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By John Goff
It took a while to catch on, but shared
services have pretty much become SOP for most big businesses. According to
consultancy The Hackett Group, 93 percent of all large companies now make
extensive use of shared services organizations to manage back-office functions.
The organizations centralize departmental services once left to the departments
themselves, saving money and improving oversight.
Now that CFOs are finally,
finally comfortable with shared services, they might want to get ready for a
whole new model. Indeed, Hackett says shared services are starting to morph
into something else, something that’s currently being called a‘global business
service,’ or GBS.
Joy – another abbreviation for
finance chiefs to remember. Essentially, a global business service is a beefed-up
shared-services center. But unlike a stand-alone shared-service center, which typically
handles individual functions, a larger global business services operation takes
a multi-function approach.
Typically, a global business
service provides assistance for a number of corporate functions, including
finance, IT, and procurement. A recent study done by Hackett and the Shared
Services & Outsourcing Network, which surveyed more than 250 SSON member
organizations, found that nearly 45 percent of all companies surveyed had
incorporated three or more functions in their shared services operations.
Some incorporated as many as five
functions.
The allure of such an approach is
obvious. A GBS can break down siloed operations, offering managers a better
view of internal operations. It also makes it easier to standardize – or
improve -- existing back-office practices. In addition, it’s easier to move back-office
functions offshore when those functions are handled by a single outfit and not
several shared-service centers.
Equally important for finance managers, a global business service tends
to simplify reporting.
“There’s no question that shared
services has been a powerful driver of G&A cost reductions and quality
improvements at most companies,” said Hackett Global Business Services Practice
Leader Roy Barden. “But it’s also clear that the shared services model has
fully matured over nearly two decades, and companies on the cutting edge are
beginning to take the next steps. In most cases, those steps are towards global
business services.”
Take the case of Juniper Networks.
Over a 12-month period, the networking specialist moved from a shared services
model to a global services operation, with the help of an existing shared
services facility in Bangalore, India.
The move has paid off, too. By standardizing
back-office processes -- and boosting transaction volumes – Juniper has already
generated cost savings of more than 25 percent. That was three times the company’s
initial goal.“We started with a
detailed functional analysis to help identify which processes could be moved
offshore and which needed to remain locally managed,” says Mark Burrows, a vice
president at Juniper.“We also looked at which were ready to move as is, which
needed streamlining or simplification, and which we could fix after the move.”
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