From Support Functions to Global Business Services, Shared Services Evolution
The number of organisations operating in the increasingly competitive global marketplace has been growing steadily in recent years. Many have also developed their growth strategies in emerging markets. These factors have changed the overall picture and are raising critical questions in the way companies organise their services. The challenge is to choose the Service Delivery Model that best suits the organisation and its objectives. Regardless of the selected model, the fundamental principles remain the same: standardisation, consolidation, process reengineering and automation.
The following image shows the evolution of some of these Service Delivery Models according to the potential for cost savings and the degree of accountability and centralised management.
For more than two decades the common practice has been to use single-function Shared Services as a way to achieve cost reductions and increase efficiency. This stand-alone model allows the global application of standards, the maximum use of economies of scale, low-cost labour, the reduction of quality costs and an increase in flexibility.
Moreover, the increasingly competitive landscape has challenged corporate leaders to rethink their Shared Services structures with the aim of creating value rather than savings in labour costs.
Therefore, as opposed to being just a centralised function, multi-functional Shared Services operate as a single business unit providing services to the internal customer. Typically, services have a cost charged to the business and Service Level Agreements (SLAs) are used to contract performance in terms of cost, time and quality. This makes the business units available to spend most of their time with the external customer and on matters of strategic importance. For this internal contracting to be successful, it is essential that all systems are fully integrated with the platforms used by the business areas.
Therefore, the main advantages of multi-functional Shared Services are:
- Standardised implementation of best practice processes
- Maximisation of the use of economies of scale
- Greater span of control (dispersion/team size)
- Reduced labour costs
- Maximised ROI in technology
- Standardisation and re-engineering of processes
- Integrated procurement and purchasing
- Focus on customer service: front-office mindset, SLAs and cost of services provided
- Optimise specialist skills
- Leadership more available to focus on business problems
- Improved decision support
These advantages made Shared Services the industry standard. Therefore, the expectation is to increase the strategic role that these services have in the performance of the organisation, impacting not only the efficiency, but also the added value of the services they provide to the business areas. This new model is called Global Business Services and has been implemented as the new industry standard, responsible for reducing around 20% to 30% of the administrative costs of the organisations that implement it.
This model fully integrates non-core business activities into an independent and consistent organisation whose main focus is on end-to-end process management (such as procure-to-pay and employee onboarding). The relevance of customer service, agility and scalability has been increasing and, with it, the value provided by the Global Business Services solution. This model delivers highly standardised processes, customer-focused services and, above all, maintains a constant culture and focus on continuous improvement.
However, there are several challenges that this model poses to its implementation. First of all, it is a model with a high level of organisational complexity, which makes the establishment of an effective governance model difficult. In addition, there are difficulties in attracting talent with broad skills in process execution with focus on customer service.
How to succeed in implementing Shared Services?
There are critical factors that will make it easier to implement any Shared Services model and allow the organisation to achieve not only cost savings, but also faster service delivery, higher customer satisfaction and greater organisational flexibility:
Maintain the internal customer focus at all times
Improve customer satisfaction by ensuring that business areas are provided with truly innovative solutions that meet their emerging needs. This means considering your customers as strategic partners.
Be the digital and technological skill centre of the organisation
Shared Services have a privileged position in technological development since they are the aggregating element for all the initiatives and best practices of the business areas. By being fully engaged and having a deep knowledge of the platforms and systems, these teams are the source of opportunities for automation and process re-engineering, and therefore should positively contribute to the leadership of redesign projects and process automation.
Implement an agile culture focused on continuous improvement
It has never been more critical to be agile in service development and delivery. Therefore, implementing strategies such as full collaboration between different functions and using work sprints to increase the efficiency of development iterations are essential to delivering fast and quality results.
Manage talent as your main asset
The difficulty in retaining and attracting the right skills are the main challenges in talent management within Shared Services. Rotation between different functions/areas and the development of training programmes are the most frequent solutions.
Transforming an organisation’s Shared Services is a long and winding journey. It is therefore essential to ensure that this decision is taken with full knowledge of the wider context of the company, in particular in accordance with the overall business strategy. It is crucial to consider the future format the organisation wants to adopt for its value chain and understand how supplier-customer interactions can be facilitated by the existence of Shared Services.
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