Shared services – 9 tips for success
The idea of shared services is very simple – it is all about consolidating the business operations that are used by multiple parts of the same organization. Shared services may come from several different physical locations. They may involve numerous business functions and IT processes.
You may say that this has been done for ages through centralization – in a what it has! However, Shared Services differ from centralized services in this way: Shared Services Centers have the mindset of a business and view the rest of the organization as their customers. They deliver value (balancing cost and service levels) and typically identify new ways of further leveraging their operating model. The main goal is to gain efficiencies beyond consolidation through continuous improvements. And this results in more efficient and standardized processes.
Sounds like a good idea, doesn’t it? The benefits are obvious and difficult to argue against. But it might not be as easy to implement as it looks. Organizations embarking on a transition to Shared Services typically face the same challenges. Unless projects are carefully managed, there can be a high risk of failure.
Shared Services challenges
Here are a few typical challenges faced by Shared Services implementations:
- Fear of loss of control and flexibility – especially in areas with highly specialized or localized products.
- Resistance to Change – without effective change management the implementation will be challenged.
- Limitation of legacy Systems – while not always possible, Shared Services and system integrations as part of a business transformation project can give excellent results. Limitations of legacy systems can sub-optimize results.
- Lack of leadership – the transformation will mean tough times, everyone has to be on board and visibly and vocally supportive.
- Lack of skills – The attitude and skill set of a service-oriented team looking to use enabling technology to optimize processes may not exist in the organization today.
Tips for success
So what can you do to secure a successful implementation? Reaching out to organizations that have implemented Shared Services to learn from their experiences could be a very good starting point. In the meanwhile, here’s a selection of my best tips to increase your chances of success:
- Develop a meaningful case for change: Do not demonstrate an ROI based on cost savings alone and miss the opportunity to develop a deeper analysis of the way shared services will impact the business over time.
- Involve executive leaders right from the start: Not everyone in your organization will support the move to shared services, and this needs to be addressed at the highest level. Involve and update your CEO and CFO regularly on the progress of your Shared Services program.
- Timing is critical — Avoid change overload: Is the timing for the launch of your shared services project right? Make sure your organization has the time and bandwidth to cope with this change.
- Define your processes and technology thoroughly: Defined processes and technology are fundamental to a successful shared service strategy – and make sure not to underestimate the time and effort required to do it.
- Location strategy remains key – but do not overlook secondary factors: Though very important, relocating activities to low-cost locations should not be the only factor you look at. Secondary factors should also be considered, e.g. is there appropriately skilled labor at the location?
- Expect resistance – Dedicate resources to change management: The nature of shared services means that resistance to change can be considerable. Remember to articulate why the change is taking place clearly and consistently.
- Allocate time and resources for proper knowledge transfer: Knowledge transfer does not happen overnight. The shared service project sponsor should always look carefully at the proposed amount of time and the approach.
- Measure key performance from day one: The day your shared service center goes live, the new team assumes responsibility. If things go wrong, it is their fault. Period. Therefore, the KPIs for managing service delivery need to be in place right from the start.
- Think long term: Make sure not to understate the long-term gains in your business case or you risk not to have the resources necessary to achieve the steady accumulations of benefits over time.
With that in mind, you should be set to a safer start. Get in touch with me if you want to hear more.