Digital Technologies Reshape Shared Services ModelsBy
Strategic sourcing initiatives, such as outsourcing and shared services, are ways in which companies can manage complexity, reduce costs, and achieve operational efficiency. In implementing shared service models, digital technologies are increasingly an important consideration, but how should they be managed?
A recent analysis by Accenture and HfS Research shows that extensive use of digital technologies is expected to support the implementation of advanced shared services models across a broader range of business functions over the next several years. The report is based on a global survey of 115 major enterprise buyers and shows where and how the digital technologies are being deployed to drive new value into advanced shared services models and their resulting outcomes. The report further explores digital transformation for businesses in the context of the changes organizations are making across their provision and deployment of advanced shared services models and outsourcing.
Digital technologies in shared services models
According to the study, digital technologies, including software-as-a-service (SaaS), big data and analytics, cloud and mobile, are expected to have the largest projected changes in procurement and supply-chain management. Forty five percent of respondents expect digital transformation to “extensively impact” advanced shared services models in procurement over the next three years, compared to 18% who saw such change in the past three years. In supply chain, 49% expect extensive impact compared to 20% who reported it the last three years. Significant increases are also expected in finance and accounting services (40% in the next three years versus 23% in the last three); human resources (31% versus 23%); and engineering (27% versus 13%).
“Many organizations have long used various shared services models to unlock valuable cost savings, improve efficiency and increase productivity across the enterprise,” said Christian Campagna, global managing director, Accenture Strategy, CFO & Enterprise Value, in commenting on the study. “Our research now shows that savvy organizations are realizing that new digital technologies can propel their use of more advanced integrated services to support unconventional areas, better focus on the external customer and supplier relationships, and enhance their competitiveness.”
The report notes that such trends are especially evident in more mature shared services models. These include global business services, which extend the traditional single- or multi-function model to include globally aligned end-to-end processes, and integrated business services, an end-to-end model focused on simplifying the customer experience to achieve better business outcomes, according to the study. Nearly all organizations surveyed agree that one of the leading reasons for adopting digital technologies is the need to improve integration of processes and operations across functional boundaries. Other common drivers include improved productivity, cost reduction, and improving competitiveness.
Although the adoption of digital technologies is recognized as being important, only one in five survey respondents (19%) have a clear strategy in place to manage a digital transformation. The study indicates that many companies have not yet fully incorporated a digital strategy as part of their shared services model.
Management of a digital strategy in a shared services model
Chief financial officers (CFOs) traditionally have a key leadership position with respect to the prioritization, deployment, and management of shared services, and they are currently playing a strong role in determining which processes are most ready and viable for digital transformation. According to the study, 37% of CFOs make the final decision about implementation and another 52% provide major input, second only to the chief information officer (40% and 47%, respectively). Although all survey respondents agree that digital technologies are fundamentally changing the industries in which they operate, nearly one quarter (24%) have no plans to put a dedicated senior executive in place to lead their organization’s digital transformation strategy, guide investments, or measure success.
“The CFO’s pivotal position at the intersection of finance, technology, and strategy makes him or her uniquely qualified to help the organization unlock the value of the digital revolution and maximize its benefits,” said Campagna. “Our research implies that CFOs will continue to take on more responsibility in guiding the organization’s technology, both as it relates to shared services and on a broader level across the organization.”
With respect to talent, a majority of enterprises believe that they have the right talent in place to derive benefits from digital technologies. The analysis implies that many organizations plan to train and retool their current employees rather than employing the assistance of third-party experts to implement these new technologies. For example, 67% of organizations believe in the capability of their existing teams to enable business growth through analytics although only 12% of organizations feel that their organization’s adoption of analytics and big data is highly mature.
Overall, the report emphasized several key findings. First, respondenst surveyed agreed that digital technologies are fundamentally changing the way organizations operate, and they anticipate further utilization of emerging digital tools across advanced shared services models and outsourcing. Secondly, adoption is fueled by a need to gain better insight and improve competitiveness as well as lower cost. While cost reduction appears as a leading impetus for digital technology adoption, respondents also list the need to gain better insight into operations and customers and integrate activities across internal and external services.
While investments in digital technologies directed at improving sales and customer experience will continue to lead the way, such activities will broaden to include every area of advanced shared services models, including former laggards such as engineering and human resources, according to the study. Enterprises believe they have the talent, if not the technology, to compete. Although enterprises indicate that their current state of technology adoption falls short, they are reluctant to accept they do not have the right talent pool to implement the changes.
In moving forward, the study suggests that organizations need clarity of leadership across business and technology lines with their digital approach. The report points out that although there is active involvement of executives across all business units in the digital transformation, this level of direct involvement can create confusion and slow progressions. “Organizations will need to look at streamlining decision making without direct involvement by too many functional heads,” concludes the report. The report also recommends fully incorporating operational knowledge as part of a digital strategy. “Despite having the leadership and value identified, much of the decision making regarding digital transformation is being done in a vacuum,” concludes the report. “For example, more than one in five organizations surveyed indicate that shared services managers had no influence in determining what was ready and viable for change. Organizations should look at creating cross-functional teams that branch across titles and roles and involve those who have day-to-day responsibility for the activities undergoing change.”
The report also suggests to develop investment strategies for digital technologies: When asked about the level of their organization’s current investment in the four digital technologies (analytics, mobile, social, and cloud), nearly one in four large organizations indicate they were seeing heavy investments, with the greatest activity in analytics and mobility. However, the survey reveals that investment in cloud technologies is lagging. Organizations should look at cloud-based solutions as they would benefit from shifting resources away from legacy infrastructure, concludes the report.
The report also says that although organizations have service governance teams that are strong in tactical execution, they often lack process integration across internal and external providers. By retooling relationships that span internal shared services and business units, in addition to external providers, they can enable smoother digital adoption and increase the benefits, says the report.