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Disruption in Shared Services

Saturday, September 14, 2019

5 minute read

Disruption in Shared Services

Digital transformation is the next big opportunity. But, according to Deloitte’s analysis, the industry is a long way from achieving these kinds of results with as much as 70% of all transactions currently being processed by humans.

 

I had the pleasure of attending the Deloitte Shared Service conference recently in Dublin and I can honestly say I witnessed an industry in the middle of a huge disruption. Since the mid-90s, shared service centers (SSC) and subsequently the business process outsourcing (BPO) space has been in a continued race to provide cheaper services.

Achieving the “Amazon” experience

From the opening session by Peter Moller, the message was clear: digital transformation is the next big opportunity. Robotic process automation (RPA) and artificial intelligence (AI) should be used to automate tasks and SSCs should be figuring out ways to create value for the entire enterprise.  By looking to the customer experience first, shared service centers can the start to think about how to create the “amazon experience” for their stakeholders.

However, as Deloitte’s analysis highlighted, we’ve still a long way to go before these types of results are realized. Especially with 70% of all transactions currently being handled by humans and many of which simply dealing with exceptions.

How to respond to digital disruption

Since many of these SSC leaders work directly with BPOs, the impact of this disruption is already being felt. In a recent survey by KPMG and published by Horses for Sources, the following trends were identified:

  • Up to 50% of enterprises are looking to embed significant automation in their BPO services. 

  • The same number are actively looking for another BPO provider.

  • 1 in 6 were looking to pull BPO services in-house with automation.

  • This is a complete change in sentiment since the last survey 12 months ago.

In the same article Horses for Sources suggests that, in order to respond to this disruption, BPOs need to do one of the following:

  • Services providers need to quickly develop digital programs that remain relevant long term.

  • Blend a technology solution with the current outsourced model to offer a plan for mutual long-term benefits.

  • Partner with appropriate solutions to demonstrate a level of subject matter expertise

  • Build self-funding business cases that require no additional investment from clients

  • Be proactive and propose digital solutions rather than wait for clients to demand change. This will help stakeholders champion existing relationships and avoid disruption.   

Likewise, the Deloitte conference quickly turned to a similar question, but posed to the leaders of shared services, “How can we add value to the other parts of the business and become more relevant?”

The future of the shared service market

In the last six years, shared services organizations have tripled the number of services operating in Finance, HR, IT, Procurement, Corporate Services, Customer Services, and even Sales & Marketing.

There was a universal view that by focusing on robotics, the digital experience, and continuous improvement, and not focusing on continuous cost reduction would lead shared services to become more strategic.

In fact Philip Whelan, Head of GBS Finance at BP was adamant that the current BPO model was “dead” and discussions needed to had around business value rather than just cost reduction. The dual objective of improving the customer experience along with the desire to add value was making it increasingly difficult to differentiate between BPO and SSCs.

During Day 2 of the Deloitte Shared Service conference, we started to nudge closer to some concrete examples of what the future of the shared service market could look like. Robert Weltevreden, the Head of Business Services at Norvatis, talked about how they had to develop a new culture to focus on productivity driven change.

At Novartis, the goal was to move the team into the fourth generation of business services, which Robert termed as investing in technology and products. The real value-add came from automation and analytics. What was interesting was that Novartis added value by offering a business service that provided subject matter expertise, consulting services, and change management services to the wider Norvatis business.

So, this is real. RPA and AI are disrupting business sectors in positive ways. And conversations are focusing more and more on customer experiences, adding value, and solving real business problems in smart ways.

Ready to learn more?

Want to learn more about the future of shared service centers and what steps you can take to prepare your organization? Read our blog, “6 Resources to Help Your Shared Service Centre Exceed Expectations.” Questions? Contact us!