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Learn To Share

Where To Share?

There are a number of things to remember to effectively use shared services. First, not every business function is suitable for sharing with other companies. Generally, don't try to share with another company any service that is a core competency. For example, a software company probably would not share its software development skill because it would risk losing its competitive edge when other companies learned its hard-won secrets. Also, avoid sharing any function that involves direct customer contact. For example, you generally would not want to use shared marketing services with another company. Even when services are only shared with others in the company, shared services can involve risk. People at other divisions or locations who formerly used and provided the services may well be very unhappy under the new regime. "Many people feel disenfranchised as a result of shared services," says Kris. "They feel that they lose control." The fact is, they do lose control.

Business units or locations that once handled their own services are now dependent on a central location. The headquarters employees who will be providing the services to the separate units may also be discomfited. That's because, under the true shared-services model, other units or locations have to be treated as if they were customers, not underlings. For instance, instead of a home-office purchasing department telling store man-agers that all requisitions must be submitted on the 15th of the month, a shared-services approach would have the home office asking store managers when they would like to submit requisitions. It's a subtle but significant mind shift that not everyone can accommodate.

As a result of a need for different skills, implementing shared services often involves replacing a number of managers. Heads of remote locations who can't stand losing control may have to be supplanted by people with more flexible personalities. It's even more likely that the people who ran the services before they were shared will be replaced. That's because a shared-services operation is run more like an independent business than a typical internal fiefdom. "General management skills, not technical ability, are the key to running shared services," explains Kris.

The costs for putting shared services in place can come from several sources. Financial outlays will have to be made for hiring new people, training existing ones and often installing new technology. The good news is, investments in technology, training and process improvement are easier to justify and more likely to yield positive returns with the help of economies of scale when services are centralized.

Time is another resource shared services consumes. If you're lucky, you could get everything running smoothly in a year. And even after some time has passed, shared services is likely to add to senior management's burden. For many companies, shared services will remain an intriguing concept that just doesn't fit their needs. For others, it will represent exactly the right model to take advantage of a promising opportunity to make the most of home-office skills that other divisions, locations and even other companies can also use.

Buck's has just begun to share services. The company has plans to implement a shared online inventory system that will let each store know not only how many unfinished barstools it has on hand, but also how many stools are in the company's total inventory and where they might be. It's all part of an effort to make the company run better, says Buck. "Number one, we're hoping to be more efficient," he says. "If we're more efficient for [ourselves], we're going to be more efficient for our customers."

The Shared Services Forum at www.akris.com is a large and expanding online source of news, opinions, tips, resources and other information on the subject of shared services for companies at varying levels of sophistication.


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This article was originally published in the March 2001 print edition of Entrepreneur with the headline: Learn To Share.

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