10 Critical Success Factors in a Shared Services Relationship
Shared Services, as a concept, have been around for a while. In the public sector it is about working with like organisations e.g. a consortium of hospitals or social services functions across several councils. In the private sector, Shared Services might mean back office services e.g. finance across several subsidiaries within a single conglomerate. Whatever form the shared services might take, success is dependent upon one key aspect – the relationship between parties.
The Shared Service relationship must focus on achieving common outcomes and outputs through effective change management. While seeking the simple common processes is critical, the traditional focus on "money in, people and time out," does not work. A wider set of indicators is needed to measure the success of a Shared Services initiative.
When considering a Shared Services scenario, a Sourcing Strategy should be part of the business case. Early consideration of the business services in scope, potential partners and the interfaces required for success will highlight the importance of building relationships as part of the deal. This early focus will bring clarity on which processes are in scope, assist in the identification of the right shared services model, and aid conversations with potential partners on how to align buyers and suppliers around a common goal. When a vision is agreed, then it is time to consider the Procurement Strategy, and architecting the right procurement process to deliver not only the commercials but also the relationships needed between the organisations and individuals involved. An innovative procurement process that addresses not just the technology and processes but also facilitates strong working relationships will deliver early benefits.
Here are the ten critical success factors which will deliver a strong shared services relationship.
10 Critical success factors:
All successful relationships must have a foundation of trust, which is built up over time and culminates when the agreements are put in place. When partnering, parties must commit to a transparent relationship for the duration, or political problems (within the Shared Service) can undo an otherwise well designed programme.
In any successful partnership, there has to be a clear and shared vision. All parties must understand the value and the rationale for the partnership and align their goals, strategies, priorities and governance models accordingly.
The partnership must be business-like and business-led with accountability, ownership of actions and clear decision making. The governance structures in place must support and enhance this ownership without reducing the scope for flexibility in delivery.
Transparent dialogue is essential for a successful partnership. Parties should seek to provide each other with full information and to understand each other’s perspectives.
To attain a successful partnership, a focus on outcomes and seeking consensus through compromise is necessary. Parties must show clear respect and fairness between themselves in dealing with new demands and variations in imperatives.
Buyers, suppliers and intermediaries must collaborate; not only in word, but in scope, deed and behaviour.
Some convergence will occur naturally. There is still a requirement to actively drive convergence on practices, operating models and processes.
Successful partnerships should focus on the delivery of the planned and desired outcomes of the Shared Service. The optimum use of resources requires regularly measuring the value delivered.
Both parties must accept a degree of flexibility to accommodate both internal and external changes. This is best explored through regular progress updates that ensure the agreed outcomes are being achieved, there is a sound relationship between the partners and that future developments are actively considered.
Traditional contracts with the requirements at schedule 1 and the tender response at schedule 2 are no longer appropriate for multi-faceted and complex service arrangements. Look to use new forms of contracts, which are flexible and agile, so services can be added and taken away, and service lines costed and remunerated at a lower level of granularity. These contracts reduce the risk to the business model and bring higher levels of confidence.
Shared Services present an opportunity to transform both public and private services at this time, when budgets are reducing. This means simplifying processes, re-using information and systems, and capitalising on technology. It also means striving for clear and common governance arrangements, which, in turn, require new forms of contract and commercial arrangements. Get the relationship right and the Shared Services benefits will be more easily realised.