Change Management for Shared Services and BPO

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By Alsbridge

Change management is a critical part of any project that leads, manages and enables people to accept new processes, technologies, systems, structures and values. It is the set of activities that helps people transition from their present way of working to the desired way of working. The focus of change management is to address the people and organizational factors that will both drive and obstruct change throughout the organization. The ultimate goal of any change initiative is to ensure everyone in the organization is ready, willing and able to appropriately perform their role in the new environment.

Why Change Management?

Establishing new policies, procedures and processes is not sufficient on its own to ensure successful organizational transformation. Research shows that more than 80 percent of projects fail when "organization transition issues" are not addressed. When people are not adequately prepared, some will deny or resist the change. Reactions to change vary according to:

• Their ability to understand the change,
• Their ability to cope with/adapt to the change,
• How they will benefit from the change and
• What they will lose as a result of the change.

It is critical, therefore, to understand, plan for and implement necessary, practical steps to support people through the transition.

What Changes with Shared Services and Business Process Outsourcing?

Typically in a shared services and/or business process outsourcing (BPO) program there are two main changes:

• The delivery of in-scope services from a shared services or BPO operation, working with a customer/supplier-oriented culture, based on common best practice processes often with employee and manager self-service and automated reporting. This involves setting up a new operation to deliver the services, often in a new location with new systems and a customer service orientation. Often this aspect is referred to as the transition to shared services.
• A new focus for "retained organization" on value-added activity in support of the front line. This involves working with the business to reposition the role of finance, HR, etc. and the associated changes to organization structures and skills within the retained functions. Often this aspect is referred to as the transformation of the retained function.

Transition and Transformation

Here, transition is defined as the program of work required to finalize the design, manage the procurement, and build and implement the agreed multi-functional shared service or BPO. Transformation is defined as the activities required to align and improve the work of the retained HR and finance functions in each department and also to provide a program office support to manage both the transition and transformation activities. The typical changes that happen in a transition to shared services or BPO include the following:

• Move from transaction processing activities being undertaken within user departments or distributed throughout the organization, usually with no customer service culture, and possibly with poor benchmark performance and outdated processes.
• Move to transaction processes undertaken by a specialist organization, delivering services under service management culture with service-level agreements and charging – usually in a new location, with new systems and processes, and shared among many customers.

Changes experienced by current staff:

• Redeployment or job losses
• Significant upheaval from project team including analysis of processes and work shadowing
• Pressure on delivering business as usual

Changes experienced by staff in new shared services organization:

• New culture, new systems, etc.
• Project atmosphere including deadlines and risks as the work is migrated from current organizations
• Pressure from "customers" as they get used to new service approach.
• Embedding new processes and continuous improvement pressure

Transformation of the retained function typical changes:

• Move from function where transaction processing and decision support/business partner work is often combined. Often the function is valued more for the transaction processing activity than for the decision support/business partner role.
• Move to function that "buys" its transaction processing service from a shared services operation. As a result, there is the opportunity/expectation that the retained function will deliver more value-added services such as decision support and business partnering work.

Changes experienced by retained staff:

• New roles, new organization
• Maybe new skills to learn
• Need to "sell" new roles to business managers

Changes experienced by users (managers and employees):

• New processes and systems to get used to
• Maybe a new "remote" service provider
• Self-service approach: changes experienced by business leaders
• New role for retained function? More focus on value-added activities

Transition and Transformation Activities

Transition to Shared Services or BPO

Key focus

• Build and implement the shared service/BPO center
• Manage the transition of in-scope services

Key Activities

Before transition

• Design the organization structure, processes and technology for the shared services/BPO operation
• Build and test the shared services/BPO operation
• Recruit and train new staff
• Detailed transition and cut-over planning
• Implementation and launch preparation (including communications and training)

During transition

• Manage the transition activities working with the transformation team and program office
• Manage people transition (including supporting consultation and employee engagement)
• Data and technical implementation and migration

After transition

• Manage stabilization of services post-launch
• Drive initial performance improvement
• Complete handover from transition phase to operational management
• Stakeholder engagement
• Benefits realization

Transformation of Retained Organization

Key focus

• Transform the retained functions by aligning and improving their ability to work effectively with shared services
• Focus retained resources on higher value activities
• To provide program management to the overall project

Key activities

• Provide overall program management services
• Manage "make or buy" (in-house or outsource) decision
• Manage business readiness for the changes
• Manage business as usual in the retained functions during the transition/transformation period
• Agree to new organization roles and responsibilities for the post-shared service world
• People transition, consultation and engagement within the retained function
• Support to cut-over team
• Benefits realization within the retained function
• Stabilization of activities post transformation
• Complete realignment
• Stakeholder engagement
• Perform account management role with shared services team

Summary

Effective change management and communication reduces risk and potential costs, and it increases the likelihood of successful transition and a positive relationship between the services provider and the retained functions. It is not, however, a magic bullet. It cannot compensate for a shaky business case, a poorly thought out project plan or poor design of the future state of the organization, its processes and/or systems.

Useful Link

Alsbridge's "The Practitioner's Guide to Shared Services and BPO" (links to four guides on the topic)

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