What is Shared Services^SM

Shared Services is the singular management paradigm used by major companies around the globe to organize and deliver internal support services more effectively.

For years, the desire to make staff services more efficient and market-driven has impelled leading-edge companies to explore various cost reduction, outsourcing, process reengineering, TQM and organizational restructuring alternatives. For many, the search ultimately led to the formation of a Shared Services business unit, an organizational entity that signals a fundamental change, not only in the way staff services are evaluated and delivered, but in the very structure of an enterprise as well.

Shared Services allows a company - usually for the first time - to leverage the capabilities of its staff resources across the entire enterprise, achieving and sustaining performance excellence. The underpinning is a concentration of common management practices in a business-oriented unit focused entirely on delivering highest-value services at the lowest cost to internal customers. This stimulates greater accountability than having multiple points of responsibility and varied management practices.

In a Shared Services company, a unique service provider-recipient relationship is established. The same "best practices" used to gain a competitive advantage with external customers are applied internally to create a harmonious partnership. Internal customers can specify what services they need and can expect the Shared Services business unit to take responsibility for meeting those requirements; service providers can expect to have their performance evaluated objectively because measurable criteria have been established.

Shared Services is revolutionary because it represents a fundamental change in an organization's structure, in the attitude of those who deliver internal staff services, and in the nature of provider-user relationships. In a true Shared Services environment, service providers are service-oriented, business-based, contributor-valued, and partner-integrated.

• Service-oriented: individual customers and their requirements are known, performance is measured, and problems promptly resolved. Providers know what their customers expect for each service and are capable and motivated in meeting these expectations;
• Business-based: services to be performed are agreed upon with customers and priced based on services consumed;
• Contributor-valued: accountability and responsibility is clearly delineated, and compensation is linked to satisfactory delivery of service;
• Partner-integrated: providers and customers co-define their respective roles and agree upon how work is performed across organizational boundaries to meet service requirements and expectations. Providers anticipate new service needs. Users see service providers as direct contributors to profitability.

The second major shift in a Shared Services environment is that it re-focuses the energy and interaction to be between the service provider and the customer rather than "up the corporate ladder." Customers and providers work together on clarifying service requirements, performance improvements, and priorities and share responsibility for successful service delivery. Accountability of a Shared Services unit is often to a Customer Board vs. to a Corporate functional leader. Fees are charged based on services rendered vs. being part of an overhead allocation. Customers know what each service costs them and can influence both the cost and level of service they receive. Lastly, Shared Services units are often located in a "non-corporate" location vs. within corporate headquarters. Ultimately, Shared Services obliterates traditional functional organizational relationships by challenging work boundaries and hierarchies as we know them today.

Benefits

Shared Services can generate any number of benefits to an organization, both immediate and long-term. There is a significant increase in customer interaction, and in the consistency of shared information, which promotes a service orientation. Customers, because they can specify and control which services they receive and how much of those services, become more satisfied with service delivery. A well-defined Shared Services framework and mindset helps service providers forego corporate safety nets as greater value is placed on risk-taking and entrepreneurism. Staff can be consolidated or reduced without negatively affecting service performance. Work fragmentation is minimized, allowing staff to become specialized and concentrate on value-added services. Departmental silos are eliminated, and support services can take a more business-like approach.

As it matures, the Shared Services organization can be transformed from simply being a low-cost provider to attaining the supplier of choice status.

Shared Services does not exist in a vacuum. It recognizes the priorities and pressures affecting all organizational units and adopts a win-win-win perspective such that the corporation as a whole wins, each business unit and its employees win, and the service providers win. Shared Services girds itself for competition with external service providers and outsourcing firms by managing itself as a profit-oriented business on equal footing with them, working to outdo the competition and secure an internal competitive advantage.

Types of Shared Services and Related Entities

Most Shared Services efforts begin by focusing on volume-based services - transactional, processing and administrative - that are delivered to most employees or to external customers and can be maximized by aligning economies of scale. Typically, success in these areas leads companies to search for other services where similar operational efficiencies and cost reductions can be achieved. The logical choices for this second stage are knowledge-based services - specialized expertise, consultative and integrated solutions - targeted to supervisors, department managers and teams.

So, Shared Services is not a single idea. It is a set of principles for structuring the majority of staff work to be more cost effective, and business and service-like in its approach to delivering results to customers.

To learn more about how we can help you address the challenges of Shared Services, contact us.