Shared Services Model

Many business, finance and shared services leaders seek a common or consistent shared services model definition. A shared services model delivers services to internal customers by consolidating, standardising and automating processes in low-cost locations. Services are delivered to many different divisions, departments and groups within an organisation, and may include: accounts payable and receivable, travel and entertainment (T&E) reimbursement, payroll, general ledger and cost accounting. Any process that can be centralised and would benefit from increased customer focus is a candidate for a shared services model. Internal customers include anyone within the organisation who would benefit from increased focus on value-add activities. The purpose of a shared services model is to run, grow or transform the business. Effective shared services models are defined by an unrelenting focus on customer value and satisfaction, by being competitive and by continuous improvement.

When establishing a new shared services model or expanding on an existing one, business, finance and shared services leaders may seek examples of shared services models. Some examples show work retained in-house because they require direct customer or investor interaction, specific business or product knowledge, or because they have the potential to put sensitive information at risk. In-house work may include legal, investor relations, tax, treasury as well as planning and analysis. Other examples of shared services models show work outsourced because the work is process-driven, routine and easy to teach. Outsourced work may include accounts payable, T&E reimbursement and payroll. Before adapting your approach based on examples of shared services models, it is important to evaluate your current processes with regards to their level of complexity and their degree of commonality across multiple business units. Key questions you should ask yourself are: How well understood and documented are the management and operational activities associated with each process? How mature is each process and how much will the organisation benefit from process improvements? Is there any resistance from business units and local IT?

Shared services models and centralised services both promise significant process standardisation and economies of scale, making them popular among business leaders needing low-cost and reliable services. However, benefits from shared services models are distinct from those obtained from centralised services: better expectation setting with the business, greater motivation to reduce costs and increased responsiveness to changing business needs. Because shared services models have a strong focus on transparency, continuous improvement and customer centricity, one of the benefits is that they equip businesses with the means to deliver sustained impact in the face of constantly evolving needs.

The price of a shared services model plays an important role in defining the degree of control over customer behaviour. When pricing and charging out costs, organisations need to balance efficiency with effectiveness in influencing customer behaviour. Since there is no “one-size-fits-all” price for a shared services model, leaders in this industry should understand the pros and cons of the various mechanisms for pricing or charging out the cost of shared services. Leaders should also determine which approach regarding the price of a share services model is the most suitable to support their services. Leaders developing or revising the price of shared services models should determine the level of transparency and flexibility in pricing by assessing business unit customers’ needs and objectives.