[Note: this blog is an expanded commentary to that which can be found in SSON’s report “The State of Shared Services & Outsourcing Industry 2021 Global Report” co-sponsored by Chazey Partners. Download the full report here].
By Phil Searle, CEO & Founder of Chazey Partners
Introduction – Embracing the new Shared Services trends
Over decades, Shared Services has been an evolving service delivery operating model that supports the host enterprise’s internal customers. When successfully deployed and operated, Shared Services is able to provide thetriple benefit of lower costs, improved service levels, and a tighter, moreefficient, control environment, delivered by an internal (as opposed to an externally outsourced) delivery team. The model has traditionally involved some degree of centralization, with the establishment of Shared Services “Centers”, that are often based in different regions across the world. However, the current COVID-19 pandemic has, as with so many aspects of business, challenged the conventional set-up of Shared Services, and forced Shared Services and Global Business Services (GBS) professionals to adapt and re-think how it is set up and operates, whilst also leveraging the many benefits from having such a model in place during a time of crisis. Shared Services and GBS leaders have had to embrace the new trends, the new way of working, including considering how best to benefit from what is sometimes called the “future of work” (including virtual platforms, remote working, flexible hours, etc) and take advantage of the significant opportunities from both the technology landscape previously established (such as bandwidth, video conferencing capabilities and security protocols) and new developments (such as Intelligent Automation and digitalization).
The Evolution Journey and the Impact of COVID-19
Since its debut nearly 40 years ago, the Shared Services model has been through quite a number of necessary evolutions and upgrades, with numerous trends including expansion of scope, moving up the value chain, move to multifunctional, offshoring, business process outsourcing, global business services, intelligent automation, and, more recently, digitalization, the move to “OneOffice” (Connecting the front, middle, and back offices to create a touchless and frictionless digital experience, as described by HfS Research), and, of course, remote working/virtual Shared Services, which has been accelerated by the current COVID-19 global pandemic.
The more “traditional” Shared Services solutions (e.g. reduced functional scope, limited in technology, limited in reach, not leveraging the very best practices, etc) have experienced more challenges as a result of the pandemic than those that are more integrated, leveraging the latest technology enablers, with agile service management and operating frameworks. Also, business continuity plans (BCPs) and operationalization of those plans have really come to the forefront. Those Shared Services organization with robust, comprehensive BCPs have fared very well indeed and have been a big part of the business response to the impact of the pandemic, while those that did not have these in place, for whatever reason, have struggled more, at least initially.
In the face of the global pandemic, many components of any Shared Services operating model have needed to be re-evaluated. The extent to which outsourcing – and specifically offshoring – forms part of the current service delivery model has needed, and will continue to need, to be re-examined. There is a desire to have delivery teams closer to the business and to some degree less centralized, while still operating under a Shared Services model. Stretched and remote elements of the supply chain have also become a concern. Additionally, some current models have been exposed as being over-reliant on one global location rather than multiple delivery centers with a robust degree of redundancy planning and capability, and the ability to leverage a global team across multiple timezones.
Traditional Shared Services models, by their very nature, tend to be more siloed and therefore are less able to leverage scale and be more integrated. This does also mean that there is a lower risk of a global, cross-enterprise impact if one siloed center is, for example, suffering from a shut down or lots of staff being off sick. But “proper” Shared Services models, and especially those leveraging Global Business Services and all its elements, have been well able to handle the impact of the pandemic.
Trend #1 – Automation and Digitalization
The pandemic has accelerated many of the shared services trends that were already in place. It has been clearly demonstrated that world-class Shared Services/GBS organizations, with strong operating models and greater automation, are better prepared for today’s challenges and opportunities.
Indeed, the very best organizations are building hyper-resilient operating models, working with selective, expert external partners and outsourcing relationships, leveraging the very latest in digital technologies and Intelligent Automation (Robotic Process Automation, Machine Learning, Artificial Intelligence, Blockchain, etc.), and embracing remote working.
Robotic Process Automation (RPA), for example, has advanced to the point that it is being implemented and scaled across most Shared Services organizations, at least to some degree, today. Many GBS/ Shared Services organizations have successfully implemented RPA at scale by embracing this new technology, altering their operating models, redesigning their processes, and training their people. To eliminate some of the very frustrating manually intensive activities that either always existed or were never solved by the implementation of Enterprise Resource Planning (ERP) solutions.
To achieve world-class digitally-enabled performance levels, Shared Services/GBS organizations need to develop and accelerate their digital capabilities. Organizations will be need to become highly digitized and self-service-enabled. To evolve from world-class to digital world class, Shared Services will need to accelerate the development and adoption of new digital business capabilities that leverage all the data that is gathered and available today, drive better analytics, and develop value adding business partnerships. Skills needed for success in the new world include analytical skills, technical skills, plus business and commercial skills. Especially as we move closer to what some are calling the “OneOffice” where functions, teams, technologies, data and processes are more closely aligned, integrated and inter-related, and supportive of one another to drive the fastest and most valuable business outcomes. Long gone are the days of the “out of sight and out of mind” unintegrated shipping off to far flung locations of “non-core” processes and activities.
Trend #2: Virtual Shared Services – Future of Work
This isn’t really a new Shared Services trend. We have actually been discussing “virtual” Shared Services for a very long time and this did not happen as quickly or as significantly as the textbooks and specialists were predicting for many years. This was partly due to the fact that bringing people together in the same place has had advantages in terms of greater scalability and economies of scale, the ability to embed more consistency in processes, and the potential cost savings from labor arbitrage. Plus also the benefits that derive from having people together in terms of collaboration and developing a team culture. However, with the significant advancement in new technologies (including bandwidth) and online collaboration tools, supported by a robust service management framework and training, and team support techniques, virtual Shared Services will likely become a new trend – a greater component of the model moving forward. The global pandemic made this a necessity but has also proved that it is possible, and can bring added benefits in terms of efficiency, effectiveness and indeed scalability. What the global pandemic has proved once and for all is that you don’t need all of your team “just down the hall” to work as a team or collaborate together. I do think that post pandemic there will be a hybrid approach that many organizations will follow, leveraging a mix of virtual, remote and onsite working, perhaps part time on a rotating basis. This all very much links to the “Future of Work”.
Trend #3: Marching into Next Generation
I would define “Next-Generation Shared Services” as the next stage in the evolution of Shared Services that I have mentioned above. “Next-Generation Shared Services” organizations will embrace the very latest technologies such as Digitalization and Intelligent Automation (including Robotic Process Automation , Machine Learning, Natural Language Processing, Artificial Intelligence and Blockchain) and future developments thereof. They will implement more resilient operating models, with hybrid workforces of human and digital workers, and will deliver more services, higher up the value chain, for a wider group of clients, whilst still ensuring that they get the basics right. I would also add that “Next-Generation Shared Services” is likely to play a big part in the move towards what is being called “OneOffice”, and will assist with the closer integration of functions, technologies, processes, data and teams across the business, all with the goal of producing better outcomes for the organization, its customers and employees, and other key stakeholders.
While the Shared Services model has proved its worth over many decades it has had to adapt and evolve to achieve this. The COVID-19 pandemic has accelerated this need. At the same time, we must not compromise on getting the basic right, and should continue to leverage and build on the fundamentals of Shared Services: a robust operating model, enabled by a customer-centric and business-aligned structure, a robust Client Interaction Framework, and more streamlined and standardized processes. By doing this Shared Services will be able to stay relevant and value generating, continue to grow by evolving to meet changing business needs, make the most of presented opportunities, and continue the march towards “next generation”.
Here are some more articles and blogs that I recommend reading: