SSC managers are discovering that activity based management (ABM) can be used to create a framework that provides the cost information required to answer these questions. Gunn Partners found that 16% of the service centers in its 1999
Global Shared Services Research project have completed their ABM implementation. But even more interesting is that 30% of the companies are in the process of implementing ABM, and an additional 21% expect to implement within the next three years. This means that by the end of 2002 nearly 70% of the research companies will have implemented ABM.
These results clearly show the expected use of ABM as an important management tool. HOW DO WE MANAGE SSC COSTS? Critical to the success of any shared service center is a thorough understanding of costs and the ability to impact those costs. After all, most SSCs were founded on the premise of saving money for the corporation. Cost management is key—possibly more so than for any other part of the business. SSC managers must understand what activities are performed and how each activity contributes to total cost. They need to understand the drivers of cost— especially the drivers that are completely under their control. For example, an internal driver might be the number of internal approval levels required for a particular transaction.