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Shared Services Models... What's Right for Your Organization
The document critiques common pitfalls in establishing shared services models, including oversimplification and the influence of confirmation bias, advocating for a tailored approach based on organizational context and maturity. It introduces a survey identifying four shared services personas—Landlord, Servant, Consolidator, and Integrator—all with distinct characteristics and performance indicators. Key findings highlight that successful transitions to optimal shared services require executive sponsorship, careful consideration of business conditions, and an alignment of decision-making across the organization.
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Shared Services Models... What's Right for Your Organization
- 2. I’m grumpy abouthow we shape shared services models for our organizations ▪ Bandwagon effect: look to implement headline models to be seen as up-to-date ▪ Oversimplification: make model decisions in a binary fashion ▪ Lack of context: forget that shared services model success is situational ▪ Confirmation bias: search for benchmarks confirming preconceptions We take shortcuts which can lead us to suboptimal decisions So I sat down and developed a “Myers-Briggs” for shared services 2
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- 4. Why pick theright shared services persona? ▪ SUCCESS MATTERS …the wrong approach can put shared services back years ▪ SQUARE PEG IN A ROUND HOLE …models must work with organizational reality ▪ THOSE THAT IGNORE HISTORY ARE BOUND TO REPEAT IT …with shared services maturity we can now see patterns ▪ ELIMINATE PEER PRESSURE …Armed with data and patterns, do what’s optimum ▪ PREREQUISITE TO “MATURITY” …identifying right starting point is critical to knowing when you can evolve IN SHORT…. NO ONE SIZE FITS ALL! THE RIGHT STARTING POINT IS KEY 4
- 5. ▪ Business contextgrowth potential/margin & revenue performance/operating footprint/peer comparisons/corporate events/market or product expansion/change initiatives ▪ Organizational reality chief executive tenure/risk profile/state of technology/management diversity/power structure/culture/ decision-making context/value placed on talent ▪ Shared services journey mandate/stakeholder support/value creation expectations/current scope/investment/scaling/level of automation/reporting/reputation/source for talent/cost allocation/process delivery What feeds into the right persona for your organization? 5
- 6. About the SharedServices Persona Survey ▪ First run: 30 responses October-November 2017 ▪ Confidential: unless details shared ▪ Even split: between trans-national, regional and global companies ▪ 4 primary personae ▪ Across 40 questions/ 3 dimensions: business context, organizational reality, shared services experience ▪ Predictive/indicative of success: based on patterns but not an absolute Transformation Control Landlord Servant Integrator Consolidator 6
- 7. The Landlord persona Flatto negative financial performance No to slow growth High independence in decision making Low shared services maturity Market lagger positioning No seat at table Select factory processes in scope Limited to no digitization Mandate encourage but not required Challenging to neutral reputation Talent out of sight Risk adverse “Dino-sauric” tech adoption 7 No/limited appetite for transformation Cost cutter shared services brand
- 8. The Servant persona Average financial performance Limited risk Consensual decision makingSteady predictable growth Maturing through gradual scale No mandate opt in Hard to get seat at table Factory + some value added scope Limited talent mobility Low appetite for transformation Tech starts + ends with ERP Early stage digitization Considered market peer Vendor of transactions for one process brand 8 Reputation for cheap & cheerful delivery of transactions
- 9. Maturing Reports to CXO The Consolidatorpersona Appetite for measured risk Collegial, center-focused decision making Becoming global/adding new products Some E2E Aggressively embedding digitization Participation strongly encouraged with incentives Moving to next gen ERP Transform through consolidate standardize at scale Brands delivery excellence Reputation as reliable “silent runner” Market challenger Meeting/ exceeding risks Multi- functional 9 Peep source for functional talent
- 10. Mature Reports to chief executive The Integratorpersona Truly global/ obsessed with winning Center-led top down decisions E2E cross- functional scope Participation mandatory Deep source of enterprise talent Moved beyond ERP Branded as competitive advantage Reputation as value creatorMarket leaders Financial performance stratospheric 10 High tolerance for risk Loves to transform
- 11. Where are respondentstoday in aggregate? DegreeofTransformation Level of Control (held by shared service model) Business context strongly favor Integrator model but Organization reality pulls models to a Servant shared service model while maturity suggests that respondents’ Shared services journey have evolved towards both Integrator and Consolidator models. Any surprises? SHARED SERVICES JOURNEY BUSINESS CONTEXT ORGANIZATION REALITY COMBINED TOTAL 11
- 12. What does responsedistribution tell us? DegreeofTransformation Level of Control (held by shared service model) Respondents in the main have high appetite for change/transform but organizational reality is forcing some shared services models to overcome a level of business line/functional control 12
- 13. Business context Growth potential 13 Revenue performance Marginperformance Peer comparison Merger, acquisition and divestiture activityMarket expansion Imperative for change Appetite for transformation Transformation initiative status Chief executive tenure and imperative Risk profile Technology adoption Digital journey
- 14. So let’s lookat business conditions ▪ Generally moderate to high growth enterprises with chief execs well into their tenure ▪ Improving, market leading revenue performance but challenges with margin ▪ High M&A activity and expanding markets at the same time ▪ High appetite for change and transformation/always in a state of flux but low tolerance for risk ▪ High tech adoption but still early on the digital journey 14 In short, business conditions are generally favorable to advancing models
- 15. Business context scoredistribution Transformation Level of Control (at shared Service) 15
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- 17. And now fororganizational reality… ▪ Chief executives have imperative to change the way enterprises interface with markets, customers and suppliers but not reflected in mandate for shared services ▪ Grown by M&A but still preserving individual cultures and ways of working ▪ Collegial approach to management decision-making but servant view of shared services ▪ Value ascribed to talent but not consistently across business units and regions 17 It appears we’re still missing the boat on organizational alignment/change management to truly evolve
- 18. Organizational reality scoredistribution Transformation Level of Control (at shared Service) 18
- 19. Experience with shared services 19 Historical ownership Sharedservices journey Mandate Stakeholder support Value creation Scope Focus Allied transformation initiatives Investment Scaling Level of automation Reporting Reputation Perception Source for talent Cost allocation Process delivery
- 20. …with experience atdifferent starting points ▪ Overwhelming mandate/encouragement but not reporting to top table ▪ High degree of enterprise support but modest brand salience ▪ Seen as success but focused on transactions not value creation ▪ Global functional ownership driving servant model ▪ RPA evaluated but still restricted to proof of concept However, models have attained sufficient scope/scale to deliver meaningful enterprise benefit 20
- 21. Shared service journeyscore distribution DegreeofTransformation Level of Control (held by shared services models) 21
- 22. Key findings thus far ▪Business success +/= model advancement Simple models best when cost cutting a priority; complex models fostered by performance ▪ Timing and imperative impact persona Critical to avoid poor fit ▪ Top leadership must be in the mix No advancement without C-level sponsorship ▪ Transformation is necessary tail wind Velocity of change an enabler ▪ Central power base key to value Scope, complexity and scale dependent on enterprise, not functional, control ▪ Organizations still resistant Shared services evolution still restricted by acceptance 22
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- 24. Want to know moreabout your shared services persona? Like the concept? Want to help evolve the model? Contact deborah.kops@sourcingchange.com