The sharing of corporate services across an entire organisation is not a new concept. It has been around for as long as businesses have existed. Centralising “back office” services within an organisation, is also not new in concept, but optimising the centralised services through organisational redesign, process optimisation, technology enablement and behavioural change is more of a recent development.
But after an organisation achieves those benefits through the set up, stabilisation and transformation phases, a question that many mature shared service organisations are asking is what comes next…
We see that there are three are five key options for a shared service centre in that position.
1) Increase scope to more complex areas of the same function
After achieving success in the shared service centre it is always worth challenging yourselves and asking the question around whether you have been aggressive enough. Many organisations are initially comfortable only to transfer “transactional” processes to a shared service centre environment. As a result of the success of that transfer, the change management of transferring further processes can be much easier.
Hence, a number of shared service centre organisations follow the initial transfer with a next phase of migration, which are generally more complex processes that are closer to the tactical and strategic end of the function.
2) Increase functions in the shared service center
The primary struggle in setting up a successful shared service centre is the change management challenge, and it would be foolish for any organisation not to lose the momentum gained. Finance is always a popular first phase of a shared services centre. Given the success of a Finance Shared Service Centre Transition, the opportunity exists to utilise the goodwill generated to progress with other functions of the organisation.
This can include migration of the HR function, which is an increasingly popular candidate for shared services, the Procurement function, or even a function specific to that organisation that is repeatable, measurable and predictable in nature.
When doing this, it is wise to largely leverage the structures, governance and operating models with the business with appropriate customisation for specific functional requirements.
3) Deliver further process efficiencies
On migration and transformation of the processes migrated to the shared service centre, organisations introduce continuous improvement to provide optimal process efficiencies. In addition to this, shared service centres can consider further changes that will align their ways of working to “best practice” and provide even further process efficiencies.
In reality, following the first phase of a shared service centre migration and transformation, the additional efficiencies that can be delivered from optimising the processes become more and more challenging ie it can take as much effort and resource to achieve 30% efficiencies in the migration to shared services, as it could to achieve a further 10% in efficiencies once all the low hanging fruit is already grabbed!
4) Deliver true “value” for the business
One can spend hours reading wonderfully written Consultancy and Research reports that describe what amazing value a shared service centre can bring to an organisation. However, aside from faster cycle times, service improvement and cost reduction the true “value” to a business can be minimal.
To really assess the benefit that a shared service centre can bring, you must analyse the business strategy, understand the key issues faced in the business, and ask yourself what the organisation needs. Only then, can it be assessed how the shared service centre (if at all) can truly benefit the organisation.
This can be through better management information in a particular area, improved relationships with key suppliers, better support for customer facing staff or even slicker processes that make life easier for the entire business. However, to achieve this is no easy task and can involve more cost in the shared service centre to provide true “value”!
5) Sale
A shared service centre is now an asset that can be sold to bring cash inflow to an organisation. In the current economic environment, where cash is most definitely king, many are considering the sale of their shared service centre as part of a “sale and leaseback” arrangement, where they buy the services back from the acquiree of the centre.
The deals are attractive to a BPO provider as they provide sustainable long term revenue streams, and attractive to organisations with shared service centres as it enables cash inflows coupled with further efficiencies.
If you do have a shared service centre and are interested in discussing options for sale, please contact me directly on rakesh.sangani@proservartner.co.uk or directly on +44 (0)7545 143587.
Tags: Shared Services
