Papinda Bhandal, Finance Transformation Consulting, PA Consulting Group says CFOs will have heard much about the pros and cons of outsourcing processes or of setting up their own finance-orientated shared service centres. However, surprisingly few are discussing the ever-growing shift towards multi-functional shared services, despite the clear benefits in formation and delivery.
While liquidity is tight and cash-flow constrained, many organisations are, quite rightly, embracing shared services – Finance, Procurement, HR, Facilities Management and IT functions to name but a few, all working in parallel towards similar goals and all supporting the same outcome.
But this unifying ambition is typically being pursued by each business function independently, and resources are not being shared as far as they could be, meaning duplicated effort and superfluous resource and expenditure, not just in effecting the necessary changes but also in terms of a sub-optimal over-arching outcome.
First of all IT and then Finance have for a long time proclaimed the advantages of shared services and have consolidated various resources to reduce cost, often to enviable effect. HR, procurement and others have typically followed suit and created their own shared service and self services arrangements and have mirrored the benefits.
However, one step remains. In the process of setting up their individually focused centres, each business function has more likely than not gone through similar negotiations with suppliers, devised and implemented their own and unaligned business support processes and spent similar budgets on infrastructure and resource.
The opportunity they have missed is consolidating the various centres into one cohesive virtual whole – creating a multi-functional shared services establishment with consistent design architecture and service delivery over a broad range of support processes, serving a common internal client base.
But the gains to be made from adopting such a multi-functional model do not stop at initial set-up – ongoing operational links can be made between finance and procurement, finance and payroll, recruitment and payroll, which remove the inter-departmental barriers that can take time and cost money to overcome when managing a series of siloed and single-functional shared service centres.
The role of the CFO
Indeed, the very delivery of the business functions themselves can also be improved as the framework of account management, governance, service levels and controls can be mirrored across each of the collaborating functions.
And it is the CFO who must be a driving force in pursuing this trend. The CFO is in a position to promote the benefits of a collaborative effort to shared services across the various functions. With a wealth of shared service centre expertise and experience available, finance are perfectly placed to drive the multi-functional model through the business. The realisation is dawning that the benefits they have created and seen previously can not only be replicated in other departments, but can be grown even further through the sharing of resource with other business functions.
Single-functional shared services are on the wane, while multi-functional models are on the ascendancy – it’s the next step in thinking for simplifying a business, and those that start taking advantage of it sooner than their competition will be in a far stronger position for the financial upturn.