Organizations Increasingly Embrace Shared Services

Organizations Increasingly Embrace Shared Services

Paring costs has been critical for organizations that were hit hard during the recession. Many have migrated to a shared services approach due to the mounting business pressures, and many more are seriously exploring the idea.

Cost management and containment are key considerations

Organizations are setting up flexible shared services models to consolidate and standardize administrative processes, reap long-term cost savings, and create greater consistency in how policies and programs are administered.

A case in point is Yale University, whose endowment was hit hard during the downturn, prompting them to take a look at how to redirect resources. Yale decided to launch a unit called ‘Yale Shared Services’ by consolidating similar HR functions, and managing the common business transactions for many of Yale’s academic and other departments. The unit now handles tasks including payroll, accounts payable, vendor compliance, expense & financial management, and credit card reconciliation ― all with the goal of keeping administrative costs low across departments.

Adoption of shared services is on the rise

The Institute for Corporate Productivity Inc. released a survey titled “2012 Future of HR” based on responses of 454 business and senior HR leaders which revealed that two-thirds of organizations expect to centralize administrative functions in dedicated shared-services units within five years. And according to a survey of 1,025 global organizations by Towers Watson & Co, 36% of respondents plan to adopt shared services for at least part of their HR function by the end of 2014. Seventy-four percent of organizations aim to improve operational efficiency, while 53% seek quality improvements, 37% want cost savings, 34% are changing business strategy, and 29% are impelled by global corporate initiatives.

Cloud-based solutions increase shared services efficiency

According to Towers Watson, more and more organizations are looking into technologies such as cloud-based platforms as the new shared services operating model. The benefits of cloud-based shared services management solutions include being able to optimize economies of scale, capture costs of services, and allocate resources more efficiently.

For example, service center managers gain real-time visibility into service delivery costs and effort, which helps to improve forecasting of services and resources. They can provide accurate reporting to the relevant business units on services provided, and internal clients get a clear view into what services they received for the amounts expended. This helps all parties stay on-time and on-budget, and quickly make adjustments if needed.

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Karen Bell
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