"Think long, dream big, act decisively. This is a way to deal with business cycles." Neil Shen
The Shared Services sector is currently experiencing a dynamic peak of transformation. The traditional model of cost-efficient operations, which began in the early 2000s, has undergone significant evolution due to globalization, technological revolutions, and geopolitical environments and events.
The economic downturn from 2007 to 2009 led to global financial turmoil, pushing many companies to reconsider their operational strategies. This led to a considerable evolution in the shared services industry, primarily driven by labor arbitrage.
While many leaders have benefited from this model, we are now encountering a new wave of demand spurred by the post-pandemic reality, rising inflation, and a surge in technology.
Labor arbitrage is not enough
While many companies still need to adopt cost-effective models influenced by location mix, market research indicates that in the coming years, standard cost-driven Shared Services will transition to value-based outcomes and end-to-end operational domains.
Automation and digital tools have revolutionized traditional cost-efficiency models, leading organizations to pursue efficiency gains through technology in addition to standard labor cost reductions.
Shared Services as an enabler for value creation
Shared services are transitioning from focusing solely on cost savings to fostering value creation. Their goal is to achieve superior business outcomes, elevate customer experiences, and boost overall performance. This shift is evident in the industry as companies strive to catch up with standard cost savings, if they are behind, while also gearing up for transformative changes that empower their Shared Services to surpass the conventional model.
Process Design as a foundation
The transformation of Shared Services is closely linked with process excellence and standardization. Within a centralized operational model, Global Process Owners have a stronger mandate to standardise processes and operations through technology and centralized management.
Global Process Owners are crucial to the transformation of Shared Services, yet they often find themselves isolated. Success for Global Process Owners, beyond their mandate, hinges on the backing of a supportive organization. With IT being a catalyst for process transformation, seamless collaboration and proper setup are essential for factor for a success.
Moreover, transforming processes entails a significant shift in the organization's mindset and requires sponsorship.
Many companies aspire to this change but frequently underestimate factors such as the governance model, procedures, costs, and the timing of the change.
Is Gen AI a future silver bullet for transformation?
Generative AI is garnering increasing interest in the Shared Services industry and holds significant potential for the future.
Various studies have indicated that approximately 50% of Shared Services organizations are exploring Generative AI capabilities while simultaneously seeking to enhance their internal competencies in this area. This technology has substantial promise in Customer Service through chatbots, in Finance & Accounting for tasks such as account reconciliation, data entry, and invoice processing, as well as in Sales and Marketing where Generative AI can personalize content for customers, offer customized product recommendations, and craft tailored marketing messages.
Thus, Generative AI brings a transformative wave to the industry, with the potential to revolutionize Shared Services by boosting efficiency, automating processes, and enhancing customer experiences.