When it comes to shared services, the evolution of it as a concept can be dated to around three decades back. The discipline that shared services bring with them seals their position as a cost-effective and resource-efficient option. Much like with most other concepts, expectations from shared service centers (SSCs) have evolved and the focus has shifted from cost reduction to larger scale operations and direct value chain impact.
From Shared Service Centers to Value Creation Centers, what does the evolution bring along?
Traditionally, SSCs concentrated on cost efficiency and value chain enablement, but the evolution called upon them to reinvent themselves into Value Creation Centers. With newer business models and constantly increasing pressure on enterprises, it is essential that SSCs look beyond the realm of the status quo.
Driven by the shift in focus, organizations have exercised various models, such as the offshore model against the onshore or near-shore model, or the outsourcing model as against the captive model. Different organizations started on with a different set of objectives, and that often governed what this evolution brought along for them.
Sans cartography, this framework should help you locate yourself on the map
It is a given that technologies, such as Business Process Management, Enterprise Content Management, Case Management and systems integration remain critical to the success of shared services. The areas of leverage of these technologies, however, depend entirely on maturity of the set up and the priorities of the organization.
In short, there is no one template which can be applied to SSCs when it comes to ensuring they grow into value creation centers. Nevertheless, here is a framework that one can use to understand where they are in terms of Shared Services maturity, and in order to establish immediate priorities, a roadmap, and a plan.
The four stages, namely Automation, Centralization, Standardisation, and Continuous Process Innovation, not necessarily in this order can help a SSC evolve into a Value Creation Center. Though there’s no established scientific method to pegging your SSC at a certain stage, a better understanding of these stages might see you through the dilemma.
Automation: Understandably where it all starts, this is the stage where organizations move into an automated ecosystem and the ROI at this stage is a lot simpler. To ensure success, the automation must be performed over a single platform, the platform must be configurable, a performance and service management framework must be in place, and it must have the ability to modify processes without going through coding and software lifecycle.
Centralization: The second foundational stage, and often a crucial one, this helps the organization centralize their operations in one, or a few SSCs. This helps cut down operational, maintenance, and labour-related costs. In order for centralization to be a success, SSCs must build on strengths garnered in the previous stage; new processes must be an adaptation of the older ones, and communication between SSCs and new business units becomes essential.
Standardization: As a term, standardization is self-explanatory, and majorly refers to standardization across multiple processes.Depending on how it is carried forward, this stage can either be a positive or a negative one for any SSC. When an SSC provides any organization the capability to scale rapidly and saves costs by standardizing globally, this stage can be a boon. It can be a bane if it becomes a way in which the business operates and, as a result, does not allow people the flexibility to adapt to change.
Continuous Process Improvement: This is a lot more than just a well-defined stage, and would be better defined as a journey. Dashboards and KPI, standardization & automation, redesigning of processes, and innovation are the tools and levers which help push an SSC forward.
Are you there yet?
While a culture of continuous improvement provides the template on which SSCs can base their evolution into Value Creation Centers, there are some parameters which can help answer the impending question.
Strategic agility which ensures the business is responsive and agile, a level of differentiation to ensure increased profitability for new launches and existing offerings, increaser transparency and better collaboration, are the few factors that can help govern if an SSC has arrived.