Shared services centers (SSCs) are a no-brainer as organizations continue scrutinizing operating costs and exploring areas to drive efficiencies. The concept of a multi-function SSC has been around for decades. However, many expanding businesses are yet to realize the strategic significance of consolidating resources, such as accounts payable, HR, procurement and IT, to lower costs, align skill sets, institutionalize best practices, and drive economies of scale. According to Deloitte’s annual global shared services survey 2021, companies with more than three SSC functions increased by more than 40 percent over the last two years, with an additional 71 percent looking to increase the number of functions in the future. Globally, the shared services concept has grown since the 1970s, with 85 percent of Fortune 100 companies utilizing shared services to reduce costs, improve capabilities, and transform their business models.
How Simple Is It to Set Up a Shared Services Model?
Sure, the idea behind a multi-function SSC is straightforward. First, as an internal customer service business, identify what resources to consolidate and support the entire business. Then ensure that those resources track and charge back the services provided to the various business units. And while you’re at it, establish some clear service-level agreements (SLAs) to establish clear performance measures. From here, companies can step back to focus on other areas of strategic importance.
Unfortunately, the approach is not always as clear-cut. One of the biggest roadblocks is the absence of scalable processes to manage resources, calculate chargebacks and provide accurate reporting on SLAs to business units. What seems like a smart move can drive even more inefficiencies through several unintended consequences. For example, SSCs can struggle to manage numerous service requests and forecast future pipeline and resource demand, internal clients can lack visibility into the services being offered, and executives may need to intervene due to the friction between the SSC and the clients.
What Drives Sharing Services’ Success?
You can overcome challenges by establishing automated processes from the onset. A cloud-based shared service management solution can help stakeholders by effectively capturing the costs of services delivered and calculating chargebacks with ease. Plus, it can help allocate resources more effectively based on demand, and equip internal clients with the analytics to monitor the costs of services consumed.
There are four key technologies to delivering an effective automated shared services solution. They are:
1. Time Tracking
Many shared services organizations today do not track project hours, which leads to revenue leakages, poor project profitability, and unnecessary disruptions to the daily workflow. Without time tracking, shared services organizations struggle with increasing time to chargeback. Using Replicon, shared services organizations can gain accurate internal chargebacks, and track accurate project hour targets at different levels by rolling up individual billable hours to a group, business unit, or shared services organization. It gives a centralized view of all your shared services organization projects and helps manage service delivery.
2. Resource Management
Regardless of the organization or the industry size, managing resources is a constant challenge in shared services management. Also, several parallel projects complicate the task of identifying the project that may be causing the maximum cost and resource leakage. Consequently, without clear visibility, you might face billing errors, incorrect statements of work, and misquotes — leading to revenue leakage or projects going over budget. With resource management software, you can get up-to-the-minute visibility into resource utilization in your shared services with graphical calendars.
Shared services organizations leverage resource management software to provide the flexibility to assign the right employees to projects based on their skills and availability, with ‘placeholder’ resources marked to more efficiently plan for future demand.
3. Project Costing
Many shared services organizations have a justified fear of IT project overruns, incurring expenses and budgetary misses, especially when implementing new and large systems. With project management software, shared services organizations get complete visibility and control over countless project costs, statuses and deadlines. It also helps configure, define and manage chargebacks for all services delivered. An advanced unified platform project cost solution will enable you to normalize costs, differentiate between CapEx and OpEx costs, and improve audit compliance processes.
4. Analytics and Integration
Using powerful insights into resource allocation, resource utilization, and project updates, shared services and business leaders don’t need to spend hours finding or collating the data. Data-driven analytics offers high-level visibility into the chargebacks, portfolio metrics like costs, WIP, utilization, and the organization’s strategic objectives across the portfolio to make proactive decisions. Organizations can benefit from a fast and seamless integration with pre-built connectors or build their own, using Replicon’s Web Services API and other applications, including payroll, HR, HCM, finance and ERP systems, to streamline the chargeback process within the business ecosystem.
Undoubtedly, the SSC model can save massive sums and generate substantial benefits. Hence, companies can experience cost, productivity, quality and service benefits with executive support, a desire to create a culture of continuous improvement, and the right technology platforms and solutions. The question is: are you effectively utilizing the benefits of shared services to drive success?