Exploring the power, benefits and challenges of implementing shared service centres
by Fiona J. Deroo, Senior Vice President & Industry Lead International Subsidiary Banking & Business Development, Bank of America Merrill Lynch, Dick Sherrod, Senior Vice President & Treasury Practitioner Executive, Global Business Solutions, Bank of America Merrill Lynch and Brittany Marten, Senior Vice President, Bank of America Merrill Lynch
For the earliest corporate adopters, the lure of shared service centres was all about saving money. And why not? The appeal of streamlining and improving the consistency of redundant, transaction-oriented activities, often in low labour-cost locations, was an obvious driver behind the creation of shared service centres. Such savings are quantifiable and relatively easy to sell to the C-suite and boardroom.However, as the world’s business environment continues to move toward globalisation, not to mention the advent of new technologies that are creating more robust treasury management systems and ERPs, the second and third iterations of shared service centres offer additional benefits that might make the plain vanilla cost savings almost tertiary. Perhaps tertiary is a slight exaggeration as cost controls are always in the spotlight, but the fact remains that today’s global companies are being compelled to explore and extract the more powerful, strategic benefits of shared services centres.
The process of establishing a shared service centre can seem daunting and fraught with risks. The question we hear more and more from our companies is: exactly how and where do we start? This article endeavours to address those questions succinctly by:
- Reviewing the power of shared service centres;
- Summarising the key considerations in developing proper strategy;
- Identifying common pain points and best practices during implementation;
- Discussing the importance of continuous evaluation and measurement.
The big picture
Is the shared service centre concept something that your business should consider? Ultimately, that depends on a host of questions specific to your situation; however, it’s a safe bet that any large, multiregional organisation stands to gain by implementing some type of shared services strategy. We can make that generalisation simply given the ongoing trend toward globalisation, whereby companies continually seek to expand into new markets while tapping into less costly labour pools and supply chains. Quite simply, the more disparate a company’s geographic footprint, the more likely that shared service centres will yield benefits.
Many of our international companies begin investigating shared service centres as a means to centralise and simplify information and metrics required to optimise working capital. Accounts payable is often the starting point since improving the accuracy and efficiency of redundant, transaction-based work, as well as eliminating headcount, are well-documented benefits of regional accounts payable centres.