Why Consider Shared Services? Advantages Of Shared Services

By Author: Arun Kumar
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A multitude of benefits are enjoyed by organizations that implement Shared services, from reduction in costs and transaction processing to high level of customer satisfaction and better usage of personnel time on strategic activities. These benefits produce more agile and leaner organizational structures and processes.

Many organizations both private and public sectors are turning to a Shared Services model wherein, they receive a greatly reduced budget to carry out their day - to - day functions thereby resulting in improvement in process efficiencies and reduction in operational cost. Whether an organization have considered implementing the changes to its Finance, IT or Human Resource functions, the Shared Service model helps in reduction in costs beyond simple standardization of internal processes. By incorporating both hard and scope benefits into the Shared Service approach, firms not only enjoy the benefits, but also magnify the impact on a fundamental level and also help to increase overall return on investment (ROI).

In order to get the most out of the Shared Services, the organization must incorporate ...
... at least 5 minimum benefits into their scope and overall strategic goals.

1. Measure actual performance.
Organizations can precisely capture the outcome that provides a thorough view of the performance; identify areas of improvement by using shared services technology and implementing clear and realistic performance metrics. In addition, performance metrics can help realize future gaps and opportunities for enhancement.

2. Reduced cycle times.
With the reduction in process time, results in the capability to normalize processes, divide them by complexity, and increase simplicity of implementation across the organization. This benefit allows employees to focus on other strategic actions, thus, allowing organization to become for leaner and alert.

3. Better Customer Service.
Those firms that incorporate Shared Services experience enhanced customer services since time reduces on processing and better trained personnel and staffs are able to manage customer inquires efficiently. This creates a ripple effect - meaning improved customer services enhances the brand image of the organization and better trained staffs help to mitigate customer complaints and negative responses.

4. Promoting cross-functional efficiencies.
As organizations setup Shared Services model, its helps in creating efficiencies across, between and within organizational groups. This model supports the organization's planned program since it allows the implementation of a flexible resource model that accustom, changing mission requirements, reduce redundancies and promote operational reciprocity.

5. Accomplish economies of scale.
Organization can reduce cost per transaction within the Shared services, since service volume and number of transactions increase. Shared Services helps in leveraging economies of scale by amalgamating the resources and streamlining the resources through better use of technology and a straightforward service delivery.
Below is the chart that depicts the benefits while implementing Shared Services.

Below are the benefits while implementing Shared Services.

Economic -
1)Higher productivity
2)Lower cost location
3)Reduced Expense
4)Reduced system infrastructure costs.
5)Leverage investments to enterprise resource
planning systems, other technology

Strategic -
1)Shift funding/focus from back office to front office.
2)maintain meeting better demand with fewer full time employees
3)Achieve standardization in process and systems.
4)Enable new/re-organized entities.

Quality -
1)Better decision making
2)Improved services to key stakeholders
(e.g. students, parents faculty and staff)
3)widen centers of expertise and improvement