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Slow, steady growth for Crown SSC Print E-mail
Wednesday, 21 July 2010

By Denise Bedell-Bleeker

Global corporations are increasingly looking to move back-office finance functions to a shared service environment to take advantage of cost savings, reduced headcount, and to drive standardization of processes. But not all companies are taking the same approach.

While many companies choose to have a full, global roll-out of a shared services project at one go, global relocation company Crown Worldwide is taking a slow-but steady-approach to moving group A/P and A/R functions to its shared services center (SSC) in Kuala Lumpur.

Alpesh Sanghavi, Director of Operations of the Group Shared Service Center, says: "This is Crown's only SSC so we support the whole world. When we started we were not sure what we should take on within finance: A/P, A/R or full books."

They eventually decided to support full books, but take on any level of work that group offices were looking to insource. Rather than retrenching a number of staff worldwide and forcing business units to roll functions over to the SSC immediately, Crown is encouraging group companies to move functions to the SSC when it makes sense for them, using a strong internal marketing campaign to build momentum.

This approach-treating the SSC as a cost center and having it market its services internally-is of growing interest to companies. First, it reduces the disruption and change resistance often experienced in such a project. Second, it spreads the costs over a longer period of time.

Third, the cost center approach encourages efficiency through internal competition. And finally, by ring-fencing the SSC it creates the opportunity either to market services externally down the road or to eventually sell the entire operation to a Business Process Outsourcer (BPO).

In fact, a number of BPOs got their start as an SSC for large multinationals. For example outsourcer WNS began life as the shared services center for British Airways. According to Sanghavi, Crown has not ruled out the idea of selling its services externally-although that is far down the road, he notes.

Sanghavi says that the big driver for Crown Worldwide was reducing internal disruption. He explains: "Because it is a typical scenario to experience resistance from certain quarters in such a roll out, and because we are not as big as an HSBC SSC, for example, we decided to start small and let them come to us. We didn't want to send the wrong signal, so in our initial marketing we said: when a person is leaving any accounting office worldwide, rather than replace that person locally let's move their function to the SSC. So we are supporting the organization, but we are not stealing jobs."

He says the goal is not to disturb local autonomy, but to be prepared to move things to Kuala Lumpur at a pace that is comfortable for local in-house clients and for the SSC itself.

The group's first client was Seoul. There was a single accountant in the Korean business unit, and the balance of the accounting work for Korean operations was managed by staff at the holding company in Hong Kong. In order to free up the staff in Hong Kong to focus on value-added senior analytical functions, they moved the full books of the Seoul operations to the shared service center.

Its business proposition is quite straightforward, notes Sanghavi: "We are very quality focused. We want the SSC to add value rather than simply act as a cost saving vehicle." But naturally cost savings are what draw clients in, so the group began by offering a 20-to-25 percent discount to local costs.

He adds: "If an individual in Canada, as an example, would cost $2,000 to do a certain activity-for all-in employee costs, including pay, insurance, medical, and so on-then we would give a straight discount on that and take the position to Kuala Lumpur. That would give Canada a cost savings and give us a margin to offset against other Asian clients-where the actual cost savings might not equal the 20 percent discount we offered."

The center has gone from a staff of one in 2006-Sanghavi himself, as he worked to design the structure in conjunction with the APAC CFO and group financial controller Tze Shen Kong-to a staff strength of 51, and the operation is still growing.

The SSC operates on a remote Citrix server technology, and the whole company uses a single instance of Microsoft Dynamics (formerly Great Plains) accounting software. The SSC also uses software from Interact for billing, job costing and the like. Plus, the group uses Basware's Enterprise Purchase-to-Pay solution (EPP)-including both Invoice Processing and Purchase Management systems-to handle everything on the A/P side from procurement to payment.

Today, Crown's SSC serves more than 40 countries were handling various accounting, financial and operational activities at different levels. The SSC is also home to Crown's learning and development team, and group marketing team.

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