It’s safe to say that any large-scale multinational will benefit in some way from putting a shared service strategy in place. Doing it right can mean serious cost savings, easy data sharing and streamlined transactions for your whole organisation. Doing it wrong can be an expensive mess.
It’s safe to say that any large-scale multinational will benefit in some way from putting a shared service strategy in place. Doing it right can mean serious cost savings, easy data sharing and streamlined transactions for your whole organisation. Doing it wrong can be an expensive mess.
To help you avoid the most common mistakes and get the most out of your shared service centre, take a look at six essential steps below, as outlined by industry experts.
1. Plan ahead
“Planning has to be immaculate,” said Paul Taylor, Head of Sales GTS EMEA at Bank of America Merrill Lynch. “The risks associated with ripping up the pavement and rewiring everything are considerable; there are potential risks to cash flow, suppliers, employees and working capital if the implementation is not smooth.”
Rob Colle, Director of Finance Delivery and Performance at BskyB, agreed. “We took the view that we weren’t going to sacrifice quality in the short term, partly because that would undermine the process of moving processes and also because we weren’t solely focused on the short-term financial imperative,” he said. “We had a very clear top-down vision from our CFO.”
In BskyB’s case, the process took two years; six months to plan and a further 18 to migrate to the new shared service centre, based in Scotland. “The approach we took was to fly/train people down to London for the first month in order to observe how things were done,” said Collie. “In the second month, we moved them down again and they carried out the activities themselves. In the third month, we moved our staff from London up to Scotland so that they could observe the SSC staff doing the activities in situ.”
He added: “While this was quite heavy in terms of hand holding, it was very smooth. We’ve subsequently been able to drive efficiencies of 10% per annum.”
2. Get executive sponsorship
Adrian Ryan, Principal of Adrian Ryan Associates, said: “If the project is not seen as integral to the organisation’s strategy, and part of the wider operating model design, then it will be a difficult transition and benefits will be significantly delayed.” Getting strong, visible support from senior executives, linking the project’s success to senior executives’ rewards and promoting the migration in relevant functions and regions are all essential, he advised.
“If the executive and the senior leadership are true sponsors and regard the project as strategically right for the organisation, you will be able to make good ground,” Collie added. “If the sponsor is not fully behind the project, it is sometimes very easy to unwind the whole project.”
3. Seek advice
Why learn from your mistakes when you could learn from other people’s? Drawing on others’ expertise can undoubtedly make a tricky challenge like this run a whole lot smoother.
“If you are setting up a shared services operation it’s important to take advice from peers or professional advisors – if you don’t do this you are effectively reinventing the wheel,” said Chris Errington, CEO of Gresham Computing. “Once you’ve saved the costs in the first instance it’s hard to rectify anything you got wrong because that adds costs, which is a real no-no. There’s a big community of shared service centre professionals who it would be worth connecting with.”
Taylor pointed out that choosing the right partner can spell the difference between success and failure. “Various stakeholders can advise corporations about shared service centres, including banks which have been through many of the same challenges and can help the company to save money and reduce potential risks,” he said.
4. Consider the wider impact
Switching to a shared service centre model will inevitably have implications for every part of the business setup, not just sections that have been migrated. This, said Ryan, means that the “retained organisation” needs to be redesigned, too – and this means paying attention not only the functions, but to the people that use them and the processes that they use.
“Implementing shared services is a change to the operating model,” he said. “As such, the entire organisation’s operating model should be looked at. Not all of it will need to be changed, but it is a moment when serious review should take place and potentially some significant changes made.”
5. Make the most of technology
A plethora of treasury middleware technologies exist to make shared service centres work more effectively. Bank of America Merrill Lynch’s CashPro® platform, for example, helps companies to tailor systems to individual requirements in far more detail than past systems would allow.
They key to choosing what technology to use is having a clear idea of what you want to get out of it. One issue to consider is how long you need your technology provider to be able to store your data for, and how much they need to be able to process for you.
“There could be an expectation that a shared service environment can handle any volume of data to be stored – but unfortunately the reality is that unless a client is willing to spend additional money on storage, you probably wouldn’t want to keep the data stored forever,” said Julian Trostinsky, SmartStream’s Business Development Director for the Americas. “It is important to agree on the storage requirements in advance, which will in turn assist with controlling total cost of ownership.”
6. And (not so) finally…
Your shared service centre project doesn’t come to an end once installation is over. To really make it work, you need to keep monitoring how well it’s working, addressing areas in which it seems sluggish and bringing in new technology where appropriate to keep it on the cutting edge.
“We’ve come into a number of situations where an institution already has a shared service centre and is looking for guidance as to where it all went wrong,” said Taylor. “In such cases, the structure the company has ended up with may not at all meet the original aspirations. That is something that we can support and find pretty easy to address because of the experience we’ve had working with large corporations.”