Whether you are setting up Shared Services for the first time or expanding your portfolio after a decade of service, you likely have a set of criteria to determine the order for consolidation, and to assess the probability that expected benefits will be realized. An effective decision process is critical: while a larger base of business from increased scope and scale has many advantages, there are also a variety of challenges from increased complexity.
The Business Process Improvement Manager at a member company recently used Peeriosity’s iPollingTM capability to quickly understand the criteria used by peers when evaluating the consolidation of decentralized processes. When transitioning decentralized processes to Shared Services, savings of 50% or more are often possible. Typically, half of the expected savings are sourced from consolidating to one location, with additional saving from process standardization and reengineering efforts. Even though the potential upside is significant, decentralized processes are often inconsistent with many touch-points and rework steps between the process and interfaced departments. In other words, reassembling multiple inefficient processes into a new consolidated location runs the risk of creating a much larger problem.
Based on iPollingTM results, the primary criterion when evaluating the consolidation of decentralized processes for 61% of member companies is the potential savings and productivity improvements available. Another 31% of the responding companies selected as the primary criterion the degree to which the decentralized work activities have non-standard systems and processes.
When considering the second most important criterion, not surprisingly, potential cost savings and non-standard systems and processes were flip-flopped as the top two reasons. Other criteria identified as important included business partner engagement and internal controls; certainly both important considerations. While not in the top two for everyone, paying attention to the criteria of business knowledge and context, local regulatory compliance, and local language are also important considerations.
Here are some of the comments added by iPollingTM respondents:
- Once the opportunity is identified, we work closely with business partners and key stakeholders to be thoughtful about our approach to leveraging Shared Services capability to deliver value for the company.
- After we have established that a process is a good fit for Shared Services, the second criterion we look at is resource skill level and availability. Do we have the skill level in-house already? If not, can we recruit the talent we need? Where will the talent come from? These questions comprise the second criterion.
- Potential cost savings are great only if they can be realized. Realizing savings requires strict compliance with standardized processes and the consolidation of systems. These are the enablers of the projected cost savings and are therefore our top criterion.
- Cost and enhanced internal controls are primary drivers. Other criteria listed are important.
- Cost and standardization go hand in hand. It’s difficult to have one without the other.
- In reality, the assessment is a combination of all of these factors, as not only do we need active support from a business partner, we need to ensure we can deliver a quality service level on a scalable basis, so standardization is a key criterion. We practice a philosophy that if we take on those activities that we can deliver well, we will drive long-term productivity savings through the efficiency gained and have satisfied business partners who are driving more value for our company as well. Short-term cost savings are not our priority, as they will evaporate if we fail on execution due to poor or non-standardized processes, systems, language, compliance/controls, or business skill/knowledge.
Does your Shared Services operation actively look for expansion opportunities? When considering decentralized work activities, what are your decision criteria?
Who are your peers and how are you collaborating with them?
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