Shared Services

The term shared services consolidation and centralization of service processes of an organization is understood. In this case, similar processes from different areas of a company or organization are summarized and provided by ( a ) central location ( s) or department ( s). The offering place is usually referred to as a shared service center, short SSC. The departments which use the services claim, are in a kind of customer relationship with the SSC.

In contrast to outsourcing, be entrusted with the external service provider with a service that is in the shared service structure to a kind of internal outsourcing. This is to combine the advantages of an external service and internal employees. With some exceptions, the term shared services or shared services center is still used for relationship with an external service.

Important principles are:

• Preis-/Kostentransparenz,
• Short latency ( waiting time, focus, overhang, readjustment )
• Business Practices ( Management)
• Customer orientation ( higher service quality),
• Benchmarking ( continuous improvement ),
• Process orientation and standardization
• Process Monitoring

History

In the 80s, the slogan was the decentralization of the corporate organization. It was found, however, that the total corporate control has been considerably more difficult by the distributed processes. Although the processes could be optimized in the individual companies, but the overall optimum for the group could not be achieved. In addition, required the launching at the beginning of the 90's introduction of integrated processes (eg quality management systems ) is also uniform IT systems.

Next followed Keyword outsourcing. The basic idea was to focus on the core business and to buy the ever-growing ancillary services by external parties. But even here, however caused major problems for the company. It was as dependent company of others. In addition, led the handling of these third parties with sensitive financial, customer and personnel data repeatedly to data protection issues. Also, outsourcing means sometimes the job cuts, which leads to resistance within the company.

Features suitable processes

Features suitable processes are:

• High number of repetitions of the same process,
• High level of system support, such as ERP systems and in particu-lar workflows
• Only a few exceptions

Benefits

Shared Service Center will connect advantages of an external service and internal employees.

The qualitative advantage should lead to a lower error rate, which is expected by the specialization ( "learning curve" ) in a shared service center. This effect has not yet been demonstrated. Although legal and regulatory requirements such as Basel II, Sarbanes -Oxley Act, etc. more frequently lead to the fact that processes are moved to a shared service center in order to control them better.

The increase in process efficiency as a quantitative advantage can be attributed to three factors: First, economies of scale may result from the merging of similar processes. This does not happen automatically but must through appropriate investments in process management and IT (eg through self-services, workflows, etc. ) can be realized. Second, reductions for rent, building, side, telecommunications and travel costs are possible by a simultaneous change of the place. Third, cost reductions in wages and salaries are possible, eg by near- or off-shoring or by the possibility of having to use a different or no collective agreements. In particular, offshoring in Central Eastern European countries, the generally higher qualification of labor recruited proves in combination with much lower salaries as a benefit for a company to both improve process quality and reduce process costs.

Most is still called an advantage that a company's management can focus on the core processes. This can be a fallacy if the management processes for planning, management and control of a shared service center (as well as the outsourcing of processes ) remain fully exist and can not be narrowed.

Disadvantages

Proximity to customers is reduced by centralizing tendency. The processes in the original departments need to be adjusted accordingly. Possibly, the spatial distance have a negative impact on the performance. The coordination effort increases tend to increase.

In addition, due to the desired saving effect usually lost the quality of the processed content, as is here set to cheap labor with partially inferior qualifications in order to reduce the salary level (preferably Eastern Europe). The few qualified people can no longer hold the expertise in the required scope here, which has significant impact on the work content and thus reflected the controlling. To prevent these effects, it is recommended that more highly qualified employees, but they set a still significantly lower salary level. This means that both a lower cost structure as well as a possibly increased service quality is ensured.

Furthermore, there is also the motivation and loyalty of employees for the company problematic dar. turnover rates are usually very high and the duration of employment shortly. The employees of an SSC usually obtained only fixed-term contracts and precarious conditions.

Above average salary demands in Eastern Europe (10-20 % pa) due to the low unemployment can the business case regarding the establishment of a SSC difficult and tilt if necessary. Nevertheless, considerable cost savings compared to high-wage countries are to be expected even at these salary increases in the next 10-20 years.

Suitability

The implementation of shared services is suitable for support processes, provided that they are not bound geographically, occur frequently enough and have a sufficiently large potential for standardization. This is true in practice, especially for processes of HR (Human Resources), limited in Financial Accounting ( Financial Supply Chain), procurement ( Procurement) and the internal IT ( eg help desk ) to.

In corporate practice, so far the following areas and support functions for shared services have proven to be suitable ( non-exhaustive ):

• Archive and Documentation
• Office furniture and move management
• Office supplies
• Controlling
• Facility Management ( Building and Facilities Management)
• Fleet
• Graphics and presentations
• Information and research
• IT Service
• Copy service
• Logistics
• Marketing
• Personnel management
• Post and address service
• Travel Management
• Switchboard
• Translations

• Finance in general has been consistently proven in practice to be unsuccessful. Only the block legitimate uses (such as travel expenses or master data management ) appear to be viable in the small area.

Usually do not should complete areas are outsourced to a shared service center. Instead, individual processes should be considered, such as in the area of ​​finances, accounts receivable or accounts payable. The outsourcing of entire areas usually leads to self-perpetuating and gets unexpectedly out of control and cost control, which is no longer to compensate.

Design and installation

In the planning and establishment of a SSC following points should be noted:

• What are the duties and functions in such organizational units can be grouped together?
• What are the costs for the provision of services in a shared service center to fall and what cost savings over the decentralized model is possible or should be?
• What services which service quality and service levels which must be met?
• How is the distribution of benefits and costs realized?
• As the employees are prepared for their new roles?
• At what location the shared service center to be set up?
• How are the processes coordinated with the environment of the SSC, redesigned and optimized?
• Continuous review and adjustment to the respective requirements.