Shared Service Implementation in Multidivisional Organizations

Shared service is a key concept by which organizations organize their resources. Research indicates that some organizations struggle with implementing SSC and sometimes entirely fail to implement them. Although prior research exploring the determinants of implementation success is relatively scarce, researchers have conducted several SSC implementation case studies; however, these valuable findings remain isolated in standalone case studies.

Some of the critical variants that influence the successful implementation of shared service are included in this article.

Introduction

Firms face increasing pressure to create businesses that are more agile and efficient than their competitors. A pivotal means of achieving this goal is sharing corporate resources at the strategic business unit (SBU) level. Specifically, implementing a shared service center (SSC) is a strong trend among firms seeking to optimise resources and achieve substantial improvements.

An SSC is an organisational concept that firms use to bundle a subset of distributed resources previously located in SBUs. SSCs manage these resources as semi-autonomous units and supply support services for customers (i.e., the SBUs) within their corporations. Firms are more effective and efficient through sharing such resources within the group than organizing them in a multibusiness form (M-form). For instance, firms such as one of the largest banking and financial services announced that implementing SSCs resulted in lasting cost savings of up to 40%.

Four organisational resources that influence the success of SSC implementation:

• Organisational Member Support

  Organisational member support plays an important role. We define member support as the extent to which members of the organisation support the SSC implementation (i.e., accept and promote the implementation).

• Mechanistic Structure

  The degree of mechanistic structure of support activities is composed of three dimensions: centralisation, formalisation of work, and output standardisation.

• IT (infrastructure) Standardisation

  This variable is defined as the extent to which firms use standard IT applications across SBUs, such as ERP systems or human resources information systems. Firms have a low degree of IT standardisation if they use different IT applications in their SBUs, and they have a high degree if they use the same IT system in all SBUs.

• Organisational Trust

  Organisational trust as an important variable. Organisational trust is defined as an expectation held by customers—the SBUs—that the SSC will behave in a mutually acceptable manner.

How AIDOSOL can help

Our comprehensive evaluation of the key factors influencing shared services setup ensures a high success rate. Our change management strategies promote greater adoption of Shared Services and foster harmony between Strategic Business Units (SBUs) and Shared Services Centers (SSCs).