Ten Potential Opportunities in a Time of Crisis

SSON News and Analysis
Posted: 07/09/2012

There’s no doubt that these are trying times – and very few doubts that they will continue to be so for the foreseeable future as the real consequences of the biggest financial crisis since the Wall Street Crash play out across a wounded global economy.

But at the same time in this case the hoary clichê about clouds and silver linings is true: the financial turmoil has thrown up opportunities for shared services organizations which, if seized, could greatly strengthen their value-propositions both during and after the recovery period. Not every SSO will be able to take advantage of all these opportunities – and not even the most committed optimist would maintain that there won’t be casualties among SSOs in the near future – but making the most of even one of the following ten upsides to the current downturn could be the difference between sinking and swimming.

1. Expanding talent pool

Lay-offs - both in SSOs themselves and in businesses generally – have already begun and are inevitably going to soar as time goes by. This has a host of negative consequences – but for those SSOs in a position to take on extra staff (especially at a senior level) this is an incredible opportunity to secure an advance in the war for talent. Qualified, experienced shared services practitioners – and other high-talent professionals with relevant transferable skills – will be pouring onto the market looking for work: this is your chance to pick them up before the competition does.

2. Lower salary expectations

Similarly – and as a direct result of the aforementioned glut of talent – the excess of supply in a low-demand space will have a pronounced impact on compensation levels. Even top talent will be wary about being overly demanding in wage negotiations when they know there’s a long line of other people waiting to take any position they can get. This might not seem like a positive for those out of work – but for SSOs looking to keep down costs it’s a cast-iron boon.

3. Declining land/construction/material values

This crisis began in the real estate sector and the impact there has already been dramatic – but it’s good news for any SSO (or any company looking to launch shared services) seeking a greenfield site for a new center. Once-prohibitive real estate and construction costs are dropping day by day (and will do as the construction sector continues to cannibalize in panic). Many, if not most, organizations will be putting big projects like this on hold; those that don’t will find the conditions for cost-effecive construction will be as attractive as they’ve been in a long, long time.

4. Better deals from vendors/suppliers

It’s certainly not just shared services that’ll feel the pinch; everyone bar the very luckiest is going to have to tighten their belts and up their game. For providers in increasingly crowded markets like IT, and suppliers in pretty much every sector, this will mean increasing competitiveness any way they can – and where better to start than at the bottom line, making prices and fees more attractive to the cash-strapped buy-side.

5. Greater senior-level buy-in (and hence more robust mandate)

Some SSOs are lucky enough to have the full support of the biggest players in their companies; others aren’t so fortunate. "Lack of senior sponsorship" is certainly one of the most commonly heard lamentations in shared services; another one is "resistance from business units". now though, with the pressure on boards to slash costs and increase competitiveness by any means necessary, shared services’ mandate has never been stronger – and woe betide any BU that attempts to obstruct the process. After all, there’s always room in the talent pool for anyone going off-message…

6. Added value: cashflow

Cash has always been king; now it’s pretty much emperor and high priest to boot. Every last penny will count as banks turn off the credit taps and the economy squeals. So who better to maximise limited capital resources than shared services? Squeeze another couple of thousand here, another few mil here, out of order-to-cash and P2P processes globally and shared services’ seat at the top table will never have been as well merited (nor, hopefully, so well rewarded).

7. Added value: reporting

It might not seem that crucial right now, but the ability of an organization to rapidly and accurately report data has never been so important – and will continue to grow in importance over the next months and years. Up-to-the-minute reports from an SSO – especially one utilizing a successful advanced Business Process Management system – will help a business immeasurably when it comes to negotiating with no-doubt-miserly lending institutions - as well as when trying to head off hostile acquisition attempts.

8. Added value: compliance

A whole new industry sprang up after the introduction of Sarbanes-Oxley – and that weighty Act is a veritable molehill when set against the mountain of regulation which is bound to loom up once the crisis passes. Shared service organizations which have already established and developed compliance units will have a crucial head-start as businesses scramble to conform to what might be extremely tough legislation across the West. Those that haven’t yet will be well-placed to take on board the responsibility – leaders can point to existing and successful compliance functions in SSOs around the world to hammer home the point.

9. Added value: M&A

We’ve seen some huge M&A deals announced in the financial sector already; if the crunch bites as deeply as it might, this will be replicated in pretty much every industry out there. Once again, SSOs can come into their own here: not only is there the mass of back-office processes, systems etc to integrate, but some shared services already take an active role in companies’ M&A activities in terms of real estate, HR and countless other different aspects of merging and acquiring. The opportunity is there for those that don’t already to jump on the bandwagon.

10. Breathing space

The spectre of outsourcing hangs over a great many SSOs and some, no doubt, will fall under the shadow. But ironically this current credit and cash crisis may be a lifesaver for some. Some companies which prior to the crisis were contemplating major outsourcing deals might now be put off by the initial expenditure required: if only for a while, outsourcing could go on the back-burner while more immediate savings are found. This could give under-fire SSOs just enough time to demonstrate some of the aforementioned value-add strategies. For some it will be too late – but for a few others this really could mean the difference between life and death.

SSON News and Analysis
Posted: 07/09/2012

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