SOURCING MODELS: SHARE SERVICES/ CAPTIVES / DESIGNING A SHARED SERVICE CENTER
Centers of Excellence as the Model. Shared service centers reflect the centralization of certain business processes across multiple jurisdictions, multiple affiliated customers and multiple legal systems. Many shared service centers began their lives as local and regional service centers. To avoid duplication, accelerate delivery, improve transparency, reduce waste and improve expertise, a shared service center begins with standardization of workflows. By then adopting measures to make the shared service center a “center of excellence” (“COE”), the global business organization can achieve shareholder value.
Steps to Organizational Excellence. A service delivery center can be evaluated based on its organizational maturity under the Carnegie-Mellon “Capability Maturity Model.”
- Initial stage. Most processes start at level 1, where the process is performed without particular definition, structure or predictability. In this initial stage, performance reflects the chaotic, heroic, informal and adaptive steps taken to respond to changing needs.
- Repeatable stage. At CMM level 2, the process has become repeatable and thereby predictable. The process follows documented sequences. Management is aware of deviations from the predetermined “specifications” or “workflow.”
- Defined stage. At CMM level 3, the workflow has been adopted as a standard for usage across the different people or groups of people who provide the defined service. At this stage, the definition of the process is integrated into institutional memory. Consumers of the service expect to get the predictable results and rely upon such predictability to integrate the process into other unrelated operations.
- Managed stage. At CMM level 4, the workflow is the subject to management attention to share the process across the extended enterprise.
- Optimized stage. At CMM level 5, the organization has identified its goal as continuous process improvement, not merely conformity to the existing process and predictability for consumers of the service
Reaching Maturity. In the initial phase, the shared service center simply does the jobs assigned to it. In the repeatable and defined phases, the shared service center team looks at their tasks as workflows and defines the process for performance and for improved efficiency. As the center takes the leap towards the “managed” and “optimized” phases, the members of the team, management and internal users must collaborate to develop, communicate and refine competencies in the workflows. Such communications necessarily involve customer inputs, sometimes referred to as the “voice of the customer” and “user requirements.” As the shared service center matures, job descriptions become well defined to meet well-defined workflows, and career paths can reflect growth in skills within each workflow as well as management of others in that workflow.
Designing a Shared Service Center. Business organizations can achieve significant improvements by adopting the “capability maturity model” for designing, improving and propagating workflows across the extended enterprise. Key questions to answer include:
- Resource availability, with the right skill sets, language proficiency and technical knowledge of the organization and its extended operations.
- Cost structure.
- Legal, economic and political environment.
- Time zones.
- Proximity to end users.
- Tools to use for capturing and adopting effective business processes into defined and predictable workflows, with procedures for managing exceptions.
Legal Issues. While most decisions involving the design and implementation of a shared service center will be business judgments by management, a number of key legal issues arise in considering shared service centers as a tool for corporate organization. Legal department planning should address issues relating to employment, taxation, data protection, exportation of services, anti-bribery controls, accounting, audit, finance, export and import controls for IT equipment and software and services and the availability of promotional incentives for foreign direct investment.