Two years ago BlueScope Australia and New Zealand took a strategic decision to offshore already outsourced processes, with the goal being to deliver sustainable cost savings, but also to gain access to global process improvement capabilities. It’s been an eye opening exercise for them. A project of this nature comes with its challenges, but the rewards realised offered unexpected advantages that went way beyond just the benefits to the bottom line.
Stephannie Jonovska, Manager Finance Transformation at BlueScope Australia and New Zealand will be presenting at Finance Innovation & Tech Fest this year, where she’ll share the full story of BlueScope’s offshoring initiative. In the lead up to the event Stephannie shared some key insights into the major wins and challenges that were realised with this project.
The Decision to Go Offshore
We had been in an outsourced partnership arrangement for over 15 years, a lengthy time and were operating in a hybrid model – part onshore, part offshore in China. The strategic challenge we faced as a business was how to create a sustainable steel business in Australia – to really thrive, so we were looking at all areas to retest. In addition, we were in the early stages of looking for automation opportunities to improve efficiency, accuracy and reduce risks. We had a very strong view that revisiting our outsourced operating model was not only about the dollars – it was also about gaining access to global process innovation quickly to deliver even more value.
Understanding our motivation, our partner provided several options to consider to meet our strategic needs. After due diligence including visiting Capgemini Bangalore, India, reference checking with global clients and commercial considerations we signed a Letter of Intent to enable the transition to be planned. We then completed our contractual processes.
Making the Transition
Our partner had a defined transition methodology, so we leveraged that. It included preparation, team definition, assessing our processes against standard best practice models, documentation creation, work shadowing, training, ramping up, stabilisation and handover. I recommend upfront investment in this, it was huge! We did this collaboratively – and we built in tollgates which is usual, but it also cemented the culture of calling things out early if something wasn’t going as expected. It allowed us to course correct as required.
In recognition of the change management required and challenges expected, BlueScope resources were out in place to support the transition. These included process owners across the three delivery towers (Procure to Pay P2P, Credit to Cash C2C and Record to Report R2R), a transition manager and executive support with equivalent counterparts in Capgemini.
We also prepped the business – this was a significant change program affecting key processes and people. I cannot stress enough the importance of two way communication, informing and listening.
Picking the Processes
Processes outsourced across our three towers are extensive and include:
Procure to Pay
Invoice processing, payments, reconciliations, purchase order creation, material master creation, material agreements, reporting
Credit to Cash
Cash applications, claim management, collections and disputes, manual billing, reporting and analysis
Record to Report
Journal processing, fixed asset accounting, intercompany, bank reconciliations, month end close, reconciliations, reporting
Risk Mitigation and Management
We were pragmatic about managing risk and undertook risk assessments early on, and during the transition. I think the best thing we did was to have transition occur in three waves, each in increasing complexity, which spanned 16 months. This was aimed at maximising knowledge transfer, allowing for solid stabilisation of processes and hence reduce the risk. In addition, we embedded very early on a culture of calling out if something wasn’t working, allowing us to collaboratively work on a solution without blame.
We also learnt early on to measure performance and have this set up before ramping up – that way we could pinpoint any issues and reduce business impact risks.
The Benefits – the Bottom Line and Beyond
Bottom line, we have achieved more than 50% cost saving over the life of the contract (seven years) which is impressive! We have built in productivity improvements year on year, which incentivises our partner to drive process improvement. The level of process industrialisation has been incredible over the last two years. Drawing on their experience with other clients, systems and processes, Capgemini have improved processes with us, but also challenged our internal BlueScope processes which are not helping the end-to-end process. We are now fully on the journey of embedding processes in technology, including RPA, which would have taken us a lot longer to get to if we tried to do this ourselves. As a result, our Future Finance thinking is quite advanced, we’ve got tangible runs on the board that has shaped our vision.
Lessons and Learning from Outsourcing Finance
- Ensure the outsourced team are part of your team from day one – invest in visiting them to understand the culture and what motivates them, what support is required, and how to leverage their experiences.
- Communicate, communicate, communicate with the business – upfront and ongoing to create trust and get feedback.
- There will be issues – fix the problem, manage stakeholders, conduct root cause analysis and work on the systemic challenges. Acknowledge the challenges – in our case, multiple ERP’s, complexity of non-standard processes and manual intervention. When you have 73 ways of paying an invoice (a real number!) you need to work on systematically fixing that.
- Ensure the accountabilities are right – our outsourced partner is responsible for the delivery, but we cannot abdicate our accountability. If they fail or succeed, it’s a joint fail or success – it’s not a blame game.
- Be fact based – have metrics built in before you go live so that you know if things are in control or not.
Most importantly, it’s essential you establish the culture and relationship you need to support the innovation. Both BlueScope and our outsourced partner are investing in this relationship to deliver tangible results – this is a true partnership, not adversarial. From the outset, we have encouraged open discussion and respectful challenging, which was perhaps counter-cultural. We have spent time understanding our cultural similarities, and our differences; we absolutely value this diversity.
Stephannie will be presenting at Finance Innovation & Tech Fest this year, where she’ll share the full story of BlueScope’s offshoring initiative. Register now to attend and hear more from Bluescope as well as other case studies from leaders in finance innovation and technology.
About the Speaker
Stephanie Jonovska is Manager Finance Transformation at BlueScope Australia and New Zealand. A high-energy leader with exceptional integrity, Stephannie is known for her drive and commitment to achieving commercial outcomes through effective people and stakeholder leadership.
With over 25 years experience in manufacturing and solutions across finance, procurement, business improvement and transformation, Stephannie has built a leadership reputation for actively and successfully disrupting the status quo.