*This post originally appeared on the Cherwell blog, prior to the acquisition by Ivanti. 

What Is the Shared Services Model for Service Delivery?

The shared services model has seen widespread and increasing adoption in the private sector since the 1980s, with up to 30 percent of United States Fortune 500 companies having implemented a shared-service center. The concept of shared services is that an organization establishes one specific group or department to perform or deliver a service that had previously been delivered by more than one group within the organization.

When we look at candidates for shared services, human resources and information technology services are the best options. Instead of having each department in the business operate its own human resource department, organizations are choosing to deliver HR services to all parts of the business from one group. Rather than having each department operate its own IT service, organizations apply the shared service model to IT and operate all of the organization's IT services and functions from a centralized group. 

Some organizations refer to these dedicated service delivery groups as a shared-service organization (SSO) or a shared-service center (SSC), but we'll be using the short-form SSC throughout this article to refer to dedicated service delivery groups. Single organizations may choose to centralize their business services, and sometimes even groups of organizations can come together to establish and operate shared services with the objective to down costs through economies of scale and efficient service delivery.

10 Key Business Benefits of a Shared Service Portal

The implementation of a software-based shared service portal can streamline the delivery of shared services within an organization, improve utilization of IT and business resources, and maximize cost reductions through economies of scale. If you're ready to make the business case for a shared service portal for your organization, following are ten key business benefits to emphasize.

1. Organizations Reduce Service Delivery Costs with Shared Services

Many of United States’  largest private sector corporations, including General Electric, Ford, Pfizer, and SAP, have adopted a shared service model to drive down service delivery costs, saving millions of dollars in the process. In the 2019 Global Shared Services Survey conducted by Deloitte, respondents indicated that cost efficiency and driving business value were the top priorities for investments in shared services. The survey revealed that 80 percent of respondents were able to recover their initial investment within three years of a significant SSC implementation.

Shared service centers have also been implemented successfully in the public sector. The NASA Shared Services Center (NSSC), which provides financial management, human resources, procurement, and IT services for NASA using the shared service model, saved the organization $20 million annually since it was established in 2006. 

2. Shared Services Facilitates the Deployment of Automated Service Delivery

The centralization of HR and IT service delivery is already an effective means of reducing costs, but it's even more effective when combined with the technological advantage of a shared services portal. Shared service portals create the opportunity for organizations to introduce robotic process automation (RPA) into their service delivery processes for repetitive, rule-based activities like password changes or information requests. Investments in robotic process automation can have a greater impact in the context of a shared services portal due to economies of scale, as they will be leveraged across departments and not siloed within a single department. RPA can be used to check on software license compliance, send and receive messages, automate finance, HR, and procurement activities, and more.

3. A Shared Services Portal Helps Standardize Reliable Service Delivery

Service standardization is one of the most important reasons that organizations choose to implement a shared services model. The establishment of a single point of contact for service delivery within an organization creates standardization in service delivery throughout the business, eliminates differences in service efficiency and methodologies between business units, and creates a reliable and efficient organization-wide path to request fulfillment.

The effects of standardization vary depending on the nature of the services your organization choose to centralize. A centralized HR service ensures uniform hiring procedures and HR service delivery throughout the organization, ensuring consistent, fair practices and compliance with state and federal employment legislation. A centralized IT service brings consistency and standardization to IT service delivery, enabling the IT organization to optimize the delivery of services such as applications, servers, and data processing to all areas of the business.

4. The Shared Services Portal Helps Eliminate Service Duplication and Business Unit Silos

The 2017 Shared Services Survey conducted by Deloitte asked respondents what functions organizations had placed under the purview of SSCs—88 percent had established an SSC for finance, 63 percent for HR, and 53 percent for IT services. 

This of course means that 47 percent of respondents had not established SSCs for IT services, meaning that each business unit managed its own IT department with its own set of policies and procedures—that’s a lot of service duplication and a lot of wasted effort.

Shared Service Centers reduce service duplication and business unit silos within organizations by integrating service functions into a single department. This prevents knowledge silos from developing within business units and ensures that knowledge generated through service delivery can benefit the entire organization. A shared service portal connects users within the organization to this single department where they can access key services through a streamlined process.

5. Shared Service Enables Business to Compete with the External Marketplace

The shared service models changes that way that organizations conceptualize the functions that they deliver. The shared service center is treated like an internal vendor by each business unit—it acts as a cost center with the business as its customers, and its goal is to provide exceptional services at a lower price point than an external vendor. Businesses optimize their cost savings by leveraging economies of scale, routing service requests through a single point of contact, and delivering services as efficiently as possible.

Shared service centers are accountable to the business based on performance KPIs that often include cost reduction targets and service level agreements for critical services. SSCs must constantly demonstrate their value to the business, a need that drives continual service improvement within each established shared service center.

6. Shared Service Centers Implement GPOs to Drive Value Creation

Implementation of the shared service model has created an opportunity for organizations to establish new, value-driving roles in service delivery. One such role is that of global process owners, or GPOs, for individual services. In the past, each business unit might have a team of people responsible for delivering and improving IT services, but under the shared service model, a GPO is assigned to a specific service with the goal of measuring and improving the quality of service delivery.

GPOs are responsible for ensuring the success of the shared service center by measuring its performance, improving service delivery through technological adoption (such as the implementation of a shared service portal), and ensuring that services are reliably and competitively priced.

7. The Shared Services Model Creates Outsourcing Opportunities

There are two major reasons that corporations may choose to outsource some of their back-office functions. First, to engage in wage arbitrage, and benefit from the cost savings associated with hiring workers in a cheaper labor market to do the same job. Second, to access a broader talent pool that may have expertise in delivering the service, whereas the firm would have to develop and enhance its capabilities to keep the function in-house.

Whatever the case, the implementation of a shared service portal makes it easier for organizations to outsource service delivery to a domestic or offshore service provider when it makes sense to do so.

8. Shared Service Portals Centralize Service Data and Promote Efficiency

One of the key benefits of a shared service portal is that it effectively captures service delivery data from all business units within the organization. When an organization provides the same service through multiple business units (service duplication), little opportunity to integrate data and share knowledge exists, especially when each business unit uses different processes and methods for service requests and delivery.

The establishment of a centralized and standardized service deliver process, along with the implementation of a software-based shared service portal that can capture service data, can inform best practices in connection with service delivery and act as a valuable information source for the GPO and the overall organization.

9. Organizations Can Increase Productivity with a Shared Service Portal

In their 2017 Shared Services Survey, Deloitte asked respondents to report the average annual productivity improvement that was achieved by each organization's SSC. Just nine percent of respondents indicated that no productivity gains have been achieved by their organization's SSCs, and 17 percent reported average annual productivity increases of less than 5 percent. Still, 44 percent reported a 5 to 10 percent increase in overall productivity, and 29 percent of organizations reported productivity gains of 10 percent or greater. 

The survey found that shared services deliver increased value on a yearly basis, with 76 percent of respondents reporting shared services productivity increases of 5 percent or greater. These gains manifest as organizations increase their knowledge and capabilities while refining their approach to shared service delivery. In addition, the average initial savings from significant new SSC implementations had risen to 15 percent, compared to 10 percent and 13 percent in past years.

10. Shared Service Centers Can Scale Up Over Time to Increase Functionality

One of the key benefits of shared service centers is that they offer a fully scalable solution for organizations that wish to improve the productivity and efficiency of their service delivery. Organizations do not need to conduct a massive, multi-service implementation of the shared service model. Instead, they can begin by establishing a single SSC with a single function and slowly increase its capabilities over time. 

The most common functions that are taken on by SSCs are finance, human resources, information technology, procurement, customer service, tax, real estate and facilities management, legal services, sales/marketing, and supply management. Increasingly, organizations establish a multi-functional SSC that can handle several functions. The 2017 Shared Services Study revealed that while 57 percent of established SSCs performed a single function, 15 percent performed two functions, eight percent performed three functions, and 20 percent of SSCs performed more than three. There was also a positive correlation between the maturity of the SSC and the number of functions that it performed.

Deloitte’s 2017 Shared Services Study reveals how organizations are choosing to structure and implement SSCs. They may begin by establishing a single SSC with a single function, most likely finance. Once the organization's financial functions are integrated into an SSC, they may implement a GPO whose role is to ensure the success of the implementation by driving continual service improvement and cost reduction within the SSC. As the SSC matures and begins to achieve performance targets, the organization can choose to establish new SSCs for additional services (HR, IT, tax, procurement, etc.) or to integrate other services into the same SSC.

A shared service portal is the ideal tool for enabling singular SSCs to deliver several different types of services as efficient as possible and at the lowest price point.