Shared services centers have been in existence for a couple of decades now and traditionally the development of a shared service centre within an organization has been an attempt to reduce costs through labour arbitrage, economies of scale, standardization of processes and improvement of service levels. For the past several months however, Covid-19 has had a huge impact on global economies, disrupting supply chains and enterprise operations. Shared service centers operating at the heart of the enterprises are at a critical juncture today as a result of this pandemic.

Challenges such as managing remote teams, lack of system bandwidth, inadequate infrastructure and unavailability of staff are currently limiting shared services operations.

According to a recent survey on shared services in the APAC region, about 60% of respondents have either prioritized critical activities, fine-tuned their SLAs or are missing SLAs altogether because of the impact of Covid-19.

The survey suggested there has been supply chain disruptions, decline in collections along with increased cost of operations in shared services.

 

 

 

Contemporary Situation of Shared Services

1Effective Process Management

Shared services have traditionally believed physical propinquity was important for process completion and efficiency. However, through Covid-19, shared services are experiencing that their operations, including face-to-face intensive processes, can be carried out without employees being in physical proximity to each other. Many enterprises are riddled with manual, paper-based and non-standardized processes. However, there are significant opportunities to drive continuous quality improvement and process standardization. Enterprises are now looking for opportunities to eliminate redundant processes that lead to inadaptability and hinders innovation and eventually impacts business performance. SSCs are constantly contemplating effective process management, bearing in mind dimensions such as process complexity, proximity, adherence to service level agreements etc.

2Transactional and Complex Processes

Shared Services have been traditionally employed to process only back-office or transactional operations. However, as shared services continue to evolve, embracing a broader set of processes is the way forward. Many shared service leaders believe while transactional processes remain a substantial part of their scope, they should also include knowledge-based, complex processes in the near future.

3Rise of Global Business Services

Enterprises are expanding their process scope and consolidating their functions geographically to achieve efficiency. The conventional single tower concept is being increasingly replaced by multi-functional or global business services. According to a recent survey, about 42% of enterprises across industries and revenue size plan to shift to a multifunctional model; and greater than 50% of these enterprises plan to do so in the next 5 years.

4Business Continuity

The major challenge that shared services is experiencing currently is, of course, to execute their business continuity plans. Shared services are looking to build a more resilient service delivery model because of the vulnerabilities in the service delivery that have been exposed during the current pandemic. If shared services continue with their conventional practices, they will fail to quickly respond to the constant changes occurring today in business.

The immediate solution that many shared service leaders foresee is to increase digital transformation and automation initiatives to build more resilient processes and to be safe from current and future global crises.

Digital Transformation in Shared Services

Shared service centers have traditionally supported enterprises in cost savings by standardizing, consolidating and applying tools to improve business process capabilities. However, these activities tend to increase value initially but are not sustainable for the long term. Digital transformation initiatives in shared services can help cater to the gamut of challenges and deliver value in unprecedented ways. George Westerman, the famous MIT research scientist once said,” When digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when done wrong, all you have is a really fast caterpillar.”

Shared services today should be looking at holistic transformation through digital rather than focusing on transforming their services by single-point solutions.

Digital technologies are being leveraged to make processes more agile and accurate and helping managers take more informed decisions by providing insights on various KPIs through dashboards. Shared service centers are increasingly instrumental in making better decisions by leveraging from huge volumes of structured and unstructured data. Workflow automation provides SSCs with the advantage of faster processes and better adherence to compliance via audit trail. Many paper-based processes are eliminated by use of technologies like OCR and document management. Technologies such as RPA, AI, ML and data analytics can further enhance current systems and processes. Tools such as RPA can automate rule-based, high volume processes and can work 24*7 to reduce process cycle time and increase productivity significantly.

The next generation SSCs will be transformation units focusing on leveraging current and next-gen technologies to provide cost-effective transactions, enhance customer experience and re-envision operational processes.

Examples of digital transformation within Finance shared service centers could be:

  1. Source To Pay

    The source-to-pay leader plays a key role in defining specific actions to be taken to create a long-term and fool-proof measure of delivering sustainable business. This includes aspects of advanced insights into degrees of impact across categories of materials and services, insights on alternative supplier channels, as well as significantly bringing down manual interventions in the process via automation. When done well, industry benchmarks indicate a savings potential of over 3 to 4 percent of the overall external spends which is a significant contribution to the bottom line. A large part of these savings will be led by technologies such as machine learning, robotic process automation, cognitive intelligence, chat-bots and supplier portals.

    These technologies would help categorize unstructured spends and costs and provide alerts on exceptions as well as deliver insights. AI could be used to predict future sources of supply and predict demand for inventories. OCR technologies read unstructured documents such as contracts, invoices, etc. to undertake business processes. Digital technologies can enable complete visibility and automation of the process including:

    • RFP/RFI release
    • PO processing
    • Invoice processing
    • Supplier communications
  1. Order to Cash

    The order-to-cash process is extremely critical as “cash is king” for many enterprises. Emerging technologies can cater to numerous discrepancies in the invoicing, credit management, cash flow and reconciliation processes within the order to cash process.

    • Credit Management: Effective credit management process at the starting of the O2C process can help eliminate issues that arise at the end of the cycle. Digital technologies like OCR, RPA can provide seamless integration with back end applications, ensuring accuracy, faster processes and automated reporting.
    • Automating Sales order: Sales order processing when done efficiently with the help of automation can help increase operational efficiency and enhance customer experience substantially. Automation technologies such as RPA, chat-bots and portals can fully automate the order entry process.
    • Goods Receipt Visibility: The movement of goods, after the billing is done until the client receives the goods, could be tracked automatically without the need of manual intervention using digital solutions.
    • Automating cash application processes will allow seamless reconciliation between information from bank statements and receivables. Subsequently, payments can be posted in the ERP.
  1. Record to Report

    The record-to-report process essentially helps process and analyze financial data to provide key insights on how a business is performing, enables more informed and quick decision making and spurs further growth for an enterprise. Digital technologies such as RPA and blockchain help bring down cycle time to financial reporting and providing powerful analytics to significantly accelerate and provide transparency in the process. RPA can automate routine, rule-based tasks such as reconciliations and sending out communication, based on discrepancies. These processes can be completed daily due to automation as opposed to monthly, leading to real-time and accurate data. Automated solutions can also be extended to reconciliations between companies with the real-time matching of transactions and discrepancy resolution. A technology like blockchain provides distributed ledgers through which enterprises can drastically reduce the reporting process cycle time.

  1. Payroll Processing

    Payroll processing provides one of the best avenues for cost savings for enterprises. Organizations are increasingly looking to reduce process cycle time by automating as much of the process as possible. Technologies like Robotic Process Automation are driving these advancements. RPA enables automation of many data management tasks and reporting, reducing the cycle time and freeing up valuable time for resources needed to complete the end-to-end payroll process.

Good Practices in Change Management

One of the most significant reasons for the success of any shared service centre is effectively managing change. As a quote goes, “Change cannot be imposed on people. The best way to instill change is to do it with them - create it with them.” Digital transformation initiatives should be taken in a phased manner based on the SSC’s short and long-term objectives.

These are some good practices in managing change, especially in exercises such as digital transformation are

Key Stakeholders Buy-In

To embark on a successful digital transformation journey it is imperative to have support at the executive level. The executive team should look at the digital transformation initiative as a strategic business project and provide the financial and human resources required. The team should clearly communicate the consequence of automation and expected benefits to the workforce and the enterprise. The team should facilitate continuous communication among functional resources, training teams, and IT to provide consistent positive messaging around automation. Business buy-in is also required to identify processes for automation, remove redundancies in process prior to automation and to decide the to-be process.

 

 

Operating Model Change

Next-generation shared service organizations will be ready for continual renewal of operating models, constantly adapting newer emerging technologies and ensuring consistency of operations across business units. Typically the operations and IT team in shared services have always worked in tandem and the next-generation shared services will facilitate further seamless collaboration between the two entities with greater efficiency and higher frequency.

 

 

Resource Development

Shared services leaders will need to redefine roles and responsibilities to accommodate changes brought about by digital transformation in the processes. An effective plan should be drawn to help assess the impact of digital solutions on the individual roles, articulately define responsibilities and prepare for redeploying resources wherever necessary. The plan should facilitate provisions for gathering, assessing, managing and scaling internal knowledge and capabilities to ensure that the scope, direction, and outcomes are in line with stated expectations at both an organizational and employee level.

 

 

Process Transformation

Shared service organizations can work with business and IT to identify opportunities for automation and evaluate the right digital technologies to infuse into the existing manual processes. As a starting point, all processes and possibly all tasks under scope, can be stacked based on a 2x2 matrix of effort and impact. This will help the organization in identifying processes that can be fully automated vs. those that need be partially automated, and even prioritize the processes based on business needs and impact.

 

 

 

 

Most shared services today are looking to significantly accelerate their cycle time and provide visibility by adopting digital options. The next-generation shared services will be outcome-based that will be closer to the strategic agenda to deliver consistent profitable growth. As a quote goes, “It is not the strongest or the most intelligent who will survive but those who can best manage change.” Shared services that get stronger at change management will be leading the wave of this transformation journey.

ABOUT THE AUTHOR

Srividya Kanan

Srividya is a business leader with 20+ of experience across diverse functions including Sales, Alliances & Channels, Strategy, Innovation, Business Finance, Operations and Sales Enablement. She has extensive experience in creating and managing high performance teams working in large matrix organizations such as Wipro, Oracle and SAP. She has a passion for incubating functions and successfully integrating them within larger businesses. She has managed various roles including heading Business Operations, Partner build organization and their competitive intelligence team at SAP India, team player at Alliances & Channels team at Oracle India. She spent over seven years between Wipro Finance and Wipro Infotech where she managed various roles including heading their Business Finance for Enterprise Products, Sales for Banking & Finance vertical, was a key member of their Innovation team and managed the Western Region for Wipro Finance. Srividya has done Masters in Business Administration from Mumbai University and ICWA post her Graduation in Commerce.