What are the obstacles to Shared Services and do they outweigh the benefits? -Successful Shared Service execution is all in the “What’s” and the “How’s”

Have you experienced or heard of shared service consolidation failures?  Shared Services is a concept that is easy to throw around but can be difficult to execute.  Many of us have participated in a board room session to draw up a plan to share services among locations only to see it take longer to execute or fail to deliver value.  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 of shared service consolidation success as does clearly defining the “What’s” and the “How’s” critical to success. 

A Fortune 100 company decided to share the payables function for its multiple business structure.  The corporate payables function did an outstanding job of benchmarking and determining the processes they were going to follow.  They also hired experienced people to implement the change.  Great people with great experience and great intentions, what could go wrong? 

The receiving or catching locations implemented the change.  Those business units were tasked with eliminating or reallocating the payable role within their location (1 to 3 people, depending on size and complexity), using the new standard process.  The business units completed the restructuring tasks and anticipated a successful process.  That’s when things slowly fell apart!  What the corporate team missed was the unique payable practices at the business units.  They assumed that the standard AP practice was being followed and failed to do individual location process assessments.  As with any process, manufacturing, healthcare or service, individuals sometimes put their own inputs into practice over time and these localized practices become standard, accepted requirements.  Leaders are trained on this localized practice.  A key element of the new process was a “3-way match” which required the invoice to match the purchase order via 3 key elements, that had to be completed at the shared service location.  This new process did not mess well with local practices.  As a result, invoices began to go unpaid and the restructured payables functions at the locations were re-born as everyone reverted to the “before” known process.  The corporate team had to do a “Do Over” with the implementation.  This time, the current state assessment was completed.  This helped to manage the change within the organization as the process could be designed to accommodate required local practices and eliminate other non-value adding ones.  This action gave leadership tangible goals and metrics they could use to optimize the change to deliver true value.  

The key takeaway from this story is simple.  The best process implementation starts with understanding the current “What” and the current “How” the work is being done.  In this way the development of and change to the new “What” and “How” can be accepted and rolled out successfully.

Beauchamp Consulting

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