Wednesday, July 28, 2010

Defining Shared Services, Enabling a Capability to do More With Less

Shared Services refers to the organizational construct and operational allocation of responsibility that bundles certain business processes and activities into a separate organization, which in turn treats those processes and activities as the core of its own business offering them as a product or service to its customers. The concept behind Shared Services is the sharing common business processes, improving service and access to information while reducing cost through leveraging economies of scale.

Shared services is generally considered tactical solutions, in that they are not typically core areas of the business and do not provide a significant competitive advantage to the business they serve. By collecting nonstrategic processes and activities into a common organization, under its own management, the potential exists for individual business units to focus on their core business. Freeing up business unit management to focus on solving business problems by enhancing the business unit’s core processes can result in enhancement of the value chain, which in turn can lead to company growth.

But why stop at non-core activities? A few companies are implementing Shared Services for Marketing, Sales, Customer support, Product development, Product support, etc. This expansion of the Shared Services concept is critical in today’s climate of having to achieve more with less (people, budget, access to enabling technologies, etc.) CandidAdvisors believes this is an essential trend and that Shared Services are more than simply aggregating work into a group, organization or center.

Some of the characteristics of effective Shared Service operations:

  • They operate as a stand-alone organization with a mission to serve the business regardless of function, business unit or location.
  • They treat their internal customers with a powerful customer service ethic.
  • They are function agnostic.
  • Their goals are reduced cost, improved service and better information.
  • They can offer value-added services such as analysis and project support.
  • They can serve as an innovation center for the business support functions.
  • They operate as a business, with a demand planning and product/price orientation towards their customers.
  • They are an excellent structure to perform governance over outsourcing contracts and services.
Overall Shared Services is a well-accepted and proven way of providing business services to corporations. They are especially effective in helping corporations reduce costs while improving service, information accuracy and accessibility. However, it is now time to expand their role into enabling corporations to do more with less and to expand their remit into new areas.

2 comments:

  1. There are several examples of how companies that stick to their core like Circuit City, Sun and Sears end up in a tailspin. How can we defend against this? Check out this posting from Forbes and see what one of their columnist has to say:

    http://bit.ly/9Omdk6

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  2. billfrechster@gmail.comJuly 29, 2010 at 7:56 AM

    Alan Hartog makes the valid and interesting point that the world is changing faster than ever. However, I believe he is saying if "focusing on your core" means doing things the same way as you have always done them companies will be in trouble. I agree with that.
    I think the point of focusing on your core it to use your resources to focus on making your business successful, be it retail, media, or whatever. Companies should not focus on their non-core functions when there are alternative to providing them in a better, faster and probably cheaper means.

    There is no doubt that the business world is changing and changing rapidly. So my point is a) why execute your support functions in the same way and b) maybe there are other functions that were formerly considered untouchable, that should be done a new, better, faster and cheaper way.

    The implementation of shared services should provide information faster and more reliably. It should also provide the flexibility needed for a company to make changes in the direction or execution of their "core" business faster.

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