The Shared Services Battle: Surviving or Competing?

State of Shared Services

First, let's sum up what is typically meant when speaking of Shared Services. Shared Service Organizations (SSO) are typically centralized business units that provide a range of services to various departments or divisions within a company. Global Business Services (GBS) is considered a mature form of SSOs, it typically encompasses an even wider range of services and activities than traditional SSOs, including secondary activities in a value chain like accounting, human resources, IT and procurement, but also primary activities like marketing, sales or logistics. The goal of a SSO is to improve the efficiency and effectiveness of these services by centralizing and standardizing processes.

The maturity of SSO entities varies between different businesses. There are great success stories for significant cost savings and improvements in service quality, while others struggle to realize clear benefits. The challenges often arise due to resistance of people, heterogeneous demands and a lack of effective communication between SSOs and customers’ departments. What is often underprioritized is that the overall challenge is about how these organizations can serve the customers best on the ongoing journey, that requires continuous efforts to improve efficiency, effectiveness and customer perception.

With the technological revolution(s) and therefore already existing waves of automation the role of shared services is questioned once again. Is it becoming redundant or relevant more than before? I believe, SSOs in general need to adapt to new ways of working and leverage technology to stay relevant to provide enhanced value to customers.

Evolution of SSOs and its future role

Let’s briefly recap the evolution of shared services by learning from leading SSOs. The journey typically starts with bundling transactional, repetitive and process-based activities within functional or multi-functional center set-up with the focus on leveraging near- and offshore labor arbitrage. As the organization matures, the focus shifts to streamlining processes, which in turn enables intelligent digitalization and automation. The resulting digital-enabled optimization can improve the efficiency and effectiveness of business processes and potentially enable cross-functional end-to-end delivery. Today, well-functioning shared service organizations are for many businesses the backbone of efficiencies. To round up the ‘evolution of buzzwords’ … sorry … I mean the conversation about next-level of shared services, I prefer to speak about digital-enabled global business services that are the engine of business transformation.

The next level of shared services is not just about the implementation of technology, but also about leveraging data, analytics, and digital platforms to drive business insights. Thus, putting more weight on new business models with high-end customer experience, and enable new ways of working across the enterprise. With this, shared service organizations can better align their services with the overall objectives of their customers and provide a more holistic and integrated approach to service delivery.

Be a partner of choice

Major challenges for SSOs are not only related to external factors such as digitalization, global value chains, or market developments. But rather with their self-perception and rationale for existence. It is important for SSOs to understand why they exist and how they see themselves to enable their customers to see them similarly, as value creators. This requires a SSO to focus on how it provides services to be a partner of choice and establish clear criteria on what to do and what not to do. It is also important to note that to be a partner of choice, SSOs need to understand their customers' business and industry to provide services that align with their customers' objectives and to achieve better results.

Wait, partner of choice? You are a mandated service provider and think this article is irrelevant for you? Then ask yourself how long you think this luxury of being a monopoly remains. If you aren’t a mandated provider, I feel your struggles. Large businesses recognized the power of free competition in terms of cost and quality, but more-so in terms of mindset of their people. Technically speaking it leads to the question: Are you a cost center or a profit center? Sounds simple? Well, it isn’t. And no, it is not just about customizing the ERP system. This is about changing the mindset of the people from being a reactive internal service provider towards becoming a proactive business partner.

To sum it up, even if your SSO organization is captive, you should not forget that your (internal) customers compare it with BPO providers of the market. Therefore, SSOs need to come up with a unique selling proposition and a customer-oriented product & service portfolio to be able to compete instead of continuously try to survive.