Shared services are being applied to an increasing number of functions. Human resources, IT, and finance were some of the first areas where shared services commonly were implemented. Now sales operations, supply chain operations, and marketing are taking advantage of shared-services platforms.
While the usual benefits of shared-services implementation—cutting costs and centralizing operations—are obvious, Ravichandran “Ravi” Venkataraman, CGMA, senior vice president and head of the Global Services Division at Hewlett-Packard, said people fully start to understand the benefits when they consider the effects that standardizing processes might have.
A global company, for example, might have different processes for the same work in different regions. Shared-services implementation could help a company standardize processes and technology platforms in every region, making it easier for executives to connect the dots across the organization. Such an implementation could also lead to a more rapid rollout of policies, creation of value-added services, and better controls.
Indeed, moving to shared services does have consequences that need to be considered. Individual business units give up freedom; bureaucracy is increased as policies are centralized; and a personal touch is lost as functions are moved to locations that sometimes are halfway around the world, Venkataraman said. Also, regulations can change quickly across multiple jurisdictions.
And if an organization is not careful in how it structures the retained portion of the function that moves to shared services, critical local domain expertise can be lost.
Venkataraman has 10 tips for successful shared-services implementation:
- Create a road map. Get buy-in from senior management. Then create a policy for shared services that maps out the stages of the transition clearly. “Otherwise, what happens is, it’s done in bits and pieces,” Venkataraman said. “And it becomes a problem.”
- Invest in change management. There is job uncertainty in some pockets of the organization, while at the same time, shared-service organization employees overseas may be struggling to get up to speed. Companies that do not invest in change management—which includes investing in managing complex change in the divisions that are giving up roles and in countries where these roles are being added—can be hurt by finger-pointing at this stage, Venkataraman said.
- Don’t bank all your savings. It’s wise to report part of the savings, Venkataraman said, but invest some of the savings in technology that will need to be more sophisticated as local operations become more global.
- Fix processes. Reducing the number of broken processes that are going into shared services can save heartache later on. Some organizations have also successfully moved work to shared services, saved costs, and used part of the savings to fix the process. Whatever the approach, fix the process and automate.
- Design the retained organization. It is essential to retain staff who possess domain expertise, understanding of the business or function, and connections to key decision-makers in the business in the relevant countries and regions, and the corporate office. The retained organization, along with the shared service, should enable better business outcomes.
- Don’t increase the number of handoffs. As the number of people touching a transaction increases, so does its chance of failure. If the number of handoffs rises with shared-services implementation, customer service will suffer.
- Focus on risk management. It’s important to ensure that a company’s shared-services implementation is not creating increased risk exposure.
- Move quickly. After a decision has been made, a slow transition to shared services can cause a loss of momentum.
- Be present. As a general rule, senior management should be visible, face-to-face, at least once a month at the shared-services location in the early days of the transition, Venkataraman suggested. In-person appearances can be scaled back to quarterly once the transition is nearly complete. A good video-conferencing facility can help decrease the frequency of face-to-face meetings, but in-person interaction is important.
- Be patient. It may take a couple of years before the full extent of the benefits is realized.
The full version of this article, “Ten Tips for Implementing Shared Services,” by Ken Tysiac, is available at tinyurl.com/qj6ns86.
—Jack Hagel, editorial director
Also at cgmamagazine.org
Companies Need to Improve Cross-Border Investigations
Many companies are not prepared to handle cross-border investigations of matters such as fraud, corruption, misconduct, or data breaches, and training in this delicate, culturally sensitive task is often neglected, according to a new report.
More than 40% of 60 executives who manage their organizations’ cross-border investigations said in a KPMG global survey that their companies lack sufficient resources to handle these investigations. Yet, just 35% of respondents said their companies conduct investigations training each year. Meanwhile, 95% of the respondents said they expect their needs for cross-border investigations to increase or stay the same over the next year.
Cross-border investigations require special care, according to KPMG, because of cultural differences and because data privacy laws vary between jurisdictions. Almost half (46%) of the KPMG survey respondents said handling data privacy issues is their greatest challenge in conducting cross-border investigations.
The full article, “How to Start a Successful Cross-Border Investigation,” by Ken Tysiac, is available at tinyurl.com/phaqmb5.
Asia’s Big Data Problem
Asian companies are eager to embrace Big Data, but most are lagging in implementing their ambitious plans, according to a survey by The Economist Intelligence Unit, which surveyed more than 500 senior executives and frontline managers in Asia Pacific.
The study, which examined why adoption of Big Data is slower than expected in the region, found that 70% of respondents think Big Data can deliver gains in productivity, profitability, and innovation. Yet, more than half (58%) said they had made only limited progress in accessing and analyzing the increasing amounts of data that are generated and hold clues to new corporate insights and opportunities.
Information silos and a lack of communication and collaboration posed the biggest barriers to Big Data adoption in Asia Pacific: 91% of respondents in the survey said they encountered them.
The full article, “Asia’s Big Data Problem,” by Sabine Vollmer, is available at tinyurl.com/pe2r3tg.
Most Productive Day? Tuesday
If you’re reading this at work on Thursday or Friday, chances are it’s one of many distractions on your least productive days. But if you’re reading this on a Tuesday, then you’re likely to move on quickly and have your most productive day of the week.
The most-productive-workday question was answered in a recent survey by staffing agency Accountemps. HR managers at U.S. companies with 20 or more employees were asked: “In your opinion, on which day of the week are employees generally most productive?”
Tuesday was the winner, with 39% of the vote. Monday was second at 24%, and Wednesday and “no particular day” each had 14%. Thursday, Friday, and “don’t know” were all at 3%.
The full article, “Most Productive Day for U.S. Workers? It’s Tuesday,” by Neil Amato, is available at tinyurl.com/qd89gwc.
CGMA Magazine is published in conjunction with the Chartered Global Management Accountant designation, which was created through a partnership between the AICPA and CIMA. The magazine offers news and feature articles focused on elevating and emphasizing management accounting issues.