Shared Services Outlook for 2025

All opinions are personal and shared according to the disclaimer at the footer of this message.

Many indicators point to a bumpy year. 2025 will feel uncomfortable much of the time. Messy in fact. But hold on, because the change that is coming is fundamentally needed to help us shift some old-system models that no longer serve, and move us into a more collaborative, compassionate, community-centric age.

Macro Themes:

Economic: A recent UN report states that, in the Western Hemisphere, growth projections are forecasted to be “moderate” (US) and “modest” (Europe). In the UK, authoritative indicators talk of Recession. Many in parts of Europe will feel this. Last month (December 2024), strategist at Quantum Strategy David Roche told CNBC, “Think of [Europe] as a soufflé, and the rising part of the soufflé was always France and Germany, and that has really collapsed into stagnation and paralysis. The core of Europe [looks] incredibly bad economically and politically, and I think markets will eventually reflect that.

At a consumer level, the housing market is declining in the UK, and consumer spending is slowing in the US. East Asia is looking at a more robust 4.7 per cent growth and Africa 3.7. However, “trade tensions, protectionist policies, and geopolitical uncertainties are significant risks to the outlook.”*

Geo Political: The German, French and Canadian Governments are floundering, and more will follow in 2025. If you follow astrology, you’ll be aware that 2025 is a pivotal year, full of endings and new beginnings. Systems representing higher authorities that are not serving the people will struggle for air in 2025. In his ‘Outlook 2025’ article for UK think tank OMFIF, Mark Sobel talks of the US threats of “25% tariffs on Mexico and Canada – America’s two largest trading partners – while across-the-board tariffs of 10% to 20% would batter Europe and 60% China. If implemented, a massive hit to global growth will be delivered.”

Climate Change: 2024 was the warmest year on record according to the European Union's Copernicus Climate Change Service. The World Economic Forum says that by 2030, 3.8% of total working hours worldwide could be lost to “climate induced high temperatures.” We can expect more fires, more flooding and more natural disasters this year.

Technology and communications: Increase in solar activity, building to heightened activity in July, may well impact communication networks and satellites, affecting technology, electrical power, and navigational systems, according to Nicola Fox, Director of NASA’s Heliophysics Division.

Sentiment: Many feel change coming. It’s in our bones. This is the year it will pay to “go small” – know and support your neighbour, connect with nature, help build community where you can, appreciate being present and being connected. The days of “I’m a winner and you’re a loser” and “us and them” are limited. A much more collaborative culture will start to emerge this year.

How all this relates to shared services: My sense is that organizations will be relying on their established shared services to deliver much more. Shared services teams may decrease in numbers of employees, and possibly alter their footprints, but leadership and cultures will improve, and productivity will increase because of technology, employee satisfaction and upskilling.

1. People and culture: We have gotten used to “lay off” news. According to intellizence.com, Q4 2024 announcements included:

• ThyssenKrupp Steel Europe –11,000 employees
• Schaeffler – 4,700 employees
• Auchan – 2,000 employees
• Ford – 4,000 employees
• Siemens –5,000 employees
• Intesa Sanpaolo – 4,000 employees
• Boeing – 17,000 employees
• Nissan – 9,000 employees

Microsoft and Amazon have also announced planned reductions. Shared services leaders have seen cycles like this before. But in previous cycles, we didn’t have AI. The mood seems to be around future-proofing and investing in people. Teams will be trained up and promotions will happen from within rather than recruitment from outside. Pay may not go up, but cultures will soften. They have to. Toxic cultures or manipulative personnel don’t have momentum behind them where we’re headed. Separateness and an “us and them” mentality feel very old this year.

2. Leadership: Desk-slamming CEOs can watch the door on the way out. We have all heard of the leader that shouts in a meeting, doesn’t listen, talks over you, ignores your needs, fails to follow up, thinks they’re more important than you, falls asleep in a one-on-one meeting. This style of leadership will dwindle in 2025.

Some countries and cultures may be more traditionally patriarchal in their style of leadership than others. And for the shared services centers in these locations, this is not a call for a revolution, but more awareness. The “old style” of leadership is lost in 2025. Any company that aids and abets bullying will have a sinking feeling throughout 2025. “Fostering empathy and psychological safety, so people feel comfortable innovating and driving change, is going to be a critical differentiator for high-performing finance functions,” Myles Corson, EY’s CFO expert, said in a recent Raconteur article titled ‘2025 CFO trends.

3. Cross-Function Collaboration: Division will be felt on a macro level, but not within functions that intend to survive in 2025. Togetherness, harmony, and synchronicity – these are the hallmarks of 2025. This is great for cross-function projects (e-invoicing, Purchase to Pay projects, Order to Cash projects). Where there was judgement and resistance, you will likely see a figurative hand being extended. Finger-pointing and back-stabbing will be corporate ways of the past.

4. Transparency: 2025 is a time for truth. We are getting better at trusting our “inner fact-checker.” This is a time to trust instinct and rely on our innate intelligence that tells us if “something isn’t quite right here.” We will be called out if we’re trying to cover things up or confuse, and we’ll have a stronger feeling when we’re being misled to serve another’s agenda. We will be leaning on systems, people, technology and data that can supply horizontal views of truth, and we’ll be refreshing that view constantly – for reassurance and awareness as to where misinformation exists. We will be investing heavily in AI-based tools to help us build a full, deep and up-to-date picture.

5. Supply chains: If there is one function that will be paying for previous underinvestment, it’s Procurement. If your Enterprise or mid-size company doesn’t have an established Procurement organization today, and should, then mobilize. You’ll need as much visibility, control, warning, structure, governance and leadership in Procurement as you can get. Why? a) Some suppliers will struggle for credit and pose a risk and b) globalization in the past 25 years and the rise in on-demand trading in the past 10 years has encouraged companies to build complex and massive supply chains with factories 12,000 miles away from Global HQs.

This complexity leads to vulnerability in the face of natural disasters, communication outages affecting shipping, and geo-political tension. Many companies are aware of this exposure and have started to re-shore supply chains. Reshoring supply chains reduces exposure, helps the company achieve sustainability and ESG targets but increases the cost of manufacturing. The World Economic Forum recently said, “Tariffs and trade agreements, political relationships, subsidies, and export restrictions that affect trade routes and resource availability may have a significant impact on supply chains. There may be near-term damage if massive disruptions create chaos for businesses that rely on imports.”

6. Technology: Aside from the likes of Microsoft and DropBox, the tech companies seen laying off staff have not been the ones supporting business process. With companies possibly planning for a modest or extensive level of shrinkage in 2025, or having to respond to events by shrinking in the next 12 months, we will likely see corporations depending significantly on their SSOs. These SSOs will ramp up their adoption of advanced technologies, especially robotics and AI. According to an e-invoicing provider and a Record to Report technology provider, there is a real uptick in deals, and the pipeline is incredibly healthy. Technologies that will flourish will likely be:

• E-Procurement technologies – CPOs will need to catch up in 2025 if they’ve been the victim of underinvestment. Their senior execs need to rally. The World Economic Forum published an article on January 5, 2025 titled: “AI will protect global supply chains from the next major shock”.
• Accounts Payable technologies – many SSOs have spent decades improving AP but are still largely/partly manual, and now have different stressors (fraud, inflated supplier bases that need to be reduced). While companies move to e-invoicing (mandated now in many countries), they will expand the program to all invoices and across the whole invoice process.
• Tax – tax technology will be needed to help companies cope with a continued increase in regulations. I follow Richard Asquith’s blog and, in the past 13 days alone, he has referenced over 70 VAT announcements and changes including:
• Israel VAT rise to 18%
• Changes to Tunisia VAT
• Slovakia VAT rises to 23%
• Guinea-Bissau implements VAT
• Finland reduces VAT rate
• Montenegro new 15% reduced VAT rate
• US Louisiana raises sales tax to 5%
• Bangladesh VAT rises
• Austria VAT registration threshold increases
• Tax regulations and rates are changing at a speed that is impossible to keep up with manually. Tax technologists are in high demand to see that their business flows are accurately supported by their ERPs and wider technologies.
• Order to Cash – Shared services will continue to tighten their credit risk and collections processes in 2025.
• Record to report – Like previous years, companies cannot afford errors in closing, reconciling, journal entries. In the quest for transparency, shared services will have a low tolerance for Excel or lever-arch folders.

Technologies with the advantage will be:

• AI-based and/or robotics-based. Robots have a much greater role to play in 2025 – in our shared services and in our personal worlds. AI and robotics have been tested or seriously deployed in pockets. 2025 and ongoing, we will see these technologies assisting “the all” and “the everywhere”
• Based on a tech stack that is scalable and secure and offer a refreshing user experience and rich feature functionality
• Platform-based where a shared services starts with one task and can build out, build out, build out, adding new tasks and processes from within the given function, but potentially outside the function
• Focused on support. In line with transparency, tolerance for poor support or noise trying to justify poor support will be minimal. If you’re a tech provider operating in one of the areas above, and you white-label a good deal of contracts, make sure you know exactly where responsibility sits between you and your white-label partner. Customers will have impatience when it comes to downtime.
• Straight with their marketing message. Good degrees of confusion and urgency might drive technology decisions in 2025. If you are a service provider in the market, don’t be tempted to amplify these states. Be straight in your marketing messages, resist being vague, and tell your prospects clearly what you do, how you make a difference and how you will deliver on SLAs. Be clear about what you don’t do.
• Based on a simple commercial model with an ideal 6-month return

Conclusion:

When we look back, we will see 2025 as a positive year. The change ahead is not a classic “downturn” cycle. It will have instead the markings of a transformative year. It may feel uncomfortable at times, but remember to dial into connection, community, colleagues and friendships. This year is the year about service to others rather than self. Your SSO will feel different, your leadership will soften, the work you do will be more interesting, and the projects you work on will be more meaningful. This is not an all-inclusive list, and I would love to hear your thoughts on this outlook.

*United Nations Department of Economic and Social Affairs “World Economic Situation and Prospects 2025”

DISCLAIMER: All writers’ opinions are their own and do not constitute financial or investment advice in any way whatsoever. Nothing published by sharedserviceslink constitutes an investment recommendation, nor should any data or content published by sharedserviceslink be relied upon for any investment activities. sharedserviceslink strongly recommends that you perform your own independent research and/or speak with a qualified consultant before making any investment decisions.