An Introduction to Shared Services & Outsourcing and the SSON

First and foremost: a Community As an organization, SSON is a lot of things to a lot of different people: we serve a geographical need (where are you based? where do we run our conferences? where can you meet other practitioners?), we provide commodities that are useful to you (events, webinars, white papers, training, articles), we serve your information requirements (how do you build a shared services model? what should you know about customer service? where is Wuhan and why is it important?) – but we believe our most important service to you is as a community, meaning: we connect you with each other through online forums, we answer your questions, we help you evolve and develop, we provide training to plug your skill gaps, we acknowledge your achievements through our Awards, we broadcast your promotions online, and we have a newsletter to tie it all together and keep you connected. [eventPDF] It's the community aspect that drives our members' engagement. That's why 65,000 shared services and outsourcing practitioners around the world have already joined the SSON. Please join them now by registering (free) today here. Make sure you also join our online communities on LinkedIn, Facebook, and Twitter: ––––––– An overview of shared services & outsourcing Why is a Sourcing strategy so important? What is Shared Services? How does Outsourcing work? And how can SSON help you get the answers you need? A brief introduction... Shared Services "Shared services" is the now well established principle of consolidating "non-core" (back office) support services, and delivering these from centralized locations to provide lower costs, higher quality/reliability, standardization and harmonization of processes, and a flexible services delivery platform from which to leverage growth or manage business constriction. While the name may vary from "shared services" to "business services" to "support services", what is consistent is the fact that, in a best practice scenario, the head of shared services reports either direct or indirect to the executive board, and runs a stand alone unit whose core expertise is firmly rooted in the organization's "non-core" services. Funding and resourcing of the service is shared and the SSO department effectively becomes an internal service provider, often times competing with external third-party providers (business process outsourcing providers). Early practitioners were generally U.S. companies, which recognized that it made sense to consolidate duplicate support services that were otherwise strewn across nationwide operations. The Anglo-Saxon business environment has generally been enthusiastic and quick to adopt shared services. We see a slower uptake in continental Europe, as a result of in-country labor restrictions and a tendency towards protectionist management styles; but in the growth markets of Latin America and Asia shared services are often leveraged to provide the kind of resource flexibility needed in expanding markets. Once an organization has decided that shared services is worth pursuing, there are a couple of decisions that need to be made: 1. Single function or multifunction? Support services generally fall into human resources, finance and accounting, and IT. This is of course a simplified definition. In reality, non-core services include real estate management, legal support, fleet management, and so on. The biggest early gains ("low hanging fruit") have been found within the finance and accounting function, and this sector, which is fairly transactional in nature, remains the largest market for shared services. There is an increasing trend for companies to focus on the procurement process, and globally we are seeing a lot of activity in applying shared services to this area. The focus is further being extended to "procure-to-pay", which supports the recognition that the biggest gains will be reaped as a result of more holistic policies, cutting across silos. Human resources, while facing unique requirements in-country, can still support a global enterprise platform, and much of the self-service, automated technologies that has emerged over the past decades have worked hugely in favor of HR shared services. Information Technology tends to be so amorphous within an enterprise, that it's hard to pin it down as a "support" function, supporting, as it does, marketing, sales, manufacture, etc. However, IT very clearly lends itself to a shared services model and today it represents the third largest segment in this market. 2. In-country or offshore? Once a shared services model is chosen, the next decision is whether to run it "in-country", ie providing services for that country specifically; whether to run it regionally, i.e. covering a number of countries in that region; or whether to develop a global centre (the term "captive" indicates a shared services that is located "offshore"–i.e., away from the relevant company’s home market, but owned by that company; though, given the global operations of most organizations today, these terms become somewhat meaningless). The decision as to where to base a shared services centre (SSC) tends to be driven by in-house policies and strategic priorities (not least of all, turf wars). We tend to see in-country services in some continental European countries; regional services, for example based in Eastern Europe or Asia, for broader geographies; and global services in the case of companies whose boards take a more holistic view to enterprise operations. While 15 years ago Ireland and Spain were favorite locations for basing shared services, due to wage and other cost arbitrage opportunities, today, Asian markets have opened up, and we are seeing more captive centers located in those regions. 3. In-sourced or outsourced? In shared services speak, "in-sourcing" simply refers to the delivery of services from in-house shared services operations (SSOs). These can be in-country, regional, or global, but are all captive centers (though captive tends to refer to offshore, albeit owned, operations). Today, we often hear the term "smart sourcing", which refers to a more ideal balance between in-sourcing and outsourcing. There are a number of providers that have specialized in business process outsourcing services within finance, HR, and other functions. These providers will be happy to take your entire process (or as much of it is you are comfortable handing over) and provide these services back to you at a lower cost – based on cost per transaction or other standard measure (eg, Full Time Employees). The point here is that outsourced providers make your "non-core" business, their "core" business, and therefore develop expertise in that area. That, and the fact that by supplying multiple customers with the same processes, providers can leverage significant resource and process synergies that can be passed on to you, the customer, make outsourcing attractive. An additional point is that, while it may not make a good business case for you to invest in amazing supporting technology for your in-house shared services, an outsource provider’s business depends on them investing in the latest and greatest enabling technology. Outsourcing, therefore, gives you access to that technology, to the process expertise, and, increasingly, to the data analytics capability that these providers are amassing. These tend to be the most important drivers when evaluating outsourcing. The trend today is to speak less of "outsourced providers" and more of "strategic partners". With lines between the business and its suppliers blurring, strategic partnership can, in many cases, deliver above average results by extending process scope (end-to-end, or e2e, as it is referred to), collaborating on problems, sharing risk/reward (skin in the game) and coming up with more creative solutions. How can SSON help you? SSON has been covering the shared services and outsourcing market for nearly two decades. Our conferences, of which we run dozens per year, are the most recognized and respected in the industry, bringing together practitioners and suppliers across a range of functions to share best practice and introduce the latest technologies. You can find a listing of our shared services conferences here. The SSON’s website maintains a high standard in bringing you the latest news on developments, best practice case studies, interviews with leading practitioners, updates on what providers are developing, as well as a host of interactive opportunities to network and learn from each other. More specifically, we post industry jobs, provide online training opportunities, supply the latest thought leadership through our white paper archive, provide regular webinars updating you on emerging technologies and strategies to help you get more from your shared services, and offer insight into how, exactly, your peers around the world are getting recognition for their services delivery. The "Resources" button on our home page will lead you to all of our online content around shared services and outsourcing. We also run annual Shared Services and Outsourcing Excellence Awards across the globe, which highlight and recognize the successes and achievements of SSOs. Our Training division, SSO Pro, offers an online accreditation course across 10 core competencies that serve to fill the gaps identified across the shared services industry. You'll find our editorial calendar here, and for providers wishing to connect with the market, we offer sponsorship opportunities online. So join our Network today. Together, we'll promote best practice and celebrate successes.

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