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Four ways to give GPO’s real authority.

Colin GlynnGlobal Head of Finance Service Centres

September 2015

How have the GPO’s managed to secure trust and authority within the company that empowers them to get things done.

Contents

• Rolls-Royce – what we do • Our organisation and geography• GPO’s part of the formal vision and strategy• The Global Process Model• GPO accountabilities • The four factors that made a difference for Rolls-Royce • Summary• Questions

Finance Service Delivery Model

Centres of Excellence

Enablers:• Systems• Process

• People

BusinessPartners

Business Support Centres

Finance Service Centres

Rolls-Royce FSCs & locations served

Payroll service only Full finance service only

private

Global FSC’s Vision and StrategyVision - to deliver a global service to all Rolls-Royce businesses through one shared services organisation operating through regional service centres in a standard and seamless manner.

Strategy is to •Extend existing service template to cover all sites and businesses through exploitation of appropriate systems platforms

•Operate standard processes except where agreed local variations are required (legal, statutory, customer need, local efficiencies) through a governance framework of global process owners.

•Develop and maintain a culture of continuous improvement within the context of the “one FSC” vision.

•Strive for the best cost and an efficient and effective service through use of internal and external bench-marking, process improvement and utilisation of best solution for service provision.

•Extend the scope of service offered both “up the value chain” within Finance and “across the end-to-end process” where a competitive advantage exists.

•Maintain and improve customer relationships by delivering a measureable seamless service across all regional centres.

Manage Finance MF1.0 – Perform Financial Transactions

1 Pay Suppliers

2. Pay Third Parties

3. Pay Expenses

4. Pay Payroll

8. Report Externally6. Produce Period end Actual Results

7. Cost Products & Services

5. Collect Cash

Rolls-Royce Management System is a system that captures the standard way we work, is process-based and is simple, scalable and fit for purpose to deliver customer, business and regulatory requirements

The Finance Function have a subset of the RRMS that clearly defines processes and therefore steer our GPO framework

Finance Service Centre – Global Management Team 9

Rolls-Royce Data - Strictly Private

Global Process OwnersCollect cash

Sam Hall

Pay Suppliers and third partiesMaria Walker

Periodic ReportingTBA

Global Strategy & SupportJulie Fenton

Payroll & ExpensesGeorge Castlehow

Global Head of Finance Service Centres

1 - Note in country reporting will continue to be Will Powers for Statutory & Security purposes2 - Note in county reporting will continue to be Jen Wiseman for Statutory & Security purposes

1 2

Global Process Owner Accountabilities 10

• To be responsible for optimizing the process operating model by providing scalable global processes focused on speed, simplification, standardization, productivity and control. 

• To be responsible for the overall global vision, strategy, direction, architecture and design of the end to end business process. 

The four factors that have driven our results 11

1. Strong character with a deep knowledge of the business 2. Separate the process design from the transactions3. Let the GPO adapt the role and be creative 4. Remove the management distraction

1. Strong character with a deep knowledge of the business

12

• All the GPO’s are very experienced in the business that they provide a service too and are therefore well respected.

• They understand the process from a business point of view (Norway story)

• Strong voice based on experience • Ability to push back and say NO (with facts) • Ability to communicate effectively at all levels• Not a graduate role!

2. Separate the process design from the transactions

13

• Structure the organisation appropriately• Ensure GPO’s do not run the operational processes but

monitor overall global performance

Finance Service Centre – Global Management Team 14

Rolls-Royce Data - Strictly Private

Global Process OwnersCollect cash

Sam Hall

Pay Suppliers and third partiesMaria Walker

Periodic ReportingTBA

Global Strategy & SupportJulie Fenton

Payroll & ExpensesGeorge Castlehow

Global Head of Finance Service Centres

1 - Note in country reporting will continue to be Will Powers for Statutory & Security purposes2 - Note in county reporting will continue to be Jen Wiseman for Statutory & Security purposes

1 2

2. Separate the process design from the transactions

15

• Structure the organisation appropriately• Ensure GPO’s do not run the operational processes but

monitor overall global performance • Budget at a Global Process level not by local departments

FTE and Operating Costs - Example - MF1.3 Pay Expenses and MF1.4 Pay Payroll

16

Op Costs £ '000Actual 725 433 93 - 339 135 1,724Budget 761 470 84 - 408 181 1,904

Budget y/e 1,524 938 167 - 816 362 3,807

Headcount EFSC NAFSC SFSC BFSC NFSC RRD TOTALActual 30.0 10.0 2.5 - 8.9 3.0 54.4Budget 30.3 12.0 2.5 - 7.8 3.0 55.6

Budget y/e 30.3 11.0 2.0 - 7.8 3.0 54.1

2. Separate the process design from the transactions

17

• Structure the organisation appropriately• Ensure GPO’s do not run the operational processes but

monitor overall global performance • Budget at a Global Process level not by local departments • GPO focus on design for effectiveness (quality, service) and

efficiency (cost) (Mint Story) • Ensure only GPO can authorise design changes • Take away the ERP access rights of your GPO

“You cannot optimise and run a process”

3. Let the GPO adapt the role and be creative 18

• Innovations in effectiveness and efficiency of future processes are seen as main objectives rather than the operational performance of todays process (KPI Story)

.

Global Metric – Example - MF1.5 Collect Cash 19

Benchmarks : DBO : Hackett ‘Peer’ Group ADD : Intrum

Justitia

KPIs EFSCSAP

EFSC Baan NAFSC SFSC EFSC

Houston BFSC Total Bench Marks

% of debt over 30 days covered by Dispute Reason Code 58.6% 71.2% 27.1% 27.0%

Incl in EFSC BAAN

Under development

% of debt over 90 days covered by Dispute Reason Code 70.0% 79.7% 42.1% 36.0%

Incl in EFSC BAAN

Under development

Average Time to Resolve Disputes (Days) **

Actual Cash Collected v Forecast (%) 90.1% 79.4%

Under development 107.0%

Incl in EFSC BAAN

Under development

No of Customers Contacted (as a % of Worklist) 99.3% 99.3% 11.7% 100.0%

Incl in EFSC BAAN

Under development

% of Customers Contacted by Phone 41.5% 27.5% 1.4% 8.0%

Incl in EFSC BAAN

Under development

Absolute Overdue Debt (£m) 77.2 12.1 23.8 7.2 3.3Under

development 123.6

% Overdue Debt 10.0% 41.0% 23.8% 64.0% 37.1%Under

development 13.7%

% Overdue Debt > 90 Days 2.0% 9.5% 3.1% 17.0% 11.3%Under

development 2.6%

Days Billing Outstanding (DBO) 20.2 51.9 20.8 57.6 66.8Under

development 21.1 41 - 45

Average Days Delinquent (ADD) 2.1 16.3 5.0 36.2 29.2Under

development 2.9 17

Collection Effectiveness Index (CEI) 95.4% 57.7% 87.9% 51.3% 53.9% Under development 93.6%

INPUT

PROCESS

OUTPUT

** Under Development for SAP FSCM based FSCs

3. Let the GPO adapt the role and be creative 20

• Innovations in effectiveness and efficiency of future processes are seen as main objectives rather than the operational performance of todays process (KPI Story)

• Interfaces with other GPO’s are critical• Make role boundaries flexible (Billing Story) • Ensure the GPO’s have a strong influence on the investment

funds (especially IT)• Have monthly sessions with interfacing GPO’s • Pursue best practice• Risk versus reward encouraged.

4. Remove the management distraction 21

• Transactional resource is owned by the operations managers but overall budget is agreed by the GPO

• No diversions of recruitment, performance evaluation, absence management etc.

• Local leaders know the market better• GPO’s ’s stay objective re the total process performance and

can make decisions like location unbiasedly (Norway story) • Encourage local small scale process improvement that does

not fundamentally change the processes a

Summary 22

GPO’s design the processes and set process standards and KPI’s Agree service cataloguesGPO’s are subject matter expertise with best practice awarenessGPO’s role is to overview not to transact or get divertedGPO’s will interface with StakeholdersOverall they are

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