Download Shared Services - Robert Frances Group

December 6, 2011
Experture
/RFG
Executive Technology Services
ETS 11-12-03
Shared Services
…experts on demand
Our client has been directed to take a disparate organization and
implement Shared Services.
The Shared-Services Model
Executives should consider adopting a shared-services model, especially if many
potential commoditized services are too decentralized. By centralizing and standardizing
these functions, reassigning headcount, reducing the number of vendors and associated
contracts; negotiating with vendors for bulk discounts, significant savings can be
realized.
Methodology and Project Plan
A successful move to a Shared Service Center model requires a carefully planned and
managed transition. The basic methodology is to perform a gap analysis whereby
potential shared services are identified and then a migration plan for each of these
services is developed and carefully executed.
One note before continuing - shared services does not necessarily mean to totally
centralize each service. In many cases, global organizations have special regional/cultural
considerations that need to be taken into account.
Step One - Identify Potential Shared Services
Shared service candidates have a few characteristics in common:

Commoditized Services – these are service/activities are commonly performed to
support basic business/administrative services.
Examples are:
 Purchasing/Vendor Management – typical cost savings result from volume
purchase agreements and centralized vendor negotiation;
 Human Resources – savings result from reduced headcount as well as enhancing
enforcement of enterprise-wide policies, procedures and processes;
 Finance/Accounting – savings result from reduced headcount as well as
enhancing enforcement of enterprise-wide policies, procedures and processes.
Specific areas within finance include accounts payable, accounts receivable
and/or payroll;
 Information Technology – reduced headcount, enhanced service delivery,
enhanced business support;
 Printing/Postal – reduced headcount, enhanced service delivery and reduced
hardware maintenance costs;
Copyright © 2004-2011 Experture and Robert Frances Group, all rights reserved
649 Fairfield Beach Road, Fairfield, CT. 06824; (203) 5574 0856;
http://www.experture.com/; Contact: [email protected]
December 6, 2011

Executive Technology Services
ETS 11-12-03
Specialized Skills and Resource Services – these are specialized services that are
used throughout the enterprise sporadically, but when they are needed the skills and
experience are critical and time-dependent. Typically referred to Centers of
Excellence (CoE) or Competency/Capability Centers.
Examples are:
 Business Analytics – this includes advanced statistical analysis and
financial/business modeling;
 Communications – this includes external as well as internal marketing;
 Process Reengineering – administrative and business process improvement scope.
Includes metrics and measures;
 Project Management Office – typical cost savings result from reduced project
implementation timeframes, enforced governance and accountability, efficient use
of resources;
 Risk and Compliance - reduced headcount, enhanced governance procedures,
enhanced service delivery. Note that global organizations may need to have
regional legal teams to monitor local/regional laws and regulations;
Note, that when an activity requires specific knowledge of a vertical business activity,
then it is NOT a candidate for shared services.
Step Two – Assess Potential Savings/Enhancements
After the list of shared service candidates have been picked, each one should be evaluated
from a business perspective. In other words, what shared services would produce the
greatest value. Value is determined using the following criteria:

Accountability – is the change of command more clearly established? Does everyone
in the enterprise know what shared services are available and who to go to when they
need support?
Measurement – survey to make sure that the information is communicated accurately.

Agility/Flexibility – can the business be more proactive? Can the business respond
more quickly to changes in the business environment?
Measurement – time to deploy; time to respond;

Communication – does the pooled resources and centralized service enhance
communication and/or eliminate communication break
Measurement – survey to make sure that the information is communicated in a timely
fashion.

Cost Savings – how much money would be saved by pooling resources and
capabilities?
Measurement – salary/benefits; headcount;

Enhanced Service Delivery – how would product/service quality improve?
Copyright © 2004-2011 Experture and Robert Frances Group, all rights reserved
649 Fairfield Beach Road, Fairfield, CT. 06824; (203) 5574 0856;
http://www.experture.com/; Contact: [email protected]
December 6, 2011
Executive Technology Services
ETS 11-12-03
Measurement - reduction in defects; reduction in delivery/response time;

Improved Capabilities – does the availability of new internal resources/capabilities
open up new opportunities for business growth and/or expansion?
Measurement – survey business units to see what impact shared services has had on
their capabilities;

Manageability – is the support service easier to manage?
Measurement – shared service employee satisfaction; reduction in management team
without negative impact on quality and/or service delivery;

Risk/Regulatory – does the shared service reduce risk due to standardization,
centralized management, etc.?
Measurement – perform periodic risk audits – measuring compliance with
regulatory/legislative rulings as well as business risk (sanctions/litigation/impaired
professional reputation);

Stability – does the service consistency and enhanced availability eliminate
variations due to resource/capability limitations?
Measurement – measure consistent performance, using many of the measures
identified above, but from a holistic view;
Step Three – Pick One Shared Service and Conduct Trial
After determining which shared service will have the best return, perform some
preliminary tasks to reduce risk and reduce transition effort:




Standardize Existing Processes – at a high-level, change processes scattered
throughout the enterprise so that they more closely match the projected enterprisewide process;
Review Personnel Resources – determine who will be moved to the shared service
and who will have to be retrained or released;
Pick New Location(s) – it is unlikely that any one existing location will be sufficient
to support a shared service. Existing locations will have to be reviewed for expansion
and appropriateness to support a shared service model;
Review Equipment/Systems – existing equipment and/or systems will have to be
inventoried and reviewed to determine what is to be used in the new shared service
model;
Using information from the preliminary tasks, build a shared service pilot plan.
Depending on the scope and geographic distribution of the shared service candidate, a
pilot might consist of either an enterprise-level, regional-level or partial implementation.
The new/enhanced shared service location should be outfitted with whatever is needed to
conduct the pilot and then a parallel service should be run for two-weeks to a month. The
length of time is dependent on business/demand cycles.
Copyright © 2004-2011 Experture and Robert Frances Group, all rights reserved
649 Fairfield Beach Road, Fairfield, CT. 06824; (203) 5574 0856;
http://www.experture.com/; Contact: [email protected]
December 6, 2011
Executive Technology Services
ETS 11-12-03
Step Four – Evaluate and Continue
After completion of the pilot, an evaluation of the transition should be performed. This
information is to be used to enhance the completion of the transition of this particular
shared service as well as the other targeted shared services.
After changes to the transition process are put into effect, the remainder of the
decentralized service components should be transitioned into the shared service.
Note, that the realization of savings/benefits will take at least three months before results
will be measureable. Depending on the enterprise’s timeframe, additional pilots can be
started with the other shared service candidates.
The Bottom Line – the difficulty in implementation of shared services lies at the
beginning of the selection process. On element that needs to be considered is the
chance of success. There are many potential shared service candidates that have
a reduced chance of success when compared to less potentially valuable
services. This implementation risk should be applied as well.
Copyright © 2004-2011 Experture and Robert Frances Group, all rights reserved
649 Fairfield Beach Road, Fairfield, CT. 06824; (203) 5574 0856;
http://www.experture.com/; Contact: [email protected]