Home > Lean, Service Organizations & Operations > Lean in Shared Services Organizations – Could Deliver Big Bang for the Buck …

Lean in Shared Services Organizations – Could Deliver Big Bang for the Buck …

April 24th, 2012

Lean in shared servicesBusiness models becoming more complex, customers asking for more and more for less and less, competition much more fierce, and an incessant demand to keep costs (headcounts) down — a new reality that is not just gently suggesting, but  demanding more effective utilization of available, and often scarcer,  resources.

Enter – shared-services organizations.  A shared services organization (SSO) can theoretically consolidate support operations into a single organizational unit and substantially improve operating efficiencies by eliminating duplication and excess overhead, and streamlining and standardizing processes.  The SSO should be able to deliver a substantially better service at a substantially lower cost.  It should be a center of both value creation and cost reduction for the enterprise.  If it can’t do this, you have to ask … what’s the point?

In concept, establishing a well-functioning, value-delivering SSO sounds really simple. BUT, reality says not so fast.  I work with companies every day, and it’s a very rare event (and that’s generous) for me to hear someone say their internal shared service organizations deliver the highest-quality, while being the lowest cost provider of services.  Why is this?  Optimized internal SSOs should be able consolidate, standardize, and optimize known best practices for the enterprise, right?  They should be able to align with the strategic direction and goals of the company, and orient service levels towards improving customer experience, right?   I mean, they’re part of the enterprise, so they should be able to do these things at least as well and an external provider of the service, right?

There’s more to good shared services organizations than just consolidating people and systems …

Often times, it does seem that a shared services organization was built simply by throwing together people and systems from different areas and groups.  All I can say is good luck with this approach.  In reality, it requires a change in mindset and an increased focus on the overall business, and a hard look at the processes that are really needed to drive the business. No more living in that isolated black box.  Successful SSO’s integrate aligned and continually optimizing processes with right-fit people, information, and technology automation to deliver a totally new level of capabilities.

Download Lean Services

 a short powerpoint overview of Lean in Services Operations …

Download Lean in internal service functions  a example approach to applying lean at an operations level …

  • Understand the value stream, end-to-end, from both the customer AND the producer perspective.  You can’t optimize what you don’t understand.
  • Establish meaningful and actionable service and process metrics that serve all customers of the service.  Make the metrics visible.
  • Focus on driving efficiency by eliminating wasteful, non-value-add steps and unnecessary complexity — from supplier, producer, and the consumer of the service.
  • Constant focus on customer experience, alignment, and process improvement.  Well-executed, targeted Kaizen events can deliver improvements in weeks or days, not months or years.  And, those improvements positively impact all customers of the service.

There are many other examples, but the point is that if you’re looking for a place from which to pull significant additional value, then you may need to look no further than then enterprise’s shared services organizations.  And Lean may be a powerful and extremely cost-effective tool to apply.  As always, feel free to contact me directly if you’d like to discuss in more detail.

  1. Melinda Hester
    April 25th, 2012 at 08:43 | #1

    The 2nd link to download an approach to applying lean in Shared Services is not working — it is not an active link. I had no problem with the first one.

  2. April 25th, 2012 at 12:26 | #2

    Melinda, apologies. I have corrected the link. Let me know if you have any other problems.

  3. May 14th, 2012 at 09:19 | #3

    Hi Eric,

    Fascinating article! The area of SSO’s has always fascinated me – its sounds so promising (theoretically), and yet is usually implemented so poorly.

    I work for a company that uses “The WHY Code”, the concept is to breakdown organizations / projects into steps that link together by WHAT-HOW-WHY connections. This ensures that everything you do is linked to your goals in the WHY direction (the value stream – as you call it – if it isnt linked – its not accomplishing the right goals).

    More relevantly, it highlights reused processes / structures across the enterprise and treats them as ‘components’ that people can dialogue, and collaborate around. It is a perfect control framework for SSO’s…

    I’d love to introduce you to the tech as I think you’d find it fascinating – drop me a note if you’d like a walkthrough… here is a link if you want to dive in yourself…

    http://www.knowledgegenes.com/BusinessPerformanceImprovement.aspx

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