Q 642. In an organization, shared services is a cost center. While a lot of cost optimization projects can be executed in a shared services center, what is the scope of doing revenue generating projects in it? Provide some examples.

 

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Shared services are intended to improve efficiency and lower the cost.It is a strategic framework of an organisation in which common support functions and services combined into a centralised unit.It is similar to collaboration that may take place in different areas or departments of an organisation or outside the organisation.The scope of doing revenue generating projects in shared services is very significant because it reduces cost,improves efficiency in work,enhances focus on core competencies,helps in resource optimisation.

examples are:

1.Co Working space:By providing a shared office environment with amenities like desks,meeting rooms,high speed internet we can charge the individual or a company intends to revenue generation.

2.Resource Optimisation:An organisation can better allocate resources where they are needed within the organisation.For instance,instead of each department maintaining its own administrative staff, a shared administrative can centralise the functions and work accordingly.

3.Efficiency Improvements:Shared IT desk can provide faster response times and resolution of issues,minimizing downtime and improving efficiency

Overall implementation of shared service can help Organisations streamline operations, improve service quality and savings of cost.

In today's rapidly evolving world, digital tools & technologies play a central role in the transformation of the shared services center model. Business leaders need to look beyond the traditional shared services model that is focussed on costs reduction, processing of transactions for multiple business units etc.

 

With the help of data repositories / data hubs & cross functional teams, a new shared services model can be implemented that utilizes automation & continuous improvement to focus on & enhance customer experience. This will help the shared services model transition from just execution of repetitive tasks to a digital, customer focussed 'fit for future' model.

 

The transition to this model will help shared services center to deliver revenue by way of revenue generating projects.

 

Examples of Revenue Generating Projects:

 

1.  In banks, when a customer requests for any maintenance to his existing facility (loan, card, accounts etc) with the bank, typically the request flows from the front office/call center to the shared services/back office wherein the execution of the service request is carried out. However, recently we have implemented a project wherein not only have we automated the backoffice activities for high volume service requests but also provided the maintenance request options on the banks Internet banking and mobile app to enable customer self service & enhance customer experience. This has also helped generate revenue for the bank as the customer now can pay via mobile app / internet banking for services such as credit card replacement, debit card replacement etc and enjoy a seamless experience wherein his request is fulfilled by the next working day. 

 

2. By utilizing innovative technologies like speech analytics, voice biometrics, IVR on the cloud, it has become easier and faster for the contact center agent in the shared services center of a bank to cross sell credit card loans, personal payment plans, credit card balance transfer  etc to the customer. This is an example of revenue generation for the shared services center of the bank by way of utilization of implementation of technology and automation.

 

Thanks.

 

Regards,

Lalit

 

 

Shared services create a value base with reliable yet affordable services. They simplify the level of customer experience, finding ways to increase revenue and reduce costs.
Cost centers that prioritize internal operational efficiency and cost reduction are often combined with shared services, and these centers can host revenue-generating initiatives. Leveraging skills, resources and abilities to develop new revenue streams or improve existing ones is one way to monetize shared services. Here are few examples.

Product or Service Innovation: Identify openings to introduce and develop new products or services that align with the cost center's core capabilities. These can be retailed to internal or external guests, creating new profit aqueducts. 

Internal Chargeback Mechanisms apply internal chargeback systems where business units or departments pay for the services handed by the cost center. This approach allows the cost center to recover its costs.

Process effectiveness Consultancy. 
Offer consultancy services to other departments or business units within the association to automate their processes and functional effectiveness.

Cost-Effective Procurement Services 
influence the cost center's in procurement to negotiate favorable deals with suppliers.

Effectiveness- Driven Outsourcing 
Explore openings to expand the cost center's operations to handle specific tasks or functions for other departments. This can lead to increased effectiveness and cost savings for those departments, generating profit for the cost center. 

Transforming a cost center into a profit- generating reality requires a strategic approach, invention, and a deeper understanding of the cost center capabilities. 

The thought of shared services had started in the 1980s. Large organizations which possess multiple businesses found alternate ways to reduce costs. Shared services is a centralized unit of an organization which manages the back office tasks.

Finance and HR departments are mainly included in shared services and a few other departments also use the concept of shared services.

The difference between shared services and outsourcing is the former is an internal business concept and the latter is external business concept.

The advantages of shared services include:

·      Higher expectations in business setting

·      It motivates businesses to control and reduce costs.

·      It helps in changing business needs.

       

Shared Services

The Shared Services Centre is a delivery unit that’s created with a primary focus on optimizing costs in an organization. This unit helps organizations achieve their strategic objectives by playing a pivotal role in planning, designing, and implementing the initiatives. The SSU operates with the 3 key pillars focusing on 3 major themes as listed below.

Pillars	People	Process	Platforms
Collaborate	·   Bring people together ·   Align to achieve a common goal	·   Brainstorming sessions ·   Discover Best Practices ·   Learn, Unlearn and Relearn	·   Visibility of Multi-geography tools and applications
Consolidate	·   Resource dimension and allocation ·   Cross-train colleagues ·   Create a talent pipeline	·   Implement Simplification (Do More with Less) ·   Create process repositories	·   Explore the integration of applications to achieve efficiency and cost benefits
Convert	·   Upskill people by adapting to newer technologies to meet transformation goals	·   Implement a Continual Service Improvement Framework	·   Simplify and Automate

 

Whilst SSU is predominantly a Cost Centre it does have a scope to implement projects that generate revenue. Let’s look at an example.

Scenario 1:

A global telco that has a captive shared services unit has the potential opportunity to improve revenue generation

Function	Primary Objective/ deliverable	Improvement Initiative	Benefit
Sales Support	Tele calling – Manage CRM and close calls within agreed SLA	Use AI/ML systems and segment the customer and pick up the leads that helps to improve the closure rate	Improves conversion % which increases sales
Service Delivery	Deliver Service to the customer within the agreed SLA	Through automation and lean framework optimize lead time that helps earlier activation	Increases revenue through early billing
Service Assurance	Closure of open tickets for faults within the agreed SLA	Any lead optimization in faults will help to increase revenue and customer satisfaction	Increases revenue and customer satisfaction

 

Scenario2:

A global telco that has niche skills in the sector has a captive unit to manage the services whilst the excess capacity of resources can be effectively utilized by enabling a delivery unit that can serve global telcos through an Offshore unit serving as a Subsidiary. In this approach, the SSU will also help to generate incremental revenue with good margins as they are monetizing their niche skills to serve it’s customers

Interesting answers to the intriguing question. Grace has provided the best answer to this question.

 

Response from Lalit is also a must read as he highlights cross selling as another option for increasing the topline.