As we discussed in part one of this blog series, consolidation in the healthcare industry has been on the rise, with mergers and acquisitions leading to larger healthcare organizations that are attempting to leverage economies of scale to deliver healthcare at lower costs. As these healthcare organizations grow in size, the need and opportunity to create operational efficiencies increase, and ERP shared services for back-office functions are seen as a way to achieve these goals.
In part two of these series, we continue to explore and explain the critical success factors for any ERP shared service operation. The next three success factors are:
Transitioning to shared services represents a significant change management challenge. Responsibilities and roles will change; jobs may be lost; new technologies will alter the way processes are performed. Local staff may be reluctant to let go and may look for flaws and find ways to challenge the new model. Standardization can quickly break down if processes are not well communicated, or if too many exceptions are accommodated.
Creating an effective change management model starts with a communication plan that clearly defines who the audience will be for information and developing messaging about the change and future state. Emails, announcements, newsletters, leadership reports, and other mechanisms can be used to distribute information as appropriate. If staffing reductions will be part of the change, working with the HR department is essential to determine what it means for the impacted staff. Determining if relocation is an option and how termination, relocation, retention bonuses, and other compensation issues will be addressed is vital to making sure that there is clear information provided and that the rumor mill is not allowed to take over the process. Shared service leaders are encouraged to do everything they can to take control over what information is communicated. Rumors are created in the absence of facts. Communicating early and often will go a long way to build your credibility as a new shared service center.
Shared services are extremely dependent upon working with other parts of the organization, and their ability to be successful is often heavily influenced by the relationship that the shared service center establishes with these departments. This is easier to do in an environment where those functions are also centralized, though that is not always an option. For accounts payable, purchasing is a vital relationship as their accuracy drives the success of invoice matching. A true partnership includes establishing joint metrics and mutual goals to reduce not only the time required to resolve discrepancies but also to find and address root causes to reduce the number of differences.
An effective shared service center is a metrics-driven organization, measuring the right information to enable constant process improvement and to proactively identify bottlenecks. Effective metrics are those that are actionable, comparable, and related to department goals. Metrics should not simply be skimmed, but rather evaluated and questioned–as these questions often lead to solutions. Leadership should review metrics regularly and discuss why the numbers are what they are and how to make them better. Process improvement methodologies such as Six Sigma demand that evaluation goes beyond merely “green” or “red,” but rather be on a path of constant improvement, striving slowly but surely towards perfection. The number should not be seen as good enough–but always seen as an opportunity for growth. Metrics are also a great way for a shared service leader to share their success.
As stated in the first part of this blog series, properly designed, ERP shared services creates significant cost savings – but also can provide a high level of service and help improve the quality of the healthcare organization. Following these critical success factors is the first step on the path to becoming world-class.