What are the main challenges and risks of implementing and operating SSC?

There should be a roadmap that's aligned between business leaders and SSC leaders. The objective and message should be clear on "Why" does the company want to have an SSC and the benefits should always goes beyond cost / wage arbitrage. Whilst many stakeholders who doesn't understand the vision focus on worrying about losing control and flexibility, other elements like knowledge retention, internal equity of having employee growth, ease of implementing change (including and not limited to system / ERP / Automation). Lastly, strong business leader who sets guideline and control, in critical times ensuring top-down approach would go a long-way in sustaining the SSC.

In addition, when deciding which types of work are centralised in a SSC it is important to consider how to optimise the employee and customer experiences.

It's crucial to bridge the gap between centralized efficiency, standardization and economies of scale desired by senior management and the local control and flexibility needed by business units. We started to see an increased trend towards decentralization and shifting center of gravity towards business units and navigating away from SSC control and silos. I believe this is more caused by collaboration issues which not addressed correctly, SSC should focus on delivering value according to SLAs with customer centric mindset. The key lies in striking a balance between SSC and flexibility and act with speed required by business units, focusing on collaboration and shared goals, and adapting to the changing needs of the organization.

Actually implementing a SSC is a change program, which means a comms and change strategy ought to be used for chang management. The stakeholder management is crucial, as different stakeholders clearly have different motive, and of course driving factors. The senior management empowerment is important, to ensure the messages on why, what and how are cascaded. I will also use strategy map to explain how the changes are shrink into smaller pieces, and how different level in the organization can contribute to via their value proposition. Make the impact assessment properly, addressing them together with the impacted teams usually works well, when this is facilitated with interactive approach. The main thing is engage the people!

I've learned in project management, especially with initiatives like setting up SSCs, that aligning stakeholder expectations is a pivotal challenge. Each group, from senior management to SSC staff, holds unique concerns and objectives. My approach has always fostered open communication, ensuring everyone's perspective is heard and considered. Establishing clear, measurable performance indicators and service level agreements is also crucial. This aligns expectations and builds a framework of accountability and transparency, which is vital for an SSC's smooth operation and acceptance.

the key for effective change management is to be transparent about why the change is needed, what are the benefits or rationale for change and also to paint a realistic picture of the future, including training the affected employees so that they can be prepared for the change.

To make an SSC successful, prioritize clear communication and involve key stakeholders early to build buy-in and ease the transition. Focus on setting measurable performance standards and a strong governance structure to ensure accountability and quality. Finally, invest in the right technology and talent, as they’ll be critical for sustaining efficiency and adaptability in the long run.

Effective change management strategies can significantly increase the chances of success here. By involving stakeholders, providing training and support, recognizing contributions, and addressing specific concerns, organizations can navigate the transition smoothly and get the benefits of a well-functioning SSC. another important point is leadership style and their commitment to drive change in the organization, they need to champion the SSC initiative, articulate the benefits, and show empathy for those experiencing difficulties, and set the tone for the entire organization which can minimize the resistance.

SSC implementation is a massive change in an organization. Resistance manifests at multiple levels of the organization on account of fear of losing control, uncertainty and for some for losing their roles/ jobs. It is wise to anticipate such resistance and prepare to manage effectively. Focus on engaging stakeholders in designing the SSC model, implementation and stabilization to win their trust and ownership. Ensure open communication and arrange for training and support and pay special attention to those whose roles/ jobs are impacted. Retention, rewards and recognitions commensurating to contributions is appreciated by the employees. In addition, pay special attention to processes during stabilization to build confidence in the change.

One thing I found useful is when people get involved, there is clarity to each individuals, and it is the starting point for acceptance of change. The pace, space, amount of information, time for change, the support provided by the leaders, will ensure people able to bounce back from the change curve; the fact is some could be quite fast, some take longer, hence in terms of change need to have differentiated approach. Spend more time and hire a good change manager will make a difference, because you will spend more energy to manage conflict later. So, why not take a proactive approach.

We sometimes hear from SSC leaders ".. we do not operate as boutique style SSC", and many times its the different perspectives from people. A global process could be defined, yet could allow for certain customization or we called deviation. In process design, this is normal as there are different environmental factors that could not be changed immediately. Hence, we could keep track of these deviations and re-visit later when it deems to be appropriate time. This is a process maturity topic, it's part of continuous improvement that evolving the process through different projects, with right sponsorship, timing, teams maturity and of course relationship building over time. Hence, it's about timing of change

In my experience, this point is critical and should be addressed part of organization overall strategy. It is important to clearly define which processes can be standardized, failure of doing this analysis will cause bottlenecks and resistance which will impact SSC performance and perception will be changed from supporter to roadblock. Not all processes can be standardized and the foundation for processes standardization includes (Quality Master Data, unified and stable technology platform, low legal or regulatory complexities). Customization should always considered as exception in the SSC needed to address valid Biz need and it is important to have proper definition and governance around it.

From my experience, while standardization enhances efficiency, retaining flexibility to meet diverse needs is essential. I've addressed this by offering varied service levels and pricing models. This approach allows for adapting services to the unique requirements of different business units or customers. Maintaining process consistency and responsiveness to specific demands is a tightrope, but getting it right can significantly enhance operational efficiency and customer satisfaction.

For organizations implementing SSC, standardization of policies, processes, technologies, controls and governance is one of the key objective. There is tremendous merit and value in standardization however there are always business nuances and exceptional scenarios that require special handling with flexibility and responsiveness. It is always useful to identify such exceptions and have special handling in place. Also note that there may be several different businesses in an organization with different needs and hence a straight jacket approach does not always work. SSC should be open to collaborate with variation in approach to build and implement an operating model that suits the business requirement the best.

As much as SSC main aim is to standardize processes, there will always be exceptions. This is where the tiered service model comes in. At varying levels of service, some levels cater to the exception requests of customers, while others work on the standardize requests. In doing so, there must be flexible delivery channels to handle customer's needs, such as self-service portals, direct consultation or dedicated teams.

If the SSC is a global SSC servicing the needs for multiple geographies, it is important to ensure there is sufficient initial and ongoing training on country-specific legislation and compliance needs.

Control and Compliance requirements are no different for SSC than the rest of the organization. What is important is that ownership of the controls and compliance requirements must be clearly defined in the service delivery model. There should be adequate review system built into the service delivery model. In addition, organizational protocols in relation to data security, data privacy or any other compliance requirements are extended to the SSC as well and SSC must comply like rest of the organization. Continuous audit model enabled by data analytics and exception resolution comes in handy to adhere to and improve control and compliance.

SSC deals with a lot of confidential information, especially on employees or personnel information. To mitigate risks related to compliance and security, there must be robust controls, such as regular updates to cybersecurity measures, comprehensive compliance frameworks (GDPR, data protection laws, regular audits), employee trainings, and incident response plan for security breaches or non-compliance issues. These will not only reduce the risk but also build customer trust of SSC.

Implementing and operating Shared Services Centers (SSC) presents several challenges and risks, including resistance to change from employees, integration complexities with existing systems, and potential disruptions during the transition period. Ensuring data security and compliance with regulatory standards are critical concerns. There's also the risk of not achieving anticipated cost savings due to underestimating implementation costs or overestimating efficiency gains. Cultural differences and communication barriers in global SSCs can impede collaboration. Additionally, maintaining service quality and managing stakeholder expectations require continuous oversight and adaptability to evolving business needs

There is a triangular relationship in an SSC Model that is typically formed by technology, the business process, and the SSC. Consider how these impact your service and cost model. Plan roles, responsibilities, accountabilities and processes for managing not only the startup but more importantly future change. In my experience, for example, when the business did not want to spend more on an IT solution, it meant increased manual effort in the SSC. Who decides how cost shift?

In addition to the above, you must consider the following challenges and plan accordingly: -Geopolitical and economic risks: diversify the location footprint and continuously monitor the geo-political and economic scenarios -Scalability for growth or contraction: continuously monitor capacity requirements and adjust accordingly -Cultural alignment: continuous focus on cross-functional collaboration, transparent communication and alignment of goals and objectives leads to cultural alignment -Talent management: attracting, developing and retaining talent must be a priority. Focus on engaging, enabling and enhancing as core part of talent management framework -Technology integration: ensure technology selection and implementation is a priority

Remember to retain some of the savings that SSC generates for reinvestment. In my experience, enterprises want a considerable reduction in cost, which can be obtained sometimes very quickly with SSC, but they continue to cut and not allow SSC to re-invest a percentage of those savings. Operations get new trucks and equipment each year, but when SSC wants to implement a new tool such as RPA or AI, it is challenging to find the funds. Negotiate right away a percentage to be "re-invested."