Shared services optimisation – the next generation

Shared services began in the early 1990’s when large corporates were seeking a new, more cost-efficient model for running back-office services. Today, the concept is well established with shared services saving organisations millions of pounds. But what’s next? We asked business consulting expert and Interim Manager Allan Robb to look at the options.

1 Core optimisation

Is your shared services centre really running at optimum efficiency? After all, there’s always room for improvement.

The first stage is to benchmark current levels of output / throughput / resource usage. One way to do this is through a combination of detailed activity analysis and a review of the business processes involved.

Secondly, have clear measures been set, collected, reviewed and published? It’s essential to introduce, or review and update existing metrics which the shared services centre captures. Regularly reviewed, key measures will reduce waste and help you drive continuous improvement.

The third area is the wider issue of performance management. Is performance reviewed and rewarded? This leads to consideration of how your shared services centre could be organised better or differently.

The fourth area is risk management and business continuity. As more and more activities and processes are ‘centralised’, the greater the need for robust back-up facilities.

Finally, service levels: are all customers happy? Are their expectations being exceeded? How do you know? Apart from cost saving, this is often the major driver for shared services. So what exists today and how can this be improved? Can additional revenue be leveraged from customers?

2 Growth and leverage

The first opportunity here is growth: could the centre take on more business areas? Most companies start with finance, HR and procurement, but how about marketing, estates, IT and other support functions? Then there’s the opportunity to expand into other divisions and countries.

The second is how to leverage the centre. Starting with the existing functional areas of say, finance, HR and procurement, it may be possible to look at how the centre can add value by becoming a centre of excellence and supporting a business partner model. Additionally, is it possible to look into more customer-facing processes such as customer service and help desks?

One of the key insights into shared service optimisation is how to look at the issues holistically. Where are the additional synergies that lead to cost saving, time saving and competitive advantage? Take travel and expenses processing. If you know what you spend with airlines, hotels and train companies, can you leverage this purchasing power to drive down costs?

3 Outsourcing / offshoring

Many companies believe outsourcing or offshoring is the next logical step. And it could be if you believe your organisation has gone as far as it can on its own. Outsourcing can drive down costs and improve service levels even further, plus it can allow you to simply focus on your core business.

They key thing is to ask which services can be outsourced or offshored. All of them? Or only the low added-value, transaction-processing, back-office activities?

There are many challenges in following this route from dealing with unions and handling TUPE issues, to the possibility of negative press.

Now the hard part…

Once you’ve decided which route is for you, how do you do it? Suggestions for next steps include:

• A clear shared services strategy
• An optimisation diagnostic: a pre-built template / tool to review the centre’s efficiency
• Metrics and performance management development – again using a pre-built template / tool
• Customer satisfaction surveys and a review of service level agreements
• A business case development for growth
• Traditional activity analysis, business process review and systems inventory to understand the as-is situation
• An outsourcing / offshoring strategy
• A change management strategy and plan
• An enablers’ review to look at the core elements involved such as people / capability, process and controls, and technology and communications

Three questions for your shared services strategy:

• Is your shared services centre running as efficiently as possible?
• Are there opportunities to expand the centre and create more efficiencies?
• Should you outsource to improve efficiencies even further?