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Shared-services-roadsign220We’ve all heard the mantra of ‘reduce cost by using shared services.’

The real question, though, is what activities are worth moving and what should you expect to gain?

Most organizations that are considering shared services look at administrative functions to start with. Areas like Accounts Payable, Treasury or even the entire Finance function. The perception is that these areas are not providing local competitive advantage, and instead the cost can be reduced by centralizing the activity.

What I would suggest, though, is that shared service functions work best when there is a slightly different motivator: user experience.

Many people might argue that to give the users of a service a better experience is best achieved by making the service locally accessible (ie, not shared).

While this is one option there are others that can also lower cost.

I would argue that the important thing to remember is that a centralized shared service can provide a number of important benefits, including:

  • Consistency for all users
  • Speed of service delivery
  • Lower total cost to the business

On this basis, I think that the argument is not for a shared service to be locally accessible, but for it to be easily accessible and representative of local requirements (wherever the user is local to). If the ability to get to additional information is not constrained by bureaucracy and time delays then the service will be perceived as accessible.

If that is achieved then the service will be easily accepted.

So to summarize, in order to get the cost savings that organizations want from shared services:

  1. Make sure that your people can easily and quickly get to the information they need and want
  2. Cut out as much bureaucracy as possible

If you have a group of like-minded, empowered people you will achieve this every time.

What metrics are you using to measure the effectiveness of your administrative activities?

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