Papinda Bhandal, Finance Transformation Consulting, PA Consulting Group says that whether they are outsourced or retained in-house, shared service centres (SSCs) have become a fixture of the business landscape over the past ten years. As the benefits which shared services offer become more obvious, consistent and sought after, and faith in their reliability as a strategy develops, there is an emerging trend towards entrusting SSCs with a greater portion of finance function responsibilities.
To date SSCs have continued to show their worth by leveraging business process automation, expanding geographic footprint and either off-shoring and or outsourcing. However, as SSCs and the business as a whole drive for continuous value and ongoing competitive advantage there is a recognition that for SSCs to remain successful and viable they need to take on and deliver more and this time round it means moving up the value chain.
Given the appetite for moving high level and front office functions to a SSC that question is what should be considered and what is needed to ensure success?
Within the finance world the shift is towards:
Processes that were previously not considered because they were classified as high end and not part of traditional transaction processing activities - examples of this are: management accounting activities, financial reporting, compliance and decision support activities
Front office processes that have direct customer contact that were previously considered too high risk for a move into a SSC. Now with SSCs firmly established opportunities are being sought to integrate front office with back office
Processes that are strategic in nature and previously were not considered due to a lack of fit with a SSC model. Examples are strategic procurement, management information production and analytics.
Previous reluctance to transfer responsibility for business functions beyond administrative and transaction processing activities – born out of a concern that performance levels will dip, even if only temporarily – is being quashed. Shared service centres have proved themselves and as a result of the economic conditions and the resultant challenges placed on CFOs and CEOs, there is a greater readiness to restructure the business – whether this results in the shared services ideology being pushed deeper into the finance department, or into other business functions, or both.
However, shared service centres may find themselves with little choice. If there is a refusal or an indication of incapability to take on a wider role, the centre’s ongoing function may be at risk. Suddenly, the hitherto darling of the business can become vulnerable as Boards push their shared service centre to do more and more. Of course, there is no reason why a well-managed centre that has been sensibly developed at the outset cannot practically take on a greater proportion of business functions. But there is a very real danger that if the new challenges of a wider role within the business or a deeper role within finance are not accepted eagerly and successfully, then the centre can be found to appear wanting and is regarded as resting on its laurels.