A critical evaluation of the value of the implementation of a shared services centre of the financial function at ArcelorMittal South Africa with special reference to accounts payable

Venter, Marthinus Christoffel (2011-03)

Thesis (MBA)--University of Stellenbosch, 2011.


Some companies composed of different branches or centres or business units, are frequently following different financial operating procedures. They use different financial systems that are not aligned. This lack of process standardisation and control can be seen as a “drag” on the business. Due to this challenge, management might be at risk to focus on the administrative processes, instead of the core-business of the company. This risk has lead to more and more organisations considering implementing shared services for finance, believing that through the implementation thereof there is an opportunity to reduce costs, improve quality, timeliness, and transparency of data. The main aim of this report is to verify whether the implementation of shared services at the Accounts Payable (AP) function within ArcelorMittal South Africa (AMSA) did add value to the stakeholders of the business. Managing a shared services operation includes the implementation of benchmarking and continuous improvement and must involve planning for enhancements. Increased automation should enable departments to operate more effectively and efficiently in the future by streamlining processes, improving service levels and internal control as well as increasing data analysis. The main reasons for implementing a Shared Services Centre (SSC) at AMSA are explained and the processes that AMSA followed in implementing a SSC in Vanderbijlpark are described. Specific reference to the AP function is given. The SSC AP function of AMSA should operate as an internal customer service business. Currently the internal customers of this function are not satisfied with the operation of the function and a lot of the difficulties and mistakes made during implementation and operation of the SSC AP need to be solved, although the centre has been implemented six years ago. A customer survey and interviews with three managers of AMSA, who were involved in the implementation and operation of the SSC, was done to determine the value and success of the centre. According to the feedback, the SSC of AMSA has become a static shared service unit that satisfied the needs of the customers and the organisation only at the beginning of implementation. The service currently runs the risk of becoming just another centralised function that is subject to the same problems that originally caused AMSA to seek a new means of organising. The management of the SSC of AMSA needs to look beyond what it does today, linking its plan to overall company goals and assessing how it can optimise its contributions on behalf of all parties within AMSA. The management of the shared services unit needs to develop competence in finding and exploiting leverage opportunities to be continuously of value to AMSA. Possible corrective actions to get the SSC to be customer orientated are discussed. By solely relying on centralisation and standardisation, significant benefits of the shared services operating model was omitted and not implemented. The management of AMSA needs to consider the restructuring of the SSC to ensure the reshaping of the operation into the high-performing, service-oriented “business within a business” originally intended for shared services.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/8516
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