Accidental Shared Services Program Paying Off for Diamond Resorts

The benefits of a successful shared services implementation include improved efficiency, streamlined processes, cost savings, and reduced redundancy. But Diamond Resorts International managers weren’t necessarily looking for those benefits when they ended up implementing a shared services initiative. Karen Palmer, who calls the concept of shared services one of the “most brilliant things in business,” admits the company was just trying to find a financial controller for one of its properties.

Palmer, director of shared services at Diamond Resorts, will discuss the transition the company made during a panel at this week’s 16th Annual North American Shared Services & Outsourcing Week in Orlando, Florida. While many experts tout the importance of a cautionary approach and strategic planning to a shared services transition, Palmer says that Diamond Resorts “accidentally became a shared services organization.”

“It started by looking for a solution to a specific problem,” she says. “We couldn’t find a controller for a resort in San Luis Bay, and so we took on the functions for that job at headquarters.” After that, Palmer said, they began asking the question, “’What else can we do?’”

The next step in the evolution of shared services was for Diamond Resorts to centralize its accounts payable (AP) operation for the West, which Palmer says saved the cost of eight full-time employees and also led to higher efficiency levels and better standardization. Now, in addition to AP, Diamond Resorts uses shared services for back-office management functions, payables, and general ledger at its main headquarters in Las Vegas. “There was no fancy strategy,” says Palmer. “We just evolved in a way that was positive.”

Part of the reason for Diamond Resorts’ successful migration to shared services is the nature of the hospitality industry. “We handle a lot of the back-office operations at headquarters, which really allows us to concentrate more on being a customer-centric, front-end focused business,” Palmer says.

Good, Bad, and Ugly
While implementation of shared services at Diamond has been successful, Palmer is not unfamiliar with the problems that companies experience during transition. (The panel she’s joining at the conference is called “The Good, The Bad, and The Ugly: Everything You Need to Know About Shared Services Start Up.”) “There are going to be obstacles,” she says. “There’s going to be resistance and politics.”

But, underlying any strategy, Palmer says the decision to implement shared services is a position of strength. “If you say, I’m going to improve the bottom line and make our processes more efficient,’ who’s going to argue?” she asks. “If they do, it’s going to say a lot about them.”

Streamlining of back office functions at Diamond Resorts hasn’t come without error. The company outsourced invoicing processes to India, but later brought them back in house. “If I were to do it again, I would contract on invoices processed versus head count,” says Palmer, noting that both efficiency and control were compromised.

Scale, M&A Affect Shared Services Activity
Palmer notes the importance of the company’s scale when moving toward efficiency. “We’re not Coca-Cola,” she comments. The privately held company has 5,500 employees globally and owns or manages more than 200 resorts around the world. Palmer also points out that Diamond Resorts, which acquired Sunterra Corporation in 2007, has also been in merger and acquisition mode during the past few years, which has been a catalyst for many changes, including the move to shared services.

While Palmer will share her own experiences in implementing shared services at this week’s conference, she will also be looking to bring back new ideas for their matured process. The globalization of shared services is one area she’d like learn about, and one Diamond Resorts has yet to tackle. While the company has centralized many back-office functions for its U.S. and St. Maarten operations, Palmer says standardization has yet to come to resorts in Europe and Mexico, noting the difficulty of navigating compliance laws on a global scale.

While she and other panelists will discuss specifics such as buy-in, scope, cautionary signals to look out for, and other questions for shared services start-ups at next week’s conference, Palmer’s overall message is one of encouragement – as well as flexibility and humor. “There’s no awful way to start the process,” she concludes. “If you’re looking for standardized and efficient processing, it will happen.”