There has been growing interest in the adoption of the Shared Services Center approach to the management of many corporate financial functions. Analyst research studies have confirmed these trends, which prompted the SAP collaboration with the Institute of Financial Operations to create this white paper. While the focus is predominantly on the receivables management applications within shares services, it is important to note that opportunities exist for other processes like invoice to pay, financial close, master data management, payroll and much more. We find that companies are often looking to improve their cash management and operational efficiency, while optimizing customer care and service. It is a fine balancing act that I equate to the funambulist’s use of the long pole (that was my word of the day- aka tightrope walker). The Shared Service Framework provides the balancing mechanism to successfully achieve these goals of operational efficiency, financial improvement and a better customer experience.
The paper highlights the approach, design, benefits and challenges of adopting a Shared Services landscape. Additionally, the extremely important management of metrics associated with the shared services environment is discussed. I consider this essential since tracking key performance indicators and measuring your achievement against service level agreements will ultimately define your success, as well as the areas that require further attention. The process is a continuum, and this fact is supported in a recent Hackett Group research study* which reveals that 34% of Shared Services organizations sustained year-over-year savings of over 10% during the last decade. Clearly, there are continual opportunities to leverage the shared services adoption and improve performance.
SAP has documented the success of the shared service approach as well. Our American SAP User Group (ASUG) study revealed that organizations that were fragmented, with varying processes (i.e. companies without a shared services design) experienced virtually no improvement in net cost savings or effectiveness. However, those corporations which were highly automated and integrated, with system consolidations and comprehensive metrics, enjoyed net cost savings of 23% and effectiveness improvements of 32%. Other noteworthy performance metrics include tangible impact benefits in Accounts Receivable and Accounts Payable of 50%, Budgeting and Forecasting of up to 80%, and Cash Management of 70%. I think these numbers speak for themselves, and I encourage you to further explore the opportunities found within this white paper.
The accompanying link to this paper is found here: Shared Services for Financials White Paper
* Source: Hackett GBS Annual Performance Study, 2012