By Katy Demong
The benefits to a successful shared services implementation are well known: improved efficiency, streamlined processes, cost savings, and reduced redundancy, just to name a few. But the potential risks and the likelihood of upheaval can keep companies from making the leap to a shared services approach to streamlining business functions.
To those companies that are still hovering at the edge of the precipice, Karen Palmer, director of shared services at Diamond Resorts, would likely tell you to go ahead and jump. She will be speaking this week at the 16th Annual North American Shared Services & Outsourcing Week in Orlando, FL, March 7-9) as part of a panel discussion called, “The Good, The Bad, and The Ugly: Everything You Need to Know About Shared Services Start Up.”
Palmer, who has overseen the transition to shared services at Diamond Resorts, has experienced the benefits and survived the risks. While she jokes that she could definitely speak about the “ugly” in the implementation process, she also says she thinks the concept of shared services is “one of the most wonderful, brilliant things in business.”
Change Requires Flexibility
In addition to having a sense of humor about her job, Palmer also stresses the need for flexibility when it comes to change. While many experts tout the importance of a cautionary approach and strategic planning to a shared services transition, Palmer says that Diamond Resorts “accidentally became a shared services organization.”
“It started by looking for a solution to a specific problem,” she explains. “We couldn’t find a controller for a resort in San Luis Bay, and so we took on the functions for that job at headquarters.” After that, Palmer said, they began asking the question, “’What else can we do?’”
Shared Services Evolves throughout Diamond Resorts
The next step in the evolution of shared services was for Diamond Resorts to centralize its accounts payable (AP) operation for the West, which Palmer says saved the cost of eight full-time employees and also led to higher efficiency levels and better standardization. Now, in addition to AP, Diamond Resorts uses shared services for back office management functions, payables, and general ledger at its main headquarters in Las Vegas. “There was no fancy strategy,” said Palmer. “We just evolved in a way that was positive.”
Part of the reason for Diamond Resorts’ successful migration to shared services is the nature of the hospitality industry. “We handle a lot of the back office operations at headquarters, which really allows us to concentrate more on being a customer-centric, front-end focused business,” explains Palmer.
Obstacles are Inevitable
While implementation of shared services at Diamond Resorts has been successful, Palmer is not unfamiliar with the challenges that companies experience during transition. “There are going to be obstacles,” she says. “There’s going to be resistance and politics.”
But, underlying any strategy, Palmer says the decision to implement shared services is a position of strength. “If you say, I’m going to improve the bottom line and make our processes more efficient,’ who’s going to argue?” she asks. “If they do, it’s going to say a lot about them.”
Streamlining of back office functions at Diamond Resorts hasn’t come without error. The company outsourced invoicing processes to India, but later brought them back in house. “If I were to do it again, I would contract on invoices processed versus head count,” says Palmer, noting that both efficiency and control were compromised.
Scale, M&A Affect Shared Services Activity
Palmer notes the importance of the company’s scale when moving toward efficiency. “We’re not Coca-Cola,” she comments. The privately held company has 5,500 employees globally and owns or manages more than 200 resorts around the world. Palmer also points out that Diamond Resorts, which acquired Sunterra Corporation in 2007, has also been in merger and acquisition mode during the past few years, which has been a catalyst for many changes, including the move to shared services.
Optimism for the Future
While Palmer will share her own experiences in implementing shared services at the upcoming conference, she will also be looking to bring back new ideas for their matured process. The globalization of shared services is one area she’d like learn about, and one Diamond Resorts has yet to tackle. While the company has centralized many back office functions for its U.S. and St. Martin operations, Palmer says standardization has yet to come to resorts in Europe and Mexico, noting the difficulty of navigating compliance laws on a global scale.
While she and other panelists will discuss specifics such as buy-in, scope, cautionary signals to look out for, and other questions for shared services start-ups at next week’s conference, Palmer’s overall message is one of encouragement – as well as flexibility and humor. “There’s no awful way to start the process,” she concludes. “If you’re looking for standardized and efficient processing, it will happen.”