Journey to Shared Services: Balancing Benefits and Risks for Improved Operations

The consolidation of a company's support tasks into shared services is a suitable method for enhancing service delivery and efficiency. Supply chain management, information technology, finance and accounting, human resources, and other front- and back-office services are all included. By centralising these services, businesses can benefit from cost reductions, process consistency, and improved business intelligence.

Pros of shared services in finance and accounting:

  1. The transition to a shared service centre accounting model forces organisations to reassess how they conduct business. This creates opportunities for task simplification and performance-based concentration. KPIs are utilised to track activity, and SSCs are managed as services with regard to efficiency and productivity. The number of invoices handled per FTE, the cost of each FTE as a proportion of revenue, the percentage of errors, and the number of manual entries are the most popular KPIs. Organisations can find opportunities for automation and development with the support of constant monitoring.
  2. Organisations can address the difficulty of finding the right mix of skills and experience by centralising finance and accounting processes. Organisations can obtain the greatest talent by placing these roles in nations with a large talent pool.
  3. An opportunity to review operations and consider methods to increase efficiency arises with the transition to a shared service model. This aids businesses in achieving a leaner structure, cutting expenses, and enhancing performance.

Cons of shared services in finance and accounting:

  1. Organisations must have procedures in place to manage and monitor compliance in order to remain compliant with local laws. Software for compliance management services covers data oversight, tracking, and reconciliation, as well as the requirement for specialised help to fill in any knowledge gaps.
  2. It is challenging for a shared services centre to have complete knowledge of all local accounting and tax requirements around the world because they differ from jurisdiction to jurisdiction. Issues with non-compliance and sanctions may follow from this.
  3. Maintaining compliance with local tax laws requires regular communication with tax authorities. It's crucial to have rapid and fluent local language communication skills. Despite the lesser cost reductions, near-shore SSCs are growing in popularity since they offer a better cultural fit.

Human resources shared service centres: Shared services for human resources are not a new idea, but not all businesses employ this strategy. Before using this strategy, it is important to thoroughly weigh its advantages and disadvantages.

Pros of human resources shared service centres:

1.   By centralising HR services, lowering errors, and boosting efficiency, organisations can increase process standardisation.

2.   By increasing efficiency and automating tasks, the consolidation of HR services can lead to cost savings.

3.   Organisations can access the greatest personnel and expertise by locating HR functions in nations with a large talent pool.

Cons of human resources shared services centres:

1.   Employees may feel disengaged as a result of centralising HR operations because they are less likely to interact directly with HR staff.

2.   Finance and accounting departments, as well as HR departments, must be familiar with regional laws and requirements. Non-compliance problems may arise from a lack of local expertise.

3.   Organisations face the risk of losing flexibility and the ability to adapt to local needs by standardising HR operations.

Conclusion

Any firm must carefully weigh the benefits and drawbacks before deciding to shift to a shared services centre. The advantages of shared services include cost savings, process uniformity, and centralised control, but there are also drawbacks, including reluctance to adapt, cultural differences, and the requirement for infrastructure and technological investments.

The appropriate deployment of shared services, with clear objectives, roles, and duties, communication, and change management techniques, is key to their success. In addition, it's crucial to regularly assess the shared services center's effectiveness and make improvements as necessary.

In conclusion, a company may greatly profit from moving to shared services, but it is crucial to carefully consider all the variables and make plans for a successful deployment. Shared services can assist organisations in streamlining their processes, increasing efficiency, and achieving cost savings while still providing their clients with high-quality services with proper planning and execution.

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