A focus on outcomes: Shell's GBS operating model

29 November 2013

The relentless evolution of Shell’s global business services operating model is approaching a fresh milestone as the company’s service centres expand process scope and focus on outcomes. Jack Wittels talks to Doug Alexander, Shell’s new executive vice-president of finance operations and the man spearheading the transition for finance, about the journey so far.

Doug Alexander is a busy man. As Shell's new executive vice-president for finance operations, he is responsible for over 6,500 people working in the firm's service centres dotted around the globe. Sitting behind his desk at Shell's London South Bank centre,
he discusses upcoming trips to Canada, Glasgow, India and the Philippines.

"There are periods where I'll travel for three to four weeks... sometimes, I think my family's quite pleased to get rid of me," he jokes.

Flexing well-worn smile lines and leaning back in his chair, Alexander exudes a relaxed attitude, despite his hectic schedule. This is all the more impressive considering the enormity of the task that lies before him.

"Today, Shell's business service centres (SBSCs) cover customer services, IT, HR, capital projects and finance operations," he says. "There are six centres in different locations around the world, employing around 11,000 people; about 6,500 work in finance.

"Our current focus is on transforming these centres from a process-based outlook to a business outcome approach; we want them to carry out what we call end-to-end processes."

Though accurate, Alexander's summary belies the enormity of what Shell's finance operations journey actually entails. Initiated in the early 2000s, the firm originally aimed to use its six centres based in Cape Town, Chennai, Glasgow, Krakow, Kuala Lumpur and Manila primarily for basic back-office finance functions. The chief reason for the centres' existence, as with most service operations at the time, was to reduce operating costs.

The power of big data

Over time, however, Shell continued to improve the centres' efficiency, mainly through adopting a global rather than regional approach to operations; each took on specific roles, but catered for the entire organisation. Management information, for example, was largely based in Chennai. By specialising, the centres increased process efficiency and developed key areas of expertise.

"Our current focus is on transforming Shell’s business service centres from a process-based outlook to a business outcome approach."

The latest stage in this journey, and the focal point of Alexander's new role, is to transform the centres from purely functional facilities to central components of Shell's wider business strategy. Data analysis is the driving force behind this change; information must be compiled, understood and used to inform business decisions, rather than simply processed and forgotten.

"We've got a huge information management and analysis team in Chennai, around 650 people," says Alexander. "They're becoming more and more involved in the business finance conversation - they sit in meetings and are part of the team. They just happen to be in Chennai."

Shell's data analysis operations provide valuable insight into customer behaviour, potentially leading to new business ideas or market repositioning. Information on personal weak spots can also pave the way for self-improvement - particularly useful for a firm that aims to increase efficiency by 5% year on year. Establishing and maintaining such a complex data capture structure, however, is not without its challenges.

"What people tend to forget when they talk about big data is the importance of getting the basic integrity right," explains Alexander.
"In Chennai, we have 300 engineers and 400 other people whose job is just to make sure that we're reporting and delivering the right information in the correct format. It sounds dull, but this is the foundation for all the sexy analytics."

Human capital

Shell's move towards end-to-end process management at its centres also sees new middle and front-office roles being introduced, alongside the traditional back-office functions. As with data analytics, business value is the primary motivator. But there is also a second, more psychological element. By handing over greater responsibility, Alexander hopes to break down the traditional barriers between a core business and its service centres. He wants a genuine partnership, with the ultimate aim of boosting productivity.

"We've been through various iterations; shared services, SSC, finance shared services, SBSC. In my mind, though, it's really important that we get away from this whole subservient 'service' nonsense," he says. "There has to be real accountability... people must understand that they now own this process, and that means they will tell everybody what to do and how to improve it - not only within their own and other centres, but across the whole business."

It is a bold move, requiring workers with much broader analytical and business skills than many corporate service centres currently employ. Shell is working closely with universities and accounting bodies such as the Association of Chartered Certified Accountants (AACA) and the Chartered Institute of Management Accountants (CIMA), as well as developing its own in-house learning programme, to meet its needs. Interestingly, by investing more in its workers, Shell's service centre staff turnover rate is only 10-15%; significantly lower than other BPO providers, some of whom operate at around 25%.

"Without putting too fine a point on it, the concern always used to be that we were never going to get the same kind of staff capability in some of these locations," Alexander comments. "Of course, the reality is that we've got more."

So far, organic growth has played a significant role in deciding precisely which of the more complex functions are passed across to SBSCs. Scheduling, a fundamental business operational activity, is one of the more recent transitions.

"While the outsource model works fine if you’re only looking at commodity-based transaction services, our aim is to move beyond that to a more business-focused value model."

"We've also got 1,200 people doing increasingly sophisticated customer service type roles, which is a lot more than simply fielding calls," says Alexander. "The workers need to understand the customers, comprehend the pricing - it's moving well beyond the call centre model to a more integrated decision-making exercise."

Shell is not alone in entrusting more sophisticated tasks to service centres. A number of leading firms, including Dow Chemical, Procter & Gamble and UPS, are also making the leap, the latter even using its business service organisation to support digital marketing at a global level.

Eschewing outsourcing

The core difference between the broad trend followed by these companies and Shell's activities is that, apart from some IT services, the oil giant is keeping all its processes in-house, rather that outsourcing to an expert business services provider. This is a hotly debated issue among the world's finance directors. Alexander, however, is certain Shell has made the right choice.

"We do regularly look at whether there's an outsourcing option," he says. "But I think, for a couple of reasons, we don't think it will work for us. One is that we've got sufficient scale anyway. If you're operating on a smaller basis, then outsourcing makes more sense. But we've got over 11,000 people already working in one of the world's biggest collection of captive centres.

"The other thing, is that while the outsource model works fine if you're only looking at commodity-based transaction services, our aim is to move beyond that to a more business-focused value model. We think we're better placed to do that than outsourcing it to somebody else," he adds.

Of course, not everyone would agree with Alexander. Experience suggests that fruitful operating models can be developed between parent and outsourcing companies. Professional BPO providers also argue that years of expertise means their services are superior to anything private companies going it alone can realistically hope to achieve.

But whether outsourcing or keeping operations in-house, one underlying dilemma faces all companies in relation to service centres - as processes and responsibilities are increasingly transitioned, where does one draw the line between core business and service centre?

"There are certainly organisations that have gone to the extreme," says Alexander. "So far, as their European finance organisations
go, they've got pretty much everybody in Dublin; there's literally 5% of people left outside.

"At the moment, we've got 6,500 people in our finance operations centres doing accounting transactions, as well as information analysis, plus more people in the business. As a model, it breaks down the traditional chain of people development; you're not going to have a load of recruits from India ending up working in the Netherlands.

"Consequently, there will come a point where you're faced with the question: is this sustainable? We've got a long way to go yet. But eventually, a lot of organisations will have to ask themselves how far they want to ride this train."

Doug Alexander, executive vice-president of finance operations at Shell.
The Shell business service centre in Chennai, Tamil Nadu, India.
Doug Alexander and his team at the Shell business service centre (SBSC) in the Philippine capital of Manila, one of six SBSCs worldwide.