The bottom line

If we are to learn anything from the past year, it is that if you want to achieve business transformation, look first at the basic financial building blocks and make sure you build on a solid foundation. Hilary Robertson, Group BPO Strategy Director, Steria reports

 
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The economic downfall has had an effect on the level of scrutiny placed on the CEO and their contribution to operational performance, focusing on what the executive team bring to the shareholder, or indeed the tax payer. All of a sudden it’s cool to criticise. As the steward of operating performance, the finance function is arguably the best place to begin transformation of the business.

Business decisions rely on accurate financial data. Very simple questions to understand business line profitability, spend optimisation or investment return, are often complex journeys of data discovery and interpretation. The task is made harder as organisations increase their size and complexity – especially in terms of geographic presence and supply chain. Few organisations operate across countries as one, but as a collection of businesses, with a plethora of local standards and systems plus externally imposed compliance regulations.

Data is not consistent across geographies and there are considerable differences in interpretation of the data across countries and cultures. The potential impact of poor quality data only increases with consolidation, and the more complex, the higher the business risk.

To achieve a single, accurate version of the truth requires simplification and standardisation of processes and systems. It requires defining common data standards and setting and enforcing policy, with limited variation by exception. And it requires removing inherent duplication which leads to so much waste.

An illustration of just such an organisation that is part-way through a successful journey to radically reshape its financial operating model is the National Health Service in the UK. One of the most complex and largest organisations in the world, with an annual operating budget of over €130bn, a staff of around 1.3 million and a service that never sleeps. With its funding, through mandatory national insurance, and its quality of service, subject to government and public audit, the NHS never fails to be a top five election agenda item.

The NHS is made up of several hundred separate organisations, most of which have their own CEO and Board, together with all the related supporting back office functions. In 2005 the Department of Health decided it needed to focus on core healthcare provision and went to the market to see if it could source back office services at a lower cost to the taxpayer. However it did not want to lose control. It created a unique joint venture called NHS Shared Business Services (NHS SBS) with Steria, a leading specialist provider of finance and accounting services in Europe and Asia.

By the end of 2009, NHS SBS was delivering shared services to over 120 separate NHS organisations, all on a common finance platform, with one operating model based on consistent processes and clear hand-offs.

In a bold move for the UK government, NHS SBS makes use of Steria’s fully integrated on/offshore model to deliver some of the work from India. Steria brought in best practice efficiencies, global process ownership and industrialised toolsets. The net result is efficiency savings of over 20 percent to feed back into frontline care, with transformational benefits accruing to finance users with real-time access to accurate, timely and targeted management information for some 50,000 finance users, from ward sisters to pharmacists to directors of finance.

The new financial controls offer improved governance with defined authorisation levels and robust audit trails to streamline processes. Month end closes are consistent and faster. The Trusts are now able to respond rapidly to frequent change such as mergers, business separation, financial regulation and compliance.

With clients from the smallest NHS Trust up to the largest UK corporations such as BT and the BBC, Steria has taken the learnings  and accredited world class best practice of this highly industrialised model to all manner of public and private sector organisations which are prepared to take bold and radical steps but in a tried and tested environment.