IShared service organisations are failing to live up to expectations. A recent Research Study by Alsbridge plc of nearly fifty global shared service organisations showed that SSCs are not realising their full potential. In all the categories analysed (Process, Technology, Regulatory, Organisation and Regulatory) average scores ranged from 2.8 to 3.2 out of a maximum of 5 and even organisations that have been in operation for over five years failed to achieve maximum scores. One of the most alarming features is that only a handful of organisations could report that they had zero compliance issue and ensuring regulatory compliance was seen as an ongoing challenge for the SSCs.
So what are some of the key areas in which SSCs falling short?
- Lack of standardisation and steadfastness to truly transform processes which is impeding processing efficiency.
- Failure to re-allocate resources.
- Limitation of scope. Many organisations still only include selected transactional processing activities in their scope. For example, only a quarter of our research study respondents have their final statutory accounts produced by the SSC.
- Business units opting out.
- Limited investment in technology enablers to automate processes.
- Simplistic charging mechanisms which tend to be based on a cost allocation calculated on the basis of a specific business unit characteristic (e.g. revenue).
- Cumbersome SLAs that lack buy in from key stakeholders.
- Ineffective governance structures.
So, how do you make shared services work?
1). If the benefits of shared services are to be fully realised, it is essential that the shared services part of the operation fits into the overall corporate operation in a seamless way and management focus is maintained. Ownership by top management of the end to end process is vital and a senior management mandate is essential for ensuring that:
- Processes are standardised,
- Business units comply with policies and procedures,
- Resources are re-allocated,
- The SSC gets the investment required to automate and truly transform processes.
2). Create a governance structure that encourages open dialogue between the shared service and its customers at all levels; from day to day communications at the production level to strategic discussions at the senior management level. This is essential for effective decision making and to ensure that issues are resolved rapidly.
3). Invest time in building the relation between the SSC and the retained organisation. Personal relationships and dependencies are as important here as in any other part of the corporate structure and are key to smooth running and efficient operations. So, managing the relationship and keeping it healthy is an ongoing requirement. Recognise that this takes time and effort. Give the structure of the retained organisation as much focus as you do the new shared service structure. Get the right people in the right roles in the new organisation (a good Accounts Payable manager does not necessarily make a good Relationship manager!).
4). Strive to Increase the scope of the SSC. SSCs tend to start with repetitive high volume transactions but as confidence grows and the relationship improves they should move up the value chain both in terms of the breadth of services offered, e.g. HR, IT, Procurement etc, and the depth, e.g. within Finance moving away from just transaction processing (AP, AR, GA, T&E etc.) through centres of expertise (providing services such as tax planning, treasury services, internal audit etc.) to being business partners business partnering.
5). Endeavour to include all business units as the business case is often reliant on the transaction volumes of all the business to get the economies of scale. So, when decisions are made whether or not to include a particular business unit, organisations should consider what is best overall for the SSC organisation rather than just the specific business unit, i.e. consider what’s best for the ‘family’.
6). Don’t forget that SLAs are about people. Managing through SLAs represents a change to the organisation and change creates anxiety as people wonder “what does it mean for me?” The business may be concerned about a loss of flexibility and the SSC may be concerned about meeting challenging levels of service without exception. Keep SLAs flexible and keep both the business and SSC involved in the development of them.
7). Ensure service tracking focuses on both objective measurements and subjective perceptions. Objective quantifiable measurements reflect the efficiency of the services by focusing on performance data. Subjective, qualitative perceptions reflect what is perceived. This is as important in creating customer satisfaction and keeping the business engaged as objective measures.
As pressure to reduce costs and improve efficiency continues shared services will remain high on the corporate agenda. Outsource service providers have proved that through their structured, holistic, customer focused approach they can deliver significant efficiency gains whilst improving quality of service. So, can you afford to be complacent? Shouldn’t your SSC deliver at least as much value as outsourcing could?
Source: Outsourcing Leadership News