Sizing with precision Driving efficiency in an HR shared

© 2014 Deloitte LLP. All rights reserved.

Sizing with precision Driving efficiency in an HR shared services environment

Neera MayorCraig Renshaw 19 November 2014 Deloitte

© 2014 Deloitte LLP. All rights reserved.2 Deloitte Shared Services, GBS & BPO Conference 2014

Agenda

• Introductions

• The traditional approach to SSC sizing

• A new approach to sizing

• Tools and techniques available• Overall approach• Marrying quantitative and qualitative research techniques• Tools for efficient sizing (inc. Demos)

• Questions

© 2014 Deloitte LLP. All rights reserved.3 Deloitte Shared Services, GBS & BPO Conference 2014

Introductions

Neera MayorManager

People & Workforce Analytics

Craig RenshawSenior Consultant

People & Workforce Analytics


The traditional approach to SSC sizingA static approach that may not maximise efficiency or effectiveness

4 Deloitte Shared Services, GBS & BPO Conference 2014

A rear-view mirror approach

No clarity on what ‘good’ looks like

Relies on intuition to identify skills and capability needed

Productivity and service levels not

known

Unable to articulate the relative linkage between the drivers of cost and quality*

and the output

* Based on the 2013 Deloitte Global Shared Services Survey, these are the top 2 considerations when running a SSC

A significant improvement to SSC sizing can be gained by working

additional data harder

What value does this approach create? What

impact does this approach have on sizing?

SSC

val

ue c

reat

ed

Analytics maturity

Input

Information

Insight

Intelligence

Sizing is not agile or pro-active


A new approach to sizingBalancing cost, quality and risk


Service excellence

Cost

Commercial framework

Waste and productivity

Quality

Process optimisation Capability

Risk

Analytic driven insights

Business impact

SSC sizing analytics tools can be used to underpin the cost, quality and risk levers and optimise the sizing profile in light of the

Service excellence can only be achieved by

balancing the (potentially

conflicting) levers of cost, quality and

risk

Labour quality and cost are identified as the two most important factors to consider when planning a SSC** Based on the 2013 Deloitte Global Shared Services Survey

Understand the current waste and relative productivity of the

SSC, in the context of the commercial framework to optimise the cost profile

Optimise the processes that are sub-optimal/’broken’ and

understand the capability of the staff involved in each process to improve service quality

Gain insight as to the key drivers of risk (e.g. low

retention) and understand the business impact to reduce the

business risk

TOOLS AVAILABLE

Solution impact

analysis tool

T&A AnalysisProcess

Workshops

Process Optimisation Performance Index

Sizing Engine

Dashboards

PAM


How the approach enables sizing decisionsThe new approach enables higher value questions to be answered


SSC

val

ue c

reat

ed

Analytics maturity

Input

Information

Insight

IntelligenceIf I was to introduce automation into process A or develop

more capability in process B, what does that do to my capacity and sizing levels in the future?

Which of my processes could be further optimised and by how much?

What happened to customer satisfaction scores when attrition levels increased?

How many days were lost due to absence?What were my case volumes by channel last year?


Tools and techniques availableAnalytical tools and big data can drive better sizing and capacity planning


Waste and productivity

Time and Activity Analysis

Process deep dives

Process Analytics Modeller (PAM)Sizing Engines

Process optimisation and capability

Understanding where the biggest costs are incurred and where the biggest benefits can be

achieved

Solution impact analysis tool

Analytic-driven insight Business impact

Using PAM, and live dashboards to dynamically monitor the ongoing impact of the sizing

Commercial framework

Process Optimisation Performance Index

Understanding where productivity is compromised and where the most waste is seen

Understanding how processes can be optimised and the capability

needed toimprove quality

Understanding what the sizing looks like and the key drivers of

cost and quality

Live dashboards


Appendix

8


Understanding waste and productivity


The Time & Activity analysis revealed what HR looks like today, identifying high-level opportunities to optimise labour distribution across 18 HR processes. The findings have helped us understand how we can work more effectively to position ourselves to support the business in this time of change.

Time & Activity Analysis

Over 60 HR processes were mapped with reviews held against to quantify their effectiveness and efficiency against measures like automation. The process guidebooks that were produced documented the level of opportunity for each process area.

Process Deep Dive

The business issue What have we achieved?

The client wanted to understand in detail the current state of HR function i.e. how people in the HR function are spending their time across the different processes and activities that made up the taxonomy.

Methodology

• Quantitative information -conducted a survey to identify time and cost metrics associated with HR function

• Qualitative information - interviews with key stakeholders to identify current challenges and opportunity

• Developed analytics framework to carry out the analysis and gather complete view of HR organisation

Process Optimisation Performance Index (’POPI’)

POPI is measured index that can be used to rank the processes in terms of time efficiency, related cost and quality. This combines findings from the Time & Activity Analysis with Deloitte’s subjective interpretation of information identified from the process review workshops. The output of this work will be a prioritised profile of processes relative to their opportunity for improvement.


Planning for the future


Driving towards operational excellence with leaner HR function

The precision analytics model is a tool that has been developed to add granularity to the process optimisation performance index.

Precision Analytics Model


• How determine impact of changes in different process components to help measure how changing different leavers affects the client processes and shared service centre.

Methodology

• Modelling impact – build a sizing engine which will be assumption-based, volumetric-driven model against the service catalogue to consider demand relative to intended service levels.

• Precision Analytics – use this to understand the impact of changes in different grades etc.. on the current cost metrics of the processes.

Sizing Engine

Helps to understand the financial impact of changing different components that affect the HR function. E.g. reducing level of FTE of certain grade in administrative tasks

Flexibility of changing factors identified through T&A and process workshops to determine ultimate impact on POPI score. Therefore, how the level of opportunity changes as different leavers are adjusted.

Analytics & Insights

Analytics utilised across HR services to create

visible easy to use measures and identify

key trends, hotspots and interventions that help support the business going forward. Using

case volume metrics and organisational design data, forms basis of

transformation assessment.

Proactive and real time support for the business

Size the HR transformation to deliver effective service based on agreed HR operating model. The model has been used for estimating the size of the HR function, considering the right number of resources.

Three key variables were identified:1. volume of work2. number of people3. target level of service

These variable are interrelated and by movement in these it affects, effort level, productivity and balancing factors.

The goal of the model was to ensure the

variables remain in balance and improve

service level


Value driven by solution initiatives


Driving out areas that can increase costs and reduce benefits

Solution initiatives were analysed across four broad categories i.e. technology, service delivery, people and process.

Business case framework


• High pressure to reduce costs and improve efficiencies

• Inflight IT Roadmap for Oracle Fusion with a need to understand potential benefit realisation

• Inconsistent HR Services structure and productivity

• High level of activity rework• Multiple inflight organisational

transformation programmes• .

Methodology

• Used a comprehensive excel model to calculate the net benefit over a five year period.

• The model analysed the financial cost/benefit associated with each initiative identified for the HR function.

• Assumption were made around WACC, length of roadmap etc… and relied on information from HR team

Financial analysis

Encompassed with cost and benefit assumptions from other work streams e.g. shared service centre, business partners and resourcing. The three key deep dive areas for this client.

Ability to hold HR accountable to deliver

against Business Case whilst delivering

value. Formed foundation for HR

transformation and provided target sizing

and service scope for HR operations that was key to understanding the

end state requirement for the shared service

centre.

Over the 5 year period the technology and process supported net benefit was c. £20.8m which was mainly solutions related to implementation of Oracle fusion.

£46m net benefit from solutions clustered under HR and organisation optimisation.

Benefits realisation

Sources of value are created


New ways of working


Improving service value by redesigning the structure of the HR function

3 phase organisation view created in OrgVue using a top down and bottom up approach

Bottom up – inputs from functional streams and key stakeholders from the client

Top down - numbers from business case and 45% resizing ratio

3 Phase OD design

The business issue What have we achieved?• Opportunities for efficiency were

identified by consolidating transactional activities into a single shared service centre over two years

• Bringing the opportunity to life required visualising the phased transition so the client could better understand how their HR organisation would change over the transition period

Methodology • OrgVue was used to visualise the

current As-is organisation

• To-be organisations were developed in OrgVue over 3 phases to visualise how the organisation would change

• Key inputs were the business case and transformation journey. T&A analysis provided context for developing assumptions and principles

HR Operations into One HR

Based on the scoped challenges and

opportunities, leading practice and design principles the To-Be operating model for HR Shared Services

was developed to achieve the business

case targets

HR operations formed one of the three key pillars of the new HR Operating Model

Objective was to transition as much transactional activity as possible into shared services, creating operational efficiency and truly strategic Centres of Expertise

3 phase plan sees shared service centre double in size as services transition over

Sources of value are created



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Sizing with precision Driving efficiency in an HR shared