Shared Services Model

Many business, finance and shared services leaders seek a common or consistent shared services model definition. A shared services model delivers services to internal customers by consolidating, standardizing and automating processes in low-cost locations. Services are delivered to many different divisions, departments and groups within an organization, and may include: accounts payable and receivable, travel and entertainment (T&E) reimbursement, payroll, general ledger and cost accounting. Any process that can be centralized and would benefit from increased customer focus is a candidate for a shared services model. Internal customers include anyone within the organization who would benefit from increased focus on value-add activities. The purpose of a shared services model is to run, grow or transform the business. Effective shared services models are defined by an unrelenting focus on customer value and satisfaction, being competitive and continuous improvement.

When establishing a new shared services model or expanding on an existing one, business, finance and shared services leaders may seek shared services model examples. Some examples show work retained in-house because they require direct customer or investor interaction, specific business or product knowledge, or have the potential to put sensitive information at risk. In-house work may include legal, investor relations, tax, treasury, and planning and analysis. Other shared services model examples show work outsourced because the work is process-driven, routine and easy to teach. Outsourced work may include accounts payable, T&E reimbursement and payroll. Before adapting your approach from shared services model examples, it’s important to evaluate your current processes for their level of complexity and their degree of commonality across multiple business units. Key questions you should ask yourself are: How well-understood and documented are the management and operational activities associated with each process? How mature is each process and how much will the organization benefit from process improvements? Is there any resistance from business units and local IT?

The shared services model and centralized services both promise significant process standardization and economies of scale, making them popular among business leaders needing low-cost and reliable services. However, shared services model benefits are distinct from the benefits generated from centralized services: better expectation setting with the business, greater motivation to reduce costs and increased responsiveness to changing business needs. Because the shared services model has a strong focus on transparency, continuous improvement and customer centricity, shared services model benefits include equipping the business to deliver sustained impact in the face of constantly evolving needs.

Shared services model price plays an important role in defining the degree of control over customer behavior. Organizations need to balance efficiency when pricing and charging out costs against effectiveness in influencing customer behavior. Since there isn’t a “one size fits all” shared services model price, shared services leaders should understand the pros and cons of various mechanisms for pricing or charging out the cost of shared services and determine which shared services model price approach is most suitable to support their services. Shared services leaders developing or revising shared services model price should determine the level of transparency and flexibility in pricing by assessing business unit customers’ needs and objectives.