One of the most frequent questions we hear from our members is this one:  “What are the lessons learned from other companies that will help us successfully implement our Shared Services/GBS initiative?”

To answer this question, we pulled together a list of what we consider to be the 19 most important success factors to successfully implementing Shared Services or GBS.  Here they are, in alphabetical order:

1. Adopt a Customer-First Mindset

Ultimately, the success of your GBS organization will be determined by the level of support that you earn from one key constituency – your internal business unit customers.

Your dashboard of all-green cost & productivity metrics quickly loses its sparkle if customers indicate a level of dissatisfaction with your services.  Your KPIs become “watermelon metrics” – green on the outside, but red on the inside.

You can avoid this outcome by embedding a customer-first mindset throughout your organization.  Regularly ask yourself, and your customers, two questions:

1. Are we easy or difficult to do business with?
2. Are we identifying and solving your biggest problems?

Even if you don’t get the answers that you’d like, simply opening this dialog will have a positive impact on your relationship with your customers.

2. Capture Baseline Performance

Organizations can be tempted to move forward with a GBS project without documenting the baseline of cost, productivity, and quality performance.  “After all” they say, “that’s the past and we’re looking forward, not backward.  Plus, it’s time consuming to create all of that data.”

These organizations are setting themselves up for months, or years, of emotional arguments about whether the old model was better than the shared services model.

It’s also inevitable that shared services will make mistakes.  When that happens, the knee-jerk reaction from business units is often “that never happened when we did this work ourselves.”

The only way to refute this argument is with data that shows how shared services performance compares with prior performance.  And the only way to do that is by documenting the baseline of pre-shared services performance.

3. Change Management

Successfully implementing a shared services delivery model requires a significant change management effort.  Change management plans almost always include a communication plan, but too often they don’t include much else.

In addition to a comprehensive communication plan, your change management plan should also address:

– The vision of the future        – Executive involvement

– KPIs & Metrics                      – Quick wins

– Stakeholder engagement     – Governance & RACI

– Risks & associated mitigation

The responsibility for change management goes beyond the change management team and extends to every member of the project team.

4. Celebrate Success Along the Way

Depending on the number of processes included and the geographic scope of the internal customers, GBS implementation projects can take between 9 and 24 months to complete.

The pace is very fast, and there are likely dozens of significant milestones to complete before the service center is fully operational.

As you complete interim milestones, you might be tempted to “tick the box” and move on to the next item on your project plan.

That’s a mistake.  As you make progress, don’t forget to celebrate incremental success along the way.  Your team is working long and hard, and a team lunch (or equivalent) will go a long way toward keeping them engaged and motivated. 

5. Clear Case for Change

The most common question that you’ll be asked during a shared services project is this one: Why are we doing this?

If different team members and sponsors have different answers to this question, the organization will be confused and less likely to accept that this change is both positive and inevitable.  You’re going to need a clear and concise answer to this question that everyone on the team understands and believes in.

You’ll also need to repeat the message regularly.  The Marketing Rule of 7 suggests that people need to hear a message about 7 times before it actually begins to sink in.

This means that by the time you’re getting tired of repeating the same message, your stakeholders are just beginning to understand what you’re talking about.

6. Clear Roles & Responsibilities

Decentralized finance teams are expensive, but they do offer this advantage: Physical proximity can make up for inefficient processes.  The AP processor can go upstairs to the purchasing department to clear up questions about purchase orders.  The credit analyst can go down the hall and talk to the sales rep about an incomplete credit application.

When GBS employees are no longer co-located with business units, it’s critical that both groups understand their roles and responsibilities.  For example, if both procurement and GBS think the other group is responsible for new vendor set up, problems are inevitable.

To prevent problems, you’ll need to identify each step in the end-to-end process and make sure that responsibility for completing that step is clearly understood and agreed to by both the business unit and the shared services team.

Service level agreements are often used to document roles & responsibilities at the activity level, as well as to identify the KPIs that will be reported to monitor compliance with the SLA.

7. Documented GBS Mission, Vision, & Strategy

Developing a mission, vision, and strategy for your new shared services organization is critical for three reasons:

• It defines the mission and goals for the organization.
• It helps your customers understand what to expect (and what not to expect) from you.
• It encourages your team to align around a common purpose.

Without a defined strategy, some of your internal customers might expect you to focus only on labor arbitrage and cost reduction while others hope that you’ll provide services more like an internal consulting group.

Some stakeholders may expect you to rapidly expand your service offering while others expect you to stay in your lane – whatever that is.

A strategic plan allows you, your customers, and your team to have a common understanding of your organization, and where you are headed.

8. Embed Continuous Improvement Throughout the Organization

”My biggest problem is figuring out how to spend all of the money in my budget” – said no GBS leader, ever.  For more than three decades, shared services leaders have continually been asked to do more, with less.

Embedding a continuous improvement mindset throughout the organization is critical if you’re going to achieve the cost and productivity goals that are certain to come your way.

There are five key steps to implementing a successful CI program in your organization:

• Stress the importance of CI to all employees
• Provide tools & training for them to be successful
• Schedule time for CI activities on a regular basis
• Measure & report the results of the CI program
• Reward employees who embrace CI behaviors

9. Executive Sponsor Involvement

To be successful, you’ll need more than just support from the top – you’ll need active involvement from the project sponsor(s).  Prior to launching the project, set expectations with the sponsor that they will:

• • communicate with the organization through townhall meetings,
  • attend and participate in steering committee meetings,
  • drop in to provide encouragement to the team periodically, and
  • intervene to remove roadblocks as necessary

Attempting to implement a shared services model without active involvement from the sponsor is likely to result in an unsuccessful outcome and a frustrated project team.

10. Expect Bumps in the Road

Despite all of your best intentions and detailed plans, there will be times when problems arise.  Recognize that there has never been a perfect GBS implementation, and there never will be.

One strategy to reduce the impact of problems is to front-load your implementation with business unit customers who are supportive of the GBS model and likely to work with you to resolve problems, rather than broadly advertise any problems that arise.

No matter the mindset of the impacted customer(s), you’ll need to:

• • Understand the root cause of the problem
  • Revise processes to ensure that there is no recurrence
  • Correct the input/output at the first opportunity
  • Take ownership, and communicate with your customer

11. Hire the Operations Team Early

The first phase of a GBS project is usually a feasibility analysis that lasts for 10-12 weeks.  Prior to an official decision to proceed, the team is made up of project resources and there is little need to think about the operational leadership team.

Once the project is approved for implementation, it’s time to recruit and appoint the operational leadership team.

The project team remains responsible for finalizing process designs and migrating the work to GBS.  Having the operational team on board early allows for a smooth handoff and prevents issues that may arise if an operational manager disagrees with elements of the to-be process.

Ideally, one or more members of the project team will accept operational roles in the new shared services organization.

12. Include Continuous Improvement, Customer Relationships, and Training Roles

Not surprisingly, the initial focus of the GBS organization is on delivering reliable services to internal customers, including:

• • Paying the bills in AP
  • Collecting and applying the cash in AR
  • Closing the books
  • Reimbursing employee travel costs

Once these processes are stabilized, the focus broadens to include additional topics such as continuous improvement, customer relationship management, and training.

Ideally, these roles would be filled by full-time associates, but budget constraints may prevent that, especially in the early years.

Even if it means adding responsibilities to existing team members, don’t forget to include responsibilities for improving processes, improving customer relationships, and training & developing associates.

13. Meaningful Chargebacks

Many GBS organizations charge their internal customers for the services that they provide.  Many more do not, and both approaches have their benefits and concerns.

If you elect to charge for services, adopt a methodology that enables you to have meaningful conversations with your customers.  If you charge or allocate costs to customers based on revenue or headcount, you will have a difficult time addressing how your customers might partner with you to reduce their charge.

A better methodology allows your customers to reduce their cost by adopting best practices that benefit both you and them.  Some simple examples include:

• • Lower AP cost for electronic invoices than paper invoices
  • Lower AR cost for customers that don’t require collections efforts

14. Metrics & KPIs

Most organizations establish an initial set of KPIs and metrics that are intended to show compliance with the overall charter for GBS as well as improvement over the pre-GBS model.

These are generally volume, cost, or productivity metrics such as:

• Number of invoices paid
• AP cost per invoice paid
• Cash receipts per collections FTE
• Employees paid per payroll FTE

While these metrics are necessary in order to gain the confidence of business unit customers, recognize that they have a very short shelf life.

In the early years, significant improvement over baseline performance can and should be celebrated.  Eventually, internal customers become less concerned with cost and productivity and more concerned with the value that you bring to the organization.  It is never too early to begin thinking about how you will capture and quantify this, even if you’re not ready to include it as an official KPI.

15. Over-staff Early

After a year of planning, the doors are open and the center is operational.  At this point, you’ll likely have a phased plan to migrate work from multiple business units / countries to the GBS.

As you develop your staffing and hiring plan, recognize the benefits of intentionally over-staffing the organization ahead of demand.  Admittedly, this may result in additional cost for a short time.

Conversely, consider the potential damage caused by being caught short-staffed:

• • Transaction backlogs continue to build
  • Associates are unnecessarily stressed
  • Customers are concerned, or worse
  • The migration schedule is jeopardized
  • The “I told you this wouldn’t work” voices become louder
  • The overall brand is damaged

Hiring ahead of demand might be more expensive, but it can prevent a number of negative outcomes from happening.

16. Process Documentation

Post migration, the shared services employees may be thousands of miles and multiple time zones away from their new colleagues.  Drop-in visits to ask questions aren’t possible, and even phone calls may be difficult.

The best way to ensure that the new employees have the ability to successfully complete their work is to provide accurate and complete process documentation.

Prior to migration, the incumbents (or technical writers) must thoroughly document the processes complete with screen shots, written narratives, and any supporting documentation required to complete each task.

Even if in-person work shadowing is part of the transition process, documentation is still critical.  After all, there may be unexpected turnover of new employees after the shared services center becomes operational.

Review the process documentation and ask yourself, “If I had nothing but this material, could I do the job?”

17. Staff the Team with Your Best Resources

You’re going to need resources who are subject matter experts in purchase-to-pay, record-to-report, and order-to-cash.  You’re going to need team members who are strong in project management, IT, HR, and change management.  You’re going to need SME time from resources in each business unit and every major country where you operate.

As you identify candidates for these roles, it’s likely that some managers will be reluctant to offer their best people.

Remember, you are developing the delivery model for the next decade, or longer.  Do you really want to do that without a team of A-players?  Enlist the involvement of your executive sponsor, if necessary, to ensure that you have the best resources to support the project.

18. Stop Chasing Labor Arbitrage – Use AI & RPA Instead

Early iterations of shared services models focused heavily on cost reduction.  One source of cost reduction came from reengineering processes to eliminate unnecessary steps.  Another source came from labor arbitrage – moving work from high cost locations to low cost locations.

Chasing labor arbitrage is an expensive effort that has an ever-shorter shelf life.  Years ago, highly desirable locations such as Prague, Barcelona, and Dublin quickly lost their appeal as dozens or hundreds of companies opened centers in those cities.  Today, the same thing is happening in cities such as Panama City, Budapest, and Bucharest.

Robotic Process Automation and Artificial Intelligence software have enabled companies to fully automate many routine, repetitive, and rules-based activities, eliminating the need to find the next low-cost labor location.

19. Timely Decision Making

During the course of a GBS implementation, you’ll need hundreds of decisions to be made.  If you have to wait days, or weeks, for those decisions, your project timeline will be in jeopardy very quickly.

You can prevent this by developing a clear governance model at the outset of the project.

Which types of decisions are you able to make as a project team?  Which types require your sponsor’s approval?  Which ones require the consent of the executive steering committee?

You can reduce the need for steering committee involvement in too many decisions by empowering the project team to make all decisions that are operational (versus strategic) in nature.

Plan your calendar of steering committee meetings to coincide with the major project decision points and milestones.  You don’t want to finish your location analysis and have to wait weeks to present your recommendations for approval.