Assessments can help shared services add more value. Here’s how.

by Bob Cecil

If you’re like more than 80 percent of large North American corporations, you’ve adopted some form of shared services. And in F&A, you’re probably seeing annual savings of 12 to 25 percent on such core processes as accounts payable, accounts receivable, and general accounting.

But you might get an additional 25 percent improvement if, for example, you adopted more self-service-enabling technology and a true global hub-and-spoke model. And, if you focused less on transactional costs and more on end-to-end process and business outcomes, you’re talking another five times the benefit of pure transactional cost savings.

Unfortunately, many shared services centers (SSCs) lose momentum after startup, getting stuck in the Stage 1 cocoon of executive sponsorship and the corporate mandate (see figure below). Over time, many SSCs become little more than centralized corporate staff groups. The organizations that add greater value approach shared services like a business, comparing their performance against market trends every two years and acting on those assessments.

Effective Assessment
Well-constructed assessments must go beyond traditional benchmarking. SSCs need comprehensive, multi-dimensional assessments, followed by a roadmap for implementation grounded in a solid business case. The assessment should review all operations, whether performed in-house or by an external party. The assessment also should address your comparative performance on factors ranging from the foundational elements of Stage 1 to the differentiating factors of Stages 2 and 3. The foundational elements include:

• Standardization
• Joint governance
• Cost and service orientation
• Service levels and measurement
• Best practices
• Organizational excellence
• Commercial orientation (running the SSC like a business).

The differentiators help SSCs break out of Stage I and realize the higher value of Stages II and III. Your assessment will show how well you are positioned for long-term success based on the SSC’s comparative performance on these factors:

• Global, multifunctional scope. Is the SSC responsible for global processing within multiple functions (finance, HR, and IT)?
• Services focused on business outcomes. Are you focused just on transactional cost savings, or are you leveraging shared services to influence business outcomes?
• Aggressive use of blended delivery models. Does the organization have an optimal mix of outsourcing and internal captive locations?
• Process ownership with end-to-end perspective. Is the SSC responsible and accountable for entire processes and their outputs?
• Aggressive use of self-service automation and other technologies. Do you adopt cost-effective technologies that drive efficiency?
• Improvements beyond the “four walls” of the company. Does the SSC drive process improvements, not just internally but also encompassing the related process elements of customers, suppliers, and partners?

Once you’ve compared your shared services organization on these factors, close out your review with a solid business case for improvements and a roadmap for making them happen.

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