I’ve always been slightly perplexed by the expression ‘A whole greater than the sum of its parts’, since it defied my accounting logic (the same goes for 1+1=3, but I will leave that alone for now). However, while thinking about this article on Shared Services, that phrase suddenly made the most sense in capturing the essence of the Shared Service Center (SSC). By definition, a SSC consolidates functions, processes and resources which were previously spread across business units or legal entities, into a strategic platform, to provide defined, efficient services. Translation: the ‘Whole’ (strategic platform) will be greater than the sum of its parts (multiple entity processes). So let’s dig deeper into why this is true for the SSC.
The strength of the SSC comes from the elimination of parallel (read: duplicate) service units within an enterprise. By standardizing business processes and consolidating efforts to deliver the same services to different groups, you lower your overall cost of operations. The basic principle of leveraging economies of scale comes into play, and the results are the delivery of better service quality and consistency. In addition, these standardized, automated policies and procedures lead to better transparency and improved corporate governance. Another added benefit is the more flexible adaptability to changing business conditions, such as mergers and acquisitions. Clearly, these attributes highlight the value of the SSC strategic platform, or what I referred to as the ‘Whole’.
So what’s the payoff of investing in a SSC design for your organization? I would like to cite the publically available white paper ‘Shared Service Center –Better, Cheaper, Faster’ by PwC, which offers the following savings potentials as a percentage of total costs: Finance 30-50%, Human Resources 30-50%, Procurement 25-40% and IT 25-40%. These numbers speak for themselves and fully justify the further exploration of what a SSC deployment can do for your organization. Should you also be interested in SAP’s software solution, we would be happy to update you on the SAP Shared Service Framework, which provides seamless service delivery in a multiple-backend SAP landscape. Just go to Enable Shared Services and explore away. And that’s the ‘Whole’ story.