Six Things to Know about Shared Services

1. Convergence 

Shared Services is the convergence of a company’s essential business functions to an internal service provider as opposed to outsourcing it. Shared Services Organizations (SSO) or Shared Service Centers (SSC), as they are often called, ensure the delivery of required services to the business as effectively and efficiently as possible. The most common business support functions integrated to Shared Services are Human Resources, IT, Finance, Procurement, Office Services and Legal.     

2. Cost and Quality 

Shared Service is more than just centralization and is different from outsourcing (or the use of an external third party).  Some successful Shared Services Organizations are managed as a business — providing efficient and effective services at a cost and quality better than other alternatives.     

3. Business Value Creation 

Traditionally, the development of a Shared Services group within an organization was a result of the need for cost reduction through economies of scale, centralization and standardization of processes. Businesses nowadays drive even more value creation from its Shared Services out of other functions like process management, knowledge management, product and service innovation, customer solutions, project and portfolio management, and business performance solutions among others. This allows the business to focus on its core activities.     

4. Integrated Business Systems 

Most Shared Services Organizations rely on an integrated set of electronic business processes, technology and IT applications —  usually anchored in a major piece of enterprise resource planning software. This integrated business system standardize and automate Shared Services processes, thereby increasing reliability, decreasing operational cost, and ensuring quality.     

5. Organizational Transformation 

Shared Services implementation entails significant executive management sponsorship to carry out needed process and organizational transformation as its implementation may require changes in processes, roles and work practices.     

6. Service Level and Performance 

Shared Services make use of Service Level Agreements (SLA) to establish an accord with internal customers. SLA quantifies the target quantity, quality, and cost of services in a period of time. Shared Services make use of benchmarking and measurement of strategic, tactical and operative key performance indicators to drive performance improvement.     

If you are looking for a book about Shared Services, I would recommmend Shared Services: A Manager’s Journey By Daniel C. Melchior. This book is a fantastic and a very enjoyable read with its unique story-like style. The dialogue between the characters explains many concepts and allows readers to understand why take certain decisions. It presents the realities of living the journey of implementing a shared services  organization. It provides excellent insights into the methodology behind managing day-to-day Shared Services operations.