Shared services are when a business consolidates its support functions to better serve the corporation and its business units, operating as a business within a business, utilizing a well-defined infrastructure to enable higher value service delivery. Typically, this includes services such as human resources, finance and accounting, information technology, supply chain, and other front and back-office services.
By consolidating these services into a centrally managed organization, businesses can achieve efficiencies and cost savings that would otherwise be difficult to achieve through decentralized operations. In addition to benefiting the organization as a whole, shared services also provide employees with valuable career opportunities and training.
The Benefits of Using Shared Services
When it comes to business, there are many advantages to implementing a shared services delivery model::
- Cost Reduction: Perhaps the most obvious benefit is that shared services can help to save time and money. By consolidating various functions into one organization or service provider, businesses can often achieve economies of scale and reduce duplication of effort.
- Improved Service: Centralizing certain functions can make it easier to monitor and manage performance. When services are siloed or distributed within business units, it can be difficult to track progress and identify areas for improvement. Standardized processes and the use of service management tools help improve service.
- Better Controls and Insights: Shared services enable data centralization which supports improved reporting and analytics. It also helps to improve compliance and enable better decision-making by the organization.
- Improved Communication: Shared services can improve communication and collaboration between departments and employees by breaking down silos and encouraging information sharing.
- Greater Flexibility: Shared services can give organizations the flexibility to scale up or down as needed, without having to make significant changes to their organizational structure. During mergers and acquisitions, shared services can simplify the process of integrating two organizations to combine operations and achieve synergies.
- Improved Productivity: When everyone is working from the same platform or using the same service provider, it can make sharing information and working together on projects much easier.
Ultimately, the benefits of using shared services can help businesses to operate more efficiently and effectively.
8 Examples of Shared Services
1. Human Resources
One of the most common examples is human resources shared services. By consolidating HR functions into one department, businesses can achieve efficiencies in areas such as employee onboarding, benefits administration, and payroll processing.
Another popular example is finance shared services. When businesses combine their financial operations into a shared service, they can often reduce costs and improve performance associated with accounting, accounts payable, accounts receivable, and other financial processes.
3. Information Technology
Many businesses choose to combine their IT functions into a shared service. This can help to improve service levels provided to IT’s customers as well as reduce overall IT costs.
Organizations can experience cost savings and service improvements by consolidating procurement into a shared service. When businesses manage procurement centrally, they can take advantage of volume discounts, economies of scale, and improved service delivery.
5. Facilities Management
Facilities management is another common example of C&SS. By consolidating their facilities management functions, organizations can achieve efficiencies in areas such as building maintenance, security, and janitorial services.
6. Communications and Marketing
Businesses can better manage and coordinate requests for communications and marketing in a shared services model. In this way, the organization can gain efficiencies, improve standardization, and avoid duplication of effort.
7. Project Management
Many shared services organizations have teams that provide project management services to the business. Due to involvement in many cross-functional initiatives, the shared services organization can provide strong project managers to assist other parts of the organization.
8. Data Analytics
Data analytics is a relatively new example of shared services, as businesses increasingly look to data to drive decision-making. By consolidating data into a central repository, businesses can more easily analyze it and identify trends.
Shared services are becoming more popular as businesses look for ways to streamline their operations, save money, and improve service delivery. Many organizations build in-house shared services organizations while some choose to outsource non-core functions to a third-party provider. In both cases, businesses can reduce costs while still maintaining high levels of quality and efficiency.
If you’re interested in learning more about how shared services can benefit your business, contact us today. Our team would be happy to discuss the options available and help you find the solution that’s perfect for your organization.