By Dan Berthiaume
For a multibillion-dollar global provider of business software, hardware, and services like Pitney Bowes, improving organizational and operational efficiency is a constant imperative. Since 2003, Pitney Bowes has been streamlining operations in different areas of finance and accounting (F&A) through the use of shared services, or the combining of similar outsourced functions.
Jeffrey Jacobson, VP of Finance/GM for Global Accounting Operations at Pitney Bowes, says his company’s shared services efforts all started when an external consulting firm was brought in to review organizational functions.
“They recommended like items be put together,” says Jacobson. “Their review went from 2003 into 2004, and then we created a list of targeted shared services [in F&A], incorporating accounts payable, accounts receivable, and payroll. We put like functions together to try to create shared services.”
Overcoming Internal Obstacles
Like most new corporate initiatives, Pitney Bowes’ efforts to implement shared services quickly met some internal obstacles. For example, moving four different accounts receivable groups formerly housed in different buildings into one office did not immediately produce the desired levels of cross-unit cooperation.
“I compared it to loading people in a truck, pulling a lever, and bringing them to a new location,” says Jacobson. “People sat like they had always sat before we put them together, each group in its own area of the office. In the old days, the different accounts receivable groups had sent interoffice e-mails between different buildings; now they sent the same correspondence to someone sitting three desks over. That wasn’t going to get us to efficiency or shared services.”
Functional Arrangement Does the Trick
In response to this situation, Pitney Bowes decided to arrange accounts receivable employees by functionality, rather than by business unit. This meant everyone who performed a specific function, such as cash posting or refunds, was grouped together, even if previously they had served in different units of the company. Initial response from the employees being regrouped was skeptical.
“At first blush, we got a lot of responses like, ‘This will never work,’” says Jacobson. “It took about a year to fully reorganize accounts receivable to a functional orientation. Some people could make the journey, others had to take time to grasp what we were doing.”
After Pitney Bowes completed the successful reorganization of the accounts receivable department to a shared services model, the company launched a similar initiative focused on transactional functions, such as lease administration, sales tax, billing and invoicing, in 2005. Once again, Pitney Bowes found that reorganizing the transactional department around function rather than business unit was the key to making it work.
Bringing Shared Services to Accounting
In 2009, Pitney Bowes brought in a different third-party consultant to examine how to improve efficiency in its accounting department. The consultant’s advice to implement shared services was almost identical to the advice offered by the first consultant back in 2003.
In June 2010, Pitney Bowes formally launched its accounting shared services initiative, grouping employees performing tasks such as closing books and gathering monthly financial data according to business function rather than business unit. A total of 150 employees were moved into a shared-services environment.
“The experience was like doing shared services in accounts receivable, relived,” says Jacobson. “One year-plus in with a complete organizational redesign, we have a way to go on the maturity curve.”
An Eye toward Multifunctional Shared Services
Pitney Bowes is not standing still with its program. The company is looking at synergies across its shared-service environment, where like functions and best practices are shared not just among F&A employees, but across departments.
“Other companies have put in multilevel, multiservice shared-services programs,” says Jacobson. “At Pitney Bowes, we have identified 12 areas for shared services, and put together what I call the ‘Gang of 12’ (department heads) to begin communicating with each other about things like metrics, service levels, when do you meet with a customer, how do know when you’ve done a good job.”
Over-Communicate Over the Noise
Looking at lessons Pitney Bowes has learned from its experience implementing shared services so far, Jacobson says one of the most important is to communicate with employees, customers, and stakeholders who may be affected by the transformation. “You’re moving work from a group that may have done it for a long time,” he says. “You need to communicate, and over-communicate, what they can expect and when.”
Jacobson also says companies implementing shared services need to be prepared to deal with the “emotional noise” that accompanies any major organizational change. “The emotional noise can get really high. Some units will want to see shared services fail so things can go back to the way they were.”
To manage this “emotional noise,” Jacobson partners with the stakeholder, which gives them “skin in the game” to ensure success. Employees and stakeholders should be given specific data explaining why shared services is a good idea, such as enhanced control, cost comparison of tasks, as well as the ability to measure progress. He also recommends focusing on efficiency and productivity while remaining agnostic as far as what systems are used to support shared services.
Finally, Jacobson urges companies moving to shared services to implement slow, rather than fast, change. “Slow change allows employees to understand the process more,” he says. “Fast change creates emotional noise. Teaching people to think in a different way is sometimes difficult.”
