What are shared services? Benefits and examples

Shared services are when a company consolidates its support functions to better serve the company and its business units, operating as a company within a company, using a well-defined infrastructure to enable higher value service delivery. This typically includes services such as human resources, finance and accounting, information technology, supply chain and other front and back office services.

By consolidating these services into a centrally managed organization, companies can realize efficiencies and cost savings that would otherwise be difficult to achieve through decentralized operations. In addition to benefits to the organization as a whole, shared services employees also provide valuable career opportunities and training.

The benefits of using shared services

When it comes to business, there are many benefits to implementing a shared service delivery model:

• Cost reduction: Perhaps the most obvious benefit is that shared services can help save time and money. By consolidating different functions into one organization or service provider, companies can often achieve economies of scale and reduce duplication.
• Improved services: Centralizing certain functions makes it easier to monitor and manage performance. When services are isolated or distributed across business units, it can be difficult to track progress and identify areas for improvement. Standardized processes and the use of service management tools help to improve service.
• Better controls and insights: Shared services enable data centralization, supporting enhanced reporting and analytics. It also helps improve compliance and enable better decision-making by the organization.
• Improved communication: Shared services can improve communication and collaboration between departments and employees by breaking down silos and encouraging information sharing.
• Greater flexibility: Shared services can give organizations the flexibility to scale up or down as needed, without having to make major changes to their organizational structure. During M&A, shared services can simplify the integration process of two organizations to combine activities and achieve synergies.
• Improved Productivity: When everyone works from the same platform or uses the same service provider, sharing information and collaborating on projects can become much easier.

Ultimately, the benefits of using shared services can help businesses operate more efficiently and effectively.

8 examples of shared services

1. Human Resources

One of the most common examples is shared services in the human resources field. By consolidating HR functions into one department, companies can achieve efficiencies in areas such as employee onboarding, benefits administration, and payroll processing.

2. Finance

Another popular example is shared financial services. When companies combine their financial activities into a shared service, they can often reduce costs and improve performance associated with accounting, accounts payable, accounts receivable and other financial processes.

3. Information Technology

Many companies choose to combine their IT functions in a shared service. This can help improve service levels for IT customers and reduce overall IT costs.

4. Purchasing

Organizations can realize cost savings and service improvements by consolidating procurement into a shared service. When companies manage purchasing centrally, they can take advantage of volume discounts, economies of scale and improved service.

5. Facilities Management

Facilities management is another common example of C&SS. By consolidating their facilities management functions, organizations can achieve efficiencies in areas such as building maintenance, security and concierge services.

6. Communication and Marketing

Companies can better manage and coordinate communications and marketing requests in a shared services model. In this way, the organization can work more efficiently, improve standardization and avoid duplication.

7. Project Management

Many shared services organizations have teams that provide project management services to the business. Involvement in many cross-functional initiatives allows the shared services organization to provide strong project managers to help other parts of the organization.

8. Data Analysis

Data analytics is a relatively new example of shared services as companies increasingly look to data to drive decision making. Consolidating data into a central repository makes it easier for businesses to analyze and identify trends.

Shared services are growing in popularity as companies look for ways to streamline operations, save money, and improve service. Many organizations build in-house shared services organizations, while some choose to outsource non-core functions to an outside provider. In both cases, companies can reduce costs while maintaining high levels of quality and efficiency.

To learn more about how shared services can benefit your business, contact us today. Our team is happy to discuss the available options and help you find the solution that is perfect for your organization.

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