With shared services now shifting onto the plate of the CFO, it is receiving increased focus. But as many organizations are enjoying the initial benefits of shared services, many more have only scratched the surface of what is possible, says a new report from Deloitte.
According to Richard Sarkissian, a principal with Deloitte who recently wrote about this topic for Business Finance, most companies have yet to use shared services to contribute significantly to the enterprise's overall strategic objectives, such as growth, global expansion and competiveness.
Business Finance: Shared services have become a widespread business strategy. In your most recent article for Business Finance, you suggest that many organizations are not leveraging shared services to their maximum capacity.
Richard Sarkissian: The analogy I would draw is almost like what happened with ERP systems early on: it can basically automate your existing processes or you can use ERP to really change your business and be transformational. What we have seen is that the early adopters of shared services needed them as an opportunity to reduce cost. If you think about off-shoring a piece of work, you haven't really changed the process; you've just changed the cost structure of the person doing the work.
What we're seeing now is many more organizations realize it's really a repository of information, knowledge and resource and leveraging that is beneficial to reduce cost. But it has potential to sort and enable other strategic objectives like growth. One of our clients had an expansion strategy in the emerging markets and what they were finding was when their scale is low and their cost were fairly high and fixed, they're actually deleveraging their scale. Shared services is not about cost reduction, necessarily; it can be used as a growth enabler. They set up regional centers in growth markets and basically staffed them with resources that could support emerging markets. It took the cost of entry down to a really minimal level, which enabled them to expand much quicker because it gave them profitable entry into markets that historically took them three to five years to recoup their initial investment.
BF: You suggest there are two strategies that executives can utilize to maximize their shared services. The first is to enhance the cost-saving value by pursuing tax opportunities associated with implementing and expanding an SSO. The second is to leverage shared services to strengthen a company's internal controls over financial reporting in ways that go beyond standard efficiencies.
RS: It's true. There's great opportunity if there's a thought process devoted to it. Too often, companies only respond to these efficiencies when a problem occurs.
For example, if you have a heavy involvement with your tax organization, what you are doing is moving cost across jurisdictions in a shared services strategy. Anytime there is mobility of expenses, in effect, you are actually altering your taxable position. Tax should be involved just because it should be consistent with the organization's tax strategy.
Obviously there are certain tax consequences that may be unintended: locating your shared service center in a particular district that might impose a tax on the services you provide might reduce your benefits if you're not aware of those things.
BF: What were some of the unanticipated results that took you by surprise in this survey?
RS: I think the fact that so many companies were beginning to think about this a global, multi-functional way was very a positive surprise. Shared services has changed in the last few years from being that the shiny new object people are afraid of and has turned into an accepted model for operating a business. I've described it like this: it's kind of like being a banker and looking at ATM machines and still operating with tellers. At some point you to say the future is ATMs, right? I think shared services has reached that inflection point where CFOs and executives now realize that you can't afford not to do it.
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Autor(en)/Author(s): Peter Alpern
Quelle/Source: Business Finance Magazine, 31.10.2011
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