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Best Practices in Adopting a Shared Services Model for Business

Anupam Govil & Gurmeet S. Chopra
Updated February 2022

To become high performing organizations, businesses are pushing all innovation frontiers to do more with less and achieve excellence, even in these times of curtailed budgets. Shared services is one such innovative model that many organizations have adopted to beat the ever-growing challenges of seamless service delivery, consolidation of distributed accountabilities, progressive efficiency improvements, and fiscal pressure

The Shared Services Model for Business

Shared services allow organizations to optimize the delivery of reliable, cost-effective, and flexible services to internal and external clients. Optimization is the key here because shared services effectively balances the operating model between the client enterprise and the independent support organization that comes to being, due to the shared services initiative. Shared services as a model offers the following advantages to organizations:

  • Elimination of redundancies in processes and technologies through standardization
  • Elimination of centralized or distributed accountabilities by setting up shared responsibility through two-way service level agreements
  • Elevation of service excellence through greater focus on customer service
  • Cost economies of scale and scope

The shared services model started by targeting business processes that have significant cost saving potential but transactional or low importance to organizations. While the model initially thrived with this approach, it has successfully evolved over the years to undertake business processes that are relatively complex. With this paradigm shift, global organizations are now leveraging shared services best practices to enhance the quality of internal business processes and improve overall effectiveness of operations by implementing global best practices. As it stands today, moving transactional functions, such as accounts receivable and accounts payable, to shared services centers has been done time and again, thus attaining mature and standardized processes. As more companies continue to migrate to the shared services model, they are realizing the additional benefits, such as improved operational effectiveness and ability to increasingly provide higher-value services. Example include knowledge-based processes such as market research and business analytics. Moreover, the shared services strategy enables organizations to focus on their core businesses rather than expend resources on non-revenue generating cost centers.

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