Shared Services is an autonomous business unit composed of people, technologies, and infrastructure that enables execution, delivery, management, and optimization of non-core but mission-critical corporate functions. The goal of shared service centers (SSCs) or shared service organizations (SSOs) is to provide the highest quality of service possible at a most cost-effective manner by leveraging expertise of a dedicated specialist team, standardized end-to-end processes, and industry best practices. Centralizing the services is a key component of SSCs or SSOs for consolidation, automation, and continuous improvement of workforce, facilities, and systems. However, these are geographically unconstrained and may come from several different physical locations.
Unlike the traditional corporate-driven centralized approach wherein a large volume of workload is avoided and the focus is on compliance and control rather than value creation, shared services seeks customers and fulfill client requirements with efficiency, precision, and transparency through internal enterprise personnel or third-party service providers. Services can be shared among various business units within the company or to external organizations on the open market.
Like outsourcing, shared services can be delivered by third-party service providers, foregoing the notion of ‘ownership’ but still putting emphasis on well-defined service level agreements, shared work statement, human resource provisions, and governance structures. Both outsourcing and shared service centers also rarely take over all responsibilities for a given business function. For example, a company may want to outsource some of its Human Resources functions such as recruiting and payroll but still want to retain control over administration and labor relations.
The Shared Services market, with a growth projection of $4 billion by 2027, is expected to continuously provide higher-value, enterprise-wide digital transformation at lower cost despite the pandemic and its induced economic impact. This will allow organizations to increase their efficiency, enhance digital experience, and generate substantial savings across locations and activities. Today, over 80% of Fortune 500 companies are actively implementing some type of shared services model. But as they grow in maturity, it has become clear that not all SSCs are alike, and many subpar examples do far less to boost efficiency than hoped. In an increasingly competitive global business landscape, there is a demand to target emerging markets and utilize the best service delivery model possible which makes adoption of the shared services concept a must-have for forward-thinking firms.
Successful implementation of SSOs across countries, business units, and wide-ranging industries requires understanding of systems integration and harmonization of business processes; additionally there are also language, time zone, political situation, and other cross-divisional issues to consider. It all boils down to viewing shared services as a long-term solution and having globally appropriate, established organizational structures and policies, according to Cliff Struhar, VP, Advisory, Gartner. Though much focus is on consolidation and standardization of high-volume activities, providers must not be pigeonholed in these roles but also aim to consistently expand scope and scale of service offerings.
To achieve significant savings of both time and money, SSOs should think beyond low-cost geographies and labor arbitrage models; rather, automation and digitization must be leveraged to drive process efficiency and improvement, reduce costs, and improve the quality of internal and external customer interactions. For example, advanced robotics could help in performing routine, repetitive, rule-based functions while digital technologies should be explored to automate record-keeping tasks, integrate data from multiple channels, make better product-sales decisions, and provide satisfying digital customer experiences.
Three key imperatives – flexibility, agility, and value-based thinking – can help convince stakeholders that shared services can be business ‘value-drivers’. Cost saving should not be the ‘default setting’ of shared services; rather, focus is on process consistency, efficiency, and innovation which offers greater value for business. When expenditures do not govern decision-making within the organization, priorities shift towards investing on improved core business functions, process best practices, new products/service offerings, and value-based approaches. Business leaders, on the other hand, won’t experience perceived loss of control if they can be assured state-of-the-art automation of contextual work and quick access to standardized best-in-class processes, where possible. SSOs and SSCs must hire, train, and retain technology and user-experience employees; thus, being fully capable to offer specialized skills on core competencies and to establish domains of expertise for specific higher-value processes. Stakeholders can dedicate time and resources to optimize company performance, improve interactions with customers and business partners, and fulfill the organization’s near-term and long-term objectives.
Whether you’re well on your way within your shared services journey, or still deep into the debate surrounding its potential benefits for your organization, one thing is certain: shared services isn’t just on its way; it’s earned its right to stay. If you’re interested in knowing the most strategic service delivery model for your business, feel free to schedule a FREE consultation with us.