You’ve probably heard the phrase “shared services” at least once recently. But if you’re like most of us, you may appreciate a little insight on what shared services are, and how it can help organizations operate more efficiently and save money. Today, shared services experts Linda Dourney and David McDonald answer the questions we hear most often from federal leaders when discussing this hot topic.
Question 1: What is Shared Services?
Linda: This is the question we get the most! The challenge with shared services is a lot of leaders are talking about it but many people don’t really know what it is. In layman’s terms, it’s when an organization provides a service that is offered to more than one “customer.” Think of a shared services organization (SSO) as a business offering specific services and a pricing structure.
For example, consider an internal creative services team. Instead of the sales department, marketing department, and c-suite maintaining individual creative teams or using an outside creative agency to meet their needs, a single creative services team serves the entire organization. This creative services team employs a rate card and bills “customers” for its work. This allows each customer – marketing, sales, et al – to specialize in their area of expertise and in turn rely on a team of experts when creative needs arise.
Similarly, shared services allow federal agencies to focus on the specific areas required to achieve their mission. Here’s how a report from CIO.gov summarizes why shared services is critical to maximizing future performance.
“To become more efficient, government needs to reach the point where sharing or merging functions is routine, making use of scarce but critical expertise and building high-quality capacity through economies of scale. It requires agency leaders to make critical choices about what their organization does well and what makes sense to obtain from others who can provide best-in-class services.”
David: It’s important to mention that a shared service activity is most commonly administrative or task-oriented types of work – a repeatable process. This means the biggest positive impact comes from allowing your employees to focus on the subject matter related to their job because more administrative and task-oriented work is delegated out to a specialized provider. For example, delegating accounts receivable to shared services will allow your contracts officer to focus on contracts instead of invoicing; delegating creative work to shared services will allow your junior analyst to focus on delivery instead of executive PowerPoints.
Question 2: Will Shared Services Save My Organization Money?
Linda: Due to start-up costs, there is not typically an immediate ROI when transitioning to a shared services model. According to Gartner, however, through the reallocation of resources and more efficient use of personnel savings are typically realized. In addition to potential cost savings, what SSOs offer are uniform services that are more reliable and consistent. This benefits both customers and SSO team members.
Since SSO employees focus on one area of expertise, they can develop consistent, repeatable processes to follow. This leads to greater efficiency which drives those desired organizational cost savings. These consistent processes also provide customers with a consistent experience, saving them time and effort. This also equates to greater efficiency and provides time to refine critical skills, allowing for the delivery of higher-level work.
Question 3: How Do I Get Started?
Linda: First, map the processes that you want to turn into a shared service. Let’s say it’s enrolling employees in health insurance. Begin by mapping out what happens in your organization when somebody wants to enroll in insurance so that you have a standard operating procedure (SOP).
As you map this process, remember that it may pass through multiple hands. For example, insurance enrollment may appear to be an HR process. However, as we found with one client, there are also likely finance (payroll deductions) and IT (the online enrollment portal) pieces to it. That’s why the person currently doing the work is perfect for helping develop this map. This person also knows the answers to critical questions. For example, where do employees get their insurance cards? What happens to an employee’s health insurance if they get married? By engaging that team member(s), you help ensure examples such as the above don’t fall through the cracks.
Once the map is complete, you will have a process and SOP that will allow an SSO (in this case, a call center) to handle insurance enrollments for your organization, freeing up your team members for critical work. This mapping process can be repeated for any task deemed a candidate for shared services. And in some cases, the outcome may be that a given workstream makes more sense to keep in-house. In short, the mapping process helps leaders make judicious decisions when it comes to implementing shared services.
David: Linda’s last point is really important. Just because a task can be a shared service doesn’t mean it should be. At The Clearing, Tim Rund is one of our key shared services gurus. You may have read one of his many blogs on the topic. One thing that I have heard Tim say a lot is that there really needs to be some organizational self-reflection and self-analysis around whether an organization is ready to implement a shared service. A lot of times when organizations try to solve a problem, they don’t yet fully know what the question is. So, think hard about the problem you’re trying to solve. For example, you find your organization is behind on invoicing. Is that a problem that requires shared services or simply better recruiting? Completing the process mapping Linda detailed will help leaders answer those questions and proceed accordingly.
Question 4: Where can I Find More Information on Shared Services?
David: Shared Services and Outsourcing Network is always a great place to start. They publish great information and host relevant events. GSA, CIO.gov, and the HR Quality Service Management Office (QSMO), now operating out of OPM also have a wealth of information on shared services. The HR QSMO can be reached at firstname.lastname@example.org
Linda: Of course, you can also read The Clearing’s blog! We regularly cover shared services topics. You can also read through our downloadable shared services materials, including information on how shared services can improve customer experience and contact centers.
We also love to talk all things shared services. If you have questions, Tim Rund can be reached email@example.com; David can be found at firstname.lastname@example.org; or you can email me at email@example.com.