How to Align Your Shared Services With The Needs of The Business

In the last 10 years, most global companies have had to re-invent themselves.  Many have had to transform their structure to compete in a global marketplace, and others have had to change their service offering to remain relevant.

So what do shared services need to do to reflect the changing nature of the companies they support?

Matt Montgomery, who was the global manager for P2P at Lexmark, recently wrote an executive brief on this subject, and now that he is Industry Manager of Accounting and Finance at Perceptive Software, he has interesting perspective of how shared services are evolving.

10 years ago, shared services were still mainly established and operated to reduce costs. However as Montgomery says, “Shared services operations that focus solely on lowering costs will reach the point of diminishing returns… The challenge is to maintain efficiency while shifting the focus to increasing strategic effectiveness. Executives can accomplish this by broadening the scope and value of shared services, and developing processes and implementing technology that support  enterprise-wide goals of service quality and overall earnings per share.”

Lexmark is a prime example of a company that has transformed from manufacturing printers to becoming a service-oriented company that specializes in unstructured information solutions.  From Montgomery’s experience at Lexmark he outlined three critical success factors for any shared services organization to transform alongside the companies they support.

1. Unify the business strategy and develop a single, clear vision of the role shared services will play. As their CFO at the time, John Gamble said, “We were moving to a high intellectual property/low asset model–fewer facilities, less inventory and working capital. We had to be sure our cash flow model was robust, and we had to focus our resources on development, sales and services.” Unless your shared services has the right drive, support, and technology, you are unlikely to keep up with their pace of change and meet their expectations.
2. Conform the technology strategy and ideally employ a single instance system/ERP worldwide to increase visibility. While often a painful process, this is often what enables scalability and the ability to operate on a truly global level. Lexmark in 2008 moved from three operating systems into one instance of SAP. This made it easier for IT to update and maintain the system, while accommodating the business processes, regulatory and tax differences of 170+ countries. Legacy systems supported with disparate processes will keep you from operating on a truly global level.
3. Standardize processes, globally.   Key to supporting a global organization is to have standard global processes. Gamble said at Lexmark “we used our financial and IT operations to audit our processes worldwide and force them into a common system. Processing simply did not take place for anyone operating outside that system… It was difficult, but we chose to adopt a best practices approach and standardize all our processes. No exceptions.”  To do so they used Perceptive Software's Intelligent Data Capture technology to provide control points and master data, enhancing predictability.

With a business strategy that supported the business they wanted to be, an IT system that allowed them to get there, and processes that improved the quality of service, the shared services were able to provide more meaningful sales analysis and forecasting, and a focus on developing a service-oriented culture and developing “customers for life”.

Businesses are constantly transforming, so whether your business is going through a significant transformation, or just trying to keep up with the times, you need a strategy and systems to remain agile.