COVID-19’s impact on our industry (global business travel) has been devastating. Year-over-year industry sales volumes were down more than 75% for most of 2020, and at times well over 90%. This presents obvious sustainability challenges to any company and particularly to a Shared Service Organization (SSO). In this unprecedented situation companies go into crisis mode to preserve working capital. Although the effort to reduce expenses was companywide, our SSO had a major challenge since most of the activities performed are transactions-based. We therefore had the daunting task of having to take immediate action to reduce our SSO costs in response to the sudden volume drop off.

These are the steps we took:

1. Activity Evaluation

We evaluated the key activities performed within the SSO to determine the transactional volume impacts on each activity. We also prioritized the activities based on cash flow relevance. We made the decision to focus on the activities perpetuating cash flow, and discontinue or relax the SLAs on others. This activity assessment enabled us to determine the proportionate number of resources needed to support the business.

2. SSO Expense Reductions

Action was first taken to reduce operational expenses by eliminating temporary workers, contractors, consultants, and any discretionary spending. Vendor contracts were examined for opportunities to renegotiate based on number of transactions or user licenses. Ongoing projects were also put on hold to further preserve cash outflows. 

3. Volume and Capacity Based Reductions

We then evaluated the remaining SSO resource/cost base versus the volume forecasts to determine the extent of further actions required. This brought us into the staffing actions, which was our last resort. For our captive teams we started with furloughs and voluntary reduction program offerings to reduce the overall team size. The next step was to move to involuntary reductions to ultimately reduce the team size to be proportionate with the reduced support levels. We also looked for synergy opportunities among the multi-functional resources where roles/activities could be consolidated into fewer resources. Additionally, we worked closely with our BPOs to right-size their resource levels. (Our good relationships meant that they were open to sharing the pain.)

4. Transformation

To take advantage of the low volume/resource environment, we also planned organizational changes to put the SSO in a competitive low-cost structure for when the transactional volumes come back. This would enable us to operate the SSO at a much lower cost base than pre-COVID-19 levels without sacrificing efficiency. We evaluated the physical locations of our captive teams to determine high cost locations. We then planned actions to migrate work from the higher cost locations to either our low-cost captive center or to our BPOs. This also enabled us to have a more flexible and scalable operation.

Simultaneously we reevaluated our key processes from the perspective of cost and resource requirements to determine where automation could be deployed, either via internal IT enhancements or RPA. This enabled us to identify further opportunities to increase efficiencies while reducing costs.

Summary

This transformation process has been a very challenging journey but in the end our SSO will be much more resilient, efficient, and able to support future growth with minimal cost increases.

I would be more than happy to share any ideas or provide insight to others embarking on a similar journey.

ABOUT THE AUTHOR

Robert Turck has led Financial Shared Service teams for large global enterprises operating in business travel, manufacturing, and service industries. His experience includes publicly traded and privately held international organizations, where his focus has been on process improvement, transformation, automation, cash management, cost control, dashboard metrics, and systems implementation.

 He is interested in discussing any potential opportunities to support organizations around the world. You can reach him via rturck1@gmail.com.