Shared Service Centres:Concepts,Characteristics and Advantages (Part A)

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Concept,Features &Benefits of Establishing Shared Service Centres

Introducing the SSC concept,its advantages and characteristics
SSC is not new in the market. With the unavoidable globalization and increased market competition and in line with evolving from transaction processing into adding higher quality services to their business units,many CFO have been putting up SSC’s initiative . With the SSC’s success,CFO will then be able to reduce costs and to increase the finance quality of services to their other business unit managers. Since mid 1990’s this SSC trend has spread from those Fortune 500 companies in the US to the Asia Pacific countries.

Basically,an SSC is an office that handles multiple administrative support functions including finance,human resources,information technology,customers services and other low value transactional operations.

Unlike traditional centralized offices,it operates as an independent,customer-focused business whose clients are the business units they support.
SSC can support their business units in a given market and,

• it can be in a single country
• in a region ( Asia Pacific region,Europe ,etc )
• as global operations

What are the advantages of establishing a SSC?

There are two (2) major categories of benefits:

1. financial costs saving
2. improvement in the quality of service delivery

Financial costs saving is possible as a result of:

1. elimination of redundant infrastructure
2. lower unit cost per transaction as a result of using self-service automating processes and standardization
3. deploying SSC in cheaper labour cost countries (refer below on location of SSC)
4. allowing the business to grow without increasing expenses due to economies of scale

Improvement in the quality of service delivery would be in the form of:

1. timeliness and accuracy of data as a result of improved business process or standardized practices
2. provides management with a consolidated view of essential decision-making information
3. also it allows flexibility and speedy assimilation of new acquired business units and new technology

Possible reasons for the choice of the location of SSC are:

1. quality/skill of the workforce
2. cost/flexibility of workforce
3. tax considerations
4. cost of communications &communication infrastructure
5. real estate costs
6. travel accessibility
7. political stability
8. language stability

Some of the common traits or characteristics of SSC are as follows:

1. Offers low cost services and it is driven by market competitiveness. Very often senior management mandates the use of the SSC services for the first two years but then business units are allowed to look for cheaper and better services after the mandatory period
2. Focuses on customer and process. The business units are the customers of the SSC. The service level agreement (SLA) is a service contract between the SSC,the service provider and the business units ( the customers)
3. Operates as a separate business unit and it runs like a business. The SSC has its own strategic plan,cycle time,product plan,key metric and continuous benchmarking
4. Emphasizes high quality service standards and measures. The SLA sets standards and measure to ensure consistent performance,
5. Allows for a high degree of specialization
6. Utilizes leading edge technology
7. Focuses on continuous improvement
8. Emphasises accountability to the business units instead of accountability to the head corporate.

• Survey-Type of Services,Reasons,Selecting Site &Success Factors In Implementing Share Service Centres Or Functions
• Type Or Structure Of Shared Service Centre
• SSC:Service Level Agreements (Part B)
• Introduction and Benefits/Advantages of Activity-Based-Costing System (ABC)
• TOPICS COVERED UNDER THE HEADING OF SHARED SERVICED CENTRE
• Workflow Management for Finance Departments –Introduction of Concepts
• Financial Operation:Simple Automation:Shared Service Folder for Overseas Subsidiaries