Want to add value to your organization? Take a close look at the concept of
financial shared services, but be prepared to become not just an agent of change
but also education. During the past two to three years, my company DENTSPLY has
been enjoying a significant growth spurt, both internally and through
acquisition. With more than a $1 billion in sales, we had 14 separate divisions
in North America alone, handling everything from the selling and distribution of
dental products to manufacturing, each with a fully staffed financial accounting
department headed by a controller. Our operating margins were strong, even with
each unit having its own version of receivables, payables, payroll, fixed asset
tracking and travel and expense reimbursement. Nobody's numbers looked that much
out of line, but each unit and each units financial management clearly had a
unique set of priorities and were achieving widely differing standards of
efficiencies because of it.
Nothing was broke, but let's just say we weren't getting the mileage out of our
resources that we should have been. Couldn't we do better if we eliminated some
of the obvious duplication of effort? Still, on the whole managers enjoyed this
level of autonomy.
That's when we embarked on a mission to convert not just the systems at DENTSPLY,
but, more importantly, the way our team of financial managers operated and
thought. Initially, some were reluctant. Since no one was falling that far short
in numbers, they held to the old adage: Why fix it?
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Making the Case
The first step: Convince the various teams of the need for any change. We began
with a benchmarking study. The study measured the number of full-time
equivalents participating in specific finance functions, the number of
transactions processed, and the resulting cost per transaction for our
organization. Clearly, there was room for significant improvement and, needless
to say, significant savings. The most critical part of the implementation
is building a solid case for change, says Jane Nauman, my director of Shared
Services. By the end of the study, at least managers saw the need to
reassess.
Next, it was important to get the implementation team on site, building its
knowledge base. We acknowledge that while we had a vision of our future, it was
the division managers and the people handling the work day-to-day who needed to
educate the new shared-services team about the way things were currently
operating.
Step Three: We identified financial functions
suitable for centralized processing and developed a service delivery model for
each function. Our approach was to address a few process improvements at a time.
My motto: Yard by yard, life is hard; inch by inch life's a cinch. The finer
points of implementation would be attempted in a second stage.
Start at the top trying to explain the necessity for change, but never end
there. We knew that to make this program successful, we had to engage the
thinking of all of the divisional finance staff. It wasn't always good news,
either: Some of the staff faced either a change of duty or losing their jobs
entirely. For this reason, the plan cannot be just dumped on people in one full
swoop. It would took many meetings and definitely a lot of hand-holding.
Today our shared-services center includes the functions of accounts receivable,
credit and collection, payroll, accounts payable, travel and expense
reimbursement, fixed-asset tracking and general ledger accounting. While
division controllers still retain responsibility for planning, analysis and
control functions, their roles have been enriched, evolving into business
partners to the general managers.
The success of the program is clear in the numbers: DENTSPLY has cut its
transactional costs by 50%, saving $2 million annually. But shared services does
much more than that. We have also created a team of experts in all areas of
transactional processing, adept in financial systems management throughout the
organization. So while the shared-services concept began as an engine of change,
it is now at DENTSPLY helping to build the foundations for stable growth.
William Jellison joined DENTSPLY International Inc. as CFO in 1998. DENTSPLY is
a York, Pa.-based dental equipment maker that expects to have approximately $1.5
billion in pro forma revenues in 2001.
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