Striving For Centre of Excellence
Understanding Shared Services
Definition and Purpose
Shared services refer to the consolidation of business operations used by multiple parts of the same organisation into a dedicated centre. This approach unifies various back-office operations, enhancing efficiency and eliminating redundancy. By grouping similar functions, such as Finance, Human Resources, and Information Technology, shared services streamline processes and improve resource utilisation across the enterprise.
Benefits of Implementing a Shared Services centre
Improved Efficiencies
Shared services improve efficiencies through standardized processes. In a segregated environment, different business units may use slightly different processes, leading to inefficiencies. Consolidating these processes under a single banner provides the entire organisation with access to the same processes, boosting productivity and speed of delivery. This standardization ensures consistency and reduces the time and effort required to manage multiple disparate processes.
Cost Savings
Consolidating duplicate resources reduces costs and increases delivery speed. For example, a shared services centre can apply automation to financial reports for multiple business areas, producing reports with significantly less effort than individual bespoke reports. By centralizing functions, businesses can leverage economies of scale, reducing the overall expenditure on resources and infrastructure. This cost efficiency allows organisations to reinvest savings into core business activities and strategic initiatives.
Development of Centres of Excellence
By dedicating parts of an organisation to focus on core shared service competencies, shared services centres increase specialization and drive improvement and innovation. This allows core business functions to focus on driving revenue and growth. Developing a centre of excellence fosters a culture of continuous improvement and expertise, leading to enhanced service quality and business performance.
Addressing Challenges in Shared Services
Maintaining Connection with Business Units
A key challenge is ensuring the shared services team remains in touch with the business units they support. This can be achieved by dedicating individuals or teams to bridge both business and shared services, bringing an intimate knowledge of both areas. Regular communication and collaboration between shared services and business units ensure alignment with business objectives and responsiveness to changing needs.
Key Functions of Shared Services centres
According to a recent Deloitte survey, common functions within shared services centres include:
Finance 88% Procurement 37% Tax 32%
HR 63% IT 53% Customer Service 30%
Overcoming Inefficiency and Bloat
To prevent inefficiency and bloat, shared services executives should be held accountable for the value they deliver. Internal and external benchmarking can help maintain efficiency and effectiveness. Regular performance reviews and continuous improvement initiatives ensure that shared services remain lean and deliver maximum value to the organisation.
Material Benefits of Shared Services
Standardization and Best Practices
Shared services standardize business processes and adopt best practices, enhancing the quality and flexibility of business services. This standardization ensures consistency and compliance with organisational policies and regulatory requirements, reducing the risk of errors and inefficiencies.
Accountability and Cost Savings
Shared services improve accountability through agreed-upon service levels and achieve sustainable efficiencies through economies of scale. By consolidating functions and resources, businesses can reduce operational costs and improve resource utilisation, leading to significant cost savings.
Focus on Core Operations
By releasing human capital from commodity tasks, shared services allow organisations to focus on customer service and core operations, leveraging state-of-the-art technology for better performance. This focus on core activities enables businesses to enhance their competitive edge and drive strategic growth.
Scalability and Collaboration
Shared services provide scalable solutions to accommodate geographic and service scope changes, enhancing cooperation with external partners for strategic development. The ability to scale services up or down based on demand ensures flexibility and responsiveness to market changes and business needs.
Business Continuity and Knowledge Transfer
Reducing the geographic footprint of IT systems improves resilience, while addressing corporate needs for collaborative learning and knowledge transfer. Shared services facilitate the transfer of knowledge and best practices across the organisation, promoting innovation and continuous improvement.
Shared services centres offer numerous benefits, including greater efficiency, cost savings, and enhanced business performance. However, challenges such as maintaining connection with business units and ensuring value for money must be addressed. With rigorous organisational alignment and commitment to change, businesses can successfully implement and manage shared services centres, transforming them into centres of excellence.
Explore how MagicOrange can help implement and manage shared services for your organisation. Contact MagicOrange today for more information, request a demo, or learn more about their solutions. Let us help you drive efficiency, reduce costs, and achieve excellence in your business operations.
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