The Shared Services – The elephant in the room – Time to Optim-ize, Value-ize & Global-ize

Most of us are familiar with the Indian tale of the blind men and the elephant: A group of blind men each touch an elephant to gain insight into what it looks like. Each person feels a different part—like an ear or the tail—but only one part. This story has been told in a variety of ways in most cultures around the world. In some versions, the men work together to “see” the full elephant. In others, conflict arises, and the disagreements between the blind men become violent. In yet another version, the fable ends with a sighted man walking by and convincing the group of the true nature of the beast.

You do not have to look far to read about Shared Services models that have saved multinational organizations millions of dollars, pounds, or euros, in transactional processing and value adding services. On the face of it, the business case for the model sells itself, and industry reports would seem to imply the vast majority of large-scale organizations have implemented some form of services delivery model to drive improved performance.

The truth, unfortunately, is still a different matter, with – according to some reports – two-thirds of total transactional work remaining stuck in the business units instead of being shifted to Shared Services. Why, despite the obvious and highly publicized rewards, is this still the case?

Failure to Launch: a Lost Opportunity

The still relatively limited actual S2P and F&A Shared Services implementations highlighted by a recent survey by Deloitte Consulting, PwC, Chazey Partners (roughly 60% of Spend Analytics, Category Sourcing, Contract Management, 40% Procure-To-Pay including Tail Spend, 50% of AR, AP, General Accounting, Fixed Asset Accounting and nearly 60% of T&E are still being delivered outside of Shared Services/outsourcing arrangements) highlight the enormous potential for improvement, which is being left on the table.

Another myth exposed in the study was the commonly held assumption that Shared Services is consistently moving up the value chain. In fact, few organizations (14% of those surveyed) have actually shifted higher value processes like financial planning and analysis into Shared Services and only half of those asked confirmed that tax reporting and analysis and data collection were delivered through a SSO.

So, what are the danger signs of a falling shared services operations?

·      The general absence of a service-oriented way of operating

·      High shared service team employee turnover and low employee morale due to a lack of growth culture

·      No structured communication plan with the customers

·      Service Level Agreements not in place or not confirmed/aligned with business

·      A lack of standardized processes

·      Negative customer relationships

·      Minimal use of automation tools

·      Poor leadership and line management

·      High cost of operations with NO Optim-ization and Value-ization Strategy 

What are the root causes of a falling Shared Services Operations?

Now that we have understood the signs, let’s next turn to looking at why shared services operations can and do fail. This really is the “million dollar” question. The answer will be complicated because there can be quite a number of contributory factors, not least of which is the understanding and motivation of the company/organization itself.

·      Lack of senior level sponsorship and support

·      “Solutions” Vs “Quick Fixes”

·      Company Culture

·      Poor technology roll-out

·      Lack of clear project plan and business case

·      Lack of employee training and development

How can this be turned around?

So having understood the causes here are some of the key areas to address to successfully turn around a failing shared services

·      Executive sponsorship is essential and critical – engage with senior leaders

·      A robust business case, including appropriate targets, supported by benchmarking will support the effective performance monitoring

·      Utilize effective change management – operating within a “no blame” space

·      Regular communication – engage with your users

·      Engage your best resources and people on the project – this is an investment

·      Hold regular, meaningful Steering Committee meetings of key stakeholders

·      Consider using internal charge-backs to run your shared services operations as a business model

·      Adequate support post go-live – this is a long-term investment for your business

·      An ERP system is an “enterprise” system for use by the business to meet business needs

·      Engage targeted expert outside help

I can tell you, the SHARED SERVIES elephant is one big, complex beast with unique capabilities and characteristics to each part of its operating model. Many wise men have extolled the virtues of each component without considering the whole. Others have come to encompass more and more of the whole from the start, beginning with Transactional Services like Procure-To-Pay, F&A, HR Operations like Data Management, Payroll Administration to embracing HR administration, RPO, talent management, learning and development, and training.

Folks have also approached the elephant from different business perspectives. Finance focuses on payments and therefore has a vested interest in payroll and benefits. Procurement oversees supply chains and so looks to leverage recruitment, contingent workers, training, and travel. Group level operations leaders have considered outsourcing to be a part of a shared service to be rationalized, globalized, ERP-ized, and homogenized.

The technology provider landscape has moved forward as well, starting with niche players covering specific functionalities and services. Then it entered a phase of consolidation with a few large conglomerates buying and owning all the parts. Now, best-of-breed and service integration are coming to the fore, and buyers being asked to put together the elephant of their choice.

We are all certainly spoiled for choice. The options for delivering optim-ization, Value-ization and Global-ization of shared services are endless: RPO, MSP, SaaS, remote, mobile, offshore, near-shore, onshore. You can deliver it yourself, you can be a master vendor, buy from a master, or you can buy the whole service outsourced from others. You can have one vendor or many, be global, local, or globalocal. You can focus on employees, contingent workers, contractors, or a total workforce.

It’s time to get back on track. It’s easy to get lost among myriad options and outcomes. Let’s try to see the elephant.

It’s time the shared services are looked through a prism of business strategy and looked at it as an “engine” of digital transformation thru – Standardization || Automation || Scope Enhancement || Job Enrichment || Organization || Service Orientation