By Paul Jeruchimowitz
The concept of shared services—with back-office functions organized on an enterprise-wide basis to deliver higher quality and lower cost—has transformed how companies organize their administrative and support functions over the last 20 years.
Now, however, a volatile global economy, complex world financial markets, changing political regimes, new regulations, emergence of new technologies and pressure to deliver more innovative products and services have companies looking for more control and better integration of services across their enterprises. In the search for profitable growth, leading companies are starting to develop new models and integrate their business services to deliver higher-value services that leverage both captive and outsourced solutions.
They are becoming strategic partners to the enterprise by supplying services that can help solve business problems and deliver increased enterprise value. Furthermore, their integrated business service organizations are getting involved in middle and front-office activities that place them closer to the customer, the product or service delivered and the business operation. With the emergence of these new shared services models, some things remain the same. The organizations retain the traditional shared services foundation of solid management and a focus on process and organizational standardization. However, the operational decisions made by an integrated business service operation are generally not focused strictly on cost management.
They are very focused on ways to help the enterprise they serve achieve growth and other business goals, including the rapid entry and exit of new markets, expediting mergers and acquisitions, or even providing a buffer against volatility. Through survey research and experience with clients, Accenture has identified four major components that organizations use to provide a firm foundation as they launch and operate their integrated business services.
1. Redefining the business services model to better align with the changing business environment. Executives we interviewed at integrated business services organizations that are blazing these new trails are beginning to recognize the value of tailoring their services model to more closely align with the businesses they serve. They have become more focused on the need to design a service model that recognizes, accommodates, and makes the most of corporate and geographic culture, industry nuance, market forces and more to help the enterprise achieve its objectives. For some of these organizations, this simply means evaluating their location strategy and determining the proper mix of local, regional and global support. For others, it means evaluating and understanding middle- and front-office activities, such as sales or logistics, and reorienting them so they are easy for enterprise customers to understand and consume. Some tend to be tied to helping the enterprise achieve its business strategies. Creating the flexibility to meet the changing needs of the business is critical.
2. Innovating and expanding the scope of services to partner with the enterprise to achieve business outcomes. Our research also found that the inclusion of innovative services that integrate the back-, middle- and front-office activities is important for defining the trajectory of an integrated business service organization. Middle- and front-office activities that were previously “off-limits” for shared services organizations for fear of business risk or disruption are now contenders for integrated business services at companies. As one company executive in the biopharmaceuticals industry who was quoted in our report explained, “The front end is where there is more variability, but we see an opportunity there to integrate more with the back end. We need to develop strong end-to-end processes and turn them into services. We need to make the end-user experience matter, as that is how we will ‘wow’ the business units and earn their trust to provide more innovative services.”
3. Delivering insights and taking actions based on the power of data and analytics. With the responsibility for end-to-end processes, companies often come to realize that their integrated business services organization is sitting on top of a data gold mine. This data can be harnessed to turn previously isolated functional information into aggregated data sets comprised of proprietary and public data from a variety of sources. After applying statistical modeling and advanced analytical techniques, the data can be used to derive cross-functional, actionable insights that can help business units understand the full business landscape and make proactive decisions with greater confidence. Analytics can benefit the customers of these integrated business services organizations by providing, for example, analysis of a company’s customer base, data that helps inform management decisions ranging from how a company re-positions its products in the market and new methods for driving more profitable sales, to the management of corporate resources.
4. Identifying the right lead for the evolving organization. Traditional models of shared services were often only a single-function, limited in service locations and they thrived under the leadership of an individual with deep functional expertise. The next generation integrated business services organization, however, is cross-functional with a dispersed and diversified workforce. Employees can be located locally, regionally or globally, and can have widely varied skill sets. The need for deep functional expertise in a lead has been replaced in many cases with the need for someone who can effectively operate a global business and deliver business outcomes.
These leads can benefit from possessing vision and a high level of cultural and emotional intelligence as they explore the possibility of new services. Companies that embrace the value of integrating their business services are aligning themselves more closely with the enterprise to not only support, but in many cases, drive greater business value.
Even so, doing this is not easy. It involves having vision and resilience along with strong, cross-functional leadership. The path taken to realize the vision is different for each organization. Our research and experience indicates that companies that succeed in evolving their shared services in this way are: 1) Thinking big from the start in terms of establishing an ambitious vision for the integrated business services, but implementing it tactically; 2) Identifying and empowering the leadership team; and 3) Getting started. As the alignment with the business becomes stronger, integrated business services organizations may look even more diverse, while still leveraging the shared services foundation and backbone to deliver excellent service. Decisions made now may determine the degree to which these organizations are positioned to enable business value.
Paul Jeruchimowitz is a Managing Director at Accenture, a global management consulting, technology services and outsourcing company.