Pavel Kaplunou
, Trends that govern the shared services industry are a reflection of the current state of the global enterprise. They can also be signs of things to come for the prevailing global businesses. They reflect the challenges, obstacles, and available solutions that business faces when navigating change. In this article we explore the most sought after changes in the enterprise world and girdle the conclusions drawn from SSON’s annual expert report.
The paper at hand is the Shared Services Outsourcing Network’s Shared Services Report 2020, which focuses on the future of work and the future workforce, as well as the digital revolution across enterprise. Published annually the report features opinions surveyed across participating member enterprises and shared service providers.
Before delving further into the shared services landscape, let’s explore the definition of the term and correlated term Global Business Services.
Shared Services, SSO and GBS defined
Shared services are those services that are directed at helping many different departments in a single company or enterprise on behalf of an internal service provider. According to the reviewed report, the performance of shared services depends on combining the right technologies with the right process and the right people. Such a model of internal servicing is now entering its fourth decade.
SSO is the abbreviation used to describe Shared Services Outsourcing, which essentially likens Shared Services to Managed Services. In other words the internal service provider becomes an external service provider instead of being a department native to the company.
A new term that does not appear in last year’s report is Global Business Services, or GBS. GBS refers to a governance hub, which manages all third party service providers across an enterprise’s locations and business practice. In other words GBS organizes and oversees all the SSO agent work. What’s interesting to note is that shared service networks are converging to form global business services providers, thus simplifying the hierarchy.
The SSO landscape
Shared services outsourcing is generally divided into six shared services centers (SSC). These are Central and Eastern Europe, Western Europe, North America, Asia, Australia and New Zealand, and Latin America/Caribbean.
Over 40% of such SSCs serve the global market, as opposed to on-shore or near-shore markets. The share of global market clients among Central and Eastern Europe, Asia, and Western Europe is 58, 48, and 47 percent respectively for each center.
Shared services outsourcing companies that have implemented or operate a GBS cite leveraging automation for efficiency and expanding the scope of work through new functions and services incorporation as main objectives in the next five years.
Over 29% of SSOs were planning to expand their service offerings and as many as 29% were counting on expanding their geographic reach. 13% claimed to want to do both. However, the numbers ought to be taken with a pinch of salt, as the results were derived from before the global economy became destabilized due to the pandemic. The report itself was released in January of 2020.
Shared services trends in 2020
SSOs used to believe that clients made service purchasing decisions based on proximity to their headquarters. However the year’s survey showed that it was the availability of skills and expertise, followed by costs and language that drove those decisions. In other words talent placed first, ahead of geographic location.
In terms of services sought after from SSO companies, Human Resources and Finance & Accounting prevailed. However, in line with other global IT trends, Data Analytics and Intelligent Automation (IA) have received significant demand, lining them up after HR and F&A.
As many as 55% of companies using data analysis for business intelligence and decision-making are struggling to organize enterprise data and lack standards to select the processes they should be automating. This is mainly a consequence of current data silos that have built over the years.
The general sentiment is that an increase of IA, RPA, and AI will result in binary scenarios. The first will be the reduction of the number of Shared Services Centers or their, while the second predicts the transition of staff to more value-added work.
Process mining and process mapping are identified as key solutions to solving lack of standardization as it helps to understand the process before highlighting its shortcomings.
Challenges and opportunities
The 2020 report cites the expanded integration of robotics and AI technology among the opportunities for development. Task automation and robotic process automation have been at the spear tip of digital transformation of most organizations.
It is evident that there will be a bigger transition from task automation to process automation in the years to come. Attended automation, or human reviewed tasks, will pave the way for unattended automation, wherein the artificial intelligence will learn from attended automation decision-making.
Even though 47% of organizations are already using intelligent automation, their use is restricted towards simpler solutions such as chatbots, AI, OCR/MV, ML and cognitive solutions. At the same time 33% do not have plans to integrate such solutions.
What is interesting to note is that implementing IA at enterprise level drives value and increases competency, and less so to get actual work done. Enterprises that wish to take full advantage of AI will need to address scaling.
More than a third of respondents indicate that despite the positive impact of automation on performance, lack of change management, an incomplete ecosystem, and wrong process selection are limiting automation’s success.
To prevent silos and opt for an integrated automation approach, respondents go on to show that a centralized unit or body is best suited for the job. In other words IA scaling is magnified in companies using Centers of Expertise (COEs) in the form of SSO companies and GBS providers in their intelligent automation strategy.
On the future of work
Considering the by and large shift towards data-driven decision making and intelligent automation, the future of work looks to be a combination of human and machine collaboration.
50% of companies in North America claim their workforce is ready for a ‘people plus robotics’ approach. However it takes more to define what ‘ready’ is.
42% of companies have preliminary preparations in the form of evaluations of the labor requirements in order to understand what they are. Of the companies which are otherwise not on-board with IA and re-skilling, are 37% of companies which are in progress of assessing career paths and determining re-skilling needs.
In summary
The changing landscape of shared services has prioritized data analytics, intelligent automation and the information technology that powers them to be at the forefront of the digital revolution.
Enterprises across the globe will seek outsourced talent to close skills gaps, reduce labor costs and take advantage of international Centers of Expertise. At the same time, enterprises will need to re-evaluate the requirements of the modern workforce, one that will inadvertently be coupled with the use of robotics and automated technology.
On their way to digitally transforming their operations, enterprises will benefit from SSO providers and GBS operators to drive organization and standardization, reduce costs and free-up time, and scale efficiently to gain agility in an ever changing playing field.
14 April 2020
WRITTEN BY
Pavel is Smart IT's Marketing Communication Manager. He oversees content creation and is in charge of the official Smart IT blog. Contact Pavel to learn about potential media and content collaborations. [email protected]
