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Jean Claude De Vera, LafargeDriving Global Vision of World Class Finance Management
Citation preview
DR Médiathèque Lafarge
World Leaderin Building Materials
World Leaderin Building Materials
SSON: Shared Services Week May 25th 2010
22 2
Agenda :« Finance Transformation:
Driving a Global Vision of World Class Finance Management »
1- LAFARGE
2- What Strategic Objectives for Shared Services ?
3- What Scope for Finance Transformation ?
4- What Delivery Model for Efficiency & Value Added ?
5- How to combine Service to Costs improvements andValue Added ?
6- Summary of Key Success Factors….
7- Questions / Answers
SSON Finance Transformation May 25th 2010
33 3
1- World leader in building materials (1/4)
Leadership positions in all our Businesses
World leader in Cement
No. 2 worldwide in Aggregates & Concrete
No. 3 worldwide in Gypsum
Operating in 78 countries
Employing 78,000 people
2,013 industrial sites worldwide
15.9 billion euros in Sales in 2009
753 millions of Current Operating Income
Listed on Euronext Paris stock exchange (CAC 40)
SSON Finance Transformation May 25th 2010
44 4
1- A worldwide presenceto benefit from different markets’ opportunities (2/4)
57,3%
34,5%
8,0%0,2%
CementAggregates & ConcreteGypsumOthers
31.6%
22.4%8.5%
9.2%
5.1%
12.5%
10.7%
Western Europe
North America
Middle East
Central and Eastern Europe
Latin America
Africa
Asia
Sales bybusiness line
Sales bygeographic area
SSON Finance Transformation May 25th 2010
in 2009 Revenues in emerging markets were > 50% of total Sales
55 5
1- Cultural diversity to enrich the Group’s skills (3/4)
About 40% in developed markets / 60% in emerging markets
Making diversity an asset… for a common performance culture
for sharing knowledge and know-how
for targeting excellence everywhere
for applying our values
10,0%
11,5%
10,3%
9,5%
5,2%
25,0%
17,0%
11,5%
France
Rest of Western Europe
North America
Mediterranean Basin
Central and Eastern Europe
Africa
Latin America
Asia
Split ofemployeesby region
%
SSON Finance Transformation May 25th 2010
66 6SSON Finance Transformation May 25th 2010
(4/4)
7 7
2- Strategic Objectives for Finance Transformation ?
Low
High
High
1Q
1Q
Peers
Eff
ecti
ven
ess
Efficiency
WorldWorld--ClassClass
Company X
1 - Cost reduction strategy
2-
Valu
eA
dd
ed
str
ate
gy
Transformation’s Strategies :
1- Costs reduction only:
Process optimisation only maydeliver up to 20% savings
SSC & Offshoring may deliver> 30% additional savings
2- Value Added development only:
Skills upgrades only may deliverValue Added to offset some Costs
3- Competitive Costs &Value Added :
National SSC to deliver contract’sGovernance (BU & Reg. SSC) &Compliance with local needs (datareliability for decision…) ®ulations (statutory, social…)
Regional SSC to deliver savings &End to End Process Optimisation,
Local Business Functions todeliver Value Added through LocalDecision support & PerformanceMonitoring
Group Functions to monitorStrategy, Performance, Resources...
3-Com
petiti
veCost
s
&V. A
ddedst
rate
gy
We target to be Competitive in term of Services Costs& to deliver Value Added to the Group & the Businesses
SSON Finance Transformation May 25th 2010
88 8
VALUEADDED
Todevelop
Todevelop
Todevelop
FULLY LOADED COSTS
Research &Development
Strategy& Performance
Monitoring
Sales &Marketing
DecisionSupport
Legal & Tax
Employee’sHire to Retire
Production& Logistics Sourcing
Infrastructure’sInstall to Support
Company’sRecord to Report
Customer’sOrder to Cash
<<<1
>>>1
Finance.
VAFLC
VAFLC
Supplier’sPurchase to Pay
HumanResources
IS
Strategic Activities are in Businesses/Functions (Strategy, Decision Support &Performance monitoring) and End to End Data & Processes Activities are in GlobalShared Services (Alignment, Management of Transactions & Contracts….)
ServiceGovernance
3- What Scope for Finance Transformation ?(1/2)
SSON Finance Transformation May 25th 2010
9 9
4- What Service Delivery Model : a Distributed Model (1/3)
“Distributed model” to deliver competitive cost & value-added services:
1. Group/Division/BU Finance functions focused on core expertise such as:
Group Budgeting & Controlling, Tax Planning, Treasury & Insurance
Division & BU Budgeting & Controlling in order to provide Decisionsupport (Investment, M&A) and Performance monitoring (Action Plans)
Global SSC & FPO for Data reliability & end to end Process efficiency
2. A Global Shared Services function at Group level ensuring :
SSC Development & Performance Monitoring and Optimization
Data & Process standardization through Business Process & MDM functions
National SSC as front-offices ensuring :
Governance (SLA’s accountability vs. BU and offshore delegated transactions)
Compliance services (e.g. regulation compliance, GL, statutory andmanagement reporting, tax filing, relationship with auditors and administration )
Multi-country back-office SSCs for transactions (e.g. Payables, Expense reports,Intercompany, Receivables, …) with an objective of :
Leveraging cost arbitrage & mitigating the risk of operating too manycountries from one location.
SSON Finance Transformation May 25th 2010
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4- What Service Delivery Model : a Distributed Model (2/3)
Transactional processes
Data entries, Accounts Payable, Expense Reports accounting, AccountsReceivable (Cash application), Fixed Assets, Intercompany reconciliations…
Additional administrative activities
Governance & Compliance
Data analysis for Decision support
Working Capital Contribution
Cash Collection
Statutory reporting & Tax Filing
General Accounting
Transactions control vs General Ledger
Finance Strategy
& Management
Performance monitoring
Decision support
Budget & Forecasting
Tax Planning
Treasury
Credit
Management Reporting
Delegated Transactions
Multi-Country SSC
Value-Added Services
National SSC
Group /Division /
Business Unit
Finance Strategy & Management
SSON Finance Transformation May 25th 2010
11 11
Multi-Country SSC operating low costs transactions for several countries . Locations determined according tocapacities, time zones and languages. Multi Country SSC are interacting with National SSC.
National Shared Services Centers ensuring Front Office Governance vs all Customers (including on delegatedtransactions to Regional SSC) and Compliance activities such as General Accounting, Statutory reporting, Tax filing …
Global SSC Management team covering Global governance and relationship with Group and Business Divisions,in charge of all SSC developments, Finance, HR, Continuous Improvement Process, IS/IT.
4- What Service Delivery Model : a Distributed Model (3/3)
SSON Finance Transformation May 25th 2010
1212 12
Unit Prices : To reinforce Governance :
• Professional Services Billing Transparency vs. Management Fees• Switch to Outputs instead of contemplating Means (FTE)
To offer Flexibility to Business & keep the Challenge inside Shared Services :• Move from previous Fixed Costs to Variable Prices for Business Units• Implementation of flexible means and innovation within SSC
To encourage Continuous Process Improvements :• Business invoiced according to complexity : automation/standardization rewarded• Unit Prices easily Benchmarked with peers : CIP a permanent challenge
Value Added : To balance Cost reduction and Downsizing attraction :
• Upgrading Skills and Competencies within SSC and Outside• Allowing personal and professional developments to all employees
To contribute to Profitable Growth and Working Capital Initiatives :• Beyond delivering Services to Costs Commitments• Expertise sold to the Business Units or the Corporation allowing Exposure
To maintain Customers Intimacy and Proximity :• Difficulty to build confidence from Offshore SSC• Value Added could come from regular Relations to capture Issues, Objectives…
5- How to combine Service to Costs improvements & Value Added:Taking Commitments on Unit Prices and Value Added Delivery ?
SSON Finance Transformation May 25th 2010
1313 13
Data Reliability as part of End to End Process Efficiency : + Consolidation of Process Ownership :
• Order to Cash including Customer’s, Sales Articles Master Data• Purchase to Pay including Suppliers, Purchased Articles Master Data• Record to Report including Chart of Accounts, Business Structures Master Data• Hire to Retire including Employees Master Data
- Data may be used to support Process Delivery :• Process Owner may use data to solve downstream needs instead of either pushing
back demands or addressing it at the right level• E.g. Data duplications generated by lack of IS Contract management
• As a consequence Data redundancies may generate burden for Decision support• E.g. Customer’s and/or Supplier’s Business Consolidation
Data Reliability independent from End to End Process Efficiency : + Master Data Administration for unique, reliable and shared data :
• Master Data Management at same level than Process Owners• Potential synergies between Customer’s & Suppliers Administration• Specific Data Cleaning and Upgrades independently from Process Roll Out• Transversal team integrating Group, Business Unit and Functions expectations• Specific KPI on MDM to fuel Strategic Decisions on Business Developments
- Potential objectives divergence between Process and Data Owners :• But specific Organizations and Objectives doesn't means no transparency nor
cooperation between MDM and Process teams !
5- How to combine Service to Costs improvements & Value Added:
In Reinforcing Data Reliability vs Process Efficiency ?
SSON Finance Transformation May 25th 2010
1414 14
Decide on your Strategic Objectives:
Costs Reductions and/or Value Added
Competency or Expertise gaps
Build the Business Case matching objectives and culture:
Balance between Social and Economic
Speed of Change accepted by Sponsors
Design the appropriate Service Delivery Model:
Global vs Regional vs National vs Local contributions
Design the Framework of SLA and KPI supporting Change
Select your Transformation Model: Simplification,Standardization, Automation, Offshoring….:
Sequential or Parallel
Invest in Productivity Tools and not only in ERP
Invest on Data to enhance Decision Support
Deliver the Business Case:
ASAP to move up in the VA Chain and expand the scope
Communicate with all Stakeholders and beyond !
6- Summary : Key Success Factors for Finance Transformation
SSON Finance Transformation May 25th 2010
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Questions / Answers ?
SSON Finance Transformation May 25th 2010