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Reshapping the Corporation: Emerging Best Practices in Shared Services
American Productivity & Quality Center (APQC), Jan 1997, Pages: 62
Whether or not to centralize is no longer the burning issue for organizations under pressure to achieve greater economies of scale from multimillion dollar investments. Leading-edge companies are moving away from autonomously run operations to efficient, customer-focused functions known as “shared services.”
Under shared services, scattered operations are pulled together into mega-service centers, which then serve all of a company’s business units around the globe. This results in the creation of a separate support organization with P&L responsibility that “sells” its services to other operating units. Such organizations are being designed to provide lower costs and one-stop services to all parts of the corporation. Shared services is viewed as an essential initiative that will help organizations make a quantum leap in lowering their operating costs and improving overall performance. Shared services represents the next step beyond consolidation of corporate services. And, although consolidation and shared services represent opposite ends of a continuum (as opposed to easily distinguishable categories) the primary differences
between the two are:
1. The shared service has a customer-focused mind-set—users of the service are viewed as customers, and the shared service is dedicated to providing high-quality, cost-effective, and timely service.
2. The shared service is run as an independent business, with its own budget and bottom-line accountability.
METHODOLOGY
International Benchmarking Clearinghouse, in conjunction with Ernst
& Young, LLP, and 13 sponsoring organizations, conducted a study of innovative
and successful strategies for delivering corporate shared services. This study focused on shared services at five “partner,” or best practice, organizations.
Phase I: Selecting Best Practice Partners
Phase II: Learning from the Best
KEY COMPONENTS OF A SUCCESSFUL SHARED SERVICES STRATEGY
Findings from this study, which focused on transforming internal support services into customer-focused shared service providers, indicate that the key components of a successful shared services strategy are:
1. Making appropriate “upfront” decisions to focus and manage the change—
determining the scope of the effort, the location of the shared service center,
how to roll out the change, how to staff, and the governance structure.
2. Organizational change management/focusing on employees during the change—
communicating with and motivating employees during the change, involving
employees in the change process, and educating and training employees to prepare them for their new roles within the shared services organization.
3. Developing a customer-focused mind-set—developing two-way communication
with customers, educating employees regarding the shared service role, and
tying compensation to performance.
4. Developing service-level agreements—working with customers to design and develop appropriate agreements and reaching consensus on cost and quality issues.
5. Developing performance measures—determining what to measure and what
not to measure.
Additional critical success factors necessary to support the change include:
- a corporate culture supportive of change,
- executive sponsorship, and
- information technology support.
This report examines each critical component in detail and explores the critical success factors. We will discuss the importance of each to an overall successful shared service organization and draw on specific examples from the best practice organizations to identify enablers of successful strategies.
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