Optimization and professionalization of administrative functions in the finance sector as well as in IT or HR have been the focus of many management teams for years.
Since the 1990s, outsourcing and shared services organizations in particular have been regarded as best practices and state-of-the-art.
Which promises should shared services and outsourcing fulfill? What is the difference between the two alternatives? What are the success factors? And finally the question of which processes and services are suitable for shared services?
High expectations
The core idea of Shared Services is the centralization of services to achieve economies of scale and learning curve effects and to bundle distributed know-how. In most cases, the expectation is that tasks could be performed faster and more efficiently by centralizing tasks in one location. If this location also moves eastwards, then one can also benefit from wage cost arbitrage. The quality effects from the bundling of know-how are readily accepted - but are usually not decisive in the considerations as long as succession issues do not become virulent for know-how carriers. Unfortunately, these effects are not - as Management-Talk likes to put it - low-hanging fruits, but hard work.
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Success factors
Putting people who have done their work scattered around the globe in one place and letting them continue to work does not have the desired effect. To let other, cheaper people do the same work in this one place, not even!
Processes must be standardized! Services must be standardized and described! Content structures, such as account structures and article structures, must be standardized. Work organizations must be fundamentally changed! And finally, it is very helpful to harmonize the basic systems.
Shared services - the in-house version of outsourcing
So what does shared services have to do with outsourcing? A lot! If you don't operate shared services with the same professionalism as outsourcing, it will fail! If you don't want to completely deliver the commercial effects of outsourcing to the external provider, then you should do your homework and realize the internally possible effects from the shared service organization.
The litmus test for the suitability of services and processes
When Shared Services - what to start with, where to stop?
Processes with standardized services and the same competence profiles are ideal! The more individual the service for the internal customer, the lower the effects of centralization! Accounting, payroll accounting, reporting factory, purchasing and personnel administration are therefore much more suitable than all business partner functions for shared services.
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