The concept of shared services, or the moving of like outsourced functions in a company together, is evolving in a way that can provide substantial synergy across different units of an enterprise and allow innovation to spread. Jeffrey Jacobson, VP of Finance/GM for Global Accounting Operations of Pitney Bowes, says shared services is currently “clay in motion” as it moves from a single function to multi-function idea.
“For example, our accounts payable runs systematically, with productivity and quality we can benchmark,” said Jacobson. “We have gotten synergy, benefits and positive cost variances in our financial function. Now the question is, ‘Can I use (what we’ve learned from improving the process for accounts payable) for other functions, such as HR, marketing and legal?’ In some cases there is a good fit to replicate the model used in finance to manage other services in a similar way.”
Jacobson said that shared services encompasses several different outsourcing models, including rightsourcing, which is moving a particular function or activity to a vendor with specific expertise in that area, as well more traditional offshore business process outsourcing. Pitney Bowes launched its own shared services initiative during 2003-2004, mostly with accounts payable and some accounts receivable tasks.
“Fast forward to now, and we use shared services in different financial ‘swim lanes’,” said Jacobson. “Like procure to pay, which includes accounts payable, procurement administration and transactional tax; and order to cash, which includes managing cash application, credit cards and invoicing. We also use shared services in our account to report, which is all accounting for the corporation, and hire to retire for our as processing of payroll and commissions.”
Innovation Comes First
Jacobson also cites the spread of innovation across a company as another emerging benefit of shared services. However, he said many organizations do not realize that innovation comes before standardization.
“People often ask if shared services is supposed to drive standardization, how does innovation fit into the loop? I tell them they have the equation backward; you should use innovation to help standardize. That way the innovation is already in the DNA of your process.”
The Cloud Opens Opportunity
Jacobson credits the advent of cloud computing as opening numerous opportunities for maximizing the benefits shared services can offer. “Everything comes full circle, and cloud computing is sort of like mainframes that store everything, but store it somewhere else. You can put ERP systems on the cloud and make them accessible 24/7. Cloud synergy allows the provider to make coding changes and use them for all their customers.”
Jacobson said cloud computing can eliminate the significant roadblocks for companies who may have disparate internal systems resulting from mergers and acquisitions. “The cloud is a vehicle to say, ‘Do I have the potential to migrate a process internally on many different systems to one system?’ This type of change is a large expense requiring a lot of manpower and effort. The cloud is just beginning. Everyone is buzzing and it’s pretty exciting.”
Shared Services Aid Employee Development
Employees can substantially improve their development in their jobs with the aid of shared services, according to Jacobson. “In most companies, people are assigned to a business unit, and they understand that if they do a great job, their primary means of career growth are to move up in that unit or move laterally and learn something else.”
But with shared services, Jacobson said employees can learn more functions and skills in more depth, making them better-rounded and more valuable, and opening more growth opportunities. “It can really improve the breadth and depth of a person’s career,” he commented.
Becoming a Business Partner
Lastly, but not least importantly, Jacobson said shared services can provide real value by turning both internal users and external providers into full partners with the business. “You can see all the different behaviors a process drives in different units, and see which ones work better than others. You can then go back to those units and tell them maybe you want to move a behavior a little to the right or left. You can give back in a manner that helps make business decisions which can grow revenue.”