Agenda :11
Sharing the load
Finance and HR shared service centers
In recent years the perception of the IT department has oscillated between strategic enabler and commodity service provider. A ‘commodity’ approach to IT often leads to low traction with the business and sometimes even marginalization; while a more ‘strategic’ attitude to IT services labors the constant requirement to demonstrate business value. Reality often lies between these two positions and, in the meantime, CIOs find themselves in a Catch-22 situation.
While there are no silver bullets, there are ways of dealing with such a tricky balance. CIOs need to get closer to the business. Most know this already but the challenge is finding the right opportunity to engage – resolving a business issue that is unquestionably front-of-mind for fellow executives.
Shared services – not just IT but also Finance, HR, Procurement and Estates – represent just such an opportunity. The key arguments for adopting shared services are well rehearsed: increased process standardization, better service levels, reduced costs, adoption of a customer focus, labor costs arbitrage, and improved compliance with standards and regulations. Recent research by PA Consulting Group shows that shared services are considered to be a resounding success, with 92% of companies stating that they believe their shared services centers (SSCs) have either met or surpassed expectations (See Figure 1).
Figure 1: The majority of SSCs meet expectations
Indeed the bottom line speaks for itself – executives implementing Finance and HR shared service centers from 141 of the largest 500 companies across Europe are typically achieving 12% savings, with an average payback period of just 3.5 years1. In addition to cutting costs, Finance and HR directors are continuing to prioritize investment in shared services to enable improved service delivery.
So why are successes in Finance and HR shared services of interest to the CIO? Despite these reported success stories, our survey also found that shared service implementations are no walk in the park. Significant challenges need to be overcome, including securing buy-in from senior management; standardizing processes; ensuring swift implementations; addressing the required cultural change; and embedding ongoing improvements to service quality and scope. Organizations realize that setting up shared services is just the start; ongoing improvements to service quality and reviewing the services in scope are vital to reap the long-term benefits.
These challenges will ring a bell with CIOs who have over the past years had to implement change programs within their IT Department or across the business.
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The golden opportunity now exists for organizations to leverage the skills and experience built up in their IT functions, and reduce the learning curve associated with their shared service initiatives – whether these involve IT services or not. Forward thinking CIOs should broaden their sights by proactively supporting their Finance and HR counterparts in designing, implementing and running their shared services initiatives. |
While Finance and HR shared service implementations require specialist Finance and HR knowledge, there are also elements which are generic, and where best practice from other areas can be applied. There are some essential skills that CIOs can offer to their colleagues, in addition to the pure IT advice required:
- Many CIOs have significant experience of leading IT sourcing programs and managing supplier relationships. This has led to the development of experience and skills which are readily transferable to the implementation of Finance and HR SSCs, especially in the case of the increasingly popular hybrid sourcing models, where a mix of in-house and outsourced services are used.
- CIOs often have strong experience of supporting business transformation initiatives and IT-enabled business change. These transformation skills are an invaluable part of the success of any SSC implementation, and CIOs should look to make these available to their Finance and HR counterparts.
- Process standardization is essential prior to any successful SSC implementation. Most IT Departments will have built up solid experience and skills over the years in the areas of business analysis, process design and process optimization, which are all essential for the successful implementation of any shared service initiative.
- Ongoing service improvements keep SSCs fresh, current and efficient. CIOs will have solid and transferable experience in this area, as most IT departments have had to identify and implement improvements in the way they provide services to the business, in recent years.
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"Branching out and offering support to colleagues looking to implement shared services represents a mindset change for CIOs". |
Faced with the day-to-day pressures of running an IT operation, many will see this as an additional hassle. But for the CIO who is willing to take on the challenge, the rewards can be significant. At an individual level, there is peer recognition and securing a seat at the top table; at an IT department level, there are options for new career opportunities for IT staff and raising team morale; and at the wider organizational level, there is the potential for significantly leveraging the CIOs skills and experience for the benefit of the whole organization.
This is not about the CIO taking over the domains of Finance or HR. But it is about strengthening and establishing the CIO’s profile as a leader of change across the business. Given the significant desire to secure benefits from shared services across both the private and public sectors at present, this is an opportunity too good to miss.
For a copy of the research paper referenced in this article, Shared service centers: delivering the promise, please contact sharedservices@paconsulting.com.
1 Shared service centers: delivering the promise, PA Consulting Group, 2007.
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