Top Trends In Next Generation Shared Services
Founder, Director of Avaali Solutions Pvt Ltd, Ms. Srividya Kannan’s article published in CXO Today. The article was also carried in the online version.
The concept of Shared services is probably about two to three decades old. What is interesting about this space is that unlike disruptive innovation that shakes up previously successful models, the shared services model continues to build innovation in both its range of offerings as well as the way it is being executed.
Shared services is no longer a business case only for labour, infrastructure and cost arbitrage but an intrinsic part of a company’s strategy to create a competitive edge. Shared service centers are increasingly adding to their portfolio of offerings in existing processes as well as adding new functions and processes that could significantly deliver value. This could include for instance, consulting and advisory and a CoE in addition to transactional functions. Finance shared services are for instance including financial planning and predictive analytics. HR shared services are adding offerings such as strategies for talent retention and attraction.
A relatively new set of high value add functions are coming into the ambit of shared services such as treasury, marketing, customer service, corporate strategy, legal etc.
There are various trends that are shaping the future of shared services. This article explores some of the top trends:
Process Excellence: A lot of process excellence is being driven via technology. Document imaging, digitization, OCR, workflow management, automated validation, deep integration with existing ERP and transactional applications, online collaborative platforms, mobile integration and total automation of processes are increasingly being looked at. This has a significant impact to bring down cycle time to process by over 60%-70%. Processes such as Accounts receivable, Payables, Payment approvals, Sales Order can be automated by over 80% while bringing transparency and improving overall governance.
Data Analytics: Decisions made by way of insights received from analytics is crucial to create a high performance enterprise. In addition to highlighting results from performance metrics across processes based on past data, analytics combined with visualization goes much beyond to bring in foresight and prepare for future scenarios or take proactive measures. Combined with the right set of people, with rich analytics the shared service center can now provide services that helps decide the right time for market entry of a product, optimize the marketing budget to maximize ROI, support in determining discounts from vendors during contract renewals, optimize investments to improve productivity, find out the best ways to improve customer satisfaction, determine what should be the most optimal price for a product, find high risk employees for attrition etc.
Robotic Process Automation (RPA): RPA is a way to automate repetitive and rules based processes. A number of SSC’s are considering RPA to add more value to them. While this percentage is still quite small, it is expected to significantly increase in the near future given its cost benefit advantage. Robots not only automate processes in their current state but also provide significant scope for scalability, as it can work during weekends, extended long hours etc. without any impact on productivity. This also allows the SSC to focus the attention of their people on high value add activities.
Re-defining value: SSC’s are re-defining their key performance indicators to include a set of metrics most relevant in the context of changing customer expectations, in terms of value addition. In addition to traditional metrics such as cost, volume and efficiency, a newer set of metrics such as net promoter scores, financial performance, innovation, employee metrics etc. is being added for performance assessment and driving continuous improvement.
Talent Management: Given the rapid changes as a result of technology there is a virtual war for talent. Creating a rich talent pool is getting to be one amongst the top focus areas for most SSC’s. This is especially so for the high growth ones, who have ambitious plans to integrate digital technology into their operations and scale to adopt new, high value add functions. Training employees on the right skills and engaging them to function at their most optimal productivity level is a huge task not only for the SSC but also the top agenda of the management. Without this, no amount of investment in digital or process design will yield results. SSC processors who can master the new channels will gain significant advantage.
As with all initiatives, change management is paramount. Adoption of new technologies requires focus and attention to execution as well as buy-in from stakeholders. No amount of excellence in process and technology will work without this.
These are exciting times for SSC’s. It is critical to take a deeper look at the current operating models in the context of the SSC roadmap for the future. Technology and talent are both closely linked and one cannot succeed in isolation without the other. While shared service centers put together a plan to handle the ‘what’ aspect of transformation, it is equally important to strategize the ‘how’ aspects in order to ensure excellence in execution. After all as a famous quote goes, “Excellence is not an exception, it is a prevailing attitude”.