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Shared Service Centres
In a sentence
A practical guide arguing that shared service centres succeed only when run as real businesses focused on people, culture and change management rather than mere cost-cutting centralization.
Shared Service Centres by Andrew Kris and Martin Fahy is the definitive practitioner's handbook for executives considering, building or revamping shared services and business process outsourcing. Drawing on empirical surveys from the Shared Services and BPO Association plus rich case studies from Whirlpool, Oracle, Lucent, Exel and others, the authors dismantle the myth that shared services is simply centralization under a new name. Instead they argue it must be run with the economic discipline of a genuine business—delivering services clients value enough to pay for repeatedly, at a cost, quality and timeliness competitive with alternatives. The book covers the full lifecycle: strategy and business case, technology and ERP, location and migration, outsourcing, change leadership, culture, performance measurement, and the emerging world of web-enabled e-shared services. Its central insight is that the technical components are relatively straightforward; success or failure hinges on people, culture and change management.
The four lenses
- Science
- Statistics
- Systems
- Strategy
The model
A causal model linking SSC design levers and contextual conditions through psychological and behavioral states to sustainable value outcomes, emphasizing that people, culture and change management mediate the relationship between SSC design and results.
Business Orientation of SSCdesign lever
The degree to which the shared service centre is designed and run as an independent business with competitive economics, client focus, and fully loaded cost recovery rather than as a corporate centralization function.
Process Standardizationdesign lever
The extent to which common business processes are harmonized and standardized across business units and countries prior to and during migration to the shared service centre, reducing duplication and enabling economies of scale.
Technology Enablementdesign lever
The deployment and effective use of enabling technologies such as ERP, e-workflow, data warehousing, e-procurement, EAI and web-based self-service to support and automate shared service delivery across locations.
Location Suitabilitycontextual condition
The degree to which the chosen SSC site provides the necessary skilled and multilingual labour, infrastructure, cost advantages, fiscal benefits and neutral environment to sustain effective service delivery.
Change Management Effectivenessbehavioral pattern
The quality and completeness of non-technological activities during and after implementation including stakeholder management, communication, training, readiness and impact assessments needed to achieve desired business benefits.
SSC Leadership Qualitydesign lever
The presence of a decisive, service-oriented, communicative leader with general management skills and the right attitude who can motivate teams, understand client needs and drive the SSC as a business.
Cultural Fluencypsychological state
The capacity of SSC management and staff to operate comfortably across multiple national, ethnic, functional and organizational cultures, adapting to norms and managing intercultural communication in multilingual teams.
Stakeholder Buy-inpsychological state
The level of active support and commitment from senior executives, sponsors, local managers and staff for the SSC initiative, reflected in engagement, reduced resistance and shared ownership of objectives.
Service Qualitybehavioral pattern
The extent to which the SSC delivers accurate, available, accessible, dependable, responsive and adaptable services that meet or exceed internal client expectations relative to external alternatives.
Client Satisfactionpsychological state
The degree to which internal business unit clients are satisfied with the SSC's services and repeatedly choose to work with it, reflecting perceived value, empathy, credibility and responsiveness.
Cost Savingsoutcome metric
The realized reduction in general and administrative costs, headcount and process costs achieved through consolidation, standardization, technology and economies of scale in the shared service centre.
Sustainable Value Creationoutcome metric
The long-term enhancement of shareholder and organizational value through sustained efficiency, service excellence, flexibility for growth and acquisition, and freeing of resources for core strategic activities.
How they connect
- business orientation of ssc → predicts service quality
- process standardization → predicts cost savings
- technology enablement → influences service quality
- technology enablement → influences cost savings
- location suitability → influences cost savings
- location suitability → influences service quality
- change management effectiveness → predicts stakeholder buy in
- stakeholder buy in → mediates sustainable value creation
- change management effectiveness → predicts sustainable value creation
- leadership quality → moderates change management effectiveness
- cultural fluency → moderates service quality
- service quality → predicts client satisfaction
- client satisfaction → predicts sustainable value creation
- cost savings → predicts sustainable value creation
A candidate measure
Shared Service Centres — derived measurement candidates
Business Orientation of SSC
proportion of services on SLA; cost recovery ratio; entity classification
self-report suitability: medium
Process Standardization
count of process versions; percentage on standard process; legacy systems count
self-report suitability: medium
Technology Enablement
percentage transactions automated; single-instance status; automation software inventory
self-report suitability: medium
Location Suitability
weighted location score; language skill availability; operating cost index
self-report suitability: low
Change Management Effectiveness
readiness assessment completion; training coverage rate; cutover incident count
self-report suitability: medium
SSC Leadership Quality
360 feedback scores; staff turnover under leader; client relationship ratings
self-report suitability: low
Cultural Fluency
non-national retention rate; intercultural training completion; conflict frequency
self-report suitability: medium
Stakeholder Buy-in
engagement survey scores; sponsor meeting attendance; resistance incident count
self-report suitability: high
Service Quality
percentage SLA targets met; incorrect invoice rate; help desk response time
self-report suitability: high
Client Satisfaction
satisfaction survey score; discretionary service volume; complaint rate
self-report suitability: high
Cost Savings
percentage G&A savings; reported ROI; cost per transaction
self-report suitability: medium
Sustainable Value Creation
longitudinal cost/quality trend; post-merger integration time; freed capital reinvested
self-report suitability: low
The story
The reader A senior executive or CFO of a large, complex, multinational organization who wants to deliver value-adding, low-cost, high-quality administrative and finance services.
External problem
Duplicated, costly and inefficient internal service units that drain overhead and fail to add measurable value.
Internal problem
The executive feels impoverished for reliable, independent advice and anxious about making large, risky SSC investments that may fail like half of all attempts.
Philosophical problem
It is simply wrong to treat administrative functions as inevitable overheads and to run consolidation projects that ignore the people who make them work.
The plan
- Rigorously define shared services as a business, not consolidation.
- Build a clear business case with executive sponsorship.
- Design and configure the SSC model including location and services.
- Roll out with strong change management, communication and workshadowing.
- Establish SLAs, scorecards and benchmarking to make value visible.
- Extend and web-enable the SSC toward the e-SSC and finance-to-business model.
Success
- Sustainable 25-50% cost savings with improved service quality.
- A motivated, service-oriented team and satisfied internal clients.
- A flexible, scalable platform enabling growth, acquisitions and expansion.
- Finance freed to become a strategic value-creating partner.
At stake
- An underperforming SSC that is just centralization in disguise.
- High staff turnover, poor service quality and eroded executive support.
- One-time gains reversed as the centralize/decentralize pendulum swings back.
- Loss of competitiveness as rivals achieve best-in-class administrative economics.
Questions this book answers
- What distinguishes a true shared service centre from mere centralization?
- Why do at least half of shared services fail to meet their cost and quality goals?
- How should organizations decide whether to build internal shared services or outsource?
- What people, process and technology factors determine SSC success?
- How should firms choose a location and migrate to the SSC model?
Glossary
- Business Orientation of SSC
- The degree to which the SSC operates as an independent business with competitive economics and client focus rather than as a corporate centralization function.
- Process Standardization
- The extent of harmonization of common business processes across units and countries feeding the SSC.
- Technology Enablement
- Deployment and effective use of enabling technologies supporting SSC delivery and automation.
- Location Suitability
- The degree to which the chosen site supplies labour, infrastructure, cost and fiscal advantages needed for effective service.
- Change Management Effectiveness
- Quality and completeness of non-technological activities enabling business benefits during and after implementation.
- SSC Leadership Quality
- Presence of a decisive, communicative, service-oriented leader with general management skills and the right attitude.
- Cultural Fluency
- Capacity to operate across multiple cultures and manage intercultural communication in multilingual SSC teams.
- Stakeholder Buy-in
- Level of active support and commitment from executives, sponsors, local managers and staff for the SSC.
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