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Building a Best-in-Class Shared Services Organization is Not Enough
Understanding the Critical Link between the Business and the SSO
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Several years ago, a popular television game show called "The Weakest Link" gave rise to the popularity of that phrase. The origin of the entire phrase "A chain is only as strong as its weakest link" can be traced back to the early 19th century. While true in a literal sense, it also applies figuratively to supply chains, in the business world. Therefore, an organization looking to develop an effective SSO must include both sides of the supply chain - Business and the SSO - in the design and implementation of the model.
Much has been written in the shared services space about the need to focus on the retained organization. This is certainly an important piece of a successful implementation. However, it is equally important to include the rest of the Business as well (e.g., executive/senior leadership, other departments not directly impacted by a change in responsibilities, etc.).
Following are three critical areas that should be addressed by the Business:
1. Educate the organization on the shared services model and continue to reinforce the learning
Operating like an external supplier or a "business within a business" is critical to the integrity of the shared services model. Employees working in an effective SSO will understand this and operate as such. However, the Business must understand this as well. Employees on the Business side may have an intellectual understanding of the shared services model, however, when it comes time to make decisions and/or take action related to, for example, moving functions into shared services and/or requesting support from the SSO, many often disregard (or forget) the tenets of the model and revert back to treating the SSO like another centralized department.
- When an existing function is to be moved into an SSO, the Business may speak in terms of "transferring budget and headcount to the SSO". While the SSO may indeed hire some or all of the employees currently performing the function, a budget transfer is not necessary if a chargeback model is in place. Instead, the Business can utilize that budget to pay the SSO bill, and, in turn, the SSO will pay for the resources via the chargebacks.
- When the Business requests support from the SSO that falls outside the scope of the defined transactions, an effective SSO will likely need to push back and/or try to negotiate a fee to charge for the out-of-scope request. A lack of understanding/education of the model on the Business side can lead to a negative perception of the SSO, - that it lacks customer focus/orientation, when, in fact, it is doing what is necessary to remain viable.
2. Develop a Program Office to manage the relationship with the SSO
It is commonly understood in the business environment that effective supplier management is critical to a business to maximize value from its external suppliers. As the SSO is, in effect, a supplier organization to the Business, it stands to reason that the same level of discipline/resources allocated to manage the relationships with external suppliers should also be applied to the SSO to extract the greatest amount of value from the model. The SSO will be much more effective if there is a single point of contact established on the Business side.
Responsibilities of a Program Office should include:
- Manage the relationship with the SSO
- Drive the education for the Business on the shared services model (in collaboration with the SSO)
- Hold SSO accountable to SLAs and continuous improvement targets
- Serve as the escalation point for issues/opportunities identified by key customers/stakeholders and communicate with SSO
- Communicate (and drive, if applicable) improvement opportunities on the Business side to reduce costs/consumption related to Shared Services. These opportunities may be brought forth by the SSO and/or identified via analysis of key business analytics provided
3. Establish a Strategic Governance Team
In addition to a fully-dedicated Program Office, the Business should also establish a governance team to advance the company’s shared services strategy. In addition to the leader of the SS Program Office and the SSO leader, other members of the governance team should include key stakeholders at the senior leadership level. It is typically from this vantage point that a holistic view of the shared services model can be seen.
Responsibilities of a Strategic Governance Team should include:
- Drive strategic, company-wide communications related to shared services
- Develop the criteria and the strategic roadmap for functions to move into the SSO
- Make "build versus buy" decisions
- Determine whether the company will mandate use of shared services
- Approve/deny business cases presented for functions to move to the SSO that are not on the roadmap
- Review SSO performance information presented by the Program Office/SSO leadership
- Set cost savings/continuous improvements targets related to shared services expenditures
In summary, if Shared Services is indeed viewed as a key enabler by the Business, the model must be designed/resourced effectively on both the customer and the supplier side. If this does not happen, the Business will not realize the maximum value potential of the shared services model resulting from the following:
- The SSO will be crippled by a lack of understanding and a negative perception by the Business regardless of how high their performance against SLAs might be
- The need for the SSO to constantly educate customers will take away from their focus on service delivery
- Resulting inefficiencies related to the need for the SSO to manage multiple points of contact on the Business side
- Lack of strategic focus around the model at the senior levels of the organization
It is counter-productive to attempt to build a world-class shared services organization and not attend to the touch points/linkage with the Business. As with the links in a chain, the Shared Services model will only be as effective as its weakest link.
About the author
Kathleen Bienkowski has over 23 years of experience in the human capital solutions sector and is currently employed as Vice President, Shared Services, for Kelly Services, Inc., a leader in providing workforce solutions. Kelly offers a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temporary-to-hire and direct-hire basis. Serving clients around the globe, Kelly provides employment to 530,000 employees annually. Revenue in 2010 was $5 billion. Visit http://www.kellyservices.com.