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Developing Your Shared Services Annual Operating Plan

Every department in a business typically goes through an annual planning process of some type that includes setting both the budget and tactical objectives for the upcoming fiscal year.  Because Shared Services is often viewed as a “business within the business”, created to support a diverse set of processes across multiple functions, business lines, and geographies, a robust annual planning process can be key to having a successful year.

A PeercastTM discussion in Peeriosity’s Shared Services Leadership research area featured two global companies, each with more than $8B in annual revenue, sharing insights about their processes for developing their annual operating plan for Shared Services.  Below are examples of discussion highlights.  For more details, Peeriosity members are invited to view the Peercast recording and follow up directly with any presenter or attendee, using Peeriosity’s integrated Peer Mail capability.

Discussion Highlights for Company A:

  • The scope of services provided is broad, including many components of Order-to-Cash, Purchase-to-Pay, Hire-to-Retire, and Record-to-Report, and with supporting centers of excellence for Audit Services, Continuous Improvement, and Vendor Management. 
  • The planning process to develop the operating plan begins roughly six months prior to the start of the fiscal year, and includes meetings with key stakeholders to discuss priorities and get their support for key initiatives. The starting point is the previous year’s plan and then using a balanced scorecard approach, the team members developing the plan look at metric results and make adjustments to shift resources as needed. 
  • Once they set improvement goals, it is important to then set specific and measurable targets for improvement, so that the return on the investment is defined and clear.
  • One limitation is that there isn’t a formal governance process in place.  They try to overcome this by identifying and actively working with key stakeholders, but this approach has mixed results, particularly when key stakeholders don’t agree on priorities.
  • The operating plan and key objectives for the year are shared internally as a part of quarterly staff meetings, with details and a review of performance discussed more frequently with members of the Shared Services leadership team than with other Shared Services team members.
  • They also create a multi-year strategic plan.

Discussion Highlights for Company B:

  • The scope of services includes key components of Order-to-Cash (Accounts Receivable, Credit & Collections, Customer Services, and Export Operations), and Purchase-to-Pay (largely Accounts Payable, although they recently added Indirect Purchasing), T&E, Record-to-Report, Payroll, and Compliance Controls.
  • The planning process to develop the operating plan starts about 6 months out, with an updated plan that is reviewed with all key customers and business partners, along with a SWOT analysis completed to understand Strengths, Weaknesses, Opportunities, and Threats.  Next, senior leaders of Shared Services meet with customers to better understand the customers’ plans and objectives, with additional follow-up with individual customers as needed.  The intent is to make sure that the Shared Services plans fit with the customers’ priorities.  Since they have a diverse group of customer groups in different regions, they use a steering committee comprised of customer representatives as the ultimate decision-maker when conflicting priorities occur.  The next step is to work with the individual teams in Shared Services to develop cascading objectives for the next fiscal year.
  • They have a formal governance committee process in place, but since implementation happened many years ago, the current review process is ad hoc and is largely focused on the review and approval of major projects.  The governance committee doesn’t have an approval role for either the annual operating plan or the 5-year strategic plan.

A related iPollingTM question asked member companies to comment on the role that key business partners play in the development of the annual operating plan for Shared Services.  While no companies indicated that key business partners were active contributors, 61% indicated that key business partners are solicited for input prior to the development of the annual operating plan, with an additional 29% reviewing the annual operation plan with key business partners.  Only 10% don’t involve key business partners in either the development or review of the annual operating plan.

description of the roles that key business partners play in Shared Services Annual Operating Plan development ipolling

When asked about the overall level of satisfaction for the current process utilized to develop an annual operating plan, only 18% were very satisfied, with 50% somewhat satisfied.  37% were either neutral or dissatisfied.  Here are the details:

ipolling satisfaction on current process utilization for Shared Services Annual Operating Plan development

Below are several of the comments from iPolling participants:

  • Our annual operating plan is developed internally during the summer. Since all of our costs are ultimately allocated to each business unit, there are several rounds of reviews to ensure that the customer understands the charges that they will receive. It is during this review process that the customers have the ability to provide input, which may result in some modifications. The planning process ends in the fall with a review and approval by the business unit controllers.
  • We coordinate improvement efforts with our key functional business partners, such as HR, IS, and the divisions, as planned activities relate to them in order to properly reflect plans in the budget. However, the partners do not specifically review or approve the GSSO budgets.
  • Our process is working pretty well, with a few pieces that are in need of additional improvement.

How does your company develop an annual operating plan for Shared Services?  Do you include key business partners in the development or review process for the operating plan?  Do you also have a longer-term strategic plan that is updated annually?

Who are your peers and how are you collaborating with them?


“PeercastsTM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion.  Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content.  Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member.  Using Peeriosity’s integrated email system, Peer MailTM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees. 

 “iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility of all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPolling.

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