As I sat back and listened to Jack Welch, former CEO of General Electric and the undisputed godfather of Six Sigma, addressing a forum of more than 600 shared service professionals in Orlando last month, I was suddenly struck by the progress that has been made by shared services.

The setting was the 10th annual Shared Services Week USA, and here was a man, universally renowned for his razor-sharp business acumen and aggressive 70/20/10 rule, highlighting the critical role that he believes shared service organisations play in the success of business strategies.

Advertisement

Sharing and saving

Ten years ago, that may have seemed an unlikely scenario. But in just six years, Procter & Gamble’s Global Business Services Unit has saved the company more than $500m through shared services alone. It was therefore no surprise to see Filippo Passerini, CIO of P&G, deservedly collect the US Shared Services Excellence Award for Shared Services Thought Leader 2006 later that evening. P&G will be explaining how that saving was achieved at the European flagship forum, the sixth Shared Services Week, in May.

As head of the Shared Services and Outsourcing Network for Europe, my role naturally demands continual research across the global shared services market, and I am constantly amazed at how the geographical expansion of shared service organisations can make the world a smaller place. With global hub strategies and follow-the-sun operations becoming commonplace, through the success of leading practitioners such as American Express and Cadbury Schweppes, no-one can deny that shared services has come to mean a lot more than just back-office cost-cutting.

It would be natural to assume this rapid evolution is purely centred on the cyclical nature of the emerging hot-spot locations for shared service organisations. But in reality, this could not be further from the truth. So while the world considers whether China is the new India for low-cost shared service organisation offshore projects, it is worth remembering that every aspect of this profession is expanding at an accelerated rate.

New shared service organisation support functions such as facilities management, procurement and supply chain have become standard to a market once dominated by finance, IT and HR. Process improvement tools and methodologies such as Six Sigma and Lean are driving forward the performance of mature shared service organisations such as Agilent Technologies and The Gap to world-class status. And Colgate’s announcement earlier this month of its formation of a seven-year purchase-to-pay deal with IBM is one of many to highlight the increasing popularity of outsourcing partnerships and how this continues to top board-level agendas.

Softer skills

Of course, softer skills such as successful people management and change management, which are demanded to execute successful shared service implementation, can’t help but form a critical part of every organisation’s strategy. Former BBC director-general Greg Dyke will speak about how he created first-class leadership and “management without fear”, when he addresses the audience at the Shared Services Week, taking place May 8-11 in Amsterdam.

However, it is still a given that location will always play a pivotal role in shared service development. As the universe for shared service activity expands, so too does the number of new players and sectors in the market and the level of foreign investment.

Emma Beaumont is managing director, Shared Services and Outsourcing Network, Europe, at IQPC, founders of Shared Services Week.

SHARED SERVICE SPECIAL REPORT