Stick or Twist? Is Shared Services right for my Business?

Stick or Twist? Is Shared Services right for my Business?

Niccolo Machiavelli (The Prince) wrote ‘There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things’….so why bother?

Well, it is inherent in all good business practitioners to drive for improvement and success; and Shared Services comes with a big promise attached (allegedly!): ‘reduce costs and improve service quality’ . So, is Shared Services right for your business?

The fact is that you need the facts, you need to experience certainty. So in this paper we will explain:

o What is a shared service?
o W hat are the choices?
o What is the size of the prize?
o What is involved in operating a Shared Service Centre (SSC)?
o What are the potential benefits?

Therefore at the conclusion of this paper you should be equipped to attempt to answer - Shared Services and my business…. stick or twist?

What is a Shared Service?

Shared service(s) is an operational philosophy that fundamentally involves centralising functions that once performed in separate divisions or locations (plus more besides, which we will explain as we progress through this paper).These are generally services that can be shared among the various business units of a company, typically Back Office functions including finance, purchasing, inventory, payroll, Human Resources (HR) and Information Technology (IT). That said it can also be applied to the Middle or Front Offices too.

Middle Office covers functions and processes which are specific to the actual business of the organisation. For example: in Local Government such functions would cover Revenues and Benefits, Refuse, Highways and Parking; in Central Government the Middle Office functions are department specific such as Vehicle Licensing in Transport, Tax Credits and Tax Assessment. In Life and Pensions it would be processing of policies and in Retail Banking mortgage assessment and tracking.

Front Office covers functions and processes which have direct contact with those not directly employed by the business but are users of, or buyers of services, regardless of the channel of communication (phone, visit or internet). The traditional Front Office functions covered contact centres and help desks. However, with the evolution of applications many Middle Office functions have now been modified with a Front Office interface via the internet.

Before we pursue this operational philosophy further it is important to add that the term ‘Shared Services’ can also apply to partnerships formed between separate businesses (e.g. the tenants of an office building may well share telecommunications or maintenance services) or ‘Shared Services’ available on the internet (e.g. application service providers (ASPs) offer numerous business clients access to online applications to allow them to avoid purchasing special systems and software).The AA offers such a service with Route Planner.

As stated earlier, the operational philosophy behind running Shared Services can be more than just centralisation or consolidation of similar activities in one location. Shared Services exploited to its full potential can mean running the in scope service activities like a stand alone business within your business, with the objective of delivering services to the internal customers at a cost, quality and efficiency level that is competitive with external alternatives. Taking this one step further, it can also lead to offering your established Shared Services to external customers.

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