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- Powering Transformation: A Shared Services Success Story
Powering Transformation: A Shared Services Success Story
Grupo Energía Bogotá SA ESP – GEB, is a multinational company with over 125 years of history and ongoing operations across the entire energy chain in Latin America. It is involved in electricity generation, transmission, and distribution, as well as in natural gas transportation and distribution in Colombia, Peru, Brazil, and Guatemala.
Today, it is a solid company with robust corporate governance and a coherent strategic organizational plan that has allowed it to grow and consolidate a portfolio of electricity and gas assets, establish a leadership position in the region’s strategic markets, and set the standard with operational excellence, ethical and social commitment, environmental conservation, and innovation initiatives.
This consolidation and growth align with its higher purpose of improving lives with sustainable and competitive energy, with four strategic objectives and their enablers, including digitalization and innovation, agile and strengthened governance + talent and culture, positive social and environmental impact, and a focused portfolio.
Aligning back-office processes with this higher purpose has played an important role in this process, leading to an evolution in their organizational model aimed at focusing areas on sets of specialized processes and leveraging technology and digitalization.
A Back Office Model that Supports Strategic Objectives
As the new organizational strategy developed, initiatives emerged as part of its roadmap, such as migrating the ERP to SAP S/4HANA, building a more robust talent management model, consolidating a portfolio of information technology and infrastructure services, and evolving a contracting model to ensure the control and compliance required for an organization with GEB’s technical rigor and public-private nature in Colombia, where its headquarters are located.
It was quickly identified that these initiatives needed to be integrated into a broader goal that structured back-office processes, avoiding isolated efforts and generating synergies capable of evaluating the organization’s roadmap holistically.
Global trends in back-office processes in recent years have been permeated by the four-channel model, which focuses on a corporate area that generates guidelines and ensures strategic direction for these processes, an agile governance, centers of expertise focused on their technical and analytical roles while promoting innovation, business partnering areas that understand and support business needs with a focused portfolio, and global services areas consolidating high-volume processes and leveraging technology to provide higher-quality, more efficient services.
Thus, GEB aimed to identify the appropriate operating model for its Organizational Talent, Finance, Procurement, Infrastructure, and Technology processes, consolidating a portfolio through a shared services center, ensuring quality and reliability for its internal clients in Colombia, Peru, and Guatemala.
Building a shared services center became the enabler for developing a flexible operating model that would support business growth by reducing process complexity with a unified group vision. This model, allowing economies of scale to optimize resources by leveraging the Group’s digital transformation, has enabled GEB to benefit from automation and digitalization.
Alignment with the Organizational Initiatives Roadmap
The Shared Services Center was the missing piece in this journey focused on a higher purpose, posing a challenge in how the model aligned with each ongoing initiative.
Corporate Governance: The Shared Services Center had to fit into a model with strong corporate governance, bringing agility to specific processes that needed to meet minimum requirements for each subsidiary, aiming to be as standardized and lean as possible.
ERP Migration: The way processes were enabled within a technological tool had already been determined by an ongoing implementation, marking the roadmap in terms of timelines and efforts, ensuring that the processes defined for GEB and its subsidiaries aligned with the new tool’s capabilities.
Talent Model Development: With a focus on developing a new talent model, organizational talent processes were being reviewed, focusing on segmenting areas by expertise, enhancing control levels, and increasing efficiency. The Shared Services Center arrived to complement this model, providing greater focus.
Robust and Agile Contracting Model: Contracting standards for such organizations require strong controls given the organization’s public-private nature and business type. A roadmap was being developed to create a contracting model applicable to all Group subsidiaries, providing greater control and assurance of processes. The Shared Services Center’s analysis had to determine whether it made sense to migrate activities, adding value without risking operations.
Strategic Portfolio and Locations
The first step was designing the shared services center, defining the potential service portfolio according to stakeholder expectations, the organization’s current state, its needs, and best practices and market trends.
As the organization and its specific cases were understood, and tasks were selected for migration to the shared services center, the optimal model to configure this operation was determined.
Financial management services such as master data management, accounts payable and receivable, billing, treasury, financial assurance, tax management, assets, and accounting were chosen as the optimal portfolio among global trends in financial shared services centers to achieve operational cost reduction and deviation benefits and allow for a more efficient alignment with SAP S/4HANA-defined processes.
For administrative services, processes suited for a shared services center were mostly updated to migrate, covering general services management, maintenance, infrastructure, and physical security.
Similarly, information technology was evolving with new tools like SAP S/4HANA and the necessary capacity to support required assistance. With evolving service models and implementing protocols, the decision was made to migrate SAP and non-SAP application management, infrastructure, support, and security to the shared services center.
For talent processes, the challenge was to determine a set of activities that would enable the rest of the talent organization to focus on developing and controlling employee data with tools like SuccessFactors. Therefore, a service portfolio of attraction and selection, payroll management, and employee support was created.
Procurement, in line with the contracting model’s evolution, went through several decisive rounds to determine the optimal portfolio. After analyzing GEB’s needs and new trends, Sourcing was moved to the shared services center, including core and non-core purchases, providing control and efficiency in centralized negotiations within a service model framework.
These services were configured with a main site in Colombia at GEB’s facilities to serve subsidiaries in Colombia and Guatemala, while two hubs in Peru were established to ensure optimal service for Peruvian subsidiaries.
The Greatest Challenges
Every shared services center setup brings challenges. The main ones included:
Service Portfolio Selection: The evolution of operational models in organizational processes increasingly demands an end-to-end vision, enabling synergies, automation, continuous improvement, and data analysis. The first step was identifying an optimal portfolio that met this requirement and the organization’s organizational and corporate governance model evolution.
Public Nature and Organizational Specifics: Handing over tasks to a different structure involves change management, which is challenging in terms of relinquishing control of certain activities while standardizing inputs for a new service-providing area. This is more complex when factoring in specific controls and requirements of a public-private organization, complicating process standardization and service model configuration.
Established Group Culture and Functionality: The speed of implementing a Global Business Center is influenced by the existence of a strong, established group culture. If such a culture exists, implementation can proceed more quickly. In the case of GEB, the Center has significantly contributed to the strategic enabler of Agile and Strengthened Governance.
Lessons Learned
Sponsorship: Having the necessary support to make things happen was essential. The availability of resources, the speed of decision-making, the governance exercised across the different subsidiaries along with a global vision, and the continuous review and alignment of the progress in implementing the global business services with stakeholder expectations and organizational goals allowed this initiative to maintain focus within the organizational roadmap.
Partner Support: Selecting the technical expertise and experience for this implementation provided project assurance. A robust methodology, along with an external, objective perspective aligned with best practices, facilitated the structuring of scenarios and potential impacts, speeding up and optimizing decision-making.
A Solid Business Case: A business case provides the justification and financial rationale for the impacts of implementing a shared services center, adding objectivity to decision-making with the goal of minimizing risks. As decisions are made and new scenarios unfold, the variables and assumptions regarding the scenarios projected in a business case are updated and recalculated. Tracking these changes provided full context to stakeholders about the impacts of each decision taken and continues to ensure that the shared services center maintains control over its operating parameters.
Interaction Model: Clear protocols will always enable the greatest possible clarity of expectations, providing a clear framework by which a global business services unit can be governed. Developing an interaction model was key to defining final responsibilities, positioning the global business services within the organization, and especially to ensuring aligned and standardized operations with the hubs present in Peru.
Benefits
The implementation of the Shared Services Center brought qualitative and quantitative benefits. The most notable are:
- Strengthening Corporate Governance and Control: With the launch of the Shared Services Center, GEB has strengthened its corporate governance and centralized control of business support processes, contributing to both the Group’s tactical and strategic initiatives.
- Pooling of Needs and Pursuit of Cross-Functional Solutions: The Center has provided a cross-functional vision that pools needs and seeks solutions for all geographies. This accelerates standardization and increases negotiation power with the external market, resulting in significant efficiencies that contribute to the financial results of the subsidiaries served.
- Transfer of Best Practices: The Center has facilitated the transfer of best practices among the companies served, promoting knowledge sharing across geographies in a two-way exchange.
- Enabler of the Group’s Digital Transformation: The concentration of recurring activities and operational volumes in the Center facilitates and accelerates the adoption of new digital tools and their rollout to all served subsidiaries.
Other benefits achieved include:
- Greater control
- Evolution of the corporate model
- Savings from centralized purchasing negotiations
- Ensuring scalability in automation
- Lower cost per transaction
- Collaborative teamwork