Title of the Project: Private Sector Utilizing Shared Service Technique
Critical Review Example Part of Proposal
Now when we have learned about the common goals of shared services, it is advisable to know how these Shared Services are implemented. Instead of running various units of an organization differently, it is better to have a single unit, under which all the varied units work together Moller (1997). This would help the entire organization to handle all the peaks and troughs of work load together in a well managed way and the spans of control of supervisors to clerics can be increased considerably.
Another expressed goal mentioned is establishing a centre of expertise. Output quality can be enhanced at the same time by concentrating on core competencies, as it will reduce the cycle time (Kagelmann, 2000, pp. 76-7). This satisfies the employees more; also the competencies can be used in a better way and can be anchored in the organization, this would further enhance the knowledge management (Kagelmann, 2000, pp. 77-8).
When shared services were implemented, certain general challenges were recognized. As per the interviews conducted in the private organizations, in Sweden between 2002 and 2003 by Frank Ulbrich, a list of well known problems war encountered. According to this list, most frequent issues were: interfaces; business relations; and location (Ulbrich and Nilsson, 2002).
Human factors can face several problems within business relations. Repeatedly, the old staffs gets new job and role descriptions, assigned at a new organizational entity. A new way of thinking has to be adopted by an employee that earlier belonged to a different unit, besides moving effects, etc. It is difficult to act as internal service provider especially, when it comes to first negotiations between the new shared services centre and the old units. For Eg., the very simple question, who would be deciding about the range of provided services, is it up to the new unit to decide what to offer or the client would decide it. When it is seen that the Shared Services are the client-oriented Services on one side and on the other hand, some corporate services should be found which have the organization’s best in mind rather than one unit’s.
After the first problem of what to deliver has been sorted out, the next problem arises; which deals with the insufficient description of interfaces. That is, inadequate documentation of processes, which makes it difficult to deliver services because the matter is not understandable. For eg, the pay checks are the responsibility of SSC. In some business units, if employees travel a lot, and their travel and accommodation expenses had earlier been repaid together with the monthly salary, they now might find that they do not get paid at all. The misunderstanding is the result thereafter due to insufficient understanding of interfaces between business travels and paying salaries, it had been forgotten to include travel scenarios in the design of the new process.
The next question which is most frequently been encountered is the location problem of SSC, where to locate it. Mainly when there are a large number of alternatives when multinational corporations in the private sector are concerned. Should an organization have only one centre or several, regionally or globally, should it be organized locally, or may it perhaps be some kind of virtual organization? Are certain questions that arise and have to be answered and depending on an organization’s prerequisites, the answer differ from case to case, making it hard to establish some rules to follow.
Inspite of the fact of the challenges of implementing shared services, its benefits are enormous and cannot be overemphasized in the private sector. Since 1990, the private sector has turned towards Shared Services. Amongst which, certain companies are utilizing them with a great success, like BP, Ford, General Electrics, Rolls-Royce, Ericsson, BBC, and SAP. Example is in Ericsson’s Business Support (BSC) program implemented by Capgemini Consultant, the BSC provided shared services to involve businesses, re-engineer and standardize business processes, and support deployment of global, enabling business applications.
There was a significant result seen by the reduction of about 30% in administration and finance, and also in purchase department. In the changing business of Ericsson, certain terms like process-orientation, service consolidation delivering process and systems standardization focused on its service efficiency, and organizational flexibility. 14 countries were successfully managed by Ericsson’s BSC with the help of common systems platform and controlling area. This resulted into a high quality on-time service delivery. With the help of proven model of Shared Services, Ericsson’s support processes were transformed world widely in earnest. Diary Farm case study also represents similar example i.e. “Transforming Retail Organisations to make them Stronger”, due to which, finance costs were able to reduce by 55% by transformation of their business utilizing shared services model. By negotiating the procurement of operating supplies, more than $3million were saved. (www.capgemini.com)
Where radically changing an organizational core process or primary activities are focused by business process reengineering (BPR), the most accepted and most successful alternative organizational form is Shared services when compared with other methodological change approach (Davenport and Stoddard, 1994).
As seen in today’s work environment, new trends in shared services is leading its implementation towards organisations which are centralizing their IT functions to take a close look at the technology services that their IT departments, to evaluate where it is sensible to provide specific technology components as a shared service.
Many document-intensive companies are deploying scanning centers as a shared service, because their most of the work requires scanning and e-mail processes, as in many banks the documents are shared by sending the scanned copies instead of the original one.