March/April 2009 www.FAOToday.com

Feature
Shared Services
Shared Services Portfolio
AN UPDATED APPROACH HELPS TAKE SHARED SERVICES TO THE NEXT LEVEL, COMBINING
OUTSOURCED SERVICE PROVIDERS AND INTERNAL SERVICE CENTERS.
BY MARK KLENDER AND APRAJITA RATHORE
The challenges and opportunities presented by an increasingly global
economy are pushing companies to seek significantly greater performance
from their shared services organizations (SSOs). To take
shared services to the next level, forward-thinking companies are adopting a
portfolio approach in which they strategically and proactively balance flexible
options with respect to:
• What the SSO does: Operating multiple functions and processes and
servicing a number of business units;
• How the SSO sources services: Flexing between outsourced and
in-house service delivery; and
• Where the SSO operates: Leveraging the labor pools, costs, and risks
of geographies across the globe.
When applied to all three dimensions of what, how, and where, a portfolio
approach can reduce the cost of shared services by 25 percent to 60
percent—a function of process standardization, operating efficiencies and
flexibility, labor cost arbitrage, and tax efficiency. A portfolio approach
can also provide other substantial benefits, including reduced risk, greater
scalability, workforce flexibility, and access to deeper and broader infrastructure,
talent pools, and capabilities.
80
70
60
50
40
30
20
10
0
57%
Figure 1: Percent in Shared Operations, by Area
65% 65%
49% 48% 48%
38%
29%
27%
46%
33%
Many “early adopters” of a portfolio shared services approach reached
that state through a slow evolutionary process, starting cautiously with a
limited number of functions, considering only in-house service delivery,
and slowly expanding geographies. Thanks to these trailblazers, however,
the body of experience and knowledge exists today to enable more rapid
deployment and transformation to a portfolio approach. For organizations
in the relatively early stages of shared services, the lessons learned
represent an opportunity to leapfrog to a state that might otherwise take
years to attain. For companies with more mature SSOs, this body of
knowledge can be leveraged to get greater value out of their existing
shared services.
This article presents the results of a 2008 Deloitte survey of 35 shared
services leaders that explored the ways companies are using a portfolio approach
in their shared services operations.
FUNCTIONS, PROCESSES, BUSINESSES
Moving multiple functions, processes, and business-unit customers to
shared services can reduce cost by consolidating and standardizing larger
numbers of business-specific support processes. It
can also help reduce risk by using a single set of
Today
Within Three Years
IT Finance Procurement HR R&D Real Estate Legal Customer Engineering Sales
Service
Marketing
43%
27%
43%
28%
39%
25%
38%
24%
33%
work processes, centralizing decision-making,
and applying central governance and controls.
For companies moving toward a more integrated
operating model in their larger business, multifunctional
shared services is a natural step to pursue
greater integration in their shared services
operating model.
Survey respondents were eager to take advantage
of the potential benefits of extending their
SSOs’ service scope and customer base. Eightynine
percent reported that they planned to add
more processes, functions, businesses, or geographies
to their SSOs. Of special note, many respondents
plan to expand shared services’ scope
to knowledge-oriented areas that have traditionally
been closer to the businesses, including research
and development, engineering, and sales
and marketing. (See Figure 1, left. What percentage,
on average, does your organization have in
shared services for the following areas?)
As a group, survey respondents also anticipated
moving away from functional segregation
54 FAO Today March/April 2009
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