Organisations are continuing to recognise the Strategy value that Shared Services can deliver in terms of reducing costs, improving control, and service levels.
The concept of shared services is a simple one, the establishment of a capability that can deliver services that can be utilised by others within the wider business – typically different business units, countries, territories, or functions. By focusing the same (or similar) processes and services into one team this can then drive economies of scale, and drive improvement in the standardisation, simplification, and potential digitalisation of the processes such that they are cheaper, more efficient, more effective, and consistent in their provision for the benefit of the wider business. Simple.
Shared Services as a concept developed rapidly in the 1980s and 1990s focusing initially on low-value activities in Finance and IT functions but has progressed into HR, Procurement, Legal, and industry specific middle-office type activities (eg. actuarial, capital reserving), as well as moving much further up the value-chain within the functions. The original pioneers of Shared Services were in the Manufacturing and Pharmaceutical industries, and included Ford, BP, Pfizer, and Proctor & Gamble, but since these early adopters Shared Services has become a key element of most major businesses operations albeit to significantly varying extents.
A Shared Services operation may be focused on one or multiple Service Delivery Centres (SDCs) and may be established as a Centre of Excellence (CoE) for a function or as multi-functional processing factory depending on the company Operational Strategy. Equally Shared Services delivery models may vary significantly by;
- Single versus multiple centres
- Level of control over the process/activities they deliver
- Mandate to improve the services
A more recent evolution of the Shared Services model is what has become known as Global Business Services (GBS). This takes Shared Services a step further in developing it into a truly integrated, multi-functional, and central business services organisation.