As companies become increasingly more complex and, simultaneously, more integrated, the need for additional cross collaboration and more effective leveraging of the resources at their disposal is becoming increasingly significant.
The shared services organization (SSO) concept can help because it consolidates support operations into a service-oriented organizational unit and can substantially improve operating efficiencies by eliminating duplication and streamlining processes.
Establishing an SSO (in concept, of course) can be simple, however, the organizational and human implementation components can make the task quite difficult. Additionally, optimizing its performance is often a challenge. Depending on the maturity of the enterprise and of the SSO, the SSO can run as its own commercial grade business — always seeking to deliver the highest quality, while being the lowest cost provider of services. If done right, optimized SSOs have proven to be a value center as well as a cost reduction center.
The consolidation and standardization enabled by shared services does more than reduce costs. It also reduces complexity so that businesses can respond to opportunities faster. The more integrated an SSO is with the company’s strategic goals, the more adaptable it can be in a constantly changing environment. It must distinguish between commodity and strategic services; align and package services around business processes; and orient service designs and service levels toward the customer experience. In the process, an optimized SSO improves its overall value/cost contribution to the business, and enables its customers in the business to optimize their own value in return.
Another advantage of shared services is the convergence and streamlining of an organization’s functions to ensure that they deliver to the organization the services required of them as effectively and efficiently as possible. This often involves the centralizing of back office functions such as HR and Finance but can also be applied to the middle or front offices.
A key advantage of this convergence is that it enables the appreciation of economies of scale within the function and can enable multi-function working (e.g., linking HR and Finance together), where there is the potential to create synergies.
Successful implementations integrate processes, people, information, and technology automation to deliver a totally new set of capabilities. The benefits are many:
- Demonstrate the potential to significantly reduce operating costs up to 50% of existing services.
- Increase compliance/control and consistency on a global basis that is more easily achieved through consolidation when a company has fewer sites.
- Provide clarity on services and customers with the creation of a service portfolio and catalog.
- Introduce a much higher capability for innovation and the absorption of rapid business changes.
- Drive higher employee job satisfaction/retention and allow for the sourcing of a “best fit athlete” for the task at hand.
- Focus on critical transaction support work with the ability to pool knowledge and critical expertise by keeping their operating, governance, and risk areas, focused on their core activities.
As many organizations have realized, the journey to become an optimized SSO requires desire, discipline and the ability to execute a plan. Furthermore, optimizing service delivery is more than simply moving people into one location and giving them one system. It involves a change in mindset and an increased focus on the business.
Faisal Hoque is an internationally known entrepreneur and author, and the founder and CEO of BTM Corp. His previous books include Sustained Innovation and Winning The 3-Legged Race. BTM innovates business models and enhances financial performance by converging business and technology with its products and intellectual property. His next book, The Power of Convergence, will be available in May 2011.