Do shared service centers work?

Our company is considering moving to a shared service center model for several of our functions.  We would like to hear from individuals with experience of shared service centers.  What are the pros and cons?  How long have their shared service centers been up and running?  Would they consider them to be successful?  – Manager, Information technology services company

Community Responses

Linda M. Hicks, Vice-President, Corporate Engineering and Technology, Vertellus Specialties Inc.
We have used shared services for Corporate Engineering for around 8 years successfully.  Engineering gets their priorities through the stage gate process or through our capital planning process.  Engineers are assigned projects and then each month put their hours into SAP so they are directly charged out to the appropriate business unit.  When resources in engineering aren’t sufficient to cover all the needs, engineering fills the gaps with external engineers who also are charged directly to a business via SAP.  The biggest advantage is being able to leverage skills and expertise across business units (we have one civil engineer that is shared across the company as an example).  In addition, everyone is working off of one set of engineering standards, project management process, drawing and equipment filing system, etc.).  It’s been so successful we’ve been rolling out this approach to Research and Development, Quality Assurance and Analytical Methods Development.  We’re gradually getting everyone access to SAP and including projects of all types into some form of a stage gate for prioritization.

Gary Hyek, Manager, R&D Facilities Services, PPG
I manage a shared facilities services organization across 4 sites.  My organization includes about 50 people.  We restructured and created this organization in 1999 after working with several consultants and considering all options such as total outsourcing.  With the shared services concept and the continued use of LEAN methodologies we continue to drive our overhead cost down and maintain an efficient organization.  We eliminated many redundancies and used the “pay as you need” concept.  Standardization of procedures, including safety, have proven to be a great benefit.  The shared services concept worked so well that it grew into IT, HR, Library Services and Analytical.  Mostly pros, one con; if possible, organize your shared services organization under one group from a headcount standpoint so everyone can be treated the same.

Robert Stahl, Director HR Business Partner, PMI Research & Development
We introduced Shared Services for Human Resources two years ago. The typical model with a central Shared Service Center in Poland (serving roughly 30 countries in Europe), Center of Expertise for areas like compensation, Learning… and a small number of HR professionals remaining in the markets.

Overall it works very well, despite the challenges we faced with regards to standardizing processes and systems. Those two points are a prerequsite for such a huge transformation – as well as Change Management.

Senior HR Analyst, large consumer products company
We are in the process of rolling out a shared service center for many of our Finance and Procurement transactional activities, ie. Accounts Payable/Receivable, Payroll, etc…  We just transitioned our Accounts Payable function in the past month so it is too new to share the results of this transition.

Simon Lynch, Business Improvement Team, Human Resources, Safety & Sustainability, CSIRO
Background – CSIRO, the Commonwealth Scientific and Industrial Research Organisation, is Australia’s national science agency and one of the largest and most diverse research agencies in the world. With over 6500 staff in 55 locations across Australia and the world, we are focussed on addressing Australia’s major national challenges.

CSIRO Shared Services Context – CSIRO began its shared services journey in 2005 with the consolidation of IT resources and infrastructure into a single enterprise function, this move was followed by a broader change program to redesign and implement a similar service delivery model for several other support services including, Finance, HR, Property Services, Legal and Commercialisation.

Delivering to the strategic goal of ‘One-CSIRO’, the new service delivery model provided for research support across the complex and variable business units and locations of the organisation through four distinct channels: self-service, service centres, in-business and specialist services.

Self-service comprised of information accessed through the organisation’s intranet and supporting business systems. With the introduction of an ERP (SAP) in 2008, further self-service functionality has been provided particularly for the support services of HR and Finance.

Service centres were established to deliver transactional processing for many of the standard shared service functions such as the IT Help desk, accounts payable, accounts receivable, procurement and payroll. Where possible, service centres were consolidated into geographical hubs further rationalising the resource and infrastructure required.  Line management for service centres remained with the respective support functions with overall co-ordination and expertise provided by a service centre management resource at the organisation level.

In-business and specialist resources remained deployed across CSIRO to provide complex advice and service to local management and staff. Importantly, line management for these resources changed to the shared services function leader, providing greater flexibility for the allocation of resources to meet the demands of the business.

Underpinning the new service delivery model was a Service Charter providing clarity for the in-scope services and KPI’s to measure the performance against those services. The performance measurement for customer satisfaction is through an online survey of end-users conducted annually. Shared service functions respond to the results of the survey through the identification of improvement initiatives.

Key success factors for Service Centres
Several factors contributed to the success of the CSIRO transition to service centres in particular as well as the shared services model overall, they included:

CEO and Executive Team sponsorship and accountability for the successful implementation of the shared services model;
A coordinated change management framework, using a phased implementation approach, supported by a dedicated project team drawing on expertise within the business;
A consistent and transparent human resource methodology for filling the new service centres’ organisational structures;
Identification of in-scope expenditure (labour and operating) and transfer of these funds from in-business to the respective support service functions with accountability for service centres; and
Intensive staff representative and union consultation throughout the change process.

The Benefits
The benefits realised by the CSIRO resulting from the implementation of its shared services centres included:

A reduction in overall transaction costs, realised over the four years of implementation of the broader shared services model;
The development of common technology and enterprise business processes for service centre transactions delivering increased consistency of application and opportunity for optimisation;
The provision of reporting for activity at a whole of organisation level for those transactions processed by the service centres; and
Overall customer satisfaction trends with service centres and shared services increasing over the last 5 year period.

In summary, service centres in CSIRO have been an integral part of its Shared Services model and have delivered business benefits as well as opportunity for continued improvement.

For more information about CSIRO Service Centres please contact:

Robert Holland
Robert.holland@csiro.au
+61 3 9545 8212