What Are the Most Lucrative Opportunities for SSO Scope Expansion?
As the Shared Services model is coming up to three decades in play, we see widespread adoption of the model around the world – in both multinationals as well as small and medium-sized enterprises.
According to SSON Analytics data (Shared Services Atlas), there are more than 7,000 captive or in-house Shared Services globally, with more than 200 in Germany alone, most of which, according to SSON’s 2019 industry survey, are providing ‘global’ services, predominantly still in F&A and HR, but sales and marketing support is also well-developed.
Trend: Services Growth
A clear trend among DACH-based centres is to expand services scope over the next few years. Indeed, expansion is writ large on SSC agendas. Seven out of 10 respondents from the DACH region plan to expand the scope of their service offerings, while a much lower percentage plans to expand its geographic reach.
So, Where are the Opportunities?
The growth in services is being driven by technology, knowledge, and value-adding competencies that have not historically been part of traditional Shared Services. Opportunities for expansion are varied.
It’s the deeper knowledge of the market that Shared Services have through direct contact with customers that offers a competitive edge.
“With automation having taken on so many simple transactions, the human factor is where I feel the potential for Shared Services expansion lays,” explains Katarzyna Stapor, Procurement Cluster Manager in Clariant’s GBS. The main criteria, she believes, is language and specialist knowledge about the market.
Relatively new SSCs see potential in extending beyond financial services, to incorporate additional functional support.
"As a relatively new centre, we are focusing on traditional finance services like Accounts Payable, Accounts Receivable, and General Ledger for our EMEA operations, right now,” says Joachim Schmidt, GM of Olympus Europa’s Wroclaw-based Shared Services that was launched just over a year ago.
This expansion of work rests on specialisation, expertise and opportunity.
1. Supply Chain
For the past 10 years Joachim Schmidt has run Supply Chain Management for Olympus EMEA, and because of his deep knowledge of the process has brought parts of it into the Shared Services – “particularly the work around import documentation, centralised procurement from our foreign based business units, and export documentation,” he explains.
These areas, Joachim says, are not common in Shared Services, but his experience convinced him there was value in integrating them. "Order management [sales support] and master data management are two areas in which I believe our Shared Services centre can offer tremendous value-add services. After one year we have already taken on 60 to 70% of this work."
2. Front Office
As what started with robotic process automation transitions to a broader ‘intelligent automation’ strategy aligned with the digitisation agenda of the enterprise, Shared Services is in a position to offer insights that support front office-based work. Much of this is down to ‘know your customer’ type insights that are driven by customer centric work, the ability to mine this data, and data analytics. Targeting the end-customer of the business by leveraging Shared Services expertise and competencies will drive a fresh range of services hitherto untapped.
3. Expanding Procurement
While indirect spend typically falls within Shared Services’ scope, companies like Clariant see expanding to incorporate direct spend as a good opportunity, explains Katarzyna Stapor, Cluster Manager for Procurement Operations within the GBS. “Now that we have operational procurement in hand, i.e., we’ve streamlined the process, we are refocusing on tactical procurement which is more about negotiation, where we feel we can bring a lot to the table,” she says.
Structurally, direct spends is more complicated to manage, says Katarzyna. “The process and order management are more fragile in terms of delivery dates and quality control. However, we feel it is a natural progression for our employees and customers.”
4. Centres of Expertise
The Centre of Expertise (COE) is emerging as the differentiator of 2019. With two thirds of global Shared Services already taking advantage of COEs as a driver of specialist services, we expect to see significant growth from this angle. Within the DACH region, the number of Shared Services leveraging COEs is closer to 75%, with the majority prioritizing intelligent automation/RPA and data analytics support.
5. Specialist Skills
The above COE charts highlight a significant trend, namely one where specialist skills – for example, around intelligent automation, RPA and data analytics – are honed in Centres of Expertise and then effectively deployed where they add the most value.
There are two key drivers of additional services: first, automation releases employees’ time so that they can devote themselves to additional knowledge-based activities; and second, the ability to analyse enterprise data to identify additional opportunities for the business by leveraging predictive insights.
6. Cognitive & AI-based Services
The addition of Artificial Intelligence-based solutions, in particular, offer a step change in services for those Shared Services in a position to take advantage of it. “This is an area in which we expect to see a lot of growth in the coming years – indeed, already do,” says Barbara Hodge, Principal Analyst and Global Digital Editor of the Shared Services and Outsourcing Network. “Increasingly analytical work conducted by Shared Services will provide business support above and beyond the transactional activities of the past.”
Shared Services, particularly Global Business Services (GBS) models, are the engine of transformation. As such, Shared Services provide valuable services and support far beyond the traditional functional areas. GBS models are able to leverage their global footprint, process ownership, and end-to-end influence to drive real change across the enterprise. In the current digitised environment, this capability has become one of the most important tools in the GBS toolbox.
8. New & Emerging Vendors
While new technology solutions are emerging at an ever-faster rate, it's hard to stay on top of their promises. How will they change your performance? What are implementation hurdles? What is the ROI? What skills are required for deployment? These are the kind of questions Shared Services leaders are asking themselves but finding too little time to devote to.
Conferences are an excellent opportunity to 'shop' new vendors and query them, as well as exchange notes with other leading Shared Services practitioners. It makes sense to allocate some time, every quarter, to invite a handful of the newest providers in for a solutions ‘audit.’ The time spent will easily repay itself in terms of the knowledge you build up.
9. Talent Pipeline
Shared Services of the future will differ significantly from what we have been used to over the past decade. The digital workforce will sit alongside human workers, and the combination of the two will deliver exponentially greater value. The challenge will be finding the right people who can think outside the box, are creative, familiar with design thinking concepts [see below] and, of course, customer-centric and technologically savvy. The skills required, in other words, will not necessarily be found by fishing from the familiar talent pools.
Instead, Shared Services should adjust by tapping talent where specialists are found. And, given that the specialisation will no longer primarily be around 'Accounts Payable' type processes, a new strategy is called for. Cyber security experts, for example, might be found on the relevant reddit pages. Data analysts may come from the banking sector. The book is wide open.
10. Design Thinking
As Shared Services are being held increasingly accountable for business-outcome-based support, the concept of ‘design thinking’ has become more prevalent and is driving innovative approaches to service definition. Design thinking starts with the objective and considers whether an alternative to the status quo process might achieve this objective more effectively.
The reason design thinking matters in Shared Services is that what you think the stakeholder wants is not always what the stakeholder really wants. Design thinking is becoming more significant as automation takes care of the transactional side of Shared Services, shining a spotlight on the new or additional demands of global customers.
Design thinking positions key customers or stakeholders as the North Star, with services designed around their needs.