Healthcare innovator IQVIA’s Shared Service Center is on a mission: go from a cost center to a profit center. With Celonis, they instantly freed up $600,000 of working capital and saved millions of dollars across Order-to-Cash and Procure-to-Pay, contributing to IQVIA’s 40% reduction in Shared Service Center cost in just two years.
IQVIA is the leading global provider of advanced analytics, technology solutions, and clinical research services, with 80,000 employees and $14 billion of revenue. Their Shared Service Center is unusual: its mission is to become a profit center rather than a cost center. “We look for value rather than just cost reductions,” says Michael Markman, VP, Head of Financial Shared Services at IQVIA. “
The function handles close management reporting, as well as Procure-to Pay, Order-to-Cash, and nearly 80% of payroll. As the company grows, the challenge is for the Shared Service Center to “become a scalable model, and grow with the company without increasing costs.”
Data, intelligence and action at scale across systems
That mission to drive value — powered by technology — led Michael to Celonis. He remembers the first time seeing the Execution Management System in action: “It was what I was trying to get to for years, but had never seen in practice. So really a game changer for us to be able to identify processes and inefficiencies across a global platform without having to do a massive interview process across thousands of employees.”
“Celonis really opened up the door and ability for us to see that full picture and then react in real-time,” he says. What’s more, it was system-agnostic. As IQVIA was born from a merger between IMS Health and Quintiles, ”two very distinct businesses that still operate very distinctly”, this was essential. It enables the team to drive process improvement across IQVIA’s multiple ERPs, from SAP to PeopleSoft.
IQVIA adjusted DPO by 32 days – freeing up $600,000 of working capital
IQVIA has so far used Celonis in their Order-to-Cash and Procure-to-Pay processes. One of the biggest successes in P2P was fixing payment term misclassifications.
Michael explains: “We had 190 invoices for almost $30 million that were misclassified with terms that we would've paid earlier, had we not identified this.” Fixing this led to IQVIA’s Days Payable Outstanding (DPO) increasing by 32 days on average. It freed up almost $600,000 of working capital immediately.
The team also used Celonis to look at Days Sales Outstanding (DSO): “Celonis allows us to drill into every single customer that we have anywhere in the globe and say, ‘What is our average DSO for that customer?’ That was never available to us before.”
IQVIA identified inefficiencies in their billing process and have since made changes to get bills out to customers and accepted faster. “The average time of submission and acceptance has dropped dramatically,” notes Michael. And given “one day of DSO is about $40M of free cash flow, [...] that’s been a big game-changer for us as well.”
“We've already generated, on a working capital basis, hundreds of thousands of dollars per day that's resulted from increasing our days payable outstanding, while decreasing our day sales outstanding. And the overall cumulative result has been multiple millions of dollars of savings that we've been able to generate.”
IQVIA brought down Shared Service Center cost by 40%
Michael’s ambition to turn IQVIA’s Shared Service Center into a profit center is more easily realized as Celonis takes care of the fundamentals. “We've had a 40% reduction in the cost of our shared services over the last two years, by insourcing, as well as upskilling our staff to free up capacity.”
“We have brought everything in-house, and we really upskilled our work force to be much more automation-focused and more technologically-savvy, so they can really drive change within a global organization,” he adds. That includes building a Celonis Center of Excellence within shared services, to really invest in getting the value out of Celonis.
“Celonis is unique because it does something that no other system we have does, and that really is the bringing together of information in a clear and actionable way,” says Michael. “Having this other layer on top of our multiple ERPs, as well as our boundary systems, allows us to do things that we just wouldn't be capable of a year or two years ago.”
Celonis draws the map to value realization
Michael describes finding value like a ‘treasure hunt’. Celonis, he says, draws a map to the parts you would not otherwise find – even with unlimited time. “You can't look at every process, you can't talk to every single person. So you might have a gut feeling about how a process is run, but until it's really done in an automated and non-biased way, that's when you really get true value.”
With Celonis giving IQVIA’s processes a clean bill of health, Michael says people are lining up for their process improvement shot. “It becomes something that everybody wants more of… People are now coming to us, asking us to help them support their business, put in automation, and look for inefficiencies.”
That buy-in cements the importance of process improvement as well as the role of Michael’s Shared Service Center in IQVIA’s overall growth. He says: “We're thought of as thought leaders and an innovation hub… The opportunity is endless for us to be able to help drive value and get involved in more and more in the company.”
Learn how Celonis can take your shared services from cost center to innovation center here.