The Shared Services Concept further integrates the finance function

The Shared Services Concept further integrates the finance function into the organisation as a driver of increased financial efficiencies
 
The finance function as well as the role of the Chief Financial Officer is changing over time. Moving from the traditional scorekeeper, limited to financial accounting and reporting, these roles are moving into a redefined position in the organisation that includes increased partnership with other internal departments and increased corporate responsibility to outsiders. From a reactive role focused on automation and process efficiency, the finance function and its staff are now proactive business partners within the organisation.
 
Jan Gey van Pittius, PricewaterhouseCoopers Advisory partner, says that the present trend is that the finance function and CFO are expected to be trusted and value-adding business partners in an organisation, engaging the executive team in decision making. Addressing the PwC Business Partners in Africa Conference held in Mauritius from 2-4 September, Gey van Pittius says "This involves a mindset change from one of focusing on transactions and the policing thereof, to a growth mentality."
 
One essential way the finance function can adapt to its newly defined role is by increased automation and reliance on technology that allows employees to focus on value-add. "And another crucial tool says Gey van Pittius is the concept of the "shared service centre". This option allows for scale-driven, common, repetitive processes in the business to be housed in a shared but centralised repository. Common processes are taken out of the individual business units and consolidated into this centre, freeing up the business units to focus on high value-added or core tasks."
 
This methodology focuses on both company operations and organisational structure. The support processes (usually those which are high volume, low value-add, transaction-based) within a company are identified, separated out and then operated as a distinct individual business unit. This approach provides support to internal customers of the organisation being various departments and eliminates redundant processes, systems and even divisions in the business.
 
So in a simple illustration, instead of several divisions all having their own finance, IT, administration and procurement support processes, a shift to a shared service model will see all divisions drawing on the resources housed in a shared organisation. Processes suited to the shared services model range from high-volume low value-add such as claims administration to high-value expert services such as treasury and tax. Gey van Pittius says that over 50% of Fortune 500 companies have employed the shared services model as the vehicle to achieve back office improvement.

Gey van Pittius explains that there is no universal design for a shared services model and each organisation needs to evaluate its processes to determine where activities should be performed and housed, depending on function, nature of the process, geographic location, strategic value, degree of control and customisation required, and transaction frequency. "The end design will often be a shared services model that is a hybrid of the options available."
 
The risks in the shared services model include employee reluctance, loss of autonomy for individual business units and the potential for the shared service to become bureaucratic and expensive. There is also the possibility that individual business units may replicate the shared service to use exclusively themselves. A mindset barrier between staff in shared services versus those in operating units may develop and if the concept fails, reconstruction and decentralisation could be difficult.
 
But the benefits can be numerous and these include ; increased efficiencies, reduced costs throughout the business, improved controls, greater customer attention, more capacity for management to focus on core business issues, economies of scale, standardisation of processes to a single "best practice" throughout the organisation, flexibility to adapt to change and quick exploitation of acquisition synergies.