To help you identify what stage of your shared services journey you are in and what you should be planning for next, we have put together a maturity roadmap with suggested thinking points for each stage.
Posted by Barbara Hodge on 20th Mar, 2016
This post originally appeared on the Shared Services & Outsourcing Network (SSON).
Shared services first evolved about three decades ago, although the idea of centralising processes, some would say, is as old as the hills. Nevertheless, the discipline and structure of the Shared Services model has set this strategy apart as a cost- and resource-effective solution.
Today's models vary from local, to regional to global; from in-sourced to hybrid to outsourced. There is not one template, as design and implementation vary according to the organisation. What is certain, however, is that the model makes sense. Whether you are at the pre-Shared Services stage, or a mature practitioner, your strategy will be continuously evolving, driven by internal maturity and readiness and well as external market forces around new technology solutions or BPO offerings.
To help you identify where you are and what you should be planning for next, we have put together a maturity roadmap with suggested thinking points for each stage.
Stage: Is Shared Services an option?
You are at the very early stages of thinking about a service delivery model to optimise your non-core business processes, like finance and accounting, or human resources. You probably have recognised that fragmented processes are holding you back and are costly, as well as unreliable for the purposes of comparing results. You’re also frustrated by the fact that different business units are performing the same service in different ways. The lack of standardisation means you can't easily access the kind of data you need to make improvements to the process.
You’ve read about Shared Services or someone has mentioned it to you. Could this be a solution?
Tip: Do your research online. There's plenty of material and most of it is free. Use your LinkedIn connections to find out who has experience with Shared Services and speak with them. Don't be afraid to look at different industries. What's important is to find a functional peer.
Stage: Evaluating the business case
You have had a few conversations with practitioners around Shared Services, maybe taken part in a webinar or attended a conference, and like what you hear. So now you need to figure out: will this work for us? Here's where you need to roll up your sleeves and gather a clever team around you. You need to be able to define the “as is” environment and the future “to be”. If neither you nor your team has had previous Shared Services experience this might be the time to hire in some relevant skills to bridge that knowledge gap (or bring in a consultant). This stage could take a few months, but at the end of it you'll be able to pitch the benefits to the business compared to the upsets of change management and investment required.
Tip: Leverage experienced resources to get there quicker, and take into account the added value derived from improved transparency and access to data analytics that Shared Services provide as a benefit to the business. Consider also improved quality and shorter processing time.
Stage: Designing your Shared Services model
You will generally only have one chance to get this right so it's important that you put your best team on it. This is not a side project – it deserves a team’s full attention and effort. Your dream team will consist of functional experts who understand the process inside out; technology folks who you need to get on board for integration purposes; and business representatives, who are your customers.
While it's great to be customer focused, remember that the purpose of Shared Services is to standardise for efficiency, which means doing away with a lot of the tailored services your customers would like. Help them understand the difference between what they need and what they want. Develop robust service-level agreements that you can refer to when needed (you will need them). Try to keep these short and succinct. Remember that Shared Services is based on people, process, and technology, and success generally follows that order. Bear in mind you may need to scale in future so plan accordingly. Many organisations start with an in country model as there are fewer stakeholders to win over, and then shift into regional.
Tip: Look for templates from across your network but adapt these to the specifics of your organisation. Be realistic about the appetite your organisation has for change and/or risk. Change is painful so try to minimise this in the early stages where possible.
Stage: Launching Shared Services
After many months of work your “go live” will be a litmus test of sorts. Many customers or business units will want you to fail. Be prepared to reiterate why Shared Services will benefit them. Make time to visit unhappy customers face-to-face to build relationships for the future. Provide a lot of support as you work out the hitches that are part of any launch. Think about how your Shared Services team is perceived. Many organisations have successfully branded their group as a standalone service, complete with their own logo. [Editor’s note: Titles are trending towards “business services” these days]. This fosters a team spirit for the SSO, and also presents a strong entity front to the customer. Establish a culture that you want to be known by and recruit for this culture. Whatever model you launch with, keep an eye on the horizon and work towards your next stage by developing partnerships that will be useful, or establishing influential relationships.
Tip: Expect setbacks and don't be disappointed. Make sure you have an influential executive sponsor, and that that sponsor’s support is constant. Consider running small pilots with a specific business to win them over, and take that business customer on a roadshow with you. Recommendations mean more than the business case.
Stage: 1 to 3 years
Your Shared Services is brand-new and not yet well established. Guard against unnecessary risk-taking that might distract from the good you are doing. Focus on achieving low hanging fruit and make sure you are visibly and audibly communicating these achievements not just across your stakeholders, but also to the senior board. Let your customers take part in the successes – you will need their support going forward. Build a culture of partnership, the catchphrase of modern-day Shared Services. While your early focus is primarily on reducing costs, you will be working towards future opportunities to deliver value beyond cost. But that's not necessarily for now.
Tip: Focus on building up a strong and knowledgeable team. Encourage your team to develop relationships with the customer so that it's not a "them and us" culture. Empower your team to make decisions to avoid bottlenecks and unhappy customers, if these are the kind to complain loudly across the enterprise.
Stage: 3 to 5 years
You are now officially established and the “new way” of delivering services to your business unit customers has probably settled in. This is often the stage at which Shared Services start looking at what to do next. Chances are you have dealt with the low hanging fruit and your customers are beginning to trust you as a service provider and possibly even a partner.
Here's where you should be sitting down with your customers to plan for the next five years. Listen to what their objectives and targets are. See yourself as their partner and figure out how you can support them better. Given today's capabilities this will probably mean that you'll be leveraging data analytics to gain a better understanding over your customer’s business. It may also be now that you realise that you don't have the skills nor the technology to vault yourself up the value curve, so you may need to highlight how much you have saved the business and create a new business case for additional investment.
Highlight what else you can do. Invite mature SSO leaders from outside your organisation in, to present their case studies. This may also be the time to bring in outsource providers and leverage their state-of-the-art technology and expertise. If you do, make sure you talk to their customers first, to get a better idea of how these partnerships work. Don't be swayed by the flashiest and cheapest bid [you get what you pay for applies] but do pay attention to who seems to understand your business best and who shows the most interest in learning about it. Extracting yourself from outsourcing arrangements is difficult so be aware of what you're giving out and what you're gaining in return before you sign the papers.
Tip: There are so many opportunities in these early years that it’s easy to get distracted. Remember to stay focused on the original business case. Recruit a good and strong team around you that will drive performance and deliver innovative ideas.
Stage: 5 to 10 years
You're now probably speaking at conferences and see yourself as somewhat of an "expert". And so you should. If a Shared Services hits this stage of maturity, its value is generally recognised. What's certain is that you've achieved the cost benefits of the original business plan and have committed to a certain percentage of year-on-year additional cost reductions. Your clients are probably still not always happy but at least they will have stopped talking about how good it used to be in the “old days”!
Depending on which model you launched with, the business will have sat up and taken notice of what you've achieved. You may be asked to take on additional functions and officially transition to a multifunctional Shared Services operation. You may broaden your footprint across the region, or management may feel the time is right to roll out a global business services strategy. This is another moment to consider hiring in experienced resources. Any move towards global has significant implications: more stakeholders, global process owners, higher expectations, more complexity. You'll want to evaluate an optimal global footprint, and whether it makes sense to set up your own captive centres offshore or whether it is easier to tap into an existing BPO centre.
Your services are becoming more sophisticated and your clients are increasingly recognising you as a valuable resource. They will be bringing you problems which they need you to solve. Welcome these opportunities.
Tip: This phase is defined by broadening the scope. This doesn't just mean more countries or more functional service lines, but also by developing the depth of service you provide. You may have outgrown your existing technology and are ready to evaluate new solution providers. The market is constantly reinventing itself and you will find that innovations in cloud-based services, process automation, data analytics, and mobile enabled solutions are constantly redefining what's possible. Set your sights on a certain strategy and stick to it.
Stage: 10+ years
You've officially arrived. Your Shared Services is often visited by other companies wanting to start up, and you are being held up as something of a poster child. If you have successfully built relationships with your stakeholders across the enterprise you are in a fortunate position.
The business units will be coming to you at the early stages of new development in order to benefit from your business intelligence and prescriptive insights. No one knows the business as you do: processes are flowing through your teams and you have successfully pushed for end-to-end process integration to further optimise the services you support. You will be incorporating your suppliers into digital portals that improve transparency and offer real-time access to important information. You will be leveraging the digital opportunities presented by the market, and working off a common collaboration platform that supports better business process management and issue resolution.
As the old guard leaves or retires, you'll be replacing them with Millennials for whom the digital world and real-time decision-making is natural. There is a lot to learn from this segment of your team so offer opportunities for project integration irrespective of career maturity.
Tip: While talent management has always been important you'll want to prioritise leadership development as so much of the value add you offer now comes from team-based, collaborative innovation. You will have built up experienced team members across the globe and need to establish strong career paths to retain them. With so much of the transactional elements now automated and manual touch points cut out of the process, what remains is a more customer-oriented, knowledge driven service. Shared Services has moved out of the back office and is now officially offering strategic input to enterprise leaders as they navigate competitive markets. Stay plugged into industry forums to make sure you are at the forefront of the next wave as it hits. And don’t ever consider your work “done”.