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    When it comes to optimizing support functions of large global companies, Shared Services stand out as an imperative to capitalize on size, leverage expertise, improve service quality and increase efficiency. When it comes to optimizing support functions of large global companies, Shared Services stand out as an imperative to capitalize on size, leverage expertise, improve service quality and increase efficiency.

    Companies consider shared services or outsourcing to address a number of challenges, including:

    • Support function costs (e.g. IT, finance, HR) are too high and growing too fast.
    • ‘Back office’ mentality and poor service levels.
    • Lack of standardised systems, restricting the implementation of technology solutions.
    • Poor access to relevant management information due to lack of adequate business intelligence tools and information.
    • Desire to manage business growth without adding a proportionate number of finance and administration staff.
    • Lack of local ‘business partnering’ because finance’s role is largely transaction processing and fire fighting.
    • Need to comply, at optimal cost, with legislation.
    • Company mergers and acquisitions.
    • Globalisation and increased competition.
    • The drive for increased shareholder value.

    Who could benefit from transforming their service delivery model?

    Characteristics of an organisation that would benefit from shared services include:

    • Multiple, dispersed locations.
    • Unnecessary local administrative presence.
    • Non-standard processes.
    • Duplication of work across sites.
    • Incompatible information systems between locations.
    • Limited access to enabling technology.
    • Sites that do not share best practices.
    • Development of local or temporary solutions at each site.
    • Rising support costs.
    • Sites that struggle with their service levels.
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    Benefits of SSC

    Increased efficiency

    • Best practice processes.
    • Economies of scale.
    • Greater span of control.
    • Lower labour costs.
    • Get the most from investment in technology.
    • Standardisation.
    • Reengineering.
    • Integrated procurement.

    Increased effectiveness

    • Enhance customer service focus from:
    • Front-office mindset.
    • Service level agreements (SLAs) and service costing.
    • Make the most of specialist skills.
    • Management freer to focus on business issues.
    • Improved decision support.
    • Easier to do data warehousing.
    • Improved control environment.

    Shared Services are organizational units handling some activities of support functions for Business Units and Corporate Headquarters with the aim to deliver the highest standards in terms of quality and efficiency, and in particular to leverage size. In large global companies, they have become well established in the organizational landscape.

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    The decision to transform your service delivery model should be made in the wider context of, and integrated with, your overall business strategy. In particular you need to consider your organisation’s current and desired ‘value chain’ and how supplier and customer interactions can be facilitated within a shared services or outsourcing environment.

    Traditionally, the primary focus of Shared Services has been on delivering support activities in the Finance, HR, Procurement and IT functions. Within these functions, only activities that have a huge potential for efficiency improvements are transferred to Shared Services centers. Typically, shared activities across the organization are transactional, high volume and highly standardized (example: procure-to-pay and record-to report processes). The rest are retained activities, which are maintained in local business units, either because they require more business proximity or non-replicable specific expertise.

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