HP Enterprise Services and Smith & Nephew: Commitment to Collaboration Pays Off – Les Mara and David Trollope
Collaboration between a client and BPO provider is a vital driver in achieving a global shared services operating model. David Trollope of Smith & Nephew and Les Mara of HP Enterprise Services explain why collaborative engagement with equal effort from both parties is the best way to ensure success.
For a growing business focused on global expansion in a highly competitive market, optimising the back office is essential. Working with a partner that operates globally, has transformed its own back office, and brings technology and process innovation can be an attractive option to rapidly achieve results.
"It isn't simple," says David Trollope, senior vice-president of global financial systems for Smith & Nephew. "But ultimately we believed that outsourcing would help us reach our goals quicker and more effectively."
Smith & Nephew develops advanced medical devices for healthcare professionals around the world, and is an industry leader in the orthopaedic, endoscopy and wound management markets. Until recently, the company did all its transactional processing in-house - its finance function was a federated, country-based operation. This, Trollope notes, is partly because the company has grown through organic expansion into new businesses and territories, and through acquisition.
"This has meant we have had small, stand-alone businesses that have, in the past, had some degree of autonomy," he says. "More than ten years ago we formed global business units to drive the sales, marketing and product development. We have been very successful in doing that."
Opportunity to standardise
Smith & Nephew has seen strong growth, expanding in new markets and spreading geographically. Its global infrastructure continues to grow, and it is now Europe's largest medical device technology company. But the corporation realised that centralising and outsourcing could offer it additional benefits.
"In some ways we had neglected our back offices," Trollope says. "They carried out the basic transactions well. However, by centralising and outsourcing, we saw an opportunity to standardise and become a more globally orientated company, more than a series of individual businesses."
Outsourcing has always been seen as a way to reduce costs; however, companies are realising more and more that it can also enhance growth, offer increased agility and help a company outperform its competitors.
Trollope explains why Smith & Nephew eschewed outsourcing for so long: "We focused on sales growth, product development and margins, the key drivers for our success. But we couldn't ignore the changes in the market. We made huge transformations in the way in which we sell; however, we hadn't changed the way we processed our transactions or got things done."
Smith & Nephew recently signed a seven-year finance and administration BPO services agreement for Europe with HP Enterprise Services, the scope of which included order to cash, procure to pay and record to report.
HP first entered the healthcare IT service industry more than 40 years ago. Today, it is the largest provider of those services in the healthcare and managed-care market, and its global experience in this arena spans payer, provider, government and life-science communities.
HP aims to support Smith & Nephew's finance transformation by improving productivity, enhancing quality and providing increased operating flexibility. It offers BPO services to Smith & Nephew from 'best shore' delivery centres in Poland and India. The model uses automated and standardised processes to provide flexible and rapidly scalable service delivery.
"We needed an experienced BPO provider that had strong, multi-language back-office capabilities," Trollope notes. "We also required a partner with a good geographical spread and a tried-and-tested approach.
"Factors like an investment in process and technology, a robust solution and having people who we could work with also comes into play. The culture of the organisation and the way an outsourcer operates is very important to us."
Time to refocus
Using an outsource provider can free-up time internally, allowing a company to refocus. This is vital in fast-paced markets and industries that have rigorous regulations. Medical device companies face many administrative challenges, especially when dealing with suppliers and customers.
Working with HP, Smith & Nephew is able to concentrate on continued business expansion, and also increase its focus on ensuring compliance with regulations. "For example, we're sharpening up the T&E side in terms of policies and procedures," Trollope says. "All dealings between medical device companies and healthcare professionals need to be recorded properly; there needs to be complete transparency. Therefore, rigorous T&E management is a really essential aspect of what we do."
As part of its global transformation programme, Smith & Nephew intends to streamline its processes while optimising the costs of operations, delivering a more effective service to its customers, suppliers and employees. "As we looked to the future, we understood that we needed solid processes rather than relying on good people who know their way around," says Trollope.
Les Mara, a leader for HP's BPO business, agrees. "Smith & Nephew used us to help them move from a people-based approach to a process-based one, so they could harmonise the business and integrate new businesses quicker in the future," he says. "As a business moves to doing a standard thing in a standard way, there needs to be a toughness of resolve to go through that journey and overcome resistance to change. Working together, we've done a good job of keeping that resolve."
Mara and Trollope also believe that a strong partnership is key to a successful engagement, and that this type of agreement is a two-way street. Mara says of the transaction: "It requires close collaboration and a joint focus on mutually agreed goals and objectives. We brought the experience of having been through the journey before successfully."
Trollope concurs: "Working together is really important. We will both be successful if we both put in the effort. Organisations cannot simply pass on the problem; when that happens the partnership can fail quickly. The successful organisations have made a full commitment to make it work."
While both companies understand that a collaborative relationship is essential, the alliance is still young. Mara says that HP wants to earn the right to be Smith & Nephew's long-term partner - something it hopes to do through delivery certainty, a commitment to collaboration, and providing more than transaction processing. Trollope says that HP has already stepped out beyond the normal relationship.
"Their expertise has helped us - we know more about our business processes now than we did before, and when we needed extra staff in Switzerland, HP was able to provide them quickly," he explains. "This is a great opportunity for Smith & Nephew."
Trollope adds that developing and implementing a BPO strategy is not for the faint-hearted, and that organisations must think about their own capabilities, not only the ability of the outsource provider.
"Companies must look at their own organisation first and how much it wants to change," he says. "Under stress and strain some will succeed and others won't. They must be prepared for that. Strong leadership from the top, the right structure to push through the change and the stamina to make it happen are vital."
Has it been a successful partnership so far? "The signs are good," Trollope concludes. "There has been a lot of learning for both of us, and there are many more steps to take, but we're very happy that we've chosen the right partner."