Have you experienced—or heard of—shared services consolidation failures?
Shared Services is a concept that’s easy to throw around but difficult to execute. Many of us have participated in a boardroom session to draw up a plan to share services among locations, only to see it take longer than expected or fail to deliver value entirely.
One of the key success requirements relates to how your culture and systems are set up to handle the change. Leadership alignment and accountability play an important part, as does clearly defining the “Whats” and the “Hows” critical to success.
A Fortune 100 Cautionary Tale
A Fortune 100 company decided to share the accounts payable function across its multiple business units. The corporate payables team did an outstanding job of:
- Benchmarking against industry best practices
- Determining the standard processes they would follow
- Hiring experienced people to implement the change
Great people. Great experience. Great intentions.
What could go wrong?
What Went Wrong
The business units were tasked with eliminating or reallocating 1-3 payables roles (depending on size and complexity) and adopting the new standard process. They completed the restructuring and anticipated success.
That’s when things slowly fell apart.
What the corporate team missed was the unique payables practices at each business unit. They assumed standard AP practices were being followed and failed to do individual location process assessments.
As with any process—manufacturing, healthcare, or service—individuals put their own inputs into practice over time. These localized practices become standard, accepted requirements. Leaders are trained on them. They become “how we do things here.”
The Breaking Point
A key element of the new process was a “3-way match”—requiring invoices to match purchase orders via three key elements, completed at the shared service location.
This new process did not mesh well with local practices. As a result:
- Invoices began to go unpaid
- Vendor relationships were strained
- Restructured payables functions at the locations were re-born
- Everyone reverted to the “before” process
The corporate team had to do a “Do Over.”
What They Did Differently the Second Time
This time, the team completed a current state assessment at each location before implementing changes. This critical step helped them:
- Understand how work was actually being done (not how it was supposed to be done)
- Design processes that accommodated required local practices
- Eliminate non-value-adding variations
- Give leadership tangible goals and metrics to manage the change
- Build buy-in by involving local teams in the process design
The result? A successful rollout that delivered true value.
The Key Takeaway
The lesson from this story is simple:
The best process implementation starts with understanding the current “What” and the current “How” the work is being done.
Only then can you develop and change to a new “What” and “How” that will be accepted and rolled out successfully.
Skip the current state assessment, and you’re building on assumptions—assumptions that can derail even the best-planned consolidation.
Planning a Shared Services Consolidation?
Before you restructure, make sure you understand what’s actually happening at each location. Our Process Assessment & Capability Analysis can help you identify the current state, uncover hidden variations, and design a consolidation that actually works.
Contact us to discuss how OpExecs can support your shared services initiative.