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Five Characteristics of the Best Shared Service Centers

They think globally, continually look to expand their remit, and don't underestimate the value of their employees

Shared services offshore outsource offices round the world global locationsHeads of shared service centers are understandably keen to find out what the best shared services teams have in common.

It’s a difficult question to answer because there are hundreds of things that managers can do to improve the three main components of shared services – people, process, and technology – but there are five that, in CEB’s work with the world’s shared services executives, we see most often in the best teams.

  1. Think globally from the start: Most companies begin by using a shared services model in their home country or region. Once they are satisfied with the initial results, they export the concept to other regions of the world. Too often, this leads to each region trying to independently improve productivity and reduce costs.

    The most progressive companies take a global view of shared services from day one and establish policies and organizational structures intended to get the most from a global model. These firms are careful not to get carried away and open too many physical offices, usually opting for a major global center and several minor regional centers. The leader of the shared services organization is responsible for all global operations and is responsible for providing a consistent service to business units in all regions.

  2. Consistently expand the function’s scope and scale: A shared services project usually begins with the consolidation and standardization of high-volume activities such as accounts payable or cash application. Many shared service centers stick with this and then become pigeon-holed as “transaction processing factories.”

    More forward-thinking firms work to expand both the geographic scope and the breadth of their service offering. For these companies, there are no opt-out options for business units. Every country, location, business unit, and employee of the company is served by the shared services organization. Progressive companies will expand the scope to include expert functions and do not limit the criteria for evaluating whether something can be done in a shared service center to whether it will produce the same kind of cost savings as those achieved by taking on high-volume transaction processing.

  3. Use ‘global process owners’ to standardize processes: Companies have the potential to improve cost and productivity within a single process (such as accounts payable) and the potential to improve any of the entire processes handled by the shared services organization.

    Some of the most advanced companies have gone well beyond those limitations and appointed “global process owners” (GPOs) who are given global responsibility for end-to-end processes such as order-to-cash or purchase-to-pay. As well as being asked to standardize all processes they have responsibility for, GPOs are asked to:

    • Measure and improve process quality.

    • Apply best practices

    • Manage external relationships

    • Monitor customer satisfaction

    • Identify technology needs

  4. Move rules-based work to low cost regions: There is no longer a reason to have transactional work performed locally. Today, technology and communications systems enable this work to be performed in almost any part of the world.

    The best firms have thought through their location strategy and know where to send each type of work and whether to retain it in-house or outsource it. Although cost savings are an important factor, they also think through a full range of operational requirements, including what their internal customers want, before making a sourcing decision. For those that choose to outsource, they look at more than paying less for the labor, they also want to understand what kind of technology they will have access to, how easy demand planning will be, and how easy it will be to increase standardization of any processes.

  5. Invest in training and recognize the importance of their employees: Over the past two decades, companies have significantly improved their internal processes by redesigning them and using technology wherever possible. But many of these firms have done relatively little to help shared services staff provide more value to business unit customers.

    The most advanced firms realize that employee training is not a discretionary cost that can be sacrificed during the first round of budget cuts, but an investment that must be spent wisely. CEB research shows that problem solving skills are critical to providing a better service for internal customers – ahead of other competencies such as wanting to seek a resolution to any problem and being a good communicator – and four times more effective than any sort of functional expertise.

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