Doug Groves Shell S O A Symposium

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Founding Sponsors

This Presentation Courtesy of the

International SOA Symposium

October 7-8, 2008 Amsterdam Arena

www.soasymposium.com

[email protected]

Gold Sponsors

Platinum Sponsors

Silver Sponsors

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Linking SOA and Process Standardisation at Shell

Doug Groves – VP Finance Process Integration

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Theory

Should SOA fall short of expectations, it

will be for the same reasons ERP and

CRM have fallen short of expectations.

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Theory

Should SOA fall short of expectations, it will be

for the same reasons ERP and CRM have fallen

short of expectations:

Insufficient Enterprise and Process

Maturity

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Royal Dutch Shell PLC

• GLOBAL ENERGY COMPANY

– World’s 2nd largest private energy & petrochemicals

company by market cap

– Operating in more than 110 countries

– Serving millions of retail customers every day

– 104,000 staff

– A leader in clean natural gas and technology

– Leading on alternative energies

• 2007 HIGHLIGHTS

– Income ~ $31 billion

– Revenue ~ $356 billion

– Net capital spending ~ $24 billion

– Production ~ 3.3 mln barrels of oil equivalent per day

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Overview of Shell Finance

• Significant migration of jobs to shared service locations – from 2,750 today to 5,000 in 2010.

• Process improvement and standardisation activities in progress in 17 process areas

• Significant rationalisation of IT also in progress

• Over 12,000 staff operating in over 110 countries

• Six captive shared service centre sites – Glasgow, Krakow, Chennai, Kuala Lumpur, Manila and Guatemala City

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Requisition to Pay

Shell Finance Process Hierarchy

Group Finance

A: Management

of Financial

Activities

B:

Manage Equity

and Finance

ManageIntra-Group

Funding

C:

Record &

Execute

Transactions

Liquidity & FX Risk

Mgt

Local Statutory Reporting

Cash Management

Manage Direct Taxes

Payroll & Benefits

Manage Close

Group Reporting

Manage Indirect Taxes

Controls Assessment Assurance

Travel & Entertaining

Expense Claims

Budgeting, Planning &

Internal Rep

Offer to Cash

Manage Hydrocarbon

Inventory

Capital & Assets

D:

Manage

Reporting &

Analysis

E:

Specialist/Other

F:

Reserves

Commodity Trading

Support Acquisitions

& Divestments

Parent Companies

Capital

Manage supporting

records

IT Controls

End user computing

Static data management

Manage Insurance

Pensions accounting &

support

Support JVs & PSCs

Hydrocarbon Allocation

Reserves Reporting

Intra Group Services,

Fees & Billing

In scope for standard

global process

design

Not in scope for

standard global process

design

KEY

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Linking SOA with Process Standardisation

Deploying services drives process standardisation,

which requires:

– Process governance and leadership

– Process design and integration

– Organisation design

– Skills, tools and methodologies

– Data management

– Change managementProcess

SOA

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Evolution of Services in Shell Finance

(simplified model) As-Is Level 1 Level 2 Level 3

Business model

and

organization

Organization and

process specific per

business.

Single organization,

business process

variants.

Single organization,

standardized

process.

Single organization,

standardized

process.

IT model IT support specific

per business.

IT support specific

per business.

IT support specific

per business,

implementations are

alike.

Standard services

run on a shared IT

system.

Example Accounts Payable in

the UK

Finance operations

in 2008

Finance operations

after process

harmonization

Treasury, Group

Reporting,

Business process

IT support

Organization

Target levels and development roadmaps of the business and IT models must be aligned

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Applying SOA Concepts in the Application Architecture

Moving Beyond Traditional ERP

• Core finance processes require loose

coupling to non-financial processes.

• Integrated finance processes are tightly

coupled with other processes.

• Working with SAP to explore new

approaches to decouple logistics from

financials

Finance Applications

Business ERP

Business DW

Business ERP

Business DW

Business ERP

Business DW

Finance Services

Finance Finance Finance

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External ServicesFinance Functions Applications

Business Finance Applications

Finance Operations Applications

Group Reporting

Local Statutory reporting

Group Planning

Tax ComplianceGroup Services

Business Process Management

JV & PSC

Business Performance Analysis

Finance Process Performance Analysis

Payment handling

Credit Rating

Finance Master Data Management

Accounts Receivable

Accounts PayableManage Close

Dispute management

Invoicing

Business Finance Reporting

Audit Defense

Provide Routine MI

Controls, Assurance & Assessment

Cash Allocation

Indirect Tax Calculation

Pension

Decision Support

Equity and Financing Management

Cash Management

Master Data distribution

Asset Accounting

Financial Reporting Support

Manage Finance Data Warehouse

Manage Hydrocarbon Inventory

Business Planning

Manage Insurance

Liquidity & FX Risk Management

Tax Provisioning

Financial Market Rates

Investor Relations

Hydrocarbon Allocation

Credit Management

Internal Audit

Budgeting

Project Accounting

Intra Group Funding

Tax Planning

Forecasting

Direct Tax Calculation

Performance Analysis

Document Management

Travel & Entertaining Expenses Claims

Financial Market Dealing

Transaction Banking

Cash Management

Capital Planning

Banking Infrastructure

B2B Communication

General LedgerManagement Accounting

Forecasting

KEY

Target Competency

Level of coupling withBusiness ERP

Base

Core

Differentiated

Decoupled

Partially decoupled

Coupled

High Level Services in the Target Finance IT Architecture

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Get the Governance Right

LocalGlobal

Str

ate

gic

Op

era

tio

na

l

Process

Executive

Process

Manager

Process

Performer

PP – Operate processes

PE – Define process improvement

strategy; lead improvement

activities; authority for design

and changes

PO – Drive design and

improvement activities; plan

and support implementation;

monitor and assess

performancePM – Manage process operations

in accordance with standards;

drive implementation within

own organisation; support

continuous improvement;

participate on PAC

Process

Owner

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Get the Data Right

Governance defined

for key processes

Measuring data

accuracy

Measuring process

performance

Initial system

investment

Undefined governance

Poor data quality

Fragmented processes

Perceived as a systems

problem

Governance effective

across the business

Effective continuous

improvement applied

to data accuracy &

process performance.

Introduced use of

state of the art tools

Data managed as a

business critical asset

First quartile process

cost performance and

data quality

Effective use of state

of the art tools

Operationally Efficient

BE

ST

PR

AC

TIC

E

TIME

Commercially Capable

Fragmented

World Class

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Data Quality - Meeting Defined Standards for Good Business Reasons; Not

About Being Perfect

Data

Quality

Standards

Cost/BenefitHow much is it worth spending on

data?

RelevanceAre we maintaining data we do not

need?

Security/AccessibilityDo we need to restrict access to the

data?

TimelinessIs the data up to date?

Is it available when required?

CompletenessDo we have all data to the right level

of detail?

Clarity/UniquenessCan we clearly select the right data?

ConsistencyIs there more than one version of the

data?

Accuracy/PrecisionIs the data accurate within tolerance?

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Process and Enterprise Maturity Model

Process Design

Process Metrics

Process

OwnershipProcess

Performers

Process

Infrastructure

Enterprise

Leadership

Enterprise

Governance

Enterprise Culture

Enterprise

Expertise

P – Ad-hoc, Designed, Integrated to Extended

E – From Process Tolerant to Process Centric

A way to evaluate the primary elements required to manage and

execute processes

Five

Maturity

Levels

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Enterprise Maturity Extract - Leadership

Requisite Indicators Requisite Indicators

Leadership Awareness The enterprise's senior

executive team recognizes the

need to improve operational

performance but has only a

limited understanding of the

power of business processes.

Operational improvement is a

frequent discussion topic at

executive meetings.

Executives attend seminars or

perform site visits regarding

performance improvement

techniques. Process

terminology is often used but not

always precisely.

At least one senior executive

deeply understands the

business process concept, how

the enterprise can use it to

improve performance, and what

is involved in implementing it.

A member of the seniormost

executive group relates

enterprise performance

problems to specific

fragmentation and design flaws

in particular processes.

Alignment The leadership of the process

program lies in the middle

management ranks.

A mid-level manager has

developed a passion for process

and is lobbying with executives

to adopt the process approach.

A senior executive has taken

leadership of, and responsibility

for, the process program

A senior executive had made a

personal commitment of time

and resources to process

transformation, and is visibly

promoting the process concept.

Behavior A senor executive endorses and

invests in operational improvement.Budget has been allocated for

process improvement training

and initiatives, and improvement

projects have been mandated.

A senior executive has publicly

set stretch performance goals in

customer terms and is prepared

to commit resources, make

deep changes, and remove

roadblocks in order to achieve

those goals.

Resources (financial and

human) have been assigned to

a process transformation

program in pursuit of explicit

stretch goals; managers who

attempt to impede the program

are appropriately disciplined.

Style The senior executive team has

started shifting from a top-down,

hierarchical style to an open,

collaborative style.

Senior managers actively solicit

ideas from lower levels of the

organization; some diagonal

task forces are in operation and

executives are following some of

their recommendations.

The senior executive team

leading the process program is

passionate about the need to

change and about process as

the key tool for change.

The senior executive leading the

process program spends

significant personal time

communicating and promoting

the program, and weaves

process concepts and goals into

all business discussions.

E-1 E-2

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Process Maturity Model – Process Infrastructure

Information Systems

P1 P2 P3 P4

Fragmented legacy

support the

An IT system

from functional

supports the

An integrated IT

designed with the

mind and adhering

enterprise

the process.

An IT system with

architecture that

industry standards

enterprise

supports the

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PEMM Use in Shell

• Assess maturity before new

deployment and adjust plans

as appropriate

• Define annual maturity

improvement plans by process

and organisation

• Tool for understanding keys to

success

• Annual survey to assess

progress

Methodology& Tools

Leadership& Goals

Execution & Governance

Training & Communications

MeasurementPeople

& Culture

Technology

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Questions?

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Process Re-engineering in Practice?

How the Process Owner

explained it

How the Process Designers

understood it

What the consultants

suggested …

How Onshore IT

designed it

How Offshore IT built it

How it was documented What the Deployment Team

did

How it Worked

at Go-live

How IT supports it What the Business really

needed …

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Analysis of “loose” coupling in processes

Process decomposition to identify rough

boundaries

Approach to Define the Business Services

L1

L2

L3

L3

Process centric governance structure

Process driven data ownership

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The Business Services definition is iterative with Application Services definition

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Applying SOA Concepts to Organisation Design

• Financial (sub)-processes are

delivered through global delivery

centres.

• The delivery centres expose a

limited number of services to other

departments. These are stable for

a longer period of time.

• Business process improvement is

focused in the delivery centres

(tactical cycle) and across the

delivery centres and organization

(strategic cycle).

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Shell Enterprise Process Model