Best Practices in adopting a Shared Services Model

August, 2013


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
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 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 center has been done time and over, thus resulting in attainment of mature and standardized processes for doing so. As more companies continue to migrate to this model, they are realizing the additional benefits of doing so, such as improved operational effectiveness and ability to increasingly provide more higher-value services, e.g., knowledge processing activities 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.