SSOs becoming a more Strategic Asset
Date: 14-11-2007
Source: PR Newswire
While cost reduction and more efficient compliance efforts continue to be the top reasons companies adopt shared services, a variety of more strategic advantages, such as improved controls, enhanced process efficiency and greater visibility of data, are seen as increasingly important benefits, according to a study by Deloitte.
Shared services are defined as the practice of moving non-essential work out of a company's business units or divisions and into a separate organization. This year's survey marks the fourth in Deloitte's continuing series of research studies about Shared Services Organizations (SSOs).
"We see an increasingly broader and more strategic role emerging for SSOs," said Susan Hogan, principal with Deloitte Consulting LLP and co-author of the study. "Organizations are taking a more strategic approach to their service delivery models. They are thinking carefully about what processes to house in their SSO, how and in what areas to use outsource providers, and where they should locate their shared services locations around the globe."
Fifty-three percent of companies confirmed that their shared services centers make compliance efforts less expensive, up from 45 percent in 2005. Reduced headcount savings was also viewed as a major benefit of SSOs, with some 58 percent saying they achieved more than 20 percent headcount savings due to shared services. "Organizations who view their SSOs as strategic business assets are deriving the most value from their investment," said Hogan.
Maintaining high levels of output quality and high-quality customer service are the biggest challenges for SSOs. Timeliness of response was cited as the biggest operational challenge, with internal controls and effective governance ranked 2nd.
The survey showed a continued trend toward the globalization of SSOs, with many new locations being established in recent years. Indeed, one in five shared services centers are now multi-continental, considerably higher than in past years. "Companies are continuing to expand their SSO global footprint, locating lower value-add, automated and standardized process centers farther offshore and keeping higher value-added, customer-facing processes nearby," said Richard Sarkissian, principal with Deloitte Consulting and co-author of the study.
Shared services "hot spots," such as Costa Rica and India, increasingly pose recruitment challenges and cost escalation due to their popularity. "As a result, companies are now seeking less obvious locations that still have the ingredients it takes to run a good shared services operation, such as robust telecommunications and a high-quality, easily available labor pool," said Sarkissian. "In fact, companies told us that they feel a sense of urgency to establish new shared services centers now, or get shut out of new locations."
The study found that the most commonly outsourced SSO processes are IT- related, such as service management, storage management, data center, consolidated service desk, and application hosting and support. Companies are also using SSOs to manage HR information systems and data quality functions as well as payroll, pension administration, and benefits administration. Additionally, SSOs are now clearly recognized specifically for their role in helping drive Sarbanes-Oxley compliance.
About the Survey
Deloitte surveyed 131 shared services leaders around the world, who answered detailed questions about their geography, organization, scope and operations. In aggregate, survey participants are diverse in industry designations, have median revenues of just over $5 billion annually, and are distributed across all major industry groups.
For more information about the study, please visit www.deloitte.com/us/2007SharedServicesStudy
.jpg)
