SEC sues Dell accountants for improper accounting

The Austin Business Journal is reporting that the SEC has filed suit agaist two former Dell accountants. 

An excerpt from the article:

Federal regulators have fined two former Dell Inc. executives for their roles in an alleged four-year accounting fraud scheme.

Former Chief Accounting Officer Robert Davis has agreed to pay the U.S. Securities and Exchange Commission $175,000 and former Corporate Assistant Controller Randall Imhoff agreed to pay $25,000, SEC officials said.

The fines come one month after the commission fined Round Rock-based Dell (Nasdaq: DELL) $100 million and CEO Michael Dell $4 million for misstating its operating results from fiscal 2002 to fiscal 2005.

You can read the full article at: Dell execs fined for alleged fraud - Austin Business Journal

After the Go-live: Ten focus areas for effective Shared Services delivery - Part 9 - Monitor Opportunities for Additional Sourcing Centers

In a world marked by globalization, new countries and cities are regularly developing the maturity necessary to be seriously considered as a service delivery location.  A balance is needed between the critical mass necessary to obtain economies of scale and the opportunity to move processes and activities globally to refine the global delivery model and leverage lower labor rates.  Additionally, it can make sense to grow the support processes in geographies that require additional support, such as an expansion of operations in Asia or Latin America.

In Asia, China is well established as a logical place to locate support centers.  Shanghai, Shenzhen, Dalian and Beijing are well know sourcing centers; however, due to rising wages, companies are looking to 2nd tier cities to locate manufacturing facilities and related support facilities.  The Philippines is a good choice when English speaking skills are required.  Even Vietnam is working to become a destination of choice for offshore work, although now it's mostly known for its IT capabilities.  And of course, India has multiple established cities for shared services, although, as with China, companies are considering 2nd tier cities there also.

In EMEA, companies have located in Budapest, Prague and Krakow, although there are a number of choices.  Companies looking for a labor cost advantage but who either desire or require a "near shore" facility like Eastern Europe for it's skilled workforce, good infrastructure and relatively low cost.

In Latin America, Costa Rica has long been a favorite for North American companies due to the time zone proximity (Central U.S. time zone during Standard time and Mountain U.S. time zone during Daylight Savings), reasonable English language skills and a stable political environment.  Brazil, as a dominant economic force in Latin America, is also the choice of many companies, particularly Sao Paulo and Rio de Janeiro.

And don't forget rural sourcing.  Even in high cost countries like the U.S. there are companies experimenting with rural locations as a way of retaining work onshore yet achieving cost reductions.  The point of all this is that, to put it mildly, globalization is creating the opportunities to develop a global Finance organization using a variety of tools.  This includes creating a delivery model that takes advantage of developing talent markets.  World-class Finance organizations incorporate this thinking into their existing and future plans to deliver Finance services to their companies.

After the go-live: Ten focus area for effective Shared Service delivery - Part 8 - Reevaluate the Captive vs. Outsourcing decision

A key decision in the development of a global delivery model will be the decision to outsource specific functions.  There are a variety of reasons why a company may choose to outsource a finance process, including access to current technology, access to industry specific knowledge and ability to scale up capabilities without a large capital investment.  A detailed business case detailing the reasons for the outsourcing decision should be created.  The same hold true for the retained finance organization.  There will be very good reasons why some finance processes will be retained in-house, including reasons related to governance and control.

However, despite the best efforts of the sourcing team to evaluate the overall delivery strategy in the captive vs. outsourcing decision, the reality is that conditions change and assumptions that were once thought reasonable are proved to be untrue.  As part of the ongoing effort to maximize the effectiveness of the delivery structure, the Finance Management team should periodically reevaluate the need to outsource a process that was previously handled in-house.  It may be that supplier capabilities have matured in that area or that competition among suppliers has pushed prices down further. 

Keep in mind that the process works both ways.  Sometimes an outsourcing relationship isn’t working out as planned and it makes sense to insource the process to provide better service.  A company with outsourcing contracts should be continuously reviewing the suppliers performance according to the Service Level Agreement (SLA).  It could also be that a company's strategic direction has changed  and it makes sense to bring some capabilities back in-house.

World-class companies use a portfolio approach to delivering finance services.  There will almost always be a mix of captive and outsourced activities.  In a dynamically changing world, it's incumbent upon finance organization to stay on top of the best ways to deliver those services.

Outsourcing firms get tax break

A story from Shanghai Daily discusses China's efforts to boost its outsourcing business through tax incentives.  Despite the economic downturn, China continues to move agressively to remain attractive to US and European firms looking to outsource IT, BPO and KPO functions.  China has identified 21 cities that are exempt from taxes for companies setting up outsourcing operations.

An excerpt from the article:

OFFSHORE service outsourcing companies in 21 cities will be exempted from business tax effective through the end of 2013 as part of China's efforts to boost the offshore outsourcing business.

Revenues from information technology outsourcing (ITO), business process outsourcing (BPO) and knowledge process outsourcing (KPO) are eligible for the policy, effective from July 1. Firms registered in Shanghai, Beijing, Shenzhen, Guangzhou and 17 other cities can enjoy the tax break, the Ministry of Finance said yesterday.

You can read more here: Outsourcing firms get tax break

Six Costly Cloud Mistakes

By now Cloud computing has become a common term and many organizations are looking at how this new delivery model can transform their organization and cut costs.  However, the shift to Cloud computing is not without risks.  Jeff Muscarella, the Executive Vice President of the IT division at NPI, a spend-management consultancy, has outlined six mistakes that could cost a company.  The article is published at CFO.com.

Here are the six mistakes outlined in the article:

1. Not taking full account of financial commitments on existing hardware.

2. Not factoring in your unique requirements when signing up for a cloud service.

3. Signing an agreement that doesn't account for seasonal or variable demands.

4. Assuming you can move your apps to the cloud for free.

5. Assuming an incumbent vendor's new cloud offering is best for you.

6. Getting locked in to a cloud solution.

Click here to read the full article Six Costly Cloud Mistakes

Spotlight on Brazil’s plans to adopt IFRS

Brazil has been the biggest success story in Latin America.  It has an increasing large role in both Latin America and across the globe.  An article at the IFRS Foundation website discusses Brazil's move to full integration of International Financial Reporting Standards with a target of December 2010.

An excerpt from the article:

Brazil has a broad-based economy and a highly developed financial sector” says Alexandre Tombini, Deputy Governor for Financial System Regulation and Organization at the Central Bank of Brazil.”With the increasing global economic and financial integration of our country, it has become clear for us at the Central Bank of Brazil that convergence with internationally accepted accounting standards is of utmost importance. Our belief is that high-quality standards are one of the key ingredients of efficient allocation and use of scarce economic resources and comparable financial information plays a key role in the financial decision-making process of investors”.

“High-quality corporate reporting is essential for attracting and protecting investors not only because of comparability but also due to its close relationship with good governance, accountability and responsibility, enhancing investors’ confidence in the information prepared in such an environment”, says Tombini. “Corporates should, in theory, benefit when they provide comprehensive, relevant and timely information on their financial conditions, performance, and risk management practices. Such businesses should be able to access capital markets more efficiently than similar companies that do not provide information in the same level and thus reducing the cost of capital, and as already said, making the allocation of economic resources more efficient”, he says.

The gradual convergence of Brazilian GAAP with IFRS was set in train in 2006 for financial intermediaries under the supervision of the Central Bank and in 2008 for public companies with a deadline of 2010 for full convergence. In January this year a Memorandum of Understanding was signed between the relevant Brazilian accounting bodies and the IASB which confirmed the end of 2010 as the target date for full convergence and established a framework for future cooperation between the accounting bodies and the IASB.

You can read the full article here.

After the Go-Live: Ten focus areas for effective Shared Service delivery - Part 7 - Evaluate Additional Processes to Shift to the Shared Service Organization

Once the Shared Service Organization is up and running, the governance committees responsible for oversight should regularly be engaged in identifying additional processes and activities that could be moved into the Shared Service Organization.  There are several different angles a company could take as they work to leverage the existing shared service infrastructure to drive additional value.

1. Expand the number of Finance activities.  Typically a company moving to Shared Services will take a relatively low risk (read: far away from the Customer) process and migrate it to a SSO.  Many times companies start with Accounts Payable or expense reimbursement.  Not that these aren't important activities, but they tend to be lower risk than other choices a company has.  As a company becomes more comfortable with "outsourcing" these activities from the Business Units to the SSO, they start to look at other processes such as general ledger accounting, management reporting, customer invoicing and cash applications.  Still others further along the curve are looking at budgeting, variance reporting, product costing and profitability, and customer profitability.  There is no single "right" choice for every company.  It depends on a number of factors including the complexity of the product or service, diversity in the lines of business, geographic dispersion and corporate culture.  The point is that leading companies are always looking for additional processes to migrate.  And they start with the assumption that the process could be migrated and then look at why it might not be wise to do so.  The burden of proof is on those who believe it should stay locally in the Business Unit.
2. Bring additional Business Units, Regions or Countries into the fold.  For a variety of reasons it may make sense to start with one business unit to stand up the SSO and then migrate additional business units.  Many companies take a regional perspective.  I worked on one client, a U.S.-based multi-national, who started with their North American operations, moved to Asia to consolidate a number of back-office processes in that region, and then moved to Europe to consolidate there.  The roll-out strategy will need to be developed as part of the overall approach, and will be heavily guided by the potential cost savings as documented in the business case.
3. Migrate non-Finance processes.  Even though this is a Finance blog, the reality is that many companies have moved beyond the single function SSO and are leveraging their existing infrastructure to drive additional value.  IT and HR are two common functions, but companies are moving beyond that to look at Procurement, Customer Service, Facilities Management, Logistics and more.  As a company moves further away from the traditional functions of Finance, IT and HR, they can expect more and more push back from the Business Units.  They'll tell you that they're unique and that those processes can't possibly be moved to an SSO.  The reality, however, is that there are companies today doing just that.

The Steering Committee that has overall governance oversight is ultimately responsible for driving additional value.  However, they'll depend on the Process Councils as well as other interested stakeholder groups to identify processes that are logical candidates for the move to Shared Services.

India and ASEAN seek to liberalize trade

The Hindu is reporting on an upcoming economic summit between India and ASEAN (Association of Southeastern Nations).  At the top of the agenda for is a liberalized trade agreement that will create greater access to ASEAN member nations for Indian professionals.  However, no all member nations are on-board as they are concerned about dominating their markets.

An excerpt from the article:

After signing a free trade pact in goods last August, India and ASEAN are engaged in talks to widen the agreement to include services and investments at the earliest. Indian officials had earlier indicated that the negotiations would be wrapped up by end of this month.

The official, however, admitted the pace of talks is slow as there are some differences.

“ASEAN members are not ready to liberalise services where India has interest,” he said, adding that some of them are apprehensive that India, which is the world’s second fastest growing economy, would end up dominating their markets.

During the meeting, Commerce and Industry Minister Anand Sharma is likely to press for more access for Indian professionals in the ASEAN market.

India, which has expertise in areas like finance, IT and education is eager to enter the vast services market of the south-east Asia. Similarly, the ASEAN members are eyeing India’s growing contract services area and tourism.

ASEAN consists of of Malaysia, Singapore, Vietnam, Myanmar, Thailand, Bruni, Cambodia, Indonesia, Laos and Philippines.

Here the link to the full article: India, ASEAN trade ministers to meet in Vietnam on Aug 26

10 Tips for Better Outsourcing Contracts

Editor's Note:  This post is based on an article at the Shared Services & Outsourcing Network by Canda Rozier, Principal and Owner of Canda S Rozier, LLC.  It's an excellent article and well worth your time to read it in its entirety.

10 Tips for Better Outsourcing Contracts

1) Do your due diligence upfront

2) Define detailed Service Level Agreements

3) Have the outsource provider 'put skin in the game' 

4) Outsource tasks, not authority

5) Communicate, communicate!

6) Define escalation procedures

7) Embrace change management

8) Define exit provisions 

9) Require the vendor to provide transition assistance

10) Have a fall back plan

China GDP growth estimated at 11% for 2010

An article from Shanghai Daily discusses the belief of Chinese officials that GDP will rise 11% for 2010 largely due to fiscal spending by the government.  One point of interest to multi-national corporations is that part of that spending will be on infrastructure.  Not surprising since China has mad it an investment priority to build the infrastructure that not only benefits their own people but provides an incentive for North American and European companies to continue investing in China.

An excerpt from the article:

China's economy may grow 10 to 11 percent on an annual basis this year based on more fiscal spending, a senior government economist said, striking a more bullish note on the economy than other analysts.

Some fiscal expenditures are channeled as government investment into infrastructure construction, education, healthcare and subsidies for start-up businesses. More government expenditures can help raise domestic demand and stimulate the economy, Zhang said.

You can read the entire article at:

China's 2010 GDP may expand by 11%, economist says

After the Go-live: Ten focus areas for effective Shared Service delivery - Part 6 - Benchmark to Monitor Performance

When a Shared Service implementation is performed correctly, a benchmark exercise will have been completed as part of the current state discovery process.  At that point in the transformation effort, baseline performance metrics are established to understand the gap to high-performing companies and to help prioritize the road map for the journey to high-performance.  It also sets the baseline for monitoring performance and ensuring that the Shared Service Organization fulfills the goals set out in the business case.  This is valuable information and should be leveraged as part of the performance monitoring process.

A benchmarking exercise should be conducted on a regular basis after the go-live.  A successful benchmarking program will have clearly defined metrics to measure both the effectiveness of service delivery (i.e. cycle time, defect rates) and the efficiency of the processes (i.e. the cost and organizational structure required to deliver the services).  It's important to create a specific focus for the benchmarking exercise.  While it's possible to benchmark the entire Finance function, it often makes sense to benchmark a specific process or activity.  For example, benchmarking the Accounts Payable process is much more manageable that a far broader scope. 

One of the biggest challenges in a benchmarking project is deciding which benchmark data to use to evaluate the Shared Services operations.  There are a number of consulting companies and industry organizations that have benchmark data available.  A question I often get is if it's necessary to benchmark against a strict set of peers in a specific industry rather than a cross-industry set of data.  My belief is that while benchmarking against a limited peer set can have value, there is also great value in benchmarking across industries.  If your company is in an industry that is not very progressive, you might be shooting for mediocre performance instead of truly world-class performance.  Organizational complexity such as lines of business, number of products, and the number of countries the company is operating in are better factors for determining a peer group than is the idea that only companies in a specific industry are valid comparisons.

One consideration that shouldn't be overlooked is the idea of benchmarking against an internal peer group.  A global company could easily have at least one Shared Service Center in each major region they operate in (i.e. North America, Europe, Latin America and Asia).  Successful companies have used the internal benchmarking perspective to evaluate where their operations are strong and how those lessons learned can be transferred to other internal operating units.

A final consideration (for this post anyway) is that the systems must be configured to automate the majority of the data collection.  Otherwise, the demands and associated costs of collecting the information will soon outweigh the benefits of the benchmarking program and the program will eventually be dropped.  Consequently it's important to select performance metrics that can be measured without a large amount of manual effort.  If you know it's going to be near impossible to collect data for a specific metric, look for a proxy measurement that may be easier to measure.

Benchmarking is an important activity within a Shared Service Organization to understand how existing performance compares to that of leading companies.  There is a specific skill set around benchmarking that should exist either within the Shared Service Organization itself or in the broader company.  By benchmarking regularly, a company has a realistic understanding of where it performs well and where potential opportunities for improvement exist.  This is critical as part of the continuous improvement effort to attain world-class performance.

Genpact appoints new Asia leader to focus on China

As a sign of its recognition of the importance of the Chinese market, Genpact recently announced that it has appointed a new lead for the Asia region.  Genpact has been in China, most notably Dalian, as a base for serving Japanese companies.  But it has recognized the growing importance of the China-to-China market and it gearing up appropriately.

An excerpt from the press release:

NEW YORK & BEIJING August 4, 2010:Genpact Limited (NYSE: G), a global leader in business process and technology management, announces that it has bolstered its leadership team in Asia to strengthen its growth strategy in China and Japan, including a focus on the China-to-China market. Charles Hunting has been appointed chief executive officer, Asia, reporting to President and CEO Pramod Bhasin. Hunting brings more than 17 years of services experience to Genpact and will focus specifically on growing the China and Japan markets. Mitsuru Maekawa, one of the pioneers of the business process management industry in China, will be returning to Japan as vice chairman, Japan for Genpact.

You can read the entire press release here.

After the Go-live: Ten focus areas for effective Shared Service delivery - Part 5 - Invest in Training

Training is one area that often gets short-changed as part of the Shared Services process.  Personnel are often left to learn on-the-job or to be taught by another person in the department without the benefit of a standardized training curriculum. 

A formal training program is always relevant, but particularly so when positions are moved offshore and processes have been substantially transformed.  In an offshore move there is typically little to no continuity of personnel, and the tribal knowledge that has been built up over time is lost.  Formal training will be required to ensure that the personnel driving the processes are performing consistently with the processes as designed for the new service center.

Also remember that the Shared Service Organization will be working to perform to the Service Level Agreement and silence any remaining critics of the move to Shared Services.  It’s critical that employees understand not only their job but also the commitments of the Shared Service Organization and the expectations of the Business Units as codified in the governing documents. 

Equally important is an ongoing commitment to training to bring new recruits up to speed and to keep existing employees’ skills fresh.  Too often new employees are taught by the existing employees.  Sometimes that works out but far more often the training becomes diluted and further away from the original vision.  The training curriculum should be standardized so that new employees are receiving the same instructions as the existing employees.

After the Go-live: Ten focus areas for effective Shared Service delivery - Part 4 - Standardize and Optimize Technology

Note: This is the fourth post in a series focusing on the continuous improvement of Shared Services. You can read Parts 1, 2 and 3 here.

4.  Standardize and Optimize Technology

Just as processes are not completely standardized during the transfer to the Shared Service Organization, technology may sometimes not be standardized as part of the move to Shared Services.  While it’s true that a Shared Service Organization is often created or enhanced as part of an ERP implementation or upgrade, there are times when the business case for shifting resources independent of a technology implementation makes sense.  This is particularly true when positions are moved to an offshore location. 

The strategy around optimizing technology will depend heavily on which strategy was used to transfer processes to the Shared Service Organization.  In a "Lift and Shift" transfer, the focus will be on rationalizing the core ERP systems to create a common technology architecture and standard processes.  If the processes were transferred as part of a "Transform and Shift" strategy, it's much more likely that the focus will be on the introduction of additional technologies as a bolt-on to the core ERP system(s) to enable process optimization.

If the "Lift and Shift" strategy was employed, it's likely that there is not a common ERP for all of the business units.  Shared Service Organizations in this situation are often required to support multiple ERPs and processes until the ERP systems can be rationalized.  In this case, the focus of the organization should be on selecting a single (ideally) ERP package with a single instance.  This of course is an issue much bigger than just the SSO and will involve a number of stakeholders.  In addition to the rationalization of the ERP packages, there needs to be a focus on creating a single set of master data, including the vendor and customer master records, the inventory master records and the chart of accounts.  By rationalizing the core technology platform and creating a single set of master data, it will be much easier to create a common set of processes.

If the rationalization of ERP platforms and the creation of a single set of master data occurs as part of a "Transform and Shift" strategy, then the focus in the Shared Service Organization will more likely focus on additional bolt-on technologies that can lead to the optimization of already standard processes.  Once example could be Optical Character Recognition around vendor invoices.  An even better step could be the implementation of an Electronic Invoice Presentment and Payment solution.  These types of bolt-on solutions should improve the efficiency of the SSO and can also facilitate the virtualization of the SSO so that activity can be shifted across Shared Service Centers based on changing business needs.

After the Go-live: Ten focus areas for effective Shared Service delivery - Part 3 - Standardize and Optimize Processes

Note: This is the third post in a series focusing on the continuous improvement of Shared Services. You can read Parts 1 and 2 here.

3.  Standardize and Optimize Processes

Processes should be standardized as they are transferred from the Business Units to the Shared Service Organization.  However, even under the best of circumstances there will still be more work to do.   Once the processes are actually being serviced from the SSO, additional opportunities to standardize the processes will be identified.  Additionally, opportunities to optimize the processes to enhance service delivery and reduce costs through the elimination of non-value added activities should also be identified.  If processes were not transformed as part of the shift to a Shared Service Organization but were part of a "Lift and Shift" strategy, then the SSO really has work to standardize the disparate processes transferred from the Business Units.

One framework for evaluating and improving processes is Six Sigma.  Pioneered by GE and other organizations, Six Sigma uses the DMAIC methodology to either create standard processes or optimize existing processes.  DMAIC can be broken down as follows:

1. Define- This initial stage focuses on defining the customer of the process, their business requirements for the process, and the decomposing the actual process into individual activities along with the organizational titles responsible for each step (e.g. Accounts Payable processing).
2. Measure- This stage creates a measurement dashboard that incorporates both effectiveness and efficiency measures (e.g. processing error rates and invoices processed per FTE per annum).
3. Analyze -  This stage analyzes the processes in detail to understand the root causes of inefficiencies and bottlenecks.
4. Improve- This stage focuses on the development and execution of initiatives that are designed to address the inefficiencies identified in the previous stage.
5. Control - This stage maintains the controls necessary to maintain the process improvements over time.

Ideally this framework would be employed as part of the design process prior to transferring the processes to the Shared Service Organization.  However, even if there is standardization of processes as part of a "Transform and Shift" strategy, there will inevitably be opportunities for improvement once the processes are up and running in the Shared Service Organization. 

Companies in China look inward to locate factories

From The Straits Times in Singapore comes an interesting article about Chinese sourcing.  Rising wages and government incentives are causing companies like Hewlett-Packard and Cisco to look inwards for new locations to locate factories.  Historically labor has migrated from the inland provinces to coastal locations like Shanghai in search of opportunities.  Now the opportunities are moving to less developed areas of China.

As the article states:

A growing number of foreign companies in China, faced with spiralling wages and a shortage of skilled workers, are moving their factories inland to contain rising costs, analysts say.

After a spate of strikes and minimum wage hikes resulted in hefty pay rises for millions of workers, firms are looking to capitalise on government incentives to shift their operations to impoverished western China.

Foreign-invested firms are also looking to tap into a young, talented labour force which no longer wants to sacrifice family ties by leaving home to work long days in the coastal industrial belt.

While wages have been increasing for years, Vajpayee said foreign and Chinese manufacturers had now reached a 'tipping point' where labour costs were growing at a faster pace than revenues. 'Investment in a new factory in an inland province is a better option than continuing with a high cost base in coastal regions,' he said.

Although the article deals specifically with manufacturing, support services such as Finance, HR, and IT will no doubt be impacted by the same factors.  Companies looking to establish or build Shared Service Centers in China will need to evaluate the migration of manufacturing labor and where support services should be located to best serve the organization. 

At Least Some Companies are Filing in XBRL

Earlier this year Grant Thornton released a study showing that a number of companies were not on track to comply with SEC mandates around XBRL reporting.  A press release from WNS details their efforts to comply ahead of time. 

NEW YORK, NY and MUMBAI, INDIA, Jun 17, 2010 (MARKETWIRE via COMTEX) -- WNS (Holdings) Limited /quotes/comstock/13*!wns/quotes/nls/wns (WNS10.13, +0.17, +1.71%) ("WNS"), a leading provider of global business process outsourcing services, today announced that it has filed an amendment to its Annual Report on Form 20-F for the fiscal year ended March 31, 2010, which was originally filed with the Securities and Exchange Commission on June 15, 2010, for the sole purpose of furnishing the financial statements of this Annual Report in XBRL (eXtensible Business Reporting Language) format. XBRL is a language for the electronic communication of business and financial data, which greatly increases the speed of handling of financial data, reduces the chance of error and permits automatic checking of information.

"As a foreign private issuer, utilizing XBRL is not yet mandatory for us. However, we have voluntarily furnished the financial statements of our Annual Report in XBRL format this year along with other domestic filers in an effort to meet and exceed corporate disclosure standards," stated Alok Misra, WNS's Group CFO.

The XBRL version of the financial statements of the Annual Report on Form 20-F for the fiscal year ended March 31, 2010, is available on WNS's corporate Web site at www.wns.com, in the Investor Relations section.

It will be interesting to monitor additional companies that file in XBRL and to note those companies that fail to meet the SEC's 2011 deadline.

Shanghai continues to be top choice for regional headquarters

Shanghai continues to attract the notice of Western companies seeking to establish a regional headquarter in Asia.  An article at Shanghai Daily notes that 24 more companies have elected to establish their regional headquarters in Shanghai.  These companies include Walt Disney, Kraft Foods and Novartis International. 

An excerpt from the article:

THE Walt Disney Co, Kraft Foods Inc and Novartis International AG are among 24 multinational companies that decided to move their regional headquarters to Shanghai.

It pushed the total number to 795 - including regional research and development centers - and maintained the city's status as China's top destination for regional headquarters of multinationals.

"The growing number demonstrated foreign companies' recognition of Shanghai's overall environment for foreign investments," said Sha Hailin, chairman of the city's Commission of Commerce. "It also came at a special moment when the World Expo was held in Shanghai, which greatly boosted the city's awareness among many foreigners."

The article also notes that Foreign Direct Investment (FDI) in Shanghai grew 4.5% in 2009 (year over year) despite the global economic downturn.

After the Go-live: Ten focus areas for effective Shared Service delivery - Part 2 - Monitor Compliance with Service Level Agreement (SLA)

Note: This is the second post in a series focusing on the continuous improvement of Shared Services.  You can find Part 1 here.

2.  Monitor Compliance with the Service Level Agreement (SLA)

In every shared services project there are those in the organization, particularly in the business units, that doubt the promised benefits will materialize and that the service center is truly capable of providing the level of service the business units enjoyed when they had their own support services.  Don’t prove them right.  Once the service center goes live it’s time to hit the ground running and live up to the promises made.  This means living by the service level agreement and constantly monitoring the Center’s performance against the service level metrics.

Monitoring a Service Level Agreement is not without its challenges.  One challenge is that the actual agreement can be interpreted differently by different parties.  What may be clear as day to you may actually mean something different to the other party.  That's why is extremely important to develop the SLA in as a partnership between the Finance organization, the Business Units it serves and any other relevant stakeholders in the organization.  The SLA should very clearly spell out the performance metrics that will be measured, how often they'll be measured, by whom they'll be measured and how often they'll be reported.  The SLA should also define how disputes around these issues and the overall performance of the Shared Service Organization are resolved.

Another challenge often encountered by SSOs is the actual collection of data.  Don't define performance metrics in the SLA if it's virtually impossible to collect the data at the level of granularity defined.  If you have to hire a group of people to do nothing buy collect and report on the performance metrics in the SLA then something is wrong.  Remember, this is an operating agreement between units in a business; it isn't a legal agreement that enables you to sue someone if they don't live up to your expectations.  Keep the metrics defined focused on service levels, cost and response times.  And put in place procedures to collect that data at the intervals defined in the SLA and report on it as promised.

Define the intervals at which the entire SLA is re-evaluated.  No agreement lasts forever.  As the SSO and the Business Units learn more about working together it's inevitable that some aspects of the SLA will need to be changed.  Use the governance process to revisit the SLA and make changes as necessary.

Finally, use the data collected as part of the SLA process to evaluate the performance of the SSO in light of continuous improvement efforts.  Are you better today than you were a year ago?  If not, why not?  Even if the SSO is meeting the promised levels as defined in the SLA, the SSO should be looking ahead to even higher levels of performance.  What processes can be optimized to improve service delivery and reduce cost?  What new technology can be introduced to support the efforts of the SSO?  How can the SSO improve response times and customer satisfaction?

Verifying Country-specific Data in the Site Selection Process

Here's an interesting post by Kirk Laughlin at Nearshore Americas.  Mr. Laughlin discusses the need to verify data obtained about various countries as part of a site selection process.  Many times the data is provided by economic development authorities in that country who have a vested interest in getting companies to locate to their country.  This conflict of interest can lead to some rather interesting data.

The moral of the story is to always keep a skeptical eye on any data used to justify the selection of a specific country or city and to use multiple sources of data whenever possible to identify any significant anomolies in the data.