Shared Services

What exactly are "Shared Services"?
Shared Services

What are "Shared Services"?

 "Shared services," means centralization.

What Services are Shared?

Typically accounting, human resources, purchasing...really any staff function is a natural for centralization.

What are the Pros and Cons of Shared Services?

Shared services have the same pros and cons as centralization.   These issues haven´t changed much in decades.   They include:

The Modern Spin on Centralization

The modern spin on centralization is to try to set up the shared services units as true profit centers charging out their services-while profit centers are not a new idea they almost always come up in the discussion of shared services.  

Profit centers vs. cost centers, like centralization vs. decentralization, is one of the oldest issues of organization design with many pros and cons for both sides of the argument.

Another modern spin is that shared services make extensive use of technology.

The advancement of call center management, both in terms of technology and management know-how, is perhaps the one good reason for taking a fresh look at the benefits of centralization.

Is It a Good Idea?

Striking the balance between centralization and de-centralization is one of the enduring issues of organization design.   It´s an issue to be solved on a case-by-case basis.   The main warning is that for decentralized operations all the disadvantages of decentralization are very clear and centralization seems like a great idea.   Similarly for a centralized operation the disadvantages of centralization are very clear and decentralization seems like a great idea.

In other words the grass is always greener....

Closing Advice

You may want to centralize.

You may want to treat centralized services as profit centers.

You may want to invest more in technology.

However, let us call things by their real names and carefully assess them on their true merits.

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