Title of the Project: Private Sector Utilizing Shared Service Technique
About 40% of a company’s cost is constituted by its important internal services, e.g. HR Services, Procurement, etc. costs by many companies is tackled by concentrating on headcounts. But, lack of understanding of costs and needs for improving services, this above concept gets backfired frequently. And the effect of these internal services is the factor on which the competitiveness of the organization’s core business depends.
To improve on these services, various mechanisms are employed by the organization, e.g. charge backs, centralization, service level agreement, etc. Certain amount of improvement was imparted by them, but was not significantly enough to address value, cost and services levels on continuous basis.
More lasting substantially superior improvements can be seen by the application of a recently emerging, more comprehensive & shared Service approach. Here, it is to show how the service segmentation framework be obtained by shared services; around which the development plans can be made; which is similar to the strategic planning process performs for the firm’s external customers. Both, Qualitative and Quantitative approaches are used in this research to achieve its objectives: Focusing on Private Sector in UK.
The importance of Shared Services can be brought in to light by this research; as to how these internal Services deliver services to internal customers at cost, quality and timeliness which is competitive with alternatives, so as to obtain impact to the external customer’s satisfactions. On the other hand, it is clear that alone Shared Services can’t assure success in improvement process; these are merely the enabling factors for cost reduction in customer satisfaction and operation process.
The main Aim of this research is to examine how effective are the Shared Services in context with achieving and maintaining excellent performance that focuses entirely on delivery of highest-value services at the minimum cost to the internal customers, with the target of delighting external customers and enhancing corporate value of the private sector in the UK.
· How do Share Services promote efficiency, value generation, improved services to customers & cost savings.
· Investigation to know the field where these services are implemented to know whether this concept is practicable to customer satisfaction and cost reduction in operation processes.
· In finding out the limitations & challenges of implementing these services.
· Evaluation of aptitude of this approach of these services for private sector in UK.
Shared and Internal Services
It relates to the support activities of Porter’s value chain, such as procurement, human resources, information technology, and infrastructures that help the primary or core activities of organisations to create value for customers (Thompson and Strickland, 2001 p.129) and is defined as services provided by distinctive organizational units or the people working in these departments to other units or employees within the organization (Witt, 1985).
The theoretical potential for extensive improvements in support process is focused by organizational change approach (Schulman et al., 1999). These Services are also often considered by dissatisfied management staff of an organization; as one of their choice alternatives. The business press has commended this concept widely and has promised cost reduction, providing services with customer and process focus, and deploying how technologies among their benefits.
Many contemporary changes projects have focused support process, the reason being the effectiveness of these processes in extensive improvements (Schulman et al., 1999). If non- strategic activities & support processes are cut out, there will a tremendous theoretical potential for optimization and extensive economies. Hence, business press has acclaimed shared services as alternative for large organizations. (Cassell, 1997; Jackson, 1997; Lester, 2001).
Projects to implement Shared services have been started as a result of a legal orientation towards corporations in the USA in the 1980s at companies like General Electrics, Baxter Healthcare and A.T. Kearney (Moller, 1997; Quinn et al., 2000). Initially, it started with accounting/finance (Moller, 1997; Hammer, 2001), but now covers up other core staff functions also. ). As much as 80 percent of the top 20 Fortune 500 used shared service by the year 2000; and many other top Fortune 500 companies in the USA had implemented some form of shared service (Cecil, 2000; Funk, 2000; Triplett and Schumann, 2000). This concept was rapidly exported to other parts in the world from USA, like in Europe, Sweden, etc.
Many definitions are present in management for Shared Services, as it is still a new concept. But, the common criteria is Shared Services focus on optimizing corporate resources and processes in a new organizational entity. For example, Schulman et al. (1999, p. 9) define shared services as the concentration of company resources performing like activities, typically spread across the organization, in order to service multiple internal partners at lower cost and with higher service levels, with the common goal of delighting external customers and enhancing corporate value. Bergeron (2003, p. 3), defined shared services as a collaborative strategy in which a subset of existing business functions are concentrated into a new, semi-autonomous business unit that has a management structure designed to promote efficiency, value generation, cost savings, and improved service for the internal customers of the parent corporation, like a business competing in the open market.
Certain more characters are identified by Moller (1997): well defined services for more than one unit within an organization are provided by Shared Services Centre (SSC), an independent organizational entity. The management of costs and the quality and timeliness of the services provided by Shared Services are the responsibilities of the SSC. Dedicated resources and typically informal or formal contractual arrangements, often called service level agreements, with its customers are owned by it. While Quinn et al. (2000, p. 7) described shared services to the practice of business units, operating companies and organisations deciding to share a common set of services rather than have a series of duplicate staff functions.
As a whole, the organization’s units, acting independently are provided a selection of common and well-defined services by these Shared Services, same as the outsourcing, where the service provider is contracted. The support processes are taken over by an independent third party without direct connection to the outsourcing organization. . The shared service alternative is based on taking advantage of the existing knowledge with the organization. As a result of which the services remain within the corporation. Carries along the shared services held by the similarity to external outsourcing, i.e. to a third party, sometimes are called for internal outsourcing. The main difference is where the service provider is organizationally located and instead of a contractual partner, internal resources are used.
Shared Services Objectives
Common goals of shared services can be looked at after having understood the concept of shared services. Shared services are marked off by four common goals, says Shah (1998). These are as follows:
- Accumulating intellectual and capital assets.
- A place to deploy new technology.
- Reducing the cost through providing service to a diverse set of business units
- A centre of providing excellent services with process focus and customer focus.
To deal with complex issues is not possible in small organizations. Accumulation of intellectuals and capital assets in one organizational unit, there are a large number of experts on hand to tackle with the same complex problem, which is its main advantage (Connell, 1996). It is because a larger group is targeted by shared services within the corporation. Specialists in their specific fields, who offer their services to the business units (Shah, 1998; Norling, 2001), can be afforded by them. Hence, all business units can utilize experts for a comparable low cost. SSC can solve more complicated Questions, without even contacting external units.
Standardization process seems beneficial to Cecil (2000) and Triplett and Schumann (2000). When drawing together activities have been performed in the same manner at various locations before, business units become more comparable, they say. When the customers are put in focus, the work can be handled is more precise and is quicker, (Forst, 2001; Norling, 2001). Therefore, efficiency and leverage of centralization are combined together along with the superior customer service (usually associated with decentralization) by the Shared Services (Connell, 1996; Triplett and Scheumann, 2000).
Leading-edge technologies be purchased to support the corporation (that a single business unit might not be able to afford to invest) by pooling resources among several divisions so that purchasing costs can be split conjointly (Shah, 1998). Being in a single location will make it easier to coop up with the adjustments required to response to external changes such as software updating systems to legal requirements or evolution (Shah, 1998; Triplett and Schumann, 2000).
Hence, the reason behind the use of Shared Services now gets cleared with the above four common goals, i.e. it combines all the functions of continuous improvement.
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