For the management that still focuses on the cost optimization for the use of outsourcing, they are stranded at the basic level of discrete shared services. The objective remains to use the pool of resources to bring in the cost efficiencies, while the governance remains centralized within the organizations. Seldom, it involves numerous interfaces of data exchange and validation processes to achieve the objective of functional shared service.
Often the concept of outsourcing is generalized for using the services of external service providers for the processing of low value functions to demonstrate the cost optimization. However, the concept has now evolved to the new heights. The concept of taking the burden of the management has grown now to provide a complete platform for the organizations to develop the process that can be easily integrated, that can accommodate its own governance structure and create opportunities for the desired level of automation at the process level.
A Shared Services is a regional or functional operating model to organize, deliver, and continuously improve internal business services. That evolves into multi-functional shared servicing, to accumulate similar level of data processing under one umbrella. The challenges led to the concept of Global Business Services (GBS), an operating model used to organize, deliver and continuously improve internal business services provided to support value producing processes and business units.
Integrated Business Solutions emerged as the leading model of shared business services by evolving from earlier ‘stages’ of Discrete Shared Services, Multifunction Shared Service and Global Business Services.
IBS model focuses on end-to-end processes and integrates governance, locations and business practices across the organization. This model with its emphasis on integrated technology, data, applications, processes and people has many advantages and is a natural progression from SSCs. However, it is a fundamental shift in the way organization think and operate shared services as it brings together organizational silos, connecting the strategic pieces – processes, people, technology and functions to become a source of agility, end-to-end visibility, and innovation for the entire organization.
Key driver focus shifted from pure cost saving in the short-term to increasing efficiency in the long-term.
This will be achieved by higher impact changes that target each company’s area of weakness apart from traditional process optimization.
To the company they represent more sensitive topics such as introducing a leaner governance, more structured controls and improved compliance. These topics are often highly political and thus need more time for implementation, with benefits becoming visible only in the medium- and long term. Having these areas as target for multiple functions at the same time, both financial and performance data becomes increasingly visible and comparable; Not only per function but across regions and business divisions, comparing end-to-end processes within the whole company.
IBS is not a single layer, transactional level implementation. It impacts all the level of operations of the organization.
The missing change of people’s mindset and lack of key stakeholder support are easily able to make an IBS a failure – whether it is resistance in the organization to make the change or a lack of common vision. The design of the new organization is crucial to set this common mindset, as it shows how the vision materializes. The “perceived” reality may differ from the actual situation but is crucial for accepting the change and building trust between business and IBS. To achieve the desired “perceived” reality, it needs carefully selected key people that can drive the change with an appropriate level of authority. They can ensure changes in the organization are made and that people actually commit to the new structure.
Multi-functional shared services have been the logical result of gaining experience with classical mono-functional shared services. Full understanding at the C-level needs to be achieved. Being part of all global companies’ service delivery strategy, focus shifts from providing transactional services to more business partnering in the future as excellence in transactional services is achieved and new, less transactional areas for achieving new operational efficiency milestones will be integrated. This is not a revolution, but a next step for the organizations and will be part of the standard operating model. The impact on the corporate organization will be substantial as the functions’ delivery model is completely redesigned.
The technology nowadays has an enormous potential for business transformation, especially when speaking about digitalization.