SSC at a crossroads

Shared Service Centers (SSC) are here with us for more than 20 years now and in a meantime they evolved into many different set-ups, concepts and went through various maturity stages. As long as there are probably hundreds of ways to classify them, based on processes they perform, geographical scope they cover, organization, network etc, there are 2 main criteria I personally find most fundamental. It’s all about Ownership of Processes and Ownership of Resources. Why are they so important? Firstly, both areas tend to drive tensions and lots of unclarity between various stakeholders, including Local Business Units (LBU), Global Process Owners (GPO) and SSC leadership. Secondly, depending on decisions in these two dimensions, SSC needs to be dramatically differently organized.  So it’s important to have a full consensus around both aspects. And it’s equally important to clarify it at the beginning of the SSC journey, as well as during years of SSC live operations.

Ownership of Processes

While execution responsibility typically sits with SSC, it’s quite often not clear to what extend SSC can and should change processes, including major redesigns and so popular nowadays innovations and automations. Clearly day-by-day experience and “level of pain” related to current processes suggest that SSC is the first place where improvement ideas are expected to be born.  And it’s very much the case when it comes to continuous improvement approach, resulting in multiple, small enhancements done every year around process efficiency, speed or quality. But what about true innovations and game-changing automations? Some organizations may give a carte blanche to their SSC to make a call and drastically change processes, looking only on final deliverables and SLAs fulfillment.  Other businesses may want to control how things are done and will expect that HQ or LBU are a final decision maker for any important changes in the processes or systems.

Ownership of Resources

One of underlying assumptions and benefits of SSC model is clearly a labor arbitrage. Centers spread across India, Easter Europe or Latam were, and still are, delivering competent and cost effective employees, helping companies to reduce costs and improve service in the same time. Still SSC organization model vary from one company to another. Quite often SSC is a fully integrated, “stand alone” unit, managing all execution and support teams.  Still, I also saw “disintegrated” SSC-like sites, with different teams just sharing the same physical space in the low cost country, but reporting to respective regional structures, rather than to SSC head.

Modus Operandi

If we match both drivers mentioned above - Ownership of Processes and Ownership of Resources, we come to a quadrant of SSC types. All four cases vary significantly and require completely different approach to a right set-up and operations of the SSC. Therefore it’s so critical to clarify both elements and ensure full alignment with key stakeholders before we go ahead. Let’s have a quick look on some core differences:

If teams are just sharing the same office, role of the SSC leader will be mainly administrative, focused around office management, IT, maybe also HR supporting services. SSC fully controlling resources and not owning processes will be navigating toward Delivery Centers, where core focus will be put on people management and delivery efficiency. Most resources will be involved in business as usual activities as well as smaller improvements once new SOPs or Systems will come from a “mother company” represented by HQ, LBU or Governance Teams. Mature and respected SSCs may go for ownership of both processes and resources, becoming true Centers of Excellence. Role of the Center here is very much different; it needs to continuously deliver committed services but also work on process innovations, automations and take full accountability for all changes related to respective processes. Complexity of this model goes really high and requires very experienced teams, both in terms of people management but also having deep understanding of end to end processes, dependencies, architecture etc.

So what’s the best?

Let me share three main thoughts to summarize all above and give some guidance.

Firstly, SSC set-up and goals must reflect a mandate given by the organization. Ownership topic needs to be crystal clear and blessed by the top management to avoid never-ending conflicts and misunderstandings.

Secondly, based on my observations, mature and successful SSCs move typically toward full ownership of both resources and processes, becoming Centers of Excellence, delivering much higher value then only low cost and good service. They often unlock completely new opportunities and are leaders in processes digitization and innovations, creating a great competitive advantage for the overall organization.

Last but not least, mature SSCs tend to extend theirs scope of breath.  Historical Accounting sites may take over also HR or IT services, Operations can expand to Customer Service etc.  They tend to naturally gravitate toward sort of Global Business Services sites, becoming One-Stop Shopping Suppliers for wide scope of corporate processes. Does it smell like a new era monopoly? Maybe… it sounds like a good topic for the next episode. Who knows.