The common goal of shared services

02 August 2011

RICS FM BRIEFING No 20: Have you ever worked in a big organisation or a group of similar organisations where functions such as Property, Finance, Human Resources or IT were duplicated like cottage industries across different parts of the organisation or group? Each part carries out similar activities and yet fails to share resources or coordinate effectively with their equivalent function elsewhere. If so you may have wondered why they do not join-up to offer a single common service across the o

This same concept can be applied to a wide range of activities, both “front office” (i.e. customer facing) such as call centres, information desks, sales as well as the more commonly found “back office” shared services such as procurement, legal, tax, payroll or IT.
Shared services are different from outsourcing in that management and delivery of the service continues from within the organisation / group of organisations. In outsourcing the entire function is transferred to a third party provider and no longer resides in-house. In practice most organisations have some external suppliers, so in the case of shared services these can operate with some or all of the activity being delivered by external partners and in this case the role of the shared service is to manage the external service provider(s).
At this point you may be asking if shared services are the same as centralisation, where
an organisation simply mandates that a particular function will be delivered by a single head office function.
There are some similarities (for example use of the shared service might also be mandated by the centre), but there are important differences in emphasis which can result in shared services providing a more customer focussed and responsive solution than traditional centralisation, as they involve an ongoing partnership between the service users and the shared service organisation.
More specifically, shared services can provide a range of efficiency related benefits, that
range from cost savings and increased focus on core business activities, to improvements in quality, productivity and customer satisfaction.
There is the potential for an increased benefit when shared services cover multiple complimentary areas. This enables the shared services to leverage common assets and technology deployed by another function rather than having to source or create these independently e.g. call centres and software.
Shared services are less likely to be attractive if the organisation does not gain any
strategic or operational benefit by delivering the service directly and/or the cost of external providers is lower, in which case outsourcing is likely to be the better option.
Given the current stringent financial environment it is likely that we will see more organisations adopting the shared service model across a variety of disciplines, including property and facilities management. For example a recent report by the CBI states that “the Shared Services agenda is a key part of achieving the cost savings required”. They estimate that if just the top 150 local authorities followed best practice in corporate services such as finance, human resources, procurement, facilities management and estates management that up to £0.5Bn of annual savings could be achieved.
In the private sector organisations are also moving towards shared services. For example a major global manufacturer is currently preparing a suite of shared services, including “workplace”, which will be responsible for managing property and facilities services on behalf the product and geographical business units.
Increasingly technology enabling buildings to be monitored electronically and managed remotely and in an increasingly automated fashion (often referred to as “Smarter Buildings”) could also drive the adoption of shared services.
Shared Services are also an enabler for shared buildings. Under the government community budget agenda (previously known as “Total Place”) all public sector spending in a specific locality is examined to identify opportunities for efficiency by combining service delivery and sharing buildings. In this context shared services become an enabler for sharing accommodation such as “one stop shops” for customer facing services such as housing benefit enquiries, police enquiry offices and job placement advice or back office buildings for administration, potentially housing shared functions such as call centres and administrative offices. If authorities are to share buildings in this way, it is certainly logical that they should consider sharing the service that manages them.
The coalition government is also preparing a Public Service Reform White paper with proposals that will make it easier for employees to own and run the services that they
work in (also colloquially known as the “John Lewis Model”, after the worker owned retailer).
Could we soon see this being applied to shared property and facilities services, with worker-owned public service property and facilities management cooperatives being formed?
Whichever of these visions of the future you consider; it certainly seems that shared
services for property and facilities require serious consideration in the current times.
● Trevor Miles is a Senior Managing Consultant, in IBM’s Asset Management Group. He is leading a project with the Royal Institution of Chartered Surveyors Management Consultancy Executive Group examining the application of the shared services approach to property and facilities management services.