There is often confusion between shared services, centralisation and outsourcing which is essential to know the difference before deciding which is best for your company. A shared service centre (SSC) operates as an internal customer service for a task that was previously present in multiple departments. Meaning the SSC will charge the business units and uses service level agreements that quantify cost, time and quality performance indicators. Therefore, companies can focus their energy on strategic planning and implementation and external customers.
In shared services, the employees still complete the tasks, systems and processes that are integrated into the business and, similar to outsourcing, the centre is positioned as an independent party. However, with outsourcing a third party is responsible for completing tasks. Centralisation, on the other hand, requires a business to establish a headquarters where major decisions are made and tasks are completed; any relevant information from the headquarter is then sifted to individual office locations.
The key principles of shared services are standardisation, consolidation, re-engineering and automation. Companies standardize and consolidate their processes and systems throughout the organization to allow effective implementation. Processes are created and tested, then re-engineered and optimized for the company. Automation takes places as the final step to improve service quality over the long term.
Shared services are beneficial to companies because they improve the effectiveness and efficiency within the organization. When lower-adding value tasks are combined it frees capacity for high-value tasks at no extra cost, and now companies can focus on the development of other capabilities.
Companies that can benefit from shared services centres include;
- Those with multiple or dispersed locations
- Unnecessary local administrative presence
- Non-standard processes
- Duplication of work across sites
- Incompatible information systems between locations
- Limited access to enabling technology
- Sites that do not share best practices
- Development of local or temporary solutions at each site
- Rising support costs
- Sites that struggle with their service levels
What’s the process of investing in shared services?
Phase 1 – Assess feasibility
During this phase, companies should ensure that shared services are the option they want to implement. Through this process, they should determine;
- the processes they want to establish
- the vision they have for this new service delivery method
- how to divide processes between local business and SSC
- the location of the SSC
- technology to bring the best possible solution
Phase 2 – Design
The design phase requires companies to specify exactly the processes required, who will be responsible for them and what technology is required. It’s important to include other stakeholders in this process to overcome any resistance to change beforehand. Service level agreements (SLAs) and performance measures should also be identified during this phase.
Phase 3 – Build and test
During this phase is when the first two phases come together and you can see the system will works. Building and testing is one of the most important phases and requires companies to:
- Communicate with employees how their role might change or develop
- Train staff
- Create user documents, procedure and policy documents
Phase 4 – Implement
Through this phase, companies can now test everything they have worked towards. The ‘going-live’ phase can either be implemented completely or phased out over time.
Phase 5 – Optimise
Now the SSC is running, companies can think of ways to improve the service continually.
When deciding whether to implement shared services, it must be identified as the best option. Many companies find using a hybrid of shared services and outsourcing or centralisation to work better. Regardless, it is essential for companies to fully evaluate their needs and what they want to gain out of shared services, if that’s the best option for them, and then consider how they can achieve it.