1 or 5? – How many shared service centers in use?
Almost 50% of international corporations with shared services use just one shared service center (SSC) and each fifth has five or more shared service centers. Each third corporation works with 2-4 shared service centers.
The optimal number of shared service centers depends on customer requirements regarding the process complexity and level of process standardization.
How long does the SSC implementation take?
For each second multinational corporation it has taken under 12 months to implement a shared service center. For further 20% it has taken between 12 and 18 months to implement a SSC.
After the implementation of a SSC, it takes shorter than 2 years for the investment in a shared service center to payoff in case of each fifth corporation. For further 60% the amortisation period is between 2 and 4 years.
Which functions and activities are eligible to be relocated to a SSC?
Accounts payable, receivable and account reconciliation are the favourite activities and functions which are likely to be relocated to a shared service center by global corporations. Except of that, global giants use shared service centers to provide services in the following functional areas:
• Asset accounting,
• General ledger,
• Travel expenses,
• Payroll,
• Controlling and reporting,
• Procurement,
• HR administration,
• Treasury,
• Tax,
• IT helpdesk,
• Order accounting.
Why shared services?
Cost reduction, process improvements, increase of customer satisfaction and improvements in quality are the main drivers for corporations to run a SSC. In brief: shared services means establishment of a common languages in a heterogenic, multinational environment.Shared services vs. IAS/IFRS
The subject of compliance with IAS/IFRS or US-GAAP is an important issue for financial shared service centers. Placing IAS/IFRS reporting in a shared services environment can yield cost savings through consolidation and process efficiencies. It can also help increase the consistency of corporate financial reporting and improve comparability of single financial statements across the corporation.
Shared services organization (SSO): important dimensions
The following dimensions are crucial for a SSO:
• Performance metrics (mainly through a set of key performace indicators: KPIs), customer feedback
• Service level agreements (SLAs),
• Global and regional process owners.
Cost savings through shared services
The potential for cost savings through shared services vary from function to function. For most organizations it is around 15-20% in a treasury, financial reporting and analysis, procurement and tax function, amounting to even 30-50% in the IT, accounting, facility management and personnel administration functions.
posted by Magdalena Szarafin -> Website: http://www.szarafin.info | Email: mszarafin@web.de
Literature:
1. Heinz-Josef Hermes, Gerd Schwarz, Outsourcing: Chancen und Risiken, Erfolgsfaktoren, rechtssichere Umsetzung, Haufe-Lexware 2005
2. Shared services shines in challenging times. Insights from Deloitte’s 2009 global shared services survey
The German speaking Shared Services Community will be meeting at the
Shared Services Woche 21-24 November 2011 in Berlin/Germany. More information is available here.
Literature:
1. Heinz-Josef Hermes, Gerd Schwarz, Outsourcing: Chancen und Risiken, Erfolgsfaktoren, rechtssichere Umsetzung, Haufe-Lexware 2005
2. Shared services shines in challenging times. Insights from Deloitte’s 2009 global shared services survey
The German speaking Shared Services Community will be meeting at the
This article misses out one important question - does sharing services actually work? Does it reduce cost and improve service?
AntwortenLöschenThe answer is no. Evidence from all over the world, and particularly in the UK, suggests that shared service projects often cost more than they save.
It is conventional to think that you save money through economies of scale – moving telephone work to low-cost providers, sharing services, standardising services, even ‘going lean’. But what does the evidence show? Pioneering private-sector organisations are back-tracking from industrialised services, in-sourcing and abandoning back offices and the blind pursuit of ‘cheaper’ channels. In the public sector every country has its own shocking stories of shared services that have failed miserably, only overshadowed by debacles in the UK – for example, the Department for Transport’s shared services venture was supposed to save the UK taxpayer £45m, but it currently costing over £175m! Our tax office, HMRC, has ‘gone lean’ and gone wrong. Most people on PAYE have problems with their tax, call centres don’t pick up calls, accountants are tearing their hair out and voluntary services, often paid out of the public purse, are mopping up the extraordinary failure, looking after those people who can’t get a service from the tax man.
The simple fact is: economy of scale is a myth.