Most of the shared services over the past couple of decades have survived primarily on incremental rather than transformational strategies. These strategies have mainly focused on increasing efficiencies, timeliness and introducing some enabling technologies.
With the rapidly changing world around us compounded by the massive restrictions imposed due to the pandemic, the world of shared services is not going to be the same again. All shared services will need to go through major changes. While some bits of traditional shared services of managing transactional and administrative work will still need some low-cost human resources, most of it will be automated. And the other high-value services are likely to be morphed into another function or organization. Already many traditional technologies shared services are being eroded by the digital organizations, business intelligence is being replaced by growth and big-data analytics, HR services are being replaced by new-age apps, and business processes are being replaced by intelligent and hyper-automation.
What this means is that most shared services will need to fundamentally transform themselves in order to stay relevant in the future.
Whether your shared services organization becomes a knowledge management organization, innovation nerve of your business, growth analytics team, or simply center of expertise, there is a multitude of opportunities. Depending on the focus of your business, the shared services organizations will need to transform accordingly.
But I must warn you about one thing.
These strategies are different. These are not incremental changes that shared services have been used to in the past. These are revamped operating models and organizational structured organizations.
Let us illustrate with an example. If your organization is to become a knowledge management function of the business, then your traditional transactional services need to give way to knowledge-based services. Transactional services can be managed by control, efficiency, and timeliness but knowledge management needs to be managed by their richness of information, the ability to support critical business decisions and the knowledge capabilities that the business needs to gain a competitive advantage in the market.
So, this needs revitalized thinking. And these would need fundamental changes to your operating model, shifts in culture, reconfiguration of organizational structures and may need exponential technologies.
And to achieve these transformations, you need a robust approach on how to change your shared services organizations.
That is why, over the last few years, we have developed a comprehensive framework called S.C.O.R.E.TM based to facilitate a proper business transformation. This framework is based on five principles: Strategic Future-Ready Design, Competing Values Oriented, Operating Model Globally Optimized, Reconfigured Organization and People Structure, and Exponential Technology and Digital Tools.
In this article, we will explore the “S” of the SCORE framework.
The Strategic Future-ready Design is a result of a thorough and proper deliberation with diverse options being considered, and a right-fit strategy being chosen for the shared services. There are multiple aspects that must be contemplated, and insights generated through this process to provide an environment to make an informed decision.
Many businesses have annual strategic processes. More often than not, they become a “15% more” effort rather than a suitable strategic endeavor. These processes also, do not consider various aspects required for rounded strategic thinking. While there still be may be innovation and strategic brevity at a business level, by the time the strategy of shared services needs to be decided, it becomes ticking-the-box with 15% more exercise.
In our framework, we underscore the importance of each of the elements that must be considered. Here is the list of elements that must be evaluated during the process:
- Value Drivers: What are the value drivers that will define the shared services of the future? Is it skills, costs, locations, technology, or capabilities? Are there other value drivers like services, project management approaches, data mining that should be considered?
- Future Capabilities: What existing capabilities should the organization continue with, what should be stopped, what should be improved, and what new capabilities must be built afresh? In a shared services organization, there are various capabilities that can be built or managed. One of the more notorious ones to manage are the capabilities built based on outsourcing arrangements with 3rd party service providers due to divided accountability. Similarly, there are instances of the presence of tribal knowledge. A handful of old-timers possess more than a fair share of knowledge about organizational processes. And this cranial knowledge poses a significant risk for the organization. It is a flight or a fright risk.
- Organization Type: It is important to discuss and decide what sort of organization should your shared services become. What departments/functions must be created within the shared services? Examples would include becoming a Customer Knowledge center, Innovation hub, Growth & Change arm of the organization, Operational Excellence nerve center, Talent Engine, Digital Partner, or M&A Integration center of expertise. Companies can also, decide to become a High-Performance Organization, Knowledge Center, Growth Intelligence, or Central Projects Organization. There are various possibilities that shared services must explore before drawing up the final strategy.
- Organizational Constraints: What organizational constraints must be considered while designing the future state? These could be market conditions, power of customers or suppliers, regulatory environment, the culture of business, and others. Organizations must carefully explore financial, customer, supplier, employee, leadership, cultural and technical constraints that could impede the transformational journey.
- Validated Aspirations: Every leader has their own version of future aspiration. Sometimes these aspirations are just aspirations. Other times, they are well-thought concepts that are ready to hit the road. It is important that these aspirations are vetted, validated, and made sure that they are in line with the organizational aspirations that can bring benefit to the company and more importantly, are viable options. Sometimes, the glitz and glamour of innovative technology can blindside many people including accomplished leaders. That is why this is an important aspect that needs to be evaluated.
- Future Visualization: Organizations must go through a process of Future Visualization wherein they visualize the “future” setup i.e., the final state setup once the strategic implementation is over. This exercise allows organizations to get a good understanding of what and how future organizations will operate. It includes governance requirements, both positive and negative ramifications, expected behavior from internal clients as well as service providers, managing issues and disputes, as well as measuring performance. This exercise is extremely valuable for driving change management before and during transformation.
- Appetite for Change: Needless to say, that before an organization embarks on a strategic transformation, leaders must ascertain the level of appetite that their organizations have to embark on for a new transformation. These days, it is quite common to see organizations running a large number of initiatives at the same time. These often result in burnouts and the creation of “Change Fatigue.” Before embarking on a truly transformational journey, organizations must optimize the initiatives landscape because otherwise, they will face mass inertia, elevated levels of resistance, and widespread apathy. It is important that the teams are ready, inspired, motivated, and feel passionate about the change rather than view it as yet another HQ-driven initiative to overwork them.
- Leadership Orientation & Alignment: Last but not least, getting the entire leadership team involved, oriented, aligned, and engaged will determine whether the transformation will be successful or not. Too many organizations push the onus of transformation to be driven by mid-level managers. Transformations of this nature, unfortunately, can’t be run like that. These transformations are big, they change the fundamental operating models, organizational structure, leadership, and they need constant attention and intervention from the top leadership all the time. In order to succeed, these transformations must be run by the top leadership. I know many leaders would read this piece, and will say ya, ya but will eventually push it to the middle management teams. My sincere request to them is if you don’t have the bandwidth or the ability to run a transformation, then it is better not to start a transformation rather than push it to the mid-management level only to see it fail in the future.
So, this is a comprehensive list of areas that shared services organization management teams, as well as business leaders, must consider when embarking on the reinvention of their shared services.
So, just to reinforce the message, due to rapid changes in the business world and the pandemic, traditional shared services may not be able to continue much further in the future in their current state. All of them will have to reinvent themselves.
At the same time, shared services have been used to traditional incremental strategies in terms of efficiencies, control, and timeliness. In the future, they will need to become centers of expertise, knowledge centers, growth and innovation hubs, and digital nerve center of the organization.
All these structures will need fundamental remodeling of the structures. This restructuring will need a solid approach based on robust principles. The S.C.O.R.E. framework provides a comprehensive set of principles on which you can base your transformation.
Remember, each transformation must start with a really strong and thought-out strategy.
I’ll end this article with a famous quote from Sun Tzu, the author of Art of War:
“All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.”
This article is written by Anirvan Sen.
It is edited and keyword optimized by Ivelina Petkova.