In recent years, many businesses have embraced a Shared Services model for providing back office support. This movement toward the centralization of certain functional areas has been driven by the desire to achieve economies of scale and to free people from repetitive transactional processes. Human Resources (HR) is one area where the Shared Services model has become especially appealing, with many companies taking steps to consolidate HR under a single technical platform. But as Sasol a large oil and gas company in South Africa discovered, technology is only one piece of the Shared Services puzzle: The real challenges is overcoming the resistance to a new working environment, establishing a new team from diverse backgrounds, standardizing processes under a single enterprise-wide system and ensuring that a culture of measuring benefits is established.
Sasol Group is an integrated energy and chemicals company with production and marketing facilities in South Africa and 15 countries worldwide. Comprised of 12 separate enterprises, the company produces more than 240 fuel and chemical products for customers in almost hundred countries. Recently, the Sasol Group implemented SAP as its preferred ERP platform. No stranger to technological innovation, Sasol management realized that the next frontier in creating value was to look for business areas in which SAP functionality could be extended to eliminate inefficiencies and to provide economies of scale. The HR department quickly caught their attention as an area that could benefit from a group-wide common system. The implementation of mySAP HR across all 12 of the Sasol companies would enable HR to automate a number of administrative tasks, as well as allow for the consistent availability of management information.
Designing Shared Services
A standardized mySAP HR platform would also create the opportunity to develop a Human Resources Shared Services delivery model for transactional processing activities. This would free HR professionals from administrative responsibilities so they could concentrate on delivering services, managing strategic HR issues, and assisting line partners in achieving business objectives.
The implementation of Shared Services would affect not just the HR personnel, but all employees. Everyone would need to adapt to the new ways in which the human resources division of their organization would function. This implied that, in order to be successful, Sasol and its implementation partner, Deloitte, would need to make change management the cornerstone of the transition plan. Designing Shared Services projects is relatively straight-forward, particularly for the traditional high-volume processes. The approach for selecting the technology, developing the organizational design and reengineering processes is highly transferable between projects. The real challenge is overcoming the change resistance and internal political battles that break out in the face of the substantial changes that Shared Services bring. That never becomes routine.
With this in mind, the team embarked on the dual mySAP HR/Shared Services roll-out in 2002, successfully completing the project 18 months later. Among the lessons learned from this complex undertaking, which encompassed numerous HR processes, were the following as indicated In the text box.
Setting the Business Case
It is necessary to obtain leadership support and buy-in very early in the process. Developing a detailed business case is typically central to securing this support, as it was in the Sasol project. The business case should include detailed analysis of benefits and return on investment as well as a work plan to measure progress and to ensure that results are delivered on targeted dates. In this way, it can be used not only to justify the project in the first place, but also to guide its success as it unfolds. In addition to securing initial buy-in, it’s important to establish realistic expectations among company leaders and to keep them informed of progress throughout the project.
Teaming with Employees
For a journey as complex and challenging as implementing Shared Services, it’s absolutely necessary to get business unit and employee input. In the Sasol project, the team conducted stakeholder workshops early in the design process to assess the needs of various groups and to identify the synergies between them. Although best practices provided the guidelines for the overall design, business unit and employee input was used to refine the solution and to devise an effective plan for putting it in place. The implementation team also communicated clearly and often with employees to help them understand what they could expect and what was expected of them. After all, using Shared Services and Employee Self Service (ESS) would represent a big change in their day-to-day activities.
Planning the Implementation
Although the availability of relatively low-cost skilled labor is usually the primary site selection criterion for a Shared Services center, the most successful companies take into account all aspects from culture to facilities. Most importantly, companies must set a clear strategy and implementation plan, including firm deadlines, before attempting to build a new HR service center. Once a plan is in place, they must move forward, sticking to deadlines and giving employees adequate support and training to do so. At Sasol, the Information Center staff went through an entire month of training to acclimate them to the new environment and to ensure they had the correct skills to be able to provide service from day one.
Measuring the Progress
Making a significant commitment to training end users is important. A Shared Service model affects everyone. At Sasol, all employees were required to participate in extensive SAP training. This was tracked and information on attendance was highlighted at “all-hands” meetings.
Equally important is developing performance metrics both during and after the implementation. Companies with the most successful implementations use these measures both to gauge their progress and to manage their Shared Services organization on an ongoing basis. They also adjust their targets to reflect the evolving nature of the organization and the markets in which it operates.
Communicating the Change
The most underestimated issues that challenge the success of a Shared Services implementation revolve around people. Research shows that while companies usually overcome the strategic and project management hurdles, they wrestle with leading change and managing the employee transition. Failure to adequately address communications is a common cause of this difficulty.
To avoid this pitfall, Sasol used what became known as the CAN team (Change Agent Network) to assist with the communication process. The change leadership team communicated to members of the CAN, who, in turn, took the messages down to their individual business units. To ensure that the messages were consistent, the change leadership team developed all of the communication content and presentations, yet they relied on the CAN to present the information in a way that would resonate with each employee group. For Sasol, this mechanism worked extremely well.
Reacting to Markets
By following these principles and emphasizing change management, Sasol met its project objectives, including reduced costs, reallocation of HR staff to strategic activities, and access to timely and accurate enterprise-wide integrated resource information. Perhaps most importantly, the company made strides in enhancing operational flexibility, which reflects the vital need for today’s companies to be “kinetic” – that is, able to react to market events and customer demands in a near instant. As the pace of business change continues accelerate, companies will continue to establish Shared Services organizations not only within HR but also within other business units to gain the flexibility needed to provide responsive customer service and to enhance their core competencies.