client Receivables − GL Maintenance − Financial
Accounting •Billing & Collections Receivable Policies & Procedures − Premiums & Claims −
Consolidations Assistance, as required − Premiums & Claims − Standards & Reporting
Receivable − Tax Documentation Collections Package •Overrides from Carriers/ − Premiums
& Claims − Non-Trade Intercompany − Billing − Sarbanes-Oxley Suppliers Collections
Eliminations − Client Service Time & Compliance − Billing •Contingent Commissions
Expense •Special Events Accounting from Carriers •Revenue Only Accruals & − Litigation
•Specific Business Area •Revenue Only Accruals & Audits & Regulatory Commissions −
Mergers & Acquisitions •Limited Revenue & Accrual Commissions Reporting, if any −
Revenue Accruals Analysis − Revenue Accruals •Account Reconciliations − Commission
Calculations − Incentive Compensation − Commission Calculations − Account
Reconciliations − Deferred Revenues •General Ledger − Non-Trade Accounts •General
Ledger − Bad Debt Allowance − Trade Intercompany Receivable & Collections − Trade
Intercompany Reserves Transactions •Cap-Ex Accounting Transactions − Work in Progress
− Journal Voucher − Capital Expenditures − Journal Voucher Reserves Processing − Non-
Capitalized Projects Processing − Business Systems & GL − Fixed Assets •Quality
Assurance − Business Systems & GL Feeds Feeds •Corporate Financial Systems •Shared
Services Centers − Payroll – HR & Benefits − Investment Accounting − Vendors Payable
Ramesh Krish Proprietary and Confidential P30
32. 32. Business Area Financial Planning & Analysis – Functional Description Internal
Performance Reporting responsibilities: Prepare reports comparing budget amounts to actual
performance and current period performance to prior periods, reports projecting future
performance, and special or ad-hoc financial and operational reports based on managerial
needs Review established strategic and business performance targets, assess and support
business performance reporting, balancing between internal and external information,
historical and predictive (leading) information and financial and non-financial information
Partner with operating management and act as business advisors; regularly attend
operational staff meetings Analysis & Forecasting responsibilities: Operate and maintain
budget tools, set up and populate assumptions, prepare planning guidelines, and produce
budgets for review Prepare strategic (multi-year), operational and capital Budgetary
Business Plans (1 year) Develop rolling forecast, collect and consolidate forecasts, perform
reiterations focused on identifying ways to meet operational targets (e.g., “what-if” scenarios
and sensitivity analyses) Prepare reports analyzing clients and staff area profitability, as
appropriate Assess opportunities for strategic alliances, acquisitions and divestitures
Overrides from Carriers/Suppliers and Contingent Commissions from Carriers
responsibilities: Monitor and assess commission fee arrangements with carriers and
suppliers that are based on previously selected criteria for volume or item counts and ensure
appropriate monthly accruals are recorded on a timely basis based on Company A revenue
recognition policies Monitor and assess commission payments from carriers and suppliers
that are based on previously selected criteria for volume and underwriting results and ensure
 appropriate monthly accruals are recorded on a timely basis based on Company A revenue
recognition policies; challenge reasonableness of reported underwriting results factor Limited
Revenue & Accrual Analysis responsibilities: Monitor and assess incentive payment
programs for personnel that are based on factors such as revenue and pre-tax income, and
ensure appropriate monthly accruals are recorded on a timely basis based on Company A
revenue recognition policies Analyze revenue and expense recognition for long term service
and sales contracts to ensure deferred revenue/ expense reserves are recorded on a timely
and appropriate basis based on Company A policies. Monitor contract for any long term
potential profitability deficiencies Monitor and assess required reserves for Business Area or
company receivables and unbilled consulting services Quality Assurance responsibilities:
Evaluate reasonableness of business area results through variance analysis, discussions,
and review of business and financial systems data and identify unexpected or unusual items
The Business Area’s Financial Planning & Analysis resources will focus on business area-
driven analysis and reporting. The following broadly describes the envisioned responsibilities
of the future FP&A position in the Business Area. Ramesh Krish Proprietary and Confidential
P31
33. 33. Accounting Functions – Mapping Summary The following matrix (on slides 20-22) maps
all accounting activities to their “future” organizational placements. Those activities listed in
the “Regional” column are the initial targets for a shared services center. All other
functionality remains unchanged from current positioning. Corporate Regional Business
Function/ Activity (Global) (Country A) Area Internal Performance Reporting + + Analysis &
Forecasting • Planning & Budgeting + + Financial Planning & Analysis Financial Planning &
Analysis • Client/ Broker Profitability + + Billing & Collections Assistance + Overrides From
Carriers/ Suppliers + Contingent Commissions From Carriers + Limited Revenue & Accrual
Analysis • Incentive Compensation + • Deferred Revenue Analysis + • Bad Debt Allowance
Reserves + • Work in Progress Reserves + Quality Assurance + + Fiduciary Accounting •
Fiduciary Payables + • Fiduciary Receivables + Operational Accounting Operational
Accounting • Client Setup + + Client-Centric Client External Reporting Client-Centric Client
Receivables • Premiums & Claims Receivable + • Premiums & Claims Collections + • Billing
+ Revenue Only Accruals & Commissions • Revenue Accruals Accounting + • Commission
Calculations + Ramesh Krish Proprietary and Confidential P32
34. 34. Accounting Functions – Mapping Summary Corporate Regional Business Client-Centric
Function/ Activity (Global) (Country Area A) Client-Centric Operational General Ledger
Accounting Operational Accounting • Trade Intercompany Transactions + • Journal Voucher
Processing + • Business Systems & GL Feeds + Fiduciary Accounting • Fiduciary Payables +
• Fiduciary Receivables + • Client Setup + Client Receivables Operational Accounting
Operational Accounting • Premiums & Claims Receivable + Non-Client-Centric Non-Client-
Centric • Premiums & Claims Collections + • Billing + • Client Service Time & Expense
Accounting Revenue Only Accruals & Commissions • Revenue Accruals Accounting + •
Commission Calculations + General Ledger • Trade Intercompany Transactions + • Journal
Voucher Processing + • Business Systems & GL Feeds + General Ledger & Cost Accounting
Accounting Accounting • General Ledger Processing + + Financial Financial • Journal
Voucher Processing + + • Shared Facilities & Expense Accounting + + • General Ledger
Maintenance + + Ramesh Krish Proprietary and Confidential P33