Next Generation Shared Services
From Functional Optimization to Business Value
The dilemma that many shared service organizations find themselves in - between being a low-cost service provider and desiring to be a high-value business enabler - can only be resolved with effective strategic planning, strong executive sponsorship and communication, and disciplined execution.
The current generation of shared services in most companies focuses on eliminating redundancies, leveraging resources, and reducing costs. However, once they have realized these benefits, other more valuable enterprise-wide opportunities arise. The next generation of shared services focuses on process and business integration, enterprise performance, and strategic innovation. Few companies have moved into the next generation, but many would like to or are in the process.
The primary elements that organizations must include in order to develop and implement a complete and successful shared services solution include:
- Strategy on a page (SOAP). This document captures the mission of shared services based on businesses strategy and market drivers. It also incorporates any appropriate market drivers that might impact the design or execution of shared services.
- Operating Model. An operating model includes definitions of the major facets of an enterprise - including processes, organizations, technology - and how they work together to meet its objectives.
- Business Culture and Hidden Logic. Hidden logic refers to the unwritten rules that people follow, rules about what's important and how to behave in order to succeed.
- Plays. Shared services implementations are accomplished through a series of "plays" in which each element of the model is adjusted in pursuit of a specific business strategy.
- Implementation Roadmap. How you are going to execute a play must be expressed as a full implementation plan, including all necessary changes to the operating model components and cultural background.
- Enterprise Architecture. Your architecture should be consistent with your goals for the shared services organization. It should provide capabilities to continuously support and enable the business.
The potential benefits of implementing shared services are substantial, and many businesses are currently reaping them. The value in succeeding is compelling. Even at the basic capability level, cost improvement can range 20-25% while improving service levels 20-30%. At higher levels of capability, the impact becomes a critical factor in achieving business strategies.
This Re.sults report identifies the components that need to be addressed in a shared services operating model, and explains how to develop an effective shared services strategy to create a high-value organization. It explores what methods or "plays" can be executed when implementing a shared services transformation in pursuit of a specific business goal. It also includes four detailed case studies showing how other companies have set out on their shared services journeys, and the plays that they executed.