Next Generation Shared Services: Win-win Proposition

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In the past, the business case proposition for changing the operating model to a shared service, has been largely based on cost reduction and the centralisation of common business administration process.

Now, Clients, their customers and employees are seeing the wider benefits of transforming the operating model: significantly better service, improved performance and higher levels of employee engagement and satisfaction. The premise being, if you want a colleague to do a good job, then (by design) give them a better job to do.

The realisable benefits which smart organisations are now achieving, through a more informed transformation of their Operating Model include:

  • Reputational improvements around the brand perception
  • ‘Best in class’ Employee engagement scores (70% +)
  • Shared services extended to other functions e.g. Legal, in addition to Finance, HR, Procurement and IT

For the well-planned, competently executed and professionally managed transition to Shared Services, the financial case is compelling: 25% to 40% savings. The positive impact on culture, improved collaboration, leveraging shared knowledge, avoiding waste, are legitimate expectations for those with the appropriate vision, ambition and expertise to complete the transformation.

What differentiates those who claim to have implemented a shared service and those who have taken shared services to the next level? Probably all of the above. The success stories in this space are far fewer than you may think. Common issues include:

Far from being a business enabler, the selected ERP or IT solution becomes a ‘problem’; expensive, time and resource hungry, extravagant customisation, over promising and under delivering.
Capability lags behind the new Shared Service operating model. Employees and stakeholders feel ‘done to’ not ‘part of’ the new way of doing things.
Complexity…we all know ‘it kills’ initiative, motivation, and the ‘best laid plans’.

The next generation or iteration of Shared Service is more informed in its design as well as execution. Insights from a master of design …who literally changed the world:

“Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains. It’s really hard to design…by focus groups. A lot of times, people don’t know what they want until you show it to them. Design is not just what it looks like and how it feels. Design is how it works. You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new. The broader one’s understanding of the human experience, the better design we will have. Ultimately, it comes down to trying to expose yourself to the best things that humans have done and then try to bring those things in to what you’re doing. Picasso had a saying: good artists copy, great artists steal. And we have always been shameless about stealing great ideas.”
Steve Jobs, CEO of Apple Inc

Simply Lifting and Shifting the ‘work’, as many shared services have tried to do, simply does not deliver optimal value. Others have done the heavy lifting…clients can learn from their gains, and arguably learn even more from their ‘pains’. ‘Smart’ is knowing where to find the operating model examples that apply to your business, adapting and implementing.

This does not mean that timescales need to extend to incorporate a major transformation programme. It does mean that the portfolio of projects need to fundamentally understand and have transparency over the following key areas:-

  • Scope of the Processes being transitioned to the Shared Service
  • The Start of each process and the End of each process
  • All of the players involved in the process – both internal and external to the business
  • How work is handed off between each player in the process
  • Will the implementation of IT automate activities within the process (i.e. remove the need to move it to the shared service)

Bringing together all the players in the current ‘end to end’ process is key, they will quickly tell you where duplication happens, where activities can be stopped or made more efficient and they will simplify the process for you, facilitating buy-in and ownership to the new ways of working.

Frequently, changes to the operating model focus on the ‘mechanics’ of creating a shared service. However, this does not cover the element which can most effect the successful adoption of the new ways of working, defined by moving to the shared service – namely, the People and capability in a business.

Ensuring that all the participants in the process are clear, aligned, confident and feel capable of operating within the transformed process, is critical. In future articles, we will focus on the Change Management element, how others have realised the benefit from changing their way of working.

If you would like to see for yourself how others have approached this opportunity, to learn from their ideas and experience, and adapt and fast track success for your business, then contact Gerry Baxter or Caroline Brown for an exploratory conversation.