Getting shared services right
by George Davies, CEO, MooD International
Wednesday, November 05, 2014
A recent report from the Shared Services & Outsourcing Network examined the mid-market companies in the German economy. These make up 99 per cent of the country’s companies and are often described as the motor that drives the German economy. Interestingly, the report found that shared services were a common denominator for more than half of the sector, which goes to show that shared services are not the exclusive preserve of huge corporations.
Shared services can be a valuable way of streamlining business operations and delivering them in a cost effective way, but the heads of these shared services centres (SSC) face pressure from all sides. They face pressure from the Board, who are always looking to cut costs; pressure from outsourcing suppliers, who need to make a profit from the services they are delivering on what is often an aging asset base; and pressure from the business units, which are quick to speak up if they do not get the level of service they believe they deserve.
The ultimate aim of all SSC is to constantly provide a better, more efficient service, while driving out unnecessary costs and innovating. But all this needs to be done while keeping the ‘lights on’ and the business running as usual. And as if that isn’t enough, the move to multiple, niche outsourcing providers means there are more ‘moving parts’ to manage.
For an SSC looking to address these issues, there are three steps they should take to help optimise the function. The first is to identify the desired business outcomes and then work down through the different layers of the organisation to understand the business services that are needed to deliver these outcomes. This provides a clear understanding of the different services that contribute to the overall objectives and how they work together. This is especially useful as SSC often manage multiple outsourcing providers feeding into the business.
This allows SSC to move to step two, which is engaging with the business units using a common business language they understand, rather than meaningless tech jargon and service level agreement terms. By being able to talk the language of the business, SSC will ensure they focus on the priorities that will make the most difference to the strategic business objectives.
The third step is for the SSC to build a business service catalogue of the most popular delivered to the business and then charge the business units accordingly. By doing this, the business units are given a far clearer view of the services they are spending money on and they can then change their behaviour according to what they’re willing to pay for.
This enables SSC and the business to build a business performance management capability that shows how each service is being delivered and how delivery is improving over time. This will help SSC evidence to the business how they are contributing to its strategic objectives and delivering an increasingly efficient operation, against a backdrop of innovation and improvement.