Whenever we encounter financial shared services, either at a conceptual stage, during transformation or immediately after implementation, the language we encounter is relatively consistent.
Shared service functions generally do deliver long-term cost base rationalisation, best-practice process management and tighter control frameworks through the effective leverage of economies of scale and technology. Whilst these are unquestionably critical to operational efficiency, should we perhaps be more focused on the other and possibly more important aspects of finance shared services output – that of the cultural, people and performance management transformation?
Recognising no organisation implements a centralised services solution without also understanding that finance leaders will have more time to business partner, there is however, a valid argument that this isn’t just a bi-product but actually is the critical reason for embarking on any such project. Through the removal of time consuming mechanical reporting requirements, the new capability of real finance partnering is arguably more critical to business effectiveness and ultimately, profitability than the services solution itself. It is therefore time for businesses to start viewing shared services transformations as providing strategic business enhancement rather than an exercise in cost arbitrage.
“Be a yardstick of quality. Some people aren’t used to an environment where excellence is expected.”
STEVE JOBS, APPLE INC.
As the late Steve Jobs of Apple Inc. once said, “Be a yardstick of quality. Some people aren’t used to an environment where excellence is expected.”
Wise words for a CFO embarking on centralising core services. Shared service delivery allows for a financial function to embed a quality environment of partnering excellence and the challenge is for finance professionals to adapt and embrace this new platform. As financial discipline continues to embed itself further into both strategic planning and business operations so finance business partnering and management information continue to evolve and become more integral to corporate leadership. Shared services provides the best situation for this evolution and CFOs need to engender and develop the finance team culture to add value through insight, intelligence and opinion not simply through data, analysis and reporting.
The impact on revenue growth and the bottom-line of any organisation through a motivated finance team that consistently looks to provide business leaders with valuable input is significant and cannot be underestimated. Whether establishing new metrics to monitor performance, looking to rationalise operating costs, providing financial models for business scenarios or simply forecasting and planning for the future, real finance business partners working in a truly evolved finance function are vital to a firm’s success. As more businesses look to undertake shared service transformations, it is wise to evaluate those who have been on this journey and already achieved the point of realisation for their finance functions. Indeed, global leaders in shared service excellence such as Proctor & Gamble and General Electric are possibly vaunted more today for the value-adding capabilities of their finance partners than for their process efficiencies, having moved to this structure many years ago.
So how does a company calculate the net value of this new approach and mentality across their finance function? It is probably too complex to measure numerically but CFOs looking to transform their back-office would do well to have this at the very forefront of their minds. The wider organisation would also be well advised to recognise the considerable impact on its long-term business health of this new mindset amongst its finance professionals. The move to true finance partnering can then be viewed as the primary benefit of a shared service structure.