Shared Services ? Are They A Good Idea

Things happen fast in business and we need to stay on top. It does not seem long ago that some enterprises were still hands-on traders or artisans with a few youngsters to help out. People like that did not do admin and their accounting was a matter of making sure there was enough money in the jar.

When Wal-Mart’s Sam Walton took over his first shop in 1945 things had moved on from there, although he did still deal directly with his customers. When he died his legacy was 380,000 jobs, and a business larger than most economies. So there?s plenty we can learn from how he grew his business.

One of Sam?s secrets was his capacity to centralise what needed gathering together, while empowering store managers to think independently when it came to local conditions. His regional warehouses had individual outlets clustered around them within one day?s drive each. This shared service eliminated 90% of safety stock and released capital for expansion.

Wal-Mart took sharing services a step further in February 2006, when it centralised accounts payable, accounts receivable, general accounting and human resources administration at Wal-Mart Stores and Sam?s Clubs in the U.S. and Puerto Rico. The objective was to bring costs down, while allowing local managers more time to focus on their business plans and other initiatives. As a further spin-off, Wal-Mart was able to integrate its data on a single SAP platform and eliminate significant roadblocks.

This is an excellent example of sharing services by creating own centres of excellence.? Of course, this is not the only business possibility. Other corporates have successfully completely outsourced their support activities, and Wal-Mart has no doubt had a variety of similar offers too. But, is the Wal-Mart picture entirely rosy, or is there a catch?

The Association of Chartered Certified Accountants has indicated that top talent may be the loser globally. This is because the Wal-Mart model removes many challenges through standardisation, and offers less scope for internal promotion as a result. Language and cultural differences may also have a long-term detrimental effect on the way the departments work well together.

Local outsourcing ? this is the business model where several firms engage a shared service provider independently- may hence prove to be a more malleable option for smaller companies. It often makes more sense to hunt down made-to-order services. Offerings such as the professional support we offer on this site.

Check our similar posts

How Bouygues manages an Empire-Sized Footprint

Bouygues is into telecoms / media, and building and road construction. It also knows it has to watch its energy footprint closely. Owning 47% of energy giant Alstom keeps it constantly in the media spotlight. Shall we find out more about its facility management policies?

The journal Premises and Facilities Management interviewed MD Martin Bouygues on his personal opinions concerning managing energy consumption in facilities. He began by commenting that this was hardly a subject for the C-Suite in years gone by. Low-level clerks simply paid the bills following which the actual amounts were lost in the general expenses account. That of course has changed.

Early pressure came from soaring energy bills, which were pursued by a whole host of electricity-saving gadgets. However, it was only after the carbon crisis caught business by surprise that the link was forged to aerial pollution, and the social responsibilities of big business to help with the solution. The duty to have an energy strategy became an obligation eagerly policed by organisations such as Greenpeace.

Unsurprisingly, Martin Bouygues? advice begins with keeping energy consumption and its carbon footprint as high up on the agenda as health and safety. ?It needs bravery and a lot of hard work to get it there,? he says, ?so perseverance is the key?. 

The company has developed proprietary software that enables it to pull data from remote sensors in more than 80 countries every fifteen minutes. A single large building can contribute 50 million data items annually making data big business in the system. Every building has an allocated energy performance contract against which results are reported monthly, as a basis for reviewing progress.

The system is intelligent and able to incorporate low-occupancy periods such as weekends and public holidays. What is measured gets managed. We all know that, but how many of us apply the principle to our energy bills. With assistance from ecoVaro, the possible becomes real.

We offer a similar service to the Bouygues model with one notable exception. You don’t buy the software and you only pay when you use it. Our systems are simply designed for busy financial managers.

UK Hauliers Pull Together on ESOS

ESOS is what UK business needed, to encourage it to become more responsible for the environmental consequences of making money. Government has met with industry leaders to hammer out the finer details. Now there are heartening signs of intra-industry collaboration, for the example the FTA approach we discuss here.

The Freight Transport Association (FTA) is one of the UK?s biggest trade associations, and exists to represent the interests of companies moving goods by air, rail, sea and road. It is their representative at national, European and local level that advises them on legal compliance. In February 2015, it announced plans to help the industry comply with ESOS too.

The association has been active since the announcement of the UK?s Energy Saving Opportunity Scheme. It has engaged with government and membership through the portal of its Logistics Carbon Reduction Scheme (LCRS). The Environment Agency has singled this out as a benchmark other industries could follow.

FTA general manager for consultancy and tendering Karen Packham recently said, ?With our highly experienced and fully qualified team of transport auditors ?the FTA is best placed to offer practical advice and is able to provide specialist audits to ensure members are fully compliant ? and will gain all the benefits that the scheme has to offer.?

These co-audits with Environment Agency specialists advising, will focus on the full range of operational and supporting activities, and ensure that all haulage companies with over 250 employees do the following:

  • Assess energy use across their full spread of buildings, transport media and industrial activity
  • Examine energy-intensive pressure points and identify savings opportunities that provide financial benefit
  • Nominate an ESOS person to conduct future audits, or oversee and approve them independently
  • Report to the Environment Agency as scheme administrator per statutory intervals

Ecovaro has energy management software that turns metrics into high-level information that busy people understand. Give us a call if you are puzzling how best to present your data. We believe two heads can achieve so much more together.

Key Steps to Complying with ESOS

Energy Savings Opportunity Scheme has already been launched. In fact, it is by now in its initial phase. However, many businesses are still not aware of the new scheme, especially those who are covered by the qualifications for ESOS. To help them understand what they need to do in compliance to the energy efficiency strategy, here are key steps they can follow along the way.

Measure Overall Energy Consumption

The first step to complying with ESOS is to make an initial estimate of the business? energy consumption. This includes measuring the use of electricity, renewable energy, combustible fuels and all other forms of energy consumed whether in buildings, transports and industrial processes.

Three important factors to consider are the measurement units used, the reference period and quality of data. Energy units, such as MWh and GJ, or energy expenditure costs should be applied. Business enterprises should also do the initial measurement within a reference period of 12 months. Moreover, data collected should be verifiable at hand.

Identify Areas of Significant Energy Consumption

When the total energy consumption for all the activities and assets has already been estimated, it’s then time to identify what areas in the organisation comprise the significant portion of the overall energy usage. The areas recognised should cover at least 90% of the overall consumption. Meaning to say, ESOS participants have the chance to omit 10% of the energy consumption and instead focus on the 90%. This would ensure that subsequent energy audits will be cost-effective and proportionate.

Consider and Choose Compliance Routes

In order to comply with ESOS, qualified businesses should consider what compliance routes to take. These routes include taking series of energy audits, operating and implementing a certified ISO 50001 energy management system, acquiring Display Energy Certificates (DECs) and working with Green Deal assessments. Whichever route the business takes, one should maintain credible evidences, along with helpful documents, to certify their compliance.

Report the Compliance

Except when the large enterprise covers all the significant areas of energy consumption by means of ISO 50001 certification, one should appoint a lead assessor to supervise, conduct and review the organisation’s chosen ESOS compliance route. In this case, the approved assessments should then be signed off at board level to ensure that the conclusions and recommendations for energy savings are properly carried. To confirm their compliance, the business should submit a formal notification to the Environment Agency.

Because ESOS is not just an opportunity but also an obligation, it designated compliance bodies and gave them the authority to file civil penalties towards those who fail to comply with the scheme. Not only that, these appropriate authorities have the right to publish information about non-compliant enterprises including their name, details of non-compliance and corresponding penalty amount. Among these UK compliance bodies are Natural Resources Wales, Environment Agency in England, The Scottish Environment Protection Agency (SEPA) and Northern Ireland Environment Agency.

So, if you are covered with the ESOS qualifications, make sure to be informed. As the famous saying goes, ?Ignorance of the law excuses no one.? Likewise, awareness of ESOS is a responsibility every large business in UK should give importance to.

Contact Us

  • (+353)(0)1-443-3807 – IRL
  • (+44)(0)20-7193-9751 – UK

Ready to work with Denizon?

Contact Us Today