While shared services have come a long way, they still face several demanding challenges that decentralized operations often do not. They include:
Service Level Agreements (SLAs): Formal service-level agreements (SLAs) help clarify the terms of service delivery, bringing in greater transparency and aligning with customer expectations. SLAs define the output required, and its quality/accuracy and timeliness in a quantitative manner. Measurements are implemented to gauge their success in meeting the SLAs. Often, SLAs are quite elaborate and complex.
Productivity annuity: A productivity annuity performance (efficiency & effectiveness) is expected to improve every year.
Accommodating multi-units: The need to accommodate multiple business units with widely varying business models, revenue streams, customer bases, ERPs etc.
Legacy systems: While shared services and system integrations as part of a business transformation project can yield excellent results, limitations of legacy systems can cripple the transformation process with sub-optimal results.
An optimal mix of people, best practice process, technology, metrics, and analytics are required to bring in these improvements. However, in reality that’s easier said than done. Also, once these are operating at a high level of effectiveness, it becomes increasingly difficult to deliver the improvements expected in the Productivity Annuity.