Benefits Vs. Challenges of Shared Service Setup

The concept of shared service centers (SSCs) has become a hot topic across various channels, with many top players claiming success in establishing centralized points of service shared across multiple departments. These SSCs have been beneficial for many multinational organizations by reducing costs and time, improving services, offering better control, and enabling more value-added activities.

The Advantages of Shared Services

Shared services aim to standardize and streamline work processes, enhancing performance and delivering reliable services. They provide a central point of contact for various functions, such as IT, HR, and finance. The benefits include:

• Cost and Time Reduction: Centralizing services reduces administrative expenses and improves efficiency.
• Improved Services: Standardized processes and service management tools enhance service quality.
• Better Control: Centralized functions make it easier to monitor and manage performance.
• Value-Added Activities: By reducing duplication of efforts, organizations can focus on more strategic tasks.
• Data Centralization: This supports improved reporting and analytics, offering deeper insights.
• Scalability and Integration: Centralized services heighten scalability and integration, allowing for the deployment of new technologies through cost sharing.

Challenges in Implementing Shared Services

However, setting up a shared service center is not without its challenges. While some organizations thrive, others struggle or even fail to implement SSCs successfully. Key challenges include:

• Leadership and Change Management: Strong leadership is essential. Challenges arise when leaders, responsible for setting up the SSC, must influence the SSC team, customers, suppliers, and stakeholders.
• Feasibility Assessment: Organizations often lack a clear vision and face challenges in defining processes, locations, and technology, making it hard to find appropriate and timely solutions.
• Design Challenges: Envisioning future processes, stakeholders, and technology requirements can meet resistance to change within units.
• Build and Testing Phase: Lack of coordination during the integration of process design and technology tools is a common challenge.
• Implementation Issues: Before going live, organizations must manage migration, phases, and business readiness, requiring clear plans, resources, and support.

Strategic Considerations for Success

To successfully implement shared services, organizations need to set a clear vision for the processes they wish to outsource or manage through SSCs. Strategic decisions regarding service transformation alternatives—such as simplification, standardization, consolidation, insourcing, or outsourcing—are crucial.

Moreover, the success of shared services hinges on several factors, including:

• Shared Service Employees: Skilled and committed employees are vital.
• Governance: Robust governance frameworks ensure alignment with organizational goals.
• Communication: Effective communication is key to managing expectations and fostering collaboration.
• Service Flexibility: Adaptability to changing business needs is essential.
• Performance Management: Continuous monitoring and improvement of performance metrics are necessary.

Expert Insights

According to Redman et al. (2007), the attractiveness of shared services lies in the need for cost reduction, improved service quality, process simplification, sharing best practices, knowledge transfer, and alignment with business requirements. Ramphal (2011) further asserts that the quality of SSCs depends on service level agreements, contact centers, communication, shared service products, employees, and the provision of services.

Our Commitment at AIDOSOL

At AIDOSOL, we are dedicated to providing our clients with valuable expertise worldwide. We offer a robust business strategy that encompasses both financial and non-financial benefits, ensuring sustained impact and enhanced efficiency in the face of constantly evolving needs.

By leveraging our comprehensive understanding of shared services, we help process owners meet rising user expectations, drive continuous improvement, and achieve greater transparency across enterprise data.