SHARED SERVICES – A BRIEF HISTORY
During the 1980s and the early 1990s, a number of the leading management consultant
‘gurus’ made their reputations telling the corporate world that decentralisation was the
way forward and, as a result, many organisations embarked on decentralisation
programmes to make their organisation units into manageable chunks, in order to achieve
greater shareholder value. This trend was supported by newly available decentralised
technology solutions.
A number of benefits resulted from this approach: not least, it allowed organisations to
identify non-performing and non-core business units that, because they had been
disentangled from the organisational whole, could be more easily divested. Loss of
economies of scale, massive duplication of resources and the hidden associated costs and
problems of co-ordination, however, led to calls for a different approach.
Just when organisations had become comfortable with the decentralised approach, along
came a new strategy on the centralise/decentralise approach. Now came the global, onecompany
approach. The small business model was not discouraged; however, there was a
change of emphasis towards developing strengths as the local level, i.e. to add value to
the sales and marketing effort. This approach was reflected in the view of John Whitwam,
Whirlpool CEO (1994), who suggested that:
‘the only way to gain lasting competitive advantage is to leverage your capabilities
around the world so that the company as a whole is greater than the sum of its parts’.
For a company to be truly global it must have the best technologies and processes at the
lowest possible cost. One way of doing this is through the shared services approach.
The last two decades have been a dynamic period for the business community. Advances
in technology, the globalisation of markets, mergers and acquisitions and heightened
customer awareness have raised the competitive bar for business organisations. Leading
organisations have recognised these changes and have responded in a variety of ways.
There is increasing awareness among leading organisations of the need for change and
many CFOs feel that an accounting service that creates value is now needed. Firms faced
with a changing competitive dynamic, the need to operate at a pan-European level and
pressure to reduce support costs are seeking to: