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The feasibility study is finished. Suppliers and customers have agreed as to what shared services can achieve. A deal has been signed. So what comes between that happy moment and actually making it happen? If clarity was the watchword for the start-up phase, engagement could be the one for getting the project going.
In short, it requires a governance strategy that co-ordinates and manages all the streams of the work being undertaken. Suppliers and customers must engage via what might be called a project management ecosystem. From assessing progress weekly and managing issues, to steering the project at the highest level and assessing the realisation of benefits, this is a mutually reinforcing system of reporting committees and managers that bear responsibility for the programme in every aspect.
“Most shared services implementation involves a mix of partners,” says Alan Richell, head of transformation leadership at Capgemini. “It is, therefore, essential to establish a collaborative working environment for success. Making shared services happen is not a one-off event. Continual innovation and collaboration needs to be built into the delivery model.”
Capgemini advises breaking the management down into four streams: business transformation; IT; applications; and service provision. “You need the business transformation partner to support organisational and process changes, whether dealing with internal shared services or BPO,” continues Tony Kelly, BPO director, Capgemini. “The IT transformation partner is needed to manage technology changes, working with the applications partner. Finally, if the decision is to outsource, then you need a BPO or service provision partner to deliver the services. The key point to remember is: do not assume one delivery partner. All of these are very important streams and must be managed appropriately. If any one of these is not given the right attention, the project can easily fail.”
It is the transformational element that lies at the heart of this. It is so important because it seems somewhat counterintuitive. The assumption of management might be that to opt for shared services is to take a load off their mind. This is not so. It is rather to change the responsibility they must bear.
Tim Brazier, senior consultant at Catalyst, identifies various aspects of this new responsibility. First, organisations need the full co-operation of everyone. “There is often internal reluctance to integrate as the change may have disempowered people,” he says. “They have less control but the same level of accountability. This relationship needs to be managed carefully.”
Another danger that stems from this kind of change is that individuals adopt a short-term view, being concerned about what is going to happen to them in the near future. This can eclipse the long-term view that is so important for the success of the project. A different kind of management skill comes in migrating local operations to the central shared services. This can cause a lot of friction between the company and the service providers if the latter are taken to be riding roughshod over what local operations regard as years of collective knowledge, or pushing the valid needs of the local operation into second place.
“An organisation needs to make a financial model and implement a strategic road map, taking the transition region by region,” says Mr Brazier. “For example, there is a disparity between the scale benefit for the company and satisfying localised requirements such as legal or taxation regulations.”
Outsourcing adds another layer of complexity to the management of shared services. The point about these relationships is that they are both deep and long term. Even if it is “only” administration and back office management that is outsourced, they are still functions that are crucial to the success of the business. They will also change over time. So, it is vital that the provider is open with the customer as to what they require for commercial success: they must avoid foisting any unpleasant surprises upon the customer farther down the line, and ending up squeezing the client in order to make their own ends meet.
“Ensure that everyone is benefiting from the commercial arrangement,” says Bob Gogel, CEO of Liberata, a provider. “Traditional outsourcing arrangements tend to talk like partners and act like customer/supplier. There’s not much in a customer-supplier relationship to guarantee big wins.
“And successes are achieved but usually at a cost elsewhere, often in service delivery. Your big benefits come through application of shared services through, say, gain share and not through application of penalties and service credits.”
Gavin Hartland, director of marketing and alliances, Emea at Servigistics, another provider, takes the point a step further: “Keep an open book by sharing information and holding regular reviews to ensure that the business interests aligned at the outset are still maintained. By committing to tackle common goals rather than each other, it will be easier for companies to go the extra mile during implementation to ensure success for both parties.”
Having said that, if good relationships, sustained by such an open spirit, are vital, then their character must be represented in the contract as much as possible. “Whether an outsourced supplier is used or a department is centralised internally, it needs to be treated as a watertight business deal,” advises law firm Addleshaw Goddard.
“Even when an in-house department is set up, it should be treated as an external supplier to ensure that the best processes are set in place and strict service level agreements are adhered to.” In short, contracts should be put in place whether the supplier is internal or external to ensure that the service meets the required criteria and that if it doesn’t, action can be taken to rectify the failure.
“Realising the benefits from shared services is a journey to be travelled with partners, not a one-off event,” concludes Mr Richell. “Customer service, people and culture are critical to sustaining benefits, and all parties need to understand this. Ultimately the business must embrace continual innovation, and focus on improving customer service to be successful.”