Marriott Redefines the Shared Services Model
Imagine that your company doesnt send out bills, but gets paid faster. Or that it doesnt pay bills at all, but keeps its vendors happy nonetheless. Sound a little far-fetched? Not if youre one of the 180 full-service Marriott International properties in North America that rely on the hospitality giants new shared services center (SSC).
Rising amid the open space just south of Knoxville, Tennessee, the SSC has done more than simply consolidate Marriotts finance functions so that hotel guests are billed more quickly and vendors are paid on time. It has unlocked new sources of business value, changed the Marriott culture, and primed the company to achieve aggressive goals for global expansion.
Initially dubbed Project Mercury, the 15-month program to create the shared services capability was designed to reduce costly, redundant processes in individual hotels and to streamline information systems support and business process integration procedures.
We had a number of obstacles slowing us down, recalls Marriotts president and chief operating officer, Bill Shaw, who was the executive sponsor of the Project Mercury team.
All around us the new economy was taking hold and the business environment was speeding up. We needed to leverage our operations to provide consistent, cost-effective service, achieve economies of scale, and make our organization quicker and more flexible.
The shared services operating model appealed to Shaw not just because it provided the opportunity to cut costs dramatically the typical benefit of shared services but also because it could reposition Marriotts support organization as a service provider to the core business. For instance, 75 percent of hotel controllers time had been spent on managing processes like accounts payable (AP) and accounts receivable (AR). Marriott wanted to use technology to streamline processes and free up controllers to work more actively with line managers to improve profitability. Explains Shaw:
We have never thought of ourselves as a hotel company. Anybody can provide a room and a bed. Marriott is a service company. With the capabilities we could gain through this transformation, we would be well positioned to provide our global workforce with the tools and information they need to better serve our customers. And we would be better able to do business the way our customers, owners, and franchisees want us to.
A shared services model was also critical to Shaws effort to make Marriott the worlds leading provider of hospitality services. His both urgent and specific objectives were to: add 1,000 hotels over the next five years (in addition to the 2,300 lodging properties the company now manages or franchises in the United States and 63 other countries); achieve $25 billion in system-wide sales by 2002 (up from $20 billion in 2000, with 25 percent of incremental sales coming from outside the United States); attain annual profit growth in the mid-teens; and have Marriott continue to be recognized as one of the best places in the world to work.
Culture Shift
Building on its 10-year relationship, Marriott decided to partner with Accenture in a massive transformation project to overcome the challenges inherent in such an aggressive growth agenda. Although the business case for change was compelling, thats not the way it seemed to property management teams when the shared services concept was first introduced. They thought we were taking away their ability to deliver service if they couldnt send out bills or pay them anymore, notes Shaw.
A significant culture change was required and speed was essential. With 8,000 users affected and only 15 months until the first implementation, achieving early buy-in was critical. Shaw stayed personally involved, signing up executive co-sponsors and steering committee members, as well as assigning a senior financial executive, Scott Woltemath, to direct the project. Team members representing every affected property function were assigned full-time to Project Mercury to ensure that employees with relevant expertise were included.
An organization transition plan was developed for employees whose positions were moved to the new SSC and for those either redeployed within Marriott or selected for outplacement. Communication was continual and personal, consisting primarily of email, voicemail, and face-to-face meetings. The 50,000 square-foot center was built to Marriotts specifications. We knew we did not want this to be a finance factory, Shaw says. We wanted it to be inviting so that people would enjoy walking in the door every day.
Team members also tackled the human performance element of the project. A comprehensive organization design and development strategy for the new center included a mission statement and guiding principles, as well as a detailed look at how the organization would be structured, right down to the management processes, size, and design of each job.
Consolidating Marriotts finance functions in an aggressive 15-month period into a shared services model did more for the hospitality giant than simply cutting costs. Unlocking new sources of business value, changing the Marriott culture, and streamlining information systems support primed the company for aggressive global expansion.
To get the most out of the new systems, computer-based training was provided to all 8,000 users, in addition to instructor-led process training for property managers. The SSC employees themselves received both forms of training and also participated in a day-in-the-life program that simulated the actual work environment. This was the most successful distance learning program that Marriott has ever done, Shaw says. It was the most cost-effective and quickest way to train thousands of users, and we received overwhelmingly positive feedback. The training also can be changed on the fly as the software is updated.
Shaw also asked Accenture to support ongoing performance and upgrade management capabilities. According to Shaw, Accentures Atlanta Delivery Centre was chosen for outsourcing support because it uses the same PeopleSoft finance applications as the SSC. He also was impressed by another key aspect of the Atlanta operation: Accentures success in Atlanta is directly aligned with Marriotts day-to-day business success.
The center delivers three sets of critical reports to Marriott every day that affect customer service, property management, operations, and payroll. Equally important, Accenture can support PeopleSoft implementations remotely without tying up Marriotts onsite resources. With systems in place and training completed, the Knoxville SSC opened for business in September 2000 under the leadership of Pam Murray, another Marriott senior financial executive. It is now home to Marriotts full service hotel AP and AR processing; credit recommendation and collection; and bill inquiries, adjustments, and reprints. To enable service delivery excellence, a new customer contact center was also created, serving the needs of the hotels, customers, and vendors.
The Knoxville operation works in tandem with the Marriott data center in Frederick, Maryland, which maintains the servers and network, produces and distributes invoices,
and processes vendor checks. Another Maryland-based facility provides basic help-desk functions. The Accenture Delivery Centre
in Atlanta provides more advanced PeopleSoft support and application maintenance and upgrade management. Together the four centers support 180 full-service properties in North America. The individual hotels authorize credit, procure food and supplies, approve invoices, conduct daily bill reviews with group customers, and conduct project tracking and reporting.
"We know we did not want this to be a 'finance factory.' We wanted it to be inviting so that people would enjoy walking in the door every day." |
Delivering Benefits
The shared services model has delivered immediate benefits for both hotel guests and vendors. A draft bill, for example, can now be created on demand thanks to a new technical infrastructure that links all hotel profit centers into a centralized system. This is a special boon for event organizers, who can track expenses for group bills on a daily basis and walk out the door with a final bill or view it on the Web. Any problems are resolved at the SSC, not at the hotel, making turnaround time consistent across the company.
Vendors are paid faster when they use electronic invoicing, and they can use the Internet to check the payment status of open invoices. Credit checks, using Dun & Bradstreet services via the Internet, can also be performed faster.
Rolling out the shared services model has proved to be the most challenging aspect of the project.
Despite all the buy-in we secured along the way, we still have to sell the properties [on the concept] every single day, Shaw notes. Its been a massive cultural change to take finance functions normally performed in each property and elevate them to a group level. We have to continue communicating the benefits. To achieve these benefits, we have to maintain the same accelerated pace during roll out that we did during design and build.
But as the benefits become tangible, property teams rally. When a property manager can send an event manager home with a Web site address to call up the bill, and not a three-inch binder, then shared services hit home, Shaw says. When the vendors they count on to provide supplies and services are paid faster, or when they can reduce their labor costs, that hits home too.
From a corporate perspective, the net savings from shared services have been impressive. But the real opportunities, says Shaw, come from the innovations inherent in the shared services model. Weve given managers more timely information for decision-making and more time to focus on the key drivers of their business. Weve created meaningful opportunities for many of our associates to develop new skills and create new career paths. And well be able to integrate new or acquired units faster and eliminate barriers to continued growth.
