Demystifying 5 Shared Services Misconceptions in Saudi Arabia

With OPEC not being able to control oil prices due to increased availability of cheap oil, economic pressures continue to hound organizations in the Kingdom of Saudi Arabia and other GCC countries. Many corporations are looking within their organizations to determine how to improve operations and reduce costs.

Being on the ground in Saudi Arabia and meeting several CFOs, CHROs and heads of Procurement and IT, I can certainly vouch that the days of abundance are over. Cost constraints, efficiency gains and productivity measures are now commonly sought to achieve objectives, and many leaders of corporations are looking at Shared Services as means to bring about cost savings and efficiencies to their organizations.

Here are 5 things leaders in Saudi Arabia and GCC countries should watch out for while implementing Shared Services.

1. Centralization is not Shared Services. Not just in Saudi, but one of the common mistakes made by organizations across the globe is thinking that centralization is Shared Services. Unless you decide to treat your business as internal customers and establish a Service Delivery framework which includes clearly defined SLA's and OLA's, the objective of cost savings and efficiency cannot be achieved. The reason being, in a mere centralization effort there is no scope for continuous improvement and customer delight that throw up data for continuous innovation and cost savings. Hence, it's vital to understand that to set up a successful Shared Services Center, it is important to go beyond centralization.

2. ERP implementation is not Shared Services. Some of the top notch software firms approach organizations and convince them them to invest in a full fledged ERP systems to simplify their processes. But leaders need to beware – as they may get conned and end up losing large amounts of money and precious time – of buying more than what is required.

I often relate an ERP to "Fighter Jets", because the capability of the ERP is no doubt highly engineered and beneficial. But in handling fighter jets you need an ecosystem of trained pilots, engineers and service staff working in a disciplined environment. Likewise, in a ERP implementation it is imperative to have a clearly defined business case coupled with clear ROI numbers that justify the investment. What you need is an SSC organization that governs not only the ERP implementation but also defines detailed operating procedures to manage the ERP and achieve the ROI.

3. Shared Services does not lead to loss of control. A common misunderstanding among senior leaders of organizations is that an SSC will lead to loss of control that they previously had over their support functions. As services are delivered online through a defined channel and service delivery methodology, leaders may feel there is no direct control over the day-to-day operations of their functions, which they earlier had. However, with a transparent governance structure built into the SSC delivery framework, the misconception of losing control will fade away. The governance mechanism will deliver insights through KPI's, SLA's and OLA's that will actually enable leaders to make faster decisions and run their functions much more effectively.

4. Shared Services is not only for large organizations. Although an SSC is a must have for large global organizations, the SSC's ways of working is also highly recommended for small and medium-sized businesses. The early adoption of an SSC delivery framework will enable support functions to work in a highly responsive and cost effective manner. Another major benefit that smaller organizations can derive from an SSC is the elimination of bureaucracy and eradication of duplication of work, which also results in faster growth and agility for a growing company.

5. Shared Services scope is not just transaction oriented activities. While SSCs generally start with transactional activities such as AP, AR, Payroll, PR to PO etc, advanced SSCs have been able to successfully onboard value-added activities such as business partnering and sales to the SSC's offerings . The interesting aspect here is that an established SSC built with the right technology and service framework churns out insightful data that can be used by functions that are not purely transactional. As an example, an SSC Sales team might be able to gain insights into market trends, customer feedback and improvement areas with ease through the data generated by the SSC.