Shared Service Centres

Shared Service Centres are organisational units in which similar company activities are brought together, or clustered. The Shared Service Centre performs these activities for several business units within the total concern. The goal of this clustering is the achievement of substantial cost reduction by means of economies of scale, while the service level to the customer is maintained or even improved.

In implementing shared services, companies should focus on both process and technology. Companies reporting the highest return on investment are those that placed the greatest initial emphasis on redesigning their processes, while reshaping their organisation and technology to support this process redesign. Instead of installing a whole new technology, most of these companies simply standardised by moving from a dozen or more systems to just two or three. They also emphasised such enabling technologies as workflow management and interactive voice response.

Companies reporting the worst results are those that saw technology as their saviour and installed new systems without first solving the problem of how well these systems would enable the redesign of the processes. Similarly, companies that focused only on consolidating on the organisational level, without re-engineering their processes and technology, also reported disappointing results.

While some critics argue that shared service centres are just a new way to describe the centralized organisation, many analysts disagree. The difference is that while the central organisation answers to corporate dictates, the shared services organisation is answerable to the internal business units which may have the corporate blessing to shop elsewhere if the shared services can not deliver the goods better or cheaper than an external provider.

The first area to be moved to a shared service centre is often the financial function. Yet they are increasingly expanding into environmental compliance, routine legal work including claims processing, estate and property management, risk assessment and insurance, HR systems, shareholder relationship management and some back office operations.

It is becoming increasingly illogical to maintain a duplicate infrastructure within each country of operation and the improvements in the functionality of IT software make geographic location irrelevant.

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