Shared services

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The term shared services is understood to mean the consolidation and centralization of service processes in an organization. Processes of the same kind from different areas of a company or organization are combined and performed by (a) central point (s) or department (s). The service provider is usually referred to as a shared service center , or SSC for short. The departments that use the services have a kind of customer relationship with the SSC.

In contrast to outsourcing , in which external service providers are commissioned with a service, the shared service construction is a type of internal outsourcing. This should combine the advantages of an external service provider and internal employees. With some exceptions, the term shared services or shared service center is still used for a relationship with an external service provider.

Important principles are:

history

In the 1980s, the buzzword in corporate organization was decentralization . It turned out, however, that the overall company management was made considerably more difficult by the distributed processes . Although the processes in the individual companies could be optimized, the overall optimum for the group could not be achieved. In addition, the introduction of integrated processes (e.g. quality management systems ) , which began in the early 1990s, also required uniform IT systems .

The next buzzword was outsourcing . The basic idea was to concentrate on the core business and to buy the increasingly growing ancillary services from external parties. But here, too, problems arose for companies. The company became dependent on third parties. In addition, the handling of these third parties with sensitive financial, customer and personal data repeatedly led to data protection problems. Outsourcing also means cutting jobs, which leads to resistance in the company.

Characteristics of suitable processes

Characteristics of suitable processes are:

  • High degree of standardization,
  • high number of repetitions of the same process,
  • high degree of system support e.g. B. through ERP systems and there in particular through workflows
  • only a few exceptions

advantages

Shared service centers should combine the advantages of an external service provider and internal employees.

The qualitative advantage should lead to a lower error rate, which one expects from the specialization (“learning curve”) in a shared service center. This effect has not yet been proven. Legal and regulatory requirements such as Basel II , Sarbanes-Oxley Act etc. are increasingly leading to processes being relocated to a shared service center in order to be able to better control them.

The increase in process efficiency as a quantitative advantage can be traced back to three causes: First, the merging of similar processes can result in economies of scale . This does not happen automatically, but must be implemented through appropriate investments in process management and IT (e.g. through self-services, workflows, etc.). Second, by moving the location at the same time, reductions in rental, building, ancillary, telecommunications and travel costs are possible. Third, cost reductions in wages and salaries are possible, e.g. B. through nearshoring or offshoring or through the possibility of having to apply other or no collective agreements. Particularly when it comes to offshoring in Central and Eastern European countries, the generally higher qualifications of the employed employees in combination with significantly lower salaries proves to be an advantage for a company in order to both improve process quality and reduce process costs.

Usually it is still mentioned as an advantage that the management of a company can concentrate on the core processes. This can be a fallacy if the management processes for the planning, control and monitoring of a shared service center (as well as with the outsourcing of the processes) remain completely in place and cannot be reduced.

disadvantage

Centralization tends to reduce customer proximity. The processes in the original departments must be adapted accordingly. The physical distance can possibly have a negative effect on the provision of services. The coordination effort tends to increase.

Incidentally, due to the desired savings effect, the quality of the content to be processed can usually be lost, since cheap workers with partially inferior qualifications are used here in order to lower the salary level (preferably Eastern Europe). The few qualified employees can no longer hold the required level of specialist knowledge, which has a significant impact on the work content and thus has an impact on controlling. To prevent these effects, it is advisable to hire more highly qualified employees, albeit with a significantly lower salary level. This ensures both a lower cost structure and possibly increased service quality.

Furthermore, the motivation and loyalty of the employees are also problematic for the company. d. Usually very high and the duration of the employment relationship short. The employees of an SSC mostly only receive fixed-term employment contracts and precarious conditions. The SSC is therefore only suitable for a few selected areas that need to be covered here.

Foreign-language call centers and entire departments (e.g. finance) have long since lost the battle for customers. The reduced customer proximity has turned out to be serious and does not outweigh the cost savings that are triggered in addition in terms of actual sales and customer loss. This key figure is usually not measurable, but it is confirmed by all distributors. On the part of the tax authorities, one has also become prudent in this way, since the services, especially in the area of ​​accounting, often do not in any way meet the local legal requirements (e.g. retention period for digitized documents with the requirement of a digital signature). Experience has shown that this claim alone is largely underestimated and that this often leads to increased tax back payments years later. The loss of the unqualified certificate by auditors regarding the annual financial statements is now not uncommon, which is not at all acceptable for a listed company. Auditors are still called upon to exercise a more precise sense of proportion when using the SSC in the area of ​​finance.

Due to the oversized wage demands in Eastern Europe (10–20% p. A.) Due to the low unemployment rate, the question of founding an SSC in Eastern Europe is currently purely academic.

Only limited SSCs in Germany or in the call center area with appropriate language qualifications appear practicable. There is still little acceptance of this on the market.

The trend is therefore back to the complete profit center with the complete cross-section in order to take into account the desired transparency.

fitness

The implementation of shared services is suitable for support processes as long as they are not geographically bound, occur sufficiently frequently and have a sufficiently large standardization potential. In practice, this applies above all to processes in human resources, to a limited extent in finance (financial supply chain), procurement and internal IT (e.g. helpdesk).

In corporate practice, the following areas and support functions have so far proven to be suitable for shared services (without claim to completeness):

  • Archive and documentation
  • Office furnishing and relocation management
  • Office supplies
  • Controlling
  • Facility Management (building and area management)
  • Vehicle fleet
  • Graphics and presentations
  • Information and research
  • IT service
  • Copy service
  • logistics
  • marketing
  • HR management
  • Post and address service
  • Travel management
  • Switchboard
  • Translations
  • Finance in general has consistently proven unsuccessful in practice. Only the modular use (e.g. travel expense accounting or master data management) appears practicable in the small area.

As a rule, not entire areas should be outsourced to a shared service center. Instead, individual processes should be considered, such as B. in the area of ​​finance accounts receivable or accounts payable. The outsourcing of entire areas usually leads to a sure-fire success and unexpectedly gets out of control and cost control, which can no longer be compensated.

Planning and setting up

When planning and setting up an SSC, the following points must be observed:

  • Which tasks and functions in such organizational units can be combined?
  • What costs are incurred for the provision of services in a shared service center and what cost savings compared to the decentralized model are possible or should be?
  • Which services, which service quality and which service levels have to be fulfilled?
  • How will the services and costs be distributed?
  • How are employees prepared for their new tasks ?
  • At which location should the shared service center be set up?
  • How are the processes coordinated, redesigned and optimized with the environment of the SSC?
  • Continuous review and adaptation to the respective needs.

literature

  • Torsten Hagedorn, Jürgen Schmid, Patrick Blume and others: Knowledge and information management in practice - introduction of a knowledge database when setting up a shared service center at E.ON Energie. In: F. Keuper, F. Neumann (ed.): Knowledge and information management. Gabler Verlag, December 2008.
  • Frank Keuper, Christian Oecking: Corporate Shared Services. Provision of services in the group. 2., revised. u. exp. Edition. Gabler, Wiesbaden 2008, ISBN 978-3-8349-0612-0 . (Contributions include Ralph Neukirchen, Marcell Vollmer: Change Management and Shared Services - Involvement of Stakeholders. )
  • Marcell Vollmer, Bernhard Fischer, Stefan Röder: Next Generation Shared Services - Automation as a Trend. In: F. Keuper, M. Schomann, R. Grimm (eds.): Strategic IT Management - Management of IT and IT-based management. Wiesbaden 2008, pp. 253-278. (contains an empirical study on the automation of SSC)
  • Frances Frei: Four winning principles for service providers. In: Harvard Business Manager. June 2008, pp. 60-74, ISSN  0174-335X .
  • Thomas M. Fischer, Sven Sterzenbach: Shared Service Center Controlling, results of an empirical study in German companies. In: Controlling. Issue 8/9, 2007, pp. 463–472.
  • Uwe Kagelmann: Shared Services as an alternative form of organization. Using the example of the finance function in a multinational corporation . Deutscher Universitäts-Verlag, Wiesbaden 2001, ISBN 3-8244-7346-1 .
  • Carsten von Glahn: Shared Services. Design concepts for the provision of IT services in corporations . Logos Verlag, Berlin 2007, ISBN 978-3-8325-1622-2 .
  • Klaus Ziegenbein: Controlling. 9th edition. Kiehl-Verlag, Ludwigshafen, 2007, ISBN 978-3-470-70599-6 .
  • Patrick Blume: HR Service Delivery Maturity Model. In: Helmut Kruppke, Manfred Otto, Maximilian Gontard: Human Capital Management . Springer, Berlin et al. 2006, ISBN 3-540-33298-7 .
  • Thomas M. Fischer, Sven Sterzenbach: ZP keyword: Shared Service Centers. In: Journal for Planning and Corporate Management. Issue 1, 2006, pp. 123-128.