Danny Gaffney outlines the findings of the Deloitte 2015 Shared Services and Global Business Services Survey.
Over the past 20 years, Ireland has developed and consolidated its position as a leading shared services location. The country’s success has been underpinned by an increasing breadth and depth of international languages, a highly skilled workforce, increasing competitiveness and an extremely strong development agency in the IDA.
Shared services and global business services entities are growing because the models’ benefits have been tested over time, and there are a myriad of examples of successful shared services and global business services models for organisations to adopt.
Deloitte’s 2015 survey consolidated the views of over 300 shared services leaders from across the globe, with the findings informing the strategies of the 100-plus Irish shared services centres. This year’s results showed a greater move towards global business services, as organisations expanded shared services to a multi-function model; geographic consolidation in regional and global centres, as language barriers and local regulatory requirements were overcome; and more knowledge-based processes, as shared service centres are ideally placed to leverage and scale technological capabilities such as analytics and robotics. These advancements point to a changing shared services environment and a greater focus on talent attraction, development and retention.
Key findings
Organisations embarking on their shared services journey are now skipping the traditional single-function concept as a starting point and pursuing a multi-function shared services or global business services strategy from the outset.
Compared to our 2013 survey, the prevalence of single-function centres has declined by 30 per cent, whereas the number of centres with more than three functions has increased. Organisations pursuing new shared services structures are also choosing to customise their delivery models by function. The survey shows a significant increase in the number of shared service centres with more than three functions, creating a greater need for centres to be located in areas that can support multi-function work. Traditional back office functions such as finance, human resources and information technology continue to dominate this landscape. When companies employ single-function stand-alone centres, meanwhile, the predominant function is finance – although this includes a number of centres on a global business services journey, but which are piloting with finance.
Regional shared services centres remain the predominant deployment model, but there is a notable increase in centres serving more than one region as organisations work towards global consolidation, where practical, to achieve cost savings and leverage capability. Geographic barriers are being eroded and it is clear that companies are finding ways to address prior concerns such as languages skills, time zone coverage and regulatory requirements.
Cost is often a driving factor as organisations look to centralise and globalise. The survey found that, on average, organisations can drive a 15 per cent headcount reduction on implementation with a further eight per cent productivity savings per annum thereafter. These savings come with a health warning and vary between highly-transactional activities (where savings could be higher) and insight-driven activities (where process quality is a greater driver than cost). Cost is just one factor identified by shared services leaders as driving a positive impact on the organisation. Other more qualitative factors such as process efficiencies, internal controls, process quality, data visibility and comparability and well as the ability to scale organically and acquisitively were also rated by over 80 per cent of respondents.
The future
The next generation of shared services will be data-driven with analytics, automation and robotics pushing shared services up the value chain. As shared service organisations aspire to become advisors and collaborators to the business, they will be challenged to become more familiar with the business in order to deliver higher-value activities such as predictive analytics.
Technology-related areas such as automation and standardisation were identified as areas where more companies missed original shared services objectives rather than exceeded them. However, a majority of those surveyed are responding to these issues by investing their technology-related spend on improving the productivity of their centres.
Furthermore, intimate knowledge of the business is required in order to become a ‘true’ advisor, and this is often better facilitated through a global business services model that enables cross-functional visibility and end-to-end process ownership – both of which allow for better information-gathering and insight development. Challenges in driving analytics remain, however, including data consistency and supporting technology platforms. It is notable that organisations are looking beyond enterprise resource planning software to increase automation capabilities and are instead focusing on additional capabilities such as cloud computing and robotics.
Managing a high performance culture
Companies are becoming better at managing the high performance culture required in shared services centres with fewer people-related challenges noted. Better management takes many forms but shared services leaders are predominantly focused on intangibles such as flexible working arrangements, brand and culture.
87 per cent of shared services leaders identified attaining or maintaining desired capability levels as a significant challenge, one that will change as the shared services and global business services concepts continue to evolve. This evolution could be beneficial to talent management as there may be opportunities for the creation of more challenging roles as an increasing number of knowledge-based activities are centralised. It may also present new challenges, however, as it may involve managing people over multiple disciplines within one end-to-end process team.
Conclusion
The increase in growth in shared services and global business services will continue both in Ireland and globally as the benefits of the delivery model are further tested and proven. Shared services as a concept will continue to evolve to include a broader set of functions and geographies as well as more value-added activities, including ana-lytics. Although challenges remain – with particular regard to driving more know-ledge-based activities – organisations are now shifting their focus towards growth in analytic capabilities within shared services.
Danny Gaffney is a Director within the Finance Transformation team at Deloitte Consulting.