Do you have a burning question?
SSON recently received a request from a member asking for help in differentiating between a Shared Services Center and a Center of Competence. Specifically: what characterizes them. We pushed this question out to our broader network. Read the responses.
A center of competence suggests an ability to master the fundamentals, to meet expectations, to serve up processes – perhaps with expertise.
From the perspective of someone who has managed multiple operations for a lengthy period of time, competency is foundational to the success of a Shared Service Center, but represents only a single building block!
Beyond competency or to the extreme, expertise, a Shared Services model is focused on service, efficiency, culture, and relentless value creation. The Shared Services center is a business within a business, it requires product expertise, but also customer and stakeholder identification, customer service, and value creation!
Moving to a Shared Services model and enjoying the value it provides generally requires leadership to drive a cultural change in the organization. This is far more complex than simply creating a center of competency. At the end of the day, the results detail the difference. A Center of Competence equates to a place in which processes are managed well, perhaps to a state of excellence and reliability. The expected results of a Shared Services center, however, will be strategic to your business. Beyond providing process excellence and reliability, the Shared Services center will provide value in unforeseen avenues – it should become central in major projects, acquisitions, divestitures, and mergers; achieve new levels of controls and compliance; and serve as the catalyst for best practices across the organization.
We call our Shared Services the Solution Center: We do not want to be "competent" in what we do, day in and day out – we want to excel! We want to solve our customers’ problems, connect the dots to other parts of the organization, leverage best practices from division A to division B, and serve as the conduit for continued improvement.
It starts with competence, to be certain, but the SSC is so much more!
Vice President Finance – Shared Services
These two terms are not mutually exclusive. Shared Services can encompass both leveraged transactional services as well as centers of expertise (what I believe your member is calling Center of Competence). Some common definitions:
1. A collection of activities that cross various functional or process boundaries which can individually and collectively be pooled and provided to internal operating groups by a common service organization.
2. A service enterprise that creates and sells common, measurable, and scalable services to business entities within the same corporate structure for a fee or similar commercial model.
3. A passion to transform end-to-end business process through scale, automation, standardization, aggressive performance management, customer orientation and wage arbitrage via a global network of captive or outsourced service centers.
Leveraged Transactional Services:
1. The delivery of transactional and operational scale based services effectively against defined service requirements to Corporate and business unit customers
Centers of Expertise – this area has a unique blend of:
1. Internal Customer Discretionary Services: Deliver skill-based specialized service execution and advice where pooling of skills is advantageous against defined business requirements to Corporate and business unit customers (e.g., a business unit wants a specialty tax analysis completed for their individual needs)
2. Governance Service: Maintain overall Corporate strategy, policy, programs, and controls development and monitoring within their domain area whether the work is completed by themselves or others (e.g., accounting policy with closing activities performed by leveraged transactional services)
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I think that the boundaries are blurred and indeed they could be one and the same thing, depending on which company you are in. In Kellogg’s case we have split the CoE and SSC based on transactional nature of work and closeness to the business.
So, from a financial point of view, we find transactional and lower value-add processes such as payables, receivables, and RtR in the service centre; whilst in the CoE we have planning and forecasting, market support, and analytics, tax and treasury, and area/centre analytical and strategic support.
We have a similar model for procurement and HR.
Shared Services Director of Kellogg Europe
(We’ll keep adding to these as we receive them. Thanks to those who took the time to respond.)