answerable to the internal business, units that may have the corporate blessing to shop
elsewhere if the shared services cannot deliver the goods better or cheaper than an
external provider.
In some ways, shared services resemble outsourcing, in that both approaches force a
company to examine the causes and effects of removing non-strategic functions from the
business units. With shared services, however, the work is re-routed internally instead of
sent to an outside vendor. As a company moves to shared services, management will see
what it actually costs to provide the services and based on this it may then outsource
certain functions. The American, and now the European, experience of implementing
shared services demonstrates significant cost savings. Savings up to 50% have been
quoted in the US, while a 35–40% saving is commonly quoted in Europe.
The business process re-engineering movement and the evolution of desktop and
networking technology made it possible for companies to link remote business units
within a central information system. More recently, the advent of such popular enterprise
resource planning tools such as Oracle, Peoplesoft and SAP packaged software
applications, which force process standardisation, have created even greater impetus for
shared services.
THE DIFFERENT FSSC MODELS
While each organisation will have its own reasons for exploring the shared services option,
it is important that the final decision to set up a shared services centre is informed by a
clear understanding of all the issues involved and is based on a well-balanced evaluation
of the costs and benefits of delivering a quality service. In the past some managers have
been guilty of following fads and embracing organisational changes that were not
appropriate for their organisations. In this section we explore the different FSSC models
available.
From the outset it is important to recognise that each organisation will have to discover its
own route to an efficient shared services architecture. The idea of a single best practice
approach is at best naive and at worst dangerous to the organisation’s health. What works
for one firm will not necessarily work for others. This section attempts to classify in
general terms the approaches that could be considered.