The Next Step for Mature Shared Services Organizations – Establishing an Independent Entity

In a fully developed model, shared services are operated as a business unit providing services to other business units in a corporation. Chargeback models with service level agreements (SLAs) are used to fund operations. As the shared services organization matures, it is natural for leaders to consider spinning off the organization into its own entity—separate from the parent company—that then provides services to both the parent company and other external customers. In another scenario, companies have sold the shared services operation to outsourcing companies that then provide the same services back to the parent corporation. However, for both of these scenarios, independence does not necessarily infer complete financial separation from the parent company. Parent companies often strive to maintain substantial ownership to ensure stringent controls over data and services provided.

In this paper, we will examine the considerations, advantages, disadvantages, and risks of spinning off a shared services organization to provide services to its parent company.

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