Benefits of Shared Services Models

From enhancing the customer experience to driving innovation and financial  efficiencies, the benefits of a shared service model are too far-reaching to discount. It is no wonder that the global market for Shared Service Centers (SSCs) is expected to grow at a CAGR of over 20% between now and 2030. 

By streamlining and unifying multiple business functions, these dedicated units help standardize service delivery and reduce redundancies. Shared Service Centers  also drive operational excellence through the incorporation of high standards of governance and the use of cutting-edge technologies and tools.

For instance, an SSC equipped with advanced automation tools can optimize routine tasks, such as payroll processing and invoice management, freeing up in-house teams to focus on strategic initiatives like growth and innovation. Not just that, by storing all operational data within a centralized SSC, enterprises can leverage real-time insights to make faster, data-driven decisions, resulting in improved response times, increased customer satisfaction, and reduced operational costs.

Overview of the Shared Services Model

Typically adopted by mid-sized to large organizations, SSCs centralize finance and accounting, human resource management, customer service and support, supply chain management, procurement,, IT and other functions to leverage economies of scale. However, the multiple benefits of a shared services model are now extending far beyond just support services, and gradually to powering business-critical functionalities.  No longer restricted to back-office processes, these centres are contributing to increase overall enterprise productivity and driving innovation. 

Key Benefits of Shared Service Centers

There are multiple benefits to leveraging the Shared Services model, majorly ~

Cost Efficiency: Globally distributed organizations often feature staff fulfilling the same roles in different divisions. SSCs help streamline these functions by centralizing them, eliminating duplication of effort, while boosting both productivity and efficiency. by leveraging economies of scale. This consolidation allows businesses to optimize resource allocation, lower overhead costs, and invest in automation for further operational savings.

For example, instead of having separate HR teams in each division handling payroll, benefits, and recruitment, an SSC consolidates these responsibilities into a single team at a single location.

Enhanced Quality and Consistency: One of the benefits of a shared services model is that it helps standardize processes by leveraging highly skilled talent and various productivity tools.  This enables organizations to receive superior quality service across its various departments, simultaneously reducing human errors and variability. Best practices like centralized training and performance monitoring further ensure that all service delivery meets established standards. 

Scalability and Flexibility: Shared service centers enable organizational scalability by providing a flexible, centralized platform that can easily expand or contract based on business needs, without disrupting core operations. This streamlined approach allows the organization to handle increased workloads more effectively and support business growth. 

By implementing uniform practices and policies across all departments, SSCs create a consistent operational framework. This uniformity facilitates smoother company-wide reorganizations and integrations.

Improved Focus on Core Activities: SSCs help organizations enhance competitiveness and prioritize on strategic business objectives by freeing up valuable resources and talent from being consumed by operational tasks. This enables the core teams to focus on innovation, customer service, and growth opportunities, as SSCs handle the non-core support functions. 

Innovation and Continuous Improvement: Driving innovation by fostering an environment of continuous improvement and optimization is another benefit of a shared services model. Centralization of service functions allows for the systematic collection and analysis of data, leading to insights that spur breakthroughs in product innovation and service delivery More importantly, SCCs create clear accountability with centralized control through standardized service-level agreements (SLAs). 

Strategic Advantages

Centralized Expertise: Unified functions within SSCs lead to the pooling of specialized skills and subject-matter expertise in a single location. 

This facilitates the development of in-depth subject matter expertise, promotes cross-functional collaboration amongst members supporting different business functions, and promotes knowledge sharing across business units. Such models create a collaborative environment where experiences and insights can be easily exchanged, which helps build organizational knowledge.

Enhanced Data and Reporting: By consolidating data from various departments into a unified system, SSCs streamline the reporting process, resulting into  comprehensive and accurate data analysis. As a result, organizations gain better visibility into operations, which, in turn, results in informed decision-making. With access to real-time data and consistent reporting formats, leaders can make strategic, data-driven decisions that align with organizational goals. 

Challenges and Considerations

While the benefits of a shared services model are inarguable, it is also important to prepare for certain challenges in its adoption. Implementing a comprehensive change management strategy and facilitating regular communication among all stakeholders can minimize resistance to change and encourage adoption.

1. Clear governance structures that define roles, responsibilities, and service level agreements can further help manage expectations and ensure accountability. 
2. The transition period can also be disruptive, and implementing this model in phases can allow time for teams to adjust better. 
3. The right training and upskilling can also ease apprehensions and get the workforce ready. Such consistent, centralized training programs also create opportunities for employees to develop expertise in specialized areas.

Digital transformation of legacy systems is another challenge that requires operations and IT teams to come together to decide how SSCs can deliver new services more efficiently.    

 To mitigate this challenge, companies should foster closer collaboration between operations and IT teams by aligning their goals and establishing clear communication channels. Companies should also invest in upskilling both teams on emerging technologies like automation, AI, ML, blockchain, and IoT, and implement agile methodologies to ensure faster, more flexible integration of new services.  Lastly, esting out new systems should be a part of the effort to proactively match the company’s short- and long-term goals. 

Last Word

Today, more than 80% of Fortune 500 companies have implemented some form of shared services in their globaloperations to capitalize on its multiple benefits, ranging from streamlined operations and improved financial efficiency, to achieving seamless alignment between their long-term and short-term business goals.  

 Wondering if the shared services model is well suited to your enterprise? Designing and implementing a comprehensive setup and management strategy for establishing and running an SSC is complex. That’s where ANSR’s team of experts come in. By collaborating with your internal teams, we integrate our offerings with your strategic objectives. Contact us to continue the conversation.