Shared Service Centers - A way of internal outsourcing
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The document discusses shared services centers (SSCs) and their benefits over centralized functions. SSCs aim to deliver cost-effective and reliable services through increased efficiency, economies of scale, standardization, and technology leverage. Common functions considered for SSCs include finance, accounting, HR, IT, legal and corporate services. The implementation of SSCs involves opportunity assessment, defining the scope, building a project team, developing a vision, analyzing current processes, designing the SSC, and change management. Critical success factors include strong executive support, engaging experienced staff, and defining performance measures. The conclusion states that SSCs can help control non-essential costs and ensure efficient service delivery across divisions in the long run.
Shared Service Centers - A way of internal outsourcing
- 1. Shared Services Centre (SCCs) June 26, 2013
- 2. Description A. Vision B. Shared Services Centers C. The Way Forward D. Conclusion
- 4. Shared Services Centers Shared Services – A Basic Concept How is shared services different from centralization? Benefits of a shared services model Methodology & Criteria for selection of SSC Common Candidates for SSC’s Phases of Shared Services Development Critical Success Factors Implementation Pitfalls Proposed Organogramme Highlights
- 5. Shared Services Centers Shared Services is a way of reorganizing knowledge based and volume based functions to deliver cost effective, flexible, and reliable services to all customers
- 6. Shared Services Centers How is SSC different from centralization?
- 7. Shared Services Centers Increased Efficiency Economies of Scale Technology leverage Standardization/ Coordination Reengineering Opportunities Greater spans of control Increase Effectiveness Specialization, skill leverage Free up management to focus on business issues Sharing Information and resources across businesses Lower Costs Increase Profits Increase ROI Achieve Strategies Increase Revenues Increase Market share Benefits of Shared Services Model
- 8. Shared Services Centers Entrepreneurial in nature Transformation of Volume driven services into Centers of Scale Recreation of Knowledge based tasks as centers of expertise Relationship driven services are NOT good candidates for SSC Shared Services Methodology
- 9. Shared Services Centers Finance & Accounts • Cash Management • General Ledger • Accounts Payable • Accounts Receivable • Tax compliance • Purchasing Human Resources • Payroll Processing • Benefits Administrati on • Relocation Services • Compensati on • Training & Education Information Services • Standards • Application development • Telecommun ications • Applications maintenance • Acquisition of Hardware & Software Legal • Litigation Support & Coordinatio n • Environmen t, health and Safety consulting / auditing • Regulatory Compliance Corporate Affairs • Communica tion services • Media relations Departmental Candidates for Shared Service Centers
- 10. Shared Services Centers Opportunity Assessment Determine Scope of the Effort Organize & build the project team Develop a vision & direction Build an understanding of current processes Develop the business case for change Design SSC Perform location analysis Design standard process Assess business risk and control environment Develop SLA’s Develop SSC governance structure Implement SSC Develop the change management plan Promoting a cost conscious & customer focused mined set Optimize SSC Develop continuous improvement plans Evaluate organizational roles & responsibilities Upgrade systems to support redesigned processes Phases of Implementation
- 11. Shared Services Centers Critical Success Factors
- 12. Shared Services Centers Implementation Pitfalls Lacking a strong executive champion Centralizing functions without creating an entrepreneurial spirit. Inadequately defining base line costs and misdirecting resources. Failing to engage and motivate experienced personnel to use their best practices. Failing to overcome paradigms e.g. stucking on old structures, processes. Failure to create a sense of ownership in implementing it. Missing focus on continuous improvements. Failing to define performance measures and SLA’s
- 13. Shared Services Centers Success Stories - Ciba Geigy Model
- 14. Shared Services Centers The private sector has been moving towards shared services since the beginning of the 1980s. Large organizations such as the BBC, BP, Bristol Myers Squibb, Ford, GE, HP, Pfizer, Rolls-Royce, ArcelorMittal, and SAP are operating them with great success. According to the English Institute of Chartered Accountants, more than 30% of U.S. Fortune 500 companies have implemented a shared- service centre, and are reporting cost savings in their general accounting functions of up to 46%. University of Michigan- USA have adopted it and it will be implemented by Dec 2014. Approximately 2700 people at M-U spend time in administrative services which is expected to be covered by 600 only. Saving goal of 17 Million USD annually. Both public and private universities and other educational institutions around the USA are launching initiatives in this direction. Cornell, North Carolina, U-C Berkeley, and Illinois are among the many universities that have launched initiatives to contain costs and improve efficiencies. Oracle saves over 2 billion USD by implementing shared services. Success Stories
- 15. What’s Next Controlling Non- essential Costs • It is a long standing need of the organization to control the non essential costs in a competitive environment. Ultimate Aim • Whatsoever approach might be used, but the ultimate aim of the organization should be the same and that is to better leverage resources to: • Create value; • Reduce cost; • Increase the quality of support work; • Increase the value added content of the organizational services; and • Result in competitive gains and market share growth. Steering Committee • A steering committee should be formed to think over both the options and work out and analyze their costs and benefits.
- 16. Conclusion In the longer run Shared Service Center ensures delivery of cost effective and efficient services to Group Business divisions.
- 17. . Thank You