1. Introduction
objectives
Many organizations consider shared services worthwhile since its elementary focus is being the concentration of transaction-orientated services that are insistent and clamant. Shared services treat each business sector as much the same as the others throughout as a whole in the organization. Broadly, the kinds of services included in a shared services model incorporates financial services integrated with both accounts payable and receivable , procurement, human resources including payroll, property and facilities management, and information technology operations. The implementation of shared services centre enables staffs to rivet on the highest-value work of the agency, and provide contented services with the available resources. Caerphilly county sorts out the needs and thirsts for these services accordingly and seeks for the refinement in the prevailing organized structure. Certainly this proactive measure will produce a vantage in resultants and as well as a more centralized way in outsourcing.
Background To Caerphilly
Transcending the 5th position among local authorities in Wales, Caerphilly County hires around 9,000 people making it the largest employer in the area and tops as 10th largest in Wales. It provides a good ambit of servicing units to 170,000 people in its region comprising fundamental departments such as education, social servicing activities, finance, consumer protection, etc.
In abidance to the Connecting South East Wales Board (CSEW), a Design team was nominated which works to cater a business case for implementing shared services by the Steering group .Orion partners was hired to assist the team and manifestly they brought in a model that widely teems with identification of costs, benefits and certain factors required for its implementation. Eventually a culmination report was received after its implementation, which apparently suggests an improvement in the existing model. This emphasizes on heightening of services and strengthening of operations especially in the fields of human resource, payroll and accounting
Issues leading to shared services
Though some problems have been encountered then and there, yet there seem some issues to be faced and are more likely to be an intermediate term in nature and more to do with letting the benefits out of shared services and some of them are clearly limned as in the following:
Internal reasons for the proposalThe local authority of Caerphilly borough council seeks for a new model in shared servicing in a view to abbreviate some of the complexities like:
External reasons for the proposal
There seem to be two main factors that an organization must consider as an impulse towards shared services and they are cost and quality. Through these means, an organization can reduce the cost effectively
The second factor, the quality can be much improved if the following points are to be focused more clearly:
2. Analysis (i)
Costs
During the last financial year the council spent over £32.5 million providing all mandatory services. Annually the cost of the Caerphilly council is £4.8 million out of which £2.2 million is spent for the recruitment external providers and training services. These costs expenditure could be considerably abbreviated to an optimized mean by implementing a new model as appraised by the council members. Also we can put forth some of the following financial considerations as they would better the design of shared services model.
Strategies in cost analysis
A coherent and a sheer cost-effective model is necessary to evaluate the costs of a newly proposed model which includes setup, transition and operation costs. Some of the key steps that could produce a reasonable, fair cost analysis are as follows:
Benefits of shared services
The implementation of the shared services in the county strikes a remarkable advantage since the Caerphilly HR cost per employee in the CIPFA 2008 benchmarking survey is considerably minimal to the mean UK local organizational cost. The HR staffs are taking up more responsibilities to cater a good caliber in service so that the annual cost of Caerphilly council is £511 per employee. I would like to quote an example from the Marriott's shared service model which had identified its most benefits.
Some organizations consider shared services to sought basic benefits that are represented as follows:
Literature on shared services provisions/outsourcing
Shared Services is the normalization, re-engineering and integration of dispensable functions within an organization to abbreviate process germination or duplication while centralizing processes and controls. Rather than executing more essential administrative functions such as accounting, human resources, and information technology from multiple locations, they are completed at one central location. This credibly yields a company more control over the quality and productivity of their business processes, increasing efficiency and reducing operating costs and errors. Centralizing administrative processes allows staff at other locations to focus on what is most vital that enhances servicing customers (Walsh et.al, 2006).
To make the benefits of converting to shared services optimal, organizations should put through a solution called document and process management automation. This is commonly pertained to as Enterprise Content Management, and these oriented systems automate labor-intensive functions there by reducing costs and bettering conformity. The expenses of shared services are spread across the organization so that even a remote location maintains profit and loss accountability and the central processing unit can exemplify the value of their services. A chargeback rate is usually determined by actual transactional or unit cost. This process is known as Activity Based Management (ABM). Some organizations use their own unique chargeback system. Regardless of the method, charging back transactional costs to individual cost centers ensures that each location maintains a level of fiscal responsibility (Walsh et.al, 2006).
Since its inception in the 1980s many diverse organizational units have converted to a shared services model almost with mixed reviews. Resultants depend on the level of planning; the ability to render enterprise-wide employee buy-in and support; a complete discernment of business needs prior to enforcement; use of the proper technology and a commitment to the process. Almost half the count of the governances with hapless conversion experiences did not hire a document management integration partner to assist them with planning and implementation therefore the essential strategies must be prioritized effectively.
Shared services operations have greatly improved efficiencies for manufacturers, service providers and educational cum government entities. The potency for this model's application is confined only by vision of the establishments. With customer relationship management getting more and more attention, a shared services model becomes even more fair and reasonable. Coherent processes, improved response times, access to better customer information and fewer departmental transfers will result in heightened customer satisfaction and retention levels. (Walsh et.al, 2006).
Processes best suited for the shared services conversion
In Essentials of Shared Services, the author Bryan Bergeron specifies that the potential customer comparing competing companies will have three main factors. They are
A well organized, properly mannered business should be able to provide a satisfactory customer service to both internal and external customers. By focusing on non indispensable business segments, organizations gain valuable insight and perfect perceptivity into the operating efficiencies of their units. Because of the complexities and intricacies involved, successful conversion to centralized shared services starts with implementation in a single sector. Hence, it has become a best practice to straighten up the changes of a single service at an instant. This certainly minimizes the overall impact to the company while providing savings, calibrating standards and process simplification. It also acts as a global arena for the wide implementation of enterprise (Keymark, 2008).
Designing a successful shared services conversion
Constructing a successful shared services operation does not merely encompass or embrace the physical consolidation of facilities or structuring a standardized, logical consolidated workflow. Initially a conversion plan must be developed which should remarkably put forth a clear vision, a workable situation with realistic goals and the areas best suited for such a conversion should be identified effectively (Keymark, 2008).
3. Analysis (ii)
Evaluation Of Decision
The following ideals will structure the design of a shared service as depicted in the prevailing model of Washington state governance which would enhance our evaluation of decision as to whether Caerphilly should join this venture.
v Shared services for centralization will be looked upon as support and secondary to core processes, and treat them in the provider organization as core processes themselves. This boosts up the resources in agencies to focus on their main mission. In turn, the shared service activities and staff receive high levels of support and management attention in the provider organization.
Accordingly, the government of Washington encloses this shared service type of model where in the phases are Identification, Assessment, Design, Construction and Operation that could be considered as one of the successful shared service model. The governance structural organization ascertains the following strategies:
This structure deployed is similar to those found in most public and private sector organizations. Apparently it consists of three tiers:
An outline of the structural components comprised in the model:
Governing Board
This provides the strategy, funding, and leadership to approve shared services and ensure they are implemented in ways that achieve targeted benefits.
Advisory Committees
Each shared service encompasses an advisory unit and it is formed soon after an appraisal is passed by the governing board. It comprises the personnel from the
Provider and consumer agencies. It peruses the collaborative process to design, implement and
Operate a needed shared service.
User Committee
The User Committee caters consumer or user input to forefront the operation and to persist improvement of a given shared service. The committee insures that the collaborative trait of shared service thus sustaining the delivery processes during all facets of the shared service life cycle (Washington state shared services, 2009).
Success factors
This model covers the following crucial factors that certainly contribute to its success:
Consequences of success factors
Shared services produce one or more of the following business outcomes:
4. Conclusion
To conclude with, I would enunciate that Caerphilly council should go for the Shared Services project since the benefits of implementing them is handsome. Some of the recommendations which would support my views are as follows:
Recommendations
5. References
Washington D.C (October 15, 2009) Washington State shared services Model, Washington, United States of America.
Redman, T, Snape, E, Wass, J, & Hamilton, P (2007) “Shared HR service models”,International Journal of Human Resource Management,18(8), 1486-1506.
Walsh, Peter and McGregor-Lowndes, Myles and Newton, Cameron (2006) “Shared Services: Lessons from the Public and Private Sectors for the Nonprofit Sector”, CPNS Working Paper No 34. Brisbane, Queensland.
Improvement and development agency (I&DEA), (2009),” shared service models: issues and opportunities”, [online], (cited 12th December 2009), available from
http://www.idea.gov.uk/idk/core/page.do?pageId=6210975
Keymark incorporation (2008), “Business process best suited for a Shared Service Conversion”, [online], (cited 14th December 2009), available from http://www.keymarkinc.com.
Accenture (2002), “Marriott redefines the shared services model”, [online], (cited 16th December 2009), available from http://www.accenture.com/NR/rdonlyres/E9EA5BDA-D8A2-4A5A-9C73-ED871B32EE92/0/Marriott.pdf .
Improvement and development agency (I&DEA), (2009),” Scoping the project for the HR service example”, [online], (cited 12th December 2009), available from http://www.idea.gov.uk/idk/core/page.do?pageId=6329032.
