Shared services turn on change, not IT

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Shared services turn on change, not IT

Missing link.

Shared services executives underestimated the effort needed to change staff thinking and work habits in such environments, according to a study by Deloitte [pdf].

Communication (47 percent) and cultural implications (44 percent) topped the areas underestimated by 270 shared services executives polled.

Almost six in ten respondents said that "increasing change management would have improved their shared services journey".

The results put people and change factors ahead of "notoriously problematic areas as technology and benefits tracking", Deloitte said.

Technology ranked equal third in terms of underestimated effort.

Cultural implications could arise when local support personnel were redeployed into a shared services environment, Deloitte said.

Personnel might experience 'culture shock' at their relative disengagement from the frontline of a business unit and difficulty adjusting to new ways of interaction.

"If someone needed a piece of information for a reconciliation, for instance, they'd call their former colleague in the business unit – who is now their customer – and ask for it instead of looking it up in the system. We had many inappropriate requests going back and forth," one respondent told Deloitte.

Ensuring the magnitude of change was manageable also surfaced as a key concern. If the change is too big, staff will not keep up, Deloitte said.

"Our view is that it is often safer to err on the side of caution when deciding how much change is too much," the consultancy said.

Other key findings:

  • Separation - Having a shared services centre located near company headquarters is becoming less important. Only nine percent of respondents said it was an "extremely important" consideration in deciding a location. In 2009 - when Deloitte last ran the study - the figure was 22 percent.
  • Tax - Over 75 percent of respondents know there are tax risks and opportunities when choosing a location for shared services, yet only 31 percent had achieved a positive tax benefit. Most respondents - 66 percent - reported neutral or no tax impact when setting up shared services.

    The low appetite of shared services firms to pursue tax incentives reflected a focus on more immediate concerns - talent, technology and cost-cutting. At least one respondent called tax benefits a "luxury" that could be pursued once shared services was delivering on its aims.

    Deloitte urged firms thinking about shared services to incorporate tax thinking early in planning to identify opportunities as well as risks.

Almost half of respondents to the Deloitte survey were in IT shared services. About three percent of the survey - equivalent to eight shared services operations - were in Australia and New Zealand.

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