Shared services centers provide significant operational efficiencies for enterprises.
But without innovative leadership, SSCs can turn into their own operational silos.
We see the integration and continued digital transformation of SSCs as an opportunity for executive leadership. By co-locating and integrating functions like finance, HR and payroll, forward-thinking executives can drive meaningful, top-down innovation.
Building a vision for an integrated payroll transformation
When making the case for shared services integration, SSC leaders should emphasize the point that automation does more than create efficiencies. If efficiency is the goal, then the best that company can hope for is middle-of-the-pack performance in shared services.
To be innovative means thinking bigger. Process automation should form the core of a truly innovative transformation. “Companies are implementing automation to increase productivity, reduce errors, and improve the quality of outputs,” BCG’s Allison Bailey, Vikram Bhalla, Rainer Strack, Diana Dosik and Judy Oh write.
“But they must aspire to go beyond that—to solve unanticipated problems and to allow people to focus on creativity, improvements, and reimagination.”
A key aspect of integrating HR, payroll and finance is the automation of manual, rote work. That’s an easy benefit to sell to individual payroll professionals, but the bigger picture is that automation in payroll creates new capabilities:
- You’re able to send cleaner, better data to local payroll providers in each of the countries where you have employees.
- You’re able to run reports at any time to facilitate high-level decision-making.
- You’re able to understand global labor costs and be agile in how and where you deploy your workforce.
That’s what it means to bridge the gap between more efficient and truly innovative. Achieving these capabilities does require a deep integration of HR, finance and payroll. The transformation of one of those functions would ideally spur the co-transformations of the others.
Such co-transformation is what turns a shared services center into a hub of operational innovation.
From service center to driver of operational excellence
In 2021, Deloitte’s Bianca den Elsen and Shaju Basheer co-wrote a white paper with ServiceNow that outlined a model for how enterprises could integrate individual shared services centers into global business services.
The goal for this transformation is to connect discrete functions (e.g. finance, HR, legal) according to the original logic of the SSC. By co-locating and integrating those functions into global business centers, greater operational efficiencies get unlocked.
Ultimately, that gives global enterprises a better foundation for workforce deployment, the Shared Services & Outsourcing Network writes. The company gets a “full understanding of these business functions and the regions they operate in [...] to determine the best uses of offshoring, and how to mix it with outsourcing opportunities.”
Two important distinctions to make at this stage:
- Global business centers, as den Elsen, et al. write about, tend to focus on integrating customer-facing activities, as io notes. This post will instead talk about integrated shared services centers and employee-facing activities.
- Integrating and transforming SSCs has impacts beyond the scope of offshoring and outsourcing. For truly global organizations, these capabilities help finance and HR executives shape their entire workforces.
Integrated services provide crucial agility
The Deloitte Middle East team has a fascinating white paper on creating an employee-centric digital strategy and supporting it with digital shared services. They describe it as a paradigm shift, and it’s a shift made possible through the tracking and analyzing of key internal data.
“The advancement of disruptive technologies allows HR Digital Shared Services to move from reporting technologies with limited integration across platforms to advanced predictive analytics,” write Roshik Shenoy, Gautam Motwani, Mert Issever and Mira Hmaidan.
A part of the paradigm shift Shenoy, et al. envision is a digital shared services center that’s not tethered to location, but as remote as many companies’ workforces are today. “The multi-tiered structure of HR Digital Shared Service elevates employee experience along with the multi-geography coverage, given that the digital HRSCC employees do not have to be in a centralized location and can be closer to the employees.”
Perhaps not every enterprise will aim for a location-agnostic approach to service center deployment. In fact, Infosys consultants Gianmaria Viero and Monika Madej outline a model for HR shared services in which data and process integration give enterprises the freedom to establish SSCs wherever the “talent availability, service coverage and labor cost” align.
This change requires leadership and a culture of innovation
Transforming several business units at once is challenging. It requires someone with a clear vision to take charge and see that transformation through.
It also requires wide buy-in from all of the teams involved, and that kind of buy-in is hard to achieve if the enterprise doesn’t already nurture the spirit of innovation.
Deloitte’s Sonal Bhagia, Ankush Bhadrish and Sarah Qin talk about this in light of a 2021 survey that found the biggest digital priorities for the leaders of shared services centers were:
- Automation (robotic process automation specifically).
- The standardization of global processes.
- Having a single-instance ERP.
“The results also show that while the top three enablers are likely to remain the same over the next one to three years, there is also increased focus on the areas of instilling a culture of innovation and centralized analytics reporting within the GBS organization,” Bhagia, et al. write.
The team at process mining company Celonis makes the case that innovation is precisely what defines top-tier shared services centers. According to their research, the majority of companies approach SSCs from the perspective of creating efficiencies (i.e. standardizing and centralizing processes). Above-average performers look for ways to optimize service quality because they’re focused on outcomes.
But the top 5 percent of enterprises focus on customer and employee experiences. This kind of enterprise “pioneers technology and drives strategy,” Celonis writes.
It’s never easy to be a pioneer. That’s why meaningful transformation requires strong leadership.
Deloitte’s Brenna Sniderman puts it this way: “As the transformation vision becomes bolder and more ambitious, a leader might encounter a large gap between the vision and the organization’s readiness to achieve it.”
For more information about our Global Payroll Control Platform contact us today.