Shared Services, Shared Success
by Helen Sanders, Editor
Those based in, or who have visited London this summer will have witnessed remarkable achievements in an amazing diversity of sports. Not only have elite able-bodied athletes continued to redefine standards of sporting excellence, but the Paralympians have pushed perceptions of the limits of human achievement even further. Perhaps the message of this summer of sport is that personal achievement is everything, and every country should strive to outdo each other in its pursuit of excellence. But perhaps not.
On day three of the Paralympic Games alone, athletes from 115 competing countries visited the official prosthetic, orthotic and wheelchair technical service provider. Eighty technicians completed 277 complex repairs to ensure that these athletes could continue to compete without interruption. It would have been extremely costly and logistically inconvenient for these 115 countries to provide their own individual technical services. Instead, leveraging a single service provider was more efficient, cost-effective and enabled each athlete to focus not on the support functions that they needed to compete, but on delivering the sporting prowess and competitive edge for which they had trained for so long.
Every company encourages entrepreneurship and ever-higher standards of excellence in each country in which it operates. Companies can often gain considerable advantage by demonstrating superior skills, expertise, innovation and local market knowledge to those of their competitors. So how can these companies foster these skills and ensure that employees are able to focus on the activities that create business success? Freeing up employees from unnecessary administration, enabling them to channel their time and energy into value-added activities is a major factor in achieving this. Consequently, companies across a wide range of industries, profiles and geographies have recognised that centralising business support functions can improve the efficiency of these activities, reduce costs, and facilitate core business activities.
This is not limited to finance, with procurement, IT support and HR amongst the business functions that companies have centralised successfully. To support the financial operations of the business, payments, treasury back-office processing, expenses management, eInvoicing and in some cases, collections are amongst the business activities that can be centralised into shared service centres (SSCs) most advantageously.
This article features insights from Filipe Simao, Head of Client Advisory, BNP Paribas and Sandip Patil, Regional Head, Payables and Receivables, Asia Pacific, Treasury and Trade Solutions, Citi Transaction Services who look at some of the considerations when setting up or evolving an SSC, and how companies are continuing to reap the benefits of centralisation.
The evolution of SSCs
As Filipe Simao, BNP Paribas outlines,
“The role of SSCs has evolved significantly over the years. Early SSCs often provided IT support, which was linked to a trend for business process outsourcing. The shared services model then expanded into areas such as finance and HR administration, and now, they frequently take responsibility for a wide range of non-core activities.”
Companies globally are increasingly centralising finance and accounting activities such as payments, reconciliation, cash allocation and forecasting, enabling consistent processes, rationalised platform and centralised expertise. While European and North American multinationals may historically have been the pioneers of centralisation, Sandip Patil, Citi explains that this is no longer the case, with considerable growth of SSCs in Asia,
“As both foreign and Asian multinationals expand their presence in the region, there is a greater need for operational efficiency. This is best driven through centralisation and standardisation of finance and accounting activities. Consequently, we are witnessing huge growth in the number of SSCs that we support, now totalling around 300 in Asia alone and more than 1,000 globally.”
SSCs are no longer limited to the largest multinationals; effectively, any company that has business support functions replicated across multiple locations may benefit from centralising services, rationalising technology, standardising process and ultimately reducing costs.