Shared Services, BPO, SAP
Shared Services Versus BPO
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Shared Services Versus BPO
By, SAP AG
Shared Services can be either internal, or external in the form of BPO. In order for company executives to decide which is best for their purposes, and how to design processes and technology to harness their potential, they need to assess their own situation and business processes closely. This paper will concretely discuss the best practices to decisionmaking in this space, and will also examine some examples, including that of Procter & Gamble.
We will explore today’s obstacles to success in service centralization: crafting an effective “extended enterprise” working seamlessly across organizational boundaries is not easy, and requires strong understanding of process and technology. The paper will discuss the benefits achievable in internal Shared Services or BPO: both scenarios have pros and cons in terms of gains around cost reduction, quality improvement, and risk management. The choice between the two models – or the decisions on the structure of a hybrid model – must be situational but anchored on a disciplined scorecard for decision-making encompassing parameters such as scale achievable, ability to optimize processes, and access to labor arbitrage. We will illustrate the use of the scorecard with the example of Procter & Gamble and clarify how that case study can not be generalized in its entirety but certainly provides strong learning across a number of topics.
The effect of software and its deployment on centralization’s success will be analyzed: business decision-makers are advised to understand the potential and constraints of process and technology design, in order to take realistic strategic decisions and direct their teams appropriately. In particular, there are some potential minefields that in our experience show patterns worth discussing.
We will finally discuss the tenets of a successful transformation and implementation and highlight how their problems are not only relevant for the implementation team – but instead should be understood by those executives involved in the strategic decision-making so that they craft a plausible high-level blueprint that can be executed upon. Additionally, transformation is of utmost important for those who will be in charge of operating the shared service later on, as “genetic problems” can nullify the effectiveness and efficiency of the transformed operations.
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