What is a shared services strategy

Functional shared services can bring so many benefits to all sorts of organisations. Whether it’s cutting labour costs thanks to location-driven arbitrage, making services like HR and finance standardised and streamlined, or giving all internal customers the same high-quality experience, there’s a lot that shared services can bring to your company. Most importantly of all, though, they can help to both cut down on unnecessary expenditure and increase company growth- making them the smart choice for any organisation that wants to get ahead of the competition.

However, have you ever thought about the extra benefits that you could reap by taking things one step further? Functional shared services have a lot to offer in themselves, but a multi-functional model, or even an integrated services model, can help take your business to the next level- under the right circumstances. The fact is, each model is more suited to a different type of organisation, and only by making an informed choice will you be able to take the right steps forward. You need to know what each shared services model is, and how much value you could add to your business as a result, before you take action.

There are three main shared services strategies to be aware of: functional shared services, multi-functional shared services, and integrated shared services. Each of them work in a slightly different way, and will be applicable in different situations. It’s a good idea to calculate the incremental value that each can provide you with, to see which is the best fit with your business.

1.    Functional shared services- this is where service delivery approaches, service scope and technology are each crafted to meet particular functional requirements. Because they are designed on a function-to-function basis, it’s likely that these services will be different for each individual function. While some functional shared services operate out of shared locations, the service definition and leadership structures will remain fixed to the functions themselves.

It's useful to think of functional shared services as the basic package out of the three approaches discussed here. While larger organisations may well benefit from a more complex approach, that’s not always going to be possible for medium-sized businesses. In these instances, implementing a functional shared services model lets you consolidate, for example, different accountancy services into a single function- something which any company can benefit from, whether they are large or small. Functional shared services can also be a useful way of determining whether further models might be of use to you. Use them as a springboard towards the further development of multi-functional shared services, to ease your organisation into a new way of doing things.

 2.    Multi-functional shared services- this approach involves grouping multiple functions under a single management team, utilising shared technology, and often operating from at least some shared delivery locations. Most services under this category are headed by a single manager, but still maintain strong links with various functions when it comes to designing processes, service scope, and upholding high service standards.

Making the jump from functional shared services to a multi-functional model allows businesses to make significant savings by dramatically cutting overheads. This is because a multi-functional model consolidates both locations and management roles to avoid any unnecessary spending, usually at a service delivery leader level. By grouping everything closely together in this way, it’s possible to pool resources such as telephone systems and office space between different functions- which will likely lead to each individual function saving a pretty penny. Instead of just a single department benefiting from shared services, now the entire organisation can become a more efficient, streamlined machine.

3.    Integrated shared services- while the previous two approaches have been business-centric, integrated shared services focus on maximising the customer’s experience. They group functions together based on end-to-end customer service, instead of treating each function as its own separate unit. The scope of services and the design of processes is therefore built around what the customer actually needs. Any transition, transformation, and financial management of the service delivery will be taken care of by the integrated organisation, while the service itself operates in much the same way as an individual business unit.

Integrated shared services bring extra value to your company by improving the service experience for customers. It’s an effective way of clearing through the clutter of the business world and focusing on your core function- and improving efficiency as a result. By remaining clear on just what services each individual customer needs, and which department is best equipped to handle those needs, everyone will benefit. Customers are dealt with faster, and employees don’t have to waste time that could otherwise be spent on taking care of additional tasks.

 It also allows you to redesign your end-to-end services and processes to avoid any unnecessary duplication, and sharing assets based on the various functions that make use of those same assets. For instance, by combining both incoming and outgoing telephone departments into a single, streamlined whole, not only will you save money on resources, but it also becomes much easier for one department to follow up on the work of the other. Finally, integrated shared services allow businesses to take a more commercial approach when it comes to pricing and service delivery, so that costs, risk, and supply-and-demand can all be managed to the highest level. By remaining as competitive as possible when it comes to both pricing and overheads, your organisation will be able to offer better prices to your customers- that way, everyone wins.

Image Credit: Peshkova  / Shutterstock
Fatmir Hyseni, Marketing Manager for
Kosbit