Shared Service Organizations (SSOs) have achieved dramatic
improvements in cost and productivity, according to new research
from The Hackett Group, Inc. (NASDAQ: HCKT). While SSOs have been
rewarded for such good work, business expectations are now forcing
companies to drive toward a second wave of value creation utilizing
complex operating models.
Hackett�s latest Book of Numbers research finds that companies
seeking to move up the value chain are implementing a multi-layer
shared services model that incorporates transaction processing
centers in low-cost regions, centers of excellence, and high-level
onsite support for analysis and decision-making. Many SSOs have
also expanded beyond finance to incorporate functions such as IT,
procurement, and HR -- in fact, an �everything in G&A� approach
is leading edge. At the best SSOs executives make sourcing
decisions relating to scope and geography within a continuous
improvement and customer service culture.
Results from the research, which examines shared service
operations at more than 150 global companies, is featured in
Hackett�s latest Book of Numbers research volume, �World-Class
Shared Services: Expanding Beyond the Transaction.� The research
also features case histories on shared service successes at
Hewlett-Packard and Royal Philips Electronics.
Hackett also announced that it has launched an open performance
study assessing key drivers of overall cost and value for SSOs, and
identify opportunities for companies to improve efficiency and
effectiveness. The study is available online
atwww.thehackettgroup.com/studies/scps .
�With a nearly 50% increase in use over the past three years,
shared services has become the standard approach to corporate
finance,� said Hackett Finance Shared Services Advisory Program
Leader Dr. Penny Weller. �These centers have played a critical role
in helping reduce the cost of finance. Today, typical companies
spend almost 40% less on finance operations than they did in 1992.
World-class finance organizations, which spend only half of what
typical companies do, have seen even greater cost reductions.�
According to Hackett Finance Advisory Practice Leader Bryan
Hall, �Across the board, the results shared services has helped
companies generate is quite impressive. Our research finds that 65%
of all companies with SSOs have cut costs by 21% or more, with some
seeing savings of over 60%. At the same time, they�re showing
dramatic improvements in productivity, quality, and customer
service.�
According to Hackett European Advisory Services Director Roy
Barden, �As next-generation SSOs move beyond pure transaction
processing, world-class SSOs are evolving towards a three-layer
model. Most have established large-volume transaction processing
centers, often in low-cost labor markets. In addition, they�ve
established centers of excellence which are responsible for service
delivery and are the primary interface to the business leaders.
These are often much closer to the business geographically.
Finally, high-level knowledge workers are likely to be co-located
with the business units, so they can serve as on-site business
partners. All this puts them in a better position to provide
value-added services such as decision support and reporting and
analysis. Within this three-layer model, we�re also seeing a growth
in multifunction SSOs, incorporating a wide range of back-office
operations beyond finance.
�We�re also seeing several other emerging trends,� said Barden.
�Many companies are also now making second-phase movements of
operations from near-shore locations to low-cost labor markets, and
most are already doing significant work offshore, either through
SSOs or outsourcers. The use of outsourcers is certainly on the
rise. Overall, leadership at top SSOs are transitioning to the role
of sourcing strategists, evaluating and managing a mix of internal
and external options, including offshoring and outsourcing.�
Case Histories: H-P and Royal Philips Electronics
Over the past 15 years, Hewlett-Packard has developed an
extensive shared services network, which now has 11 global delivery
centers. �We began with the basics, such as payables, receivables,
T&E, and general ledger work. What we�ve done more recently is
find ways to bring higher-value activities such as financial
analysis into our centers,� said H-P BPO Director of
Record-to-Report John Schlueter.
�There have been obstacles to overcome, including building the
necessary staff skills and getting the business units themselves
used to the idea that the work would be done by people that were in
another part of the world,� said Mr. Schlueter. �One key to our
success has been carefully coordinated role sharing. For
higher-value work, we can handle parts of the job that can easily
be broken down, like transactional work, data extraction, and trend
analysis, then hand things off to the business unit for activities
that are high-judgment and high-impact, such as setting
strategy.�
Royal Philips Electronics leverages shared services and business
process outsourcing through three global captive centers in Poland,
India and Thailand. While its internal SSOs delivered considerable
cost savings and performance gains, the company was concerned about
the long-term prospects for both additional value creation and
employee morale. To address these, Philips decided in 2007 to
transfer 1,400 SSO employees to Infosys, a leading Indian business
process and IT outsourcing provider, as part of a seven-year, $250
million contract.
�We look beyond SSOs at strategic sourcing from a broader
perspective, and as a result we�ve generated substantial value at
each stage of the process,� said Philips Global Shared Business
Services Finance General Manager Rens Blankers. �At this point,
Infosys has the scale and automation to handle things more
efficiently than we could internally, generating improvements we
could not have made on our own. Our finance teams have shifted
their priorities, so they�re now focused on strategies for
relationship management with Infosys and long-term
optimization.�
About The Hackett Group
The Hackett Group, Inc. (NASDAQ: HCKT), a global strategic
advisory firm, is a leader in best practice advisory, benchmarking,
and transformation consulting services, including shared services,
offshoring and outsourcing advice. Utilizing best practices and
implementation insights from more than 4,000 benchmarking
engagements, executives use Hackett's empirically based approach to
quickly define and prioritize initiatives to enable world-class
performance. Through its REL brand, Hackett offers working capital
solutions focused on delivering significant cash flow improvements.
Through its Hackett Technology Solutions group, Hackett offers
business application consulting services that helps maximize
returns on IT investments. Hackett has worked with 2,700 major
corporations and government agencies, including 97% of the Dow
Jones Industrials, 73% of the Fortune 100, 73% of the DAX 30 and
45% of the FTSE 100.
Founded in 1991, The Hackett Group was acquired by Answerthink,
which was renamed The Hackett Group in 2008. The Hackett Group has
global offices in the United States, Europe and India.
More information on The Hackett Group is available: by phone at
(770) 225-7300; by e-mail at info@thehackettgroup.com; or on the
Web at www.thehackettgroup.com.
Book of Numbers is a trademark of The Hackett Group.
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