Achieving greater efficiency is a constant goal for finance departments, with businesses of all sizes having something to gain from making better use of the time and resources available to them.
In the 21st-century business environment, there are many strategies and operational philosophies that can help you limit costs while maintaining or improving the quality of the services you offer to clients.
One approach that has proven beneficial for many organizations is the deployment of shared services, which enables the consolidation of core business operations like finance, HR and IT. Centralizing essential functions that were previously fragmented and divided across multiple divisions of the company can have a major impact on efficiency and minimize wasted resources.
Many businesses have recognized the advantages that can be gained from this strategy, with more than half of global companies having already consolidated their finance and accounting divisions into shared service centers, or considered doing so.
In order to get maximum value from shared services, it’s important to be fully aware of not only the potential efficiency gains on offer, but also the operational hurdles you might have to overcome.
Maximize the benefits
For many businesses, the biggest benefits to be gained from shared services will be financial, since the approach can lead to significant improvements in cost efficiency.
Integrating fundamental functions that were once spread across multiple divisions or locations leads to valuable cost savings and economies of scale. The need for investment in technology, office space and human resources can be substantially reduced.
These efficiency gains can be particularly valuable if you’re a large business with operations in multiple countries. International units that previously required funding for their own dedicated services can now rely on a centralized shared services center, allowing them to focus resources on achieving their specific goals and delivering value for the company.
The shared services model can provide other benefits that aren’t purely financial, such as the introduction of standardized processes in fundamental business functions such as finance. Standardizing how core parts of your company operate allows you to achieve greater transparency and control, as well as making it easier to collect and analyze data, and enforce policies that span the whole organization.
Furthermore, the integration of finance operations under a shared services model means the most experienced and capable members of your team can spend less time on routine tasks and more time on driving growth for the organization.
Prepare for the obstacles
There are many clear advantages to be gained from shared services, but to derive maximum value from this model, you also need to be aware of the possible hurdles you could face along your deployment journey.
To begin with, there could be financial considerations that come with hiring the people or installing the technology required to make the shift to the shared services model. The transition will take some time, so there should be an awareness within the business that the cost and efficiency benefits of shared services won’t become evident overnight.
As far as regulatory compliance is concerned, one of the risks to be aware of when moving to a shared services strategy is falling out of step with local rules and laws in individual countries where the company operates. Additional checks and processes might need to be put in place to ensure a centralized finance function is fully compliant in all territories.
On a human level, there could be some individuals within the organization who feel uncomfortable with the move to shared services. Employees who previously had close control over important functions within individual business units might find it difficult to hand over the reins to a centralized headquarters.
Manage the transition
Change management will become an important priority for any organization that chooses to make the transition to shared services.
Focused engagement and professional development with individuals who are directly affected by the changes could prove instrumental in helping them to adjust to the new model. Employees should be supported in seeing how the centralization of core functions could open up more opportunities for them to refine their skills and focus their energies on delivering real value for the business.
Another key part of the transition process will be thinking about the parts of the business that are best-suited to centralized delivery. While regular financial processes such as processing invoices and managing transactions can be handed over to a shared services center, more delicate, nuanced tasks like making contact with customers and maintaining relationships might be best left to individual teams.
Giving due consideration to these factors and making every effort to ensure all departments within the organization are prepared for the change will position you to gain the best possible results from shared services.