Edition 46, Finance

Shared Services Centers: toward an operational profitability

Dirección Estratégica. La revista de negocios del ITAM. Edición 46By: Francisco Alvarado
Senior Consulting Manager of Finance and Business Performance

The current dynamics in organizations with Shared Services Centers (SSC) have led them to ask which roads lead to a better evolution of the services that they provide.

In this sense, Accenture, along with a market research company, conducted 100 surveys in 16 countries among professionals responsible for managing shared services. Thanks to the extensive experience of these experts, the study presented a clear picture of the trends, opportunities and key factors of change of the organizations that make maximum benefit of SSC.

More than 50% of the companies that were surveyed reported annual revenues topping $5 billion dollars and had been operating for more than three years using shared services. Specifically, we found that the organizations seek progress in order to reduce their operating costs, simplify their process and provide better serviceto their customers.

These objectives are achieved through an evolutionary process consisting of five stages:

1. Excellence of the processes

This stage provides a global vision for the simplification and standardization of the organization’s processes and technologies.

However, even these days many organizations have not attained this first stage because of some of the following reasons:

  • Only half of the current SSC reached the desirable level of standardization.
  • Advances are not possible without excellence in the processes.
  • Applying a methodology of excellence to the processes (for example, Lean Six Sigma) is a necessary condition for the transformation of the Shared Services Centers.

2. Excellence of the services

This stage leads organizations to operate like a business with a specialized, comprehensive service. In our study, leaders of the shared service organizations affirmed that the excellence of the processes is more than providing the core service:

  • A firm step toward the next stage is that the excellence in services be greater than the excellence of the processes.
  • Managing expectations is a fundamental principle. It is important to ask what are the services and responsibilities of both the client and the service provider.
  • The excellence in services encompasses the processes of managing demand, relationships, communication, performance, and others.
  • It is possible to reduce costs by improving the services.

3. Continuous Improvement

This stage is known as the driver of organizational performance. An earlier study revealed that top performers plan ahead and they fund and vigorously pursue opportunities for continuous improvement.

  • Continuous improvement is linked to the value perceived by the customer and to the viability of existing shared services organizations.
  • More and more organizations invest in continuous improvement and they attain higher levels of development.
  • The percentage of the operating budget dedicated to continuous improvement has increased.
  • Almost 25% of those surveyed have acquired a formal ability of the Lean Six Sigma type.

4. Value added marketing

Value and confidence are generated at this point. Many shared services organizations seek to take on more strategic roles; this means moving from efficiency (reduction in operating costs) to the effectiveness of the processes (improving business results). However, it is necessary to make an intense and extensive marketing of generated value, which means that knowing how to demonstrate success is a key factor for shared services organizations to be able to create and maintain trust and motivate their customers.

  • Communicating positive performance results has become predictable and is no longer valued.
  • High performance organizations still struggle to convince customers that they are able to provide value-added services.
  • The marketing of value becomes a key strategy to offer integrated business services

Whicih services will you provide in 5 years?

5. Integrated Business Services (IBS):

IBS is the most developed stage of organizations and is currently a trend among the service models. It requires adaptation to the market, languages, decision-making processes and specialization among the people. At this stage, the service unit:

  • Is an independent entity subordinated to front-line senior managers.
  • Manages multifunctional services operated by a combination of dependent and outsourced providers that respond to a common organization and to a framework of service management that is coherent.
  • Is a strategic asset and manages processes from start to finish. It manages according to the rules of global processes and with the coordination of common systems.
  • Is responsible for reducing costs and improving the services it provides on its own itself or managed through partners.

Three years ago, 8% of the leaders of the shared services organizations were accountable to the CEO. Today, this number has risen to 17%, which shows the maturity of shared services and their ability to begin to offer integrated business services.

Conclusions

The models of services of organizations have evolved in recent years, principally because they face situations that decrease their value before the business.

The objective of the service models is to optimize the provision of services to customers at a low cost and with more flexibility. This is why the service models try to evolve along with the business to establish their value and relevance.

In many cases it has been shown that the IBS operating model solves challenges successfully and has turned into the most advanced stage of Shared Services Centers, so it is a key to achieve a high performance.

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