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Sydney, NSW, Australia - 04 Mar 2008: Australia's best known diversified entertainment group, Tabcorp, has successfully completed its move to a shared services model for finance, human resources and procurement with the assistance of IBM Global Business Services.
The company is seeing reductions in operating costs and general improvements in the quality of its core business processing just six months after the implementation. The savings were achieved through:
- Increased productivity of staff through the creation of pure roles, drawing on staff experience and specialisation more effectively.
- Standardisation and consolidation of core processes through selective re-engineering of business functions. For example, the HR team reduced the number of Tabcorp's internal forms from 145 to 72 and web-enabled them.
According to CFO, Matt Bekier and Group General Manager Business Services, Russell Flack, the experience at Tabcorp illustrates that the often touted efficiencies of shared services are genuine and can be captured relatively quickly. However, what is often overlooked are the incremental, softer benefits that shared services can create in the longer term: the reduction of risks and error rates; 2nd order efficiencies in procurement, accounting and administration; and freeing up the finance and HR functions to engage in more high value activities.
Tabcorp will now embark on a second phase of exploiting the shared services model by driving further consolidation, standardisation, and process efficiency. This will occur over the next two years.
According to Russell Flack: "Tabcorp gained great benefit from utilising IBM's deep shared services implementation experience. The skills of their consultants were invaluable in shaping the business case for a shared services model, then in developing new processes and building the organisational model.
"The successful creation of Business Services has meant Tabcorp is well placed to move to a second phase using its own in-house expertise and resources. For us, the shared services project has been well worthwhile, already showing a solid return on investment and a great back-office infrastructure for us to leverage for further benefit."
IBM assisted Tabcorp with the design and implementation of finance, HR and procurement shared services, which are all based in Melbourne. Processes migrated to the shared services organisation include: purchasing, accounts payable, accounts receivable, fixed assets, payroll, general accounting, treasury operations, HR administration, remuneration and benefits, recruitment, performance management, leave management and organisational information.
Mr Flack said Tabcorp had started the journey toward a shared services model in 2006 following a period of significant growth through acquisitions.
"The task of simplifying the company's complex collection of inherited business applications was initially addressed in 2005 by implementing Oracle ERP. While this project was delivered successfully on time and on budget, a subsequent benchmarking study and review of processes highlighted the possibility of greater efficiencies through a shared services model."
Tabcorp's objectives for the shared services project were two-fold. The first was to enhance the effectiveness of both the HR, Procurement, and Finance functions, while the second was to reduce costs.
While pleased with the benefits delivered to date, Mr Flack believes the long-term value of the shared services model will be even greater.
"We see benefits emerging in three key areas: the reduction of operational and financial risk; continuous improvement creating second order efficiencies; and re-focusing business-facing finance and HR team members on higher value activities and freeing up their time to engage with the business," he said.
"The successful implementation of shared services is a key element of our strategy, as we believe this will enable Tabcorp to integrate acquisitions more smoothly in the future."
Ian Ball, Managing Partner, IBM Global Business Services Australia and New Zealand, said, "IBM is delighted to have supported Tabcorp on its path to a shared services model. Our research continues to show that companies can gain substantial benefits from business model innovation and Tabcorp's success is proof of this."
Tabcorp is a leisure and entertainment company operating a diverse collection of wagering, gaming, gambling, hospitality and media businesses in Australia and offshore.
For more information about IBM, go to www.ibm.com/au/
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