Introduction
Designing shared services is a strategic initiative that helps organizations improve efficiency, reduce costs, and standardize operations. However, simply centralizing functions is not enough. A well-designed shared services model requires the right structure, processes, technology, and governance.
In this guide, we explain how to design shared services effectively to support scalable and high-performing business operations.
What Does Designing Shared Services Mean?
Designing shared services involves creating a centralized model that delivers common business functions across the organization. This includes defining how services are structured, delivered, and managed.
The objective is to build a model that is efficient, scalable, and aligned with business goals.
Step-by-Step Approach to Designing Shared Services
1. Define Scope and Objectives
Start by identifying:
- Which functions will be included (HR, finance, IT, procurement)
- Business goals (cost reduction, efficiency, scalability)
A clear scope ensures alignment from the beginning.
2. Select the Right Operating Model
Choose a model based on your organization’s needs:
- Centralized model
- Hybrid model
- Global Business Services (GBS) model
Each model offers different levels of control and flexibility.
3. Standardize and Optimize Processes
Process design is critical.
Focus on:
- Eliminating duplication
- Creating standardized workflows
- Improving efficiency
Well-defined processes ensure consistency across the organization.
4. Leverage Technology and Automation
Technology enables scalability.
Key tools include:
- ERP systems (SAP, Oracle)
- Robotic Process Automation (RPA)
- Workflow automation tools
These tools reduce manual effort and improve accuracy.
5. Define Governance and Control
Strong governance ensures accountability and performance.
Include:
- Service level agreements (SLAs)
- Performance metrics (KPIs)
- Clear roles and responsibilities
6. Build the Right Talent Model
People are at the core of shared services.
Focus on:
- Hiring skilled professionals
- Training and upskilling
- Creating a service-oriented culture
7. Establish Location Strategy
Decide where your shared services center will be located.
Consider:
- Cost advantages
- Talent availability
- Time zone alignment
India is a popular choice due to its strong talent pool and cost efficiency.
8. Implement Continuous Improvement
Shared services should evolve over time.
Adopt:
- Process improvement methodologies (Lean, Six Sigma)
- Regular performance reviews
- Feedback mechanisms
Common Challenges in Designing Shared Services
Organizations may face challenges such as:
- Resistance to change
- Lack of alignment across teams
- Legacy systems
- Poor process standardization
These challenges can be addressed through strong planning and change management.
Benefits of a Well-Designed Shared Services Model
- Improved efficiency and cost savings
- Standardized processes
- Better control and governance
- Scalability for growth
- Enhanced service quality
Conclusion
Designing shared services is not just about centralization. It requires a structured approach that integrates people, processes, and technology.
Organizations that invest in designing the right shared services model can achieve long-term efficiency, agility, and operational excellence.
For additional insights on shared services transformation and operating models, you can explore perspectives from McKinsey & Company: