A shared services function is the consolidation of business operations within an organisation. There are 2 main arguments for using a shared service model: the first is reducing resource will reduce cost and the second is standardising everything makes it more efficient. The model helps companies to save money and makes business processes and overall activity more effective – through the consolidation of back-office operations. HR, IT and finance are the main areas that usually make up a shared service model, although many corporate functions can fall under these three headings.
Shared service centres are the central hub of an organisation, typically responsible for handling specific operational and administrative tasks. Businesses decide to use a shared services model so they can utilise their people, as well as the processes and technologies within the business. It is more efficient, and it cuts costs – as you are not paying for multiple managers, systems or buildings. There will be a head of shared services and a director of shared services to take responsibility for the shared service centre.
A large transformation within a business can include a move to shared services, as redundancies are made and there are changes in work practices and processes as part of the move, resulting in a transformation in the organisation.
Shared services and outsourcing are sometimes confused, but they are not the same. Outsourcing is when a third party is paid to look after an area which was previously done in house. Whereas a shared services function is centralising internal functions, which are all kept under the control of the company.
Leadership, planning and technology play a huge part in shared services. If you get them right, you can enjoy success in your shared service function. As with anything, there are obstacles that will challenge you, but if you have done the preparation correctly and have the right people involved, you will be able to overcome them.