Shared Services – from cost centre to strategic asset
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Much has been written about the requirement to transform traditional service-providing functions such as Finance, Human resources and Procurement from being overhead and cost centres to value-adding business partners. With business profitability under pressure from all angles, many shared service providers are fast approaching a critical point.
Most have already started on the road to transformation, albeit at varying levels of maturity and success. This is typically focused on either considering or initiating activities such as consolidating processes and resources into single centres (often in the lowest labour cost locations), replacing legacy IT and using disruptive technology such as Robotic Process Automation or Artificial Intelligence.
Is the pace of change quick enough?
There is a high risk, however, that such initiatives may only deliver short term benefits and may even lead to increased cost or poorer service in the long run. With the clock ticking, many businesses are frustrated with solutions that take too long to deploy, fizzle out after initial excitement or fail to add additional value to those they directly impact
Single point, technology-driven solutions, delivered outside of consideration to the broader operating model have so far failed to shift the dial; to provide the wide-ranging impact needed, we need to reimagine the entire scope of operations and the roles of technology, people and process within.
When technology, people and process need to work seamlessly, how can you make sure that these strategies deliver the lasting benefits that you are looking for?
The key to sustained transformation
Sustained and effective Shared Service transformation will only genuinely take place when an operating model has been designed with high levels of stakeholder and customer engagement and in the context of the overall supply chain.
There are two main reasons this approach is so effective
- Single point solutions tend to destabilise rather than transform a system
- A consciously designed target operating model will help you to implement the optimal mix of initiatives in line with business objectives
Where we have worked alongside clients, developing and implementing our human-centred model, we ensure that people input, and are engaged with the new operating model, ensuring sustained impact and further improvements are driven
An approach that introduces solutions in isolation as reactive, tactical measures to simply reduce cost and ‘follow’ industry trends is a high-risk strategy.
Whilst reducing costs can be a short-term outcome, there is a very material risk that the level of services will deteriorate; in addition, any short-term savings are likely to be offset in the long run against increased failure demand through excessive hand-offs and re-work.
Symptoms of organisations who aim to ‘transform’ their Shared Service capability through single-point solutions without a holistic operating model design include:
- Not truly understanding their ‘customer’, their journey or in some cases who they are and their requirements
- Location strategy being defined by the lowest labour cost
- Failure to harmonise processes across internal customers – continuing to provide multiple variants of the same process
- Inconsistent IT strategy such as cloud migration, consolidating suppliers etc.
- Using technology to automate steps within processes that are neither standardised (therefore not leveraging benefits of scale) nor stable (increasing risk of service/quality failure)
- Performance measured primarily by volume, as opposed to values
The effect of rigorous design and implementation
Our approach of transforming Shared Services through rigorous operating model design and implementation ensures:
- Location strategy fuses low-cost delivery operations, where appropriate, with local advisory and specialist services
- Partnerships are developed to leverage external expertise where required
- Processes are re-engineered to maximise the synergy of the aggregated services
- Technology is introduced to stable and standardised processes in order to improve workflow, decision making and free up capacity
- Common enablers, such as data science, operate cross-functionally to capitalise on expertise at optimal cost
- People strategy is focussed on developing specialist domain skills and creativity
- KPIs are customer and outcome focussed
From cost centre to business partner
How do you transform your Shared Services into a strategic business partner and asset, whilst reducing cost?
At Gobeyond Partners, we have found that a focus on human-centred operating model design provides the essential platform for rapid Shared Services transformation. Engaging all relevant stakeholders in the design phase ensures an optimal balance of building the true requirements of the customer into every process and intervention alongside the commercial imperative of reducing cost.
We’ve successfully designed and delivered target operating models using this approach across multiple sectors and functions, building strategic and scalable marketing functions in insurance, setting up effective operations for leading banking brands and reshaping the role of IT in property and real estate, all through that critical, human-centred lens.