The Case for Consolidation

Mark Vise, Vice President and Chief Financial Officer

Intertek North America’s transition to a shared-services model shows the power of bringing back-office services under one roof, and the importance of flexibility and communication to guarantee results

Shared-services models are taking over the world. By consolidating its back-office services, such as finance, a company can enable one set of resources to be leveraged across the organization. The result is lower costs with agreed-upon customer-service levels—as Intertek North America recently discovered.

London-based Intertek Group PLC provides quality- and safety-related services, including assurance, auditing, certification, inspection, testing, and training. Working with customers to minimize the risks of their products, the $3.3 billion company has 36,000 people working at 1,000 locations in more than 100 countries—a geographic expanse that can make providing consistent corporate services difficult. Mark Vise, vice president and chief financial officer of Intertek Americas, recently offered a solution in his region, guiding it in the transition to a shared-services model and subsequent business-process outsourcing model. The transformation reduced the cost of North American finance operations from 3 to 1.9 percent of third-party revenues from 2010 to 2013, respectively.

The transition started in 2006, when Intertek began looking for ways to network across its divisional structures, building on synergies with customers and providing more connected services. That program, called “Intertek as One,” had a simple mission: break down the silos within the business and promote collaboration.

One leg of the stool, so to speak, was the structure of the company’s finance operations. “We noticed that we had divisions, each with their own finance and accounting team with a regional financial officer for that group,” says Vise. “When we looked at benchmark companies, we realized there was a significant opportunity for improvement, so we decided to collapse all of those divisional teams into one team in one center of operation [in] Houston, Texas.”

At the time, Intertek didn’t have a global shared-services center, so the move to one in North America was a pilot project. To get started, a senior program team, which included Vise, physically visited each location and met the people who would be impacted. “The goal was to introduce the project, explain why we were changing, and explain what the implications would be for each employee of Intertek,” Vise says.

When implementing a shared-services model, Vise says success is measured by how much or how little the internal customer feels the change in structure. First and foremost, one has to realize that moving to a shared-services environment is a major change both within a company and externally, with customers and suppliers.

“You’re flipping a business model that has been in place for years, in some cases decades, and while it may be a flawed business model, people still rely on it,” Vise explains. “Employees are, to a certain extent, losing the security blanket of having their own finance and accounting structure, the ability to walk down the hall and talk to a person.”

The finance and accounting employees were also impacted. Vise found redundancies in certain locations, and roles for those who remained had to evolve to meet the needs of the new structure. These changes required a true cultural shift within the business.

To achieve it, the project team was transparent. As soon as the decision was made to move to a shared-services model, the team announced it, offering a clear explanation of the milestones in the process. Then, throughout the thirteen-month transition, the project team provided regular updates that answered several key questions: Where are we now? What do we plan to change? How will it affect you? What will happen next and when? “People may not like the message, but if they feel that you’re fair—if you’re up front and you give them plenty of notice of the change—they will always surpass your expectations,” Vise says.

The project team quickly realized that the key to the success of the project would be creating a model that worked seamlessly for everyone. “You have to accommodate demand-driven differentiation as required by the different businesses, because it’s not a one-size-fits-all model,” Vise says.

After launching the project in December 2008, the project team spent thirteen months building the shared-services structure in Houston and transitioning the fieldwork to Houston. That was a big job, one that normally takes two to three years. Consolidating accounting centers was key, and building a broader team in Houston was important, but equally significant was moving all of the businesses to a common financial platform.

In addition, the team added new technologies, such as web-based time capture, e-procurement, and online expense reporting. It also customized the financial platform’s billing module to allow for the nuances of the different business functions within the company.

Vise feels it speaks to the success of the project, which went live in January 2010, that Intertek North America didn’t lose a single redundant employee before it planned, and the implementation of the shared-service model was stabilized within six to nine months without missing any close calendar dates.

Now, Vise and his team are turning their attention to the company’s Latin American model, having recently established a similar “center of excellence” in Santiago, Chile.