Global Challenges for Shared Services



Priyanka Anand
02/21/2018

How do Shared Services Adapt to Current Challenges in the Global Market?

The industry today is ripe with buzz on negative Consumer spending, significantly reduced from past levels, or on which forecasting had been based. Hiring is also being directly and proportionally impacted – it’s not only staggeringly below mark but organizations are reeling from the hard decisions of retrenchment.  

And yes, there is a domino effect across the entire economy, which no industry today can escape, and that impact is being felt in the Shared Services industry, too. 

Organizational focus has shifted to driving the bottom line, influenced through direct actions such as cost reduction in direct competition, from only top line activity of revenue increase; and, for the foreseeable future, there seems to be no escape.

Opportunities for Shared Services

There are various schools of thought around Shared Services Centers in general and despite the challenging scenario I would like to associate myself with the optimists. Professionals, particularly those thinking in global terms, see this huge cost realignment challenge as an opportunity for the Shared Services industry.

Less than a decade ago it was a popular perception that Shared Services Organizations were mainly transaction processing organizations, designed for centralizing monotonous, non-value activities to be done by low skilled, replaceable resources. Now, Shared Services Centers have come a long way with more prominent roles that reach into the consultative and strategic nature of business. Shared Services has gained its rightful position as a strategic arm of the business – a depth provider, with useful metrics, analytics, trends and insightful business intelligence to support future business decisions by its customer.

Demographics are shifting, however, and unemployability rather than unemployment is becoming an issue in emerging economies.

Its maturity curve is surely highlighted by the fact that organizations have started recognizing its worth and business demands have upscaled to ‘cost effectiveness’ – from ‘cost reduction’, which was the jargon used at its inception. In today’s business world, cost effectiveness is replacing concepts like performance management. Leadership is surely still exploring ways and methods of cost reduction, but it is ready to experiment with process improvement. Cost effectiveness is the key to driving bottom-line performance far more efficiently than the tried and tested cost reduction methods of the past. Today, SSCs are driven by tools of imagination and innovation and this industry must be open to look globally and drive improvement.

Leaders Adopting the Shared Services Model

Shared Services is becoming part of business life in today’s challenging scenario – just witness the fact that world leaders and service providers are vouching for global upscale and seeing emerging demands for their solutions. 

Process to Technology and Process standardization

Shared Services is providing more value to business partners and customers. Not only is it proactive in taking on more services that were previously delivered at ground zero, but companies are also pushing initiatives on quality with an end focus on increasing first-time-right rates. Some have a Six Sigma orientation and others are striving for accepted accreditations such as CMMI, etc. Certification alone may not be the key to success but embracing the ways and means of believing in those proven measurements, and implementing them surely is; not to mention believing and living it.

Scalability

Successful setups leverage the scalability of infrastructure to award flexibility for growth. In its absence, Shared Services’ evolution is bound to hit a roadblock very quickly on its journey towards expansion.

However, coming back to the point where we started: the reality is that Shared Services Centers are under continuous pressure of cost reduction. We may be talking fancy terminologies – performance management or enhancement through process improvement, building Centers of Excellence, flexible infrastructure, capability modelling, ROI measurement standards of singular transaction, etc. – but reducing cost is still the number one priority discussed at a business level.

In today’s changed markets, organizations must evolve beyond western-centric customer, or Asian-service-hub mindsets

While reducing costs is generally the focus, improving quality through better customer service and a lower defect rate is also significant. A big challenge is to somehow do more with less, but do it better. Organizations must challenge themselves to increase the value delivered to the customer. And although value can have various definitions for each company, we can safely assume these to include the highest quality, information, metrics & analytics, or data the customer needs to make informed business decisions.

Talent Availability

Demographics are shifting, however, and unemployability rather than unemployment is becoming an issue in emerging economies. The gap in the availability of talent with proper training has been discussed a lot in the IT industry, but Shared Services and other operation-driven setups are prone to the same lack of acumen. Lack of long term commitment for a role, and monotony of work, are the issues being faced in many geographies that are banking on a share of the Shared Services pie. The ability to work with the generation of plenty and at the same time work towards quality immigration will be key to this rising challenge.

Technology

Legacy platforms designed for small to medium sized enterprises are being implemented in Shared Services, which is being charged to manage with these kinds of technologies. Fast implementation to reduce costs and people drive more and better customer service, lower defect rates, increased value and the ability to take on more locations. It is difficult, given the various objectives, to achieve success through run-of-the-mill or off-the-shelf solutions. Organizations must move towards designing effective IT expertise with strong project management capability to front-end design and delivery of capable models, based on their process delivery mechanism.

Future of Shared Services

Shared Services will continue to be a critical delivery and support tool. Though a lot of innovation will happen as a result of changing scenarios around the globe, professional thought process will continue to lead to considering outsourcing models. The fact is that concentration of work processes in limited centers is required to cater to the growing demands of process control, just-in-time segmentation and costs. The demand for real time business information for stakeholders, voluminous transactional volume, and scalability means that requirements for Shared Services will continue to increase.

In today’s changed markets, organizations must evolve beyond western-centric customer, or Asian-service-hub mindsets. As the world changes, so should strategies evolve. The guiding vision should be to take advantage of talent beyond geographies. Other than this, short-term time frames should be planned for process delivery.

Executives in Shared Services should view their operations from a finance standpoint – i.e., evaluate available models and choose not only the lowest cost option but the one which doesn’t compromise service. Evaluating costs and the ability to deliver operations as a Shared Services Organization also require seeing things from a customer’s point of view. The alternatives that we provide should have a robust evolution graph carved out in order to compete.

Shared Services need to be proactive – and have courageous leaders that don’t shy away from tough questions.