Deloitte's 2009 Shared Services Survey Reveals 86% of SSOs Have a Positive Impact on Cost Reduction

A survey of 265 shared services leaders around the world who provided data on 733 individual shared services facilities was recently carried out by Deloitte Consulting, resulting in a number of very interesting findings.

"Across the globe, organisations are trying to minimise their overall structural costs, so it is not surprising that cost control was one of the most prominent themes in this year's results," said Susan Hogan, principal with Deloitte Consulting LLP and leader of Deloitte's shared services practices. "Even though cost reduction has always been a primary goal of shared services organisations [SSOs], it's obvious that the recession has increased the sense of urgency around delivering financial savings to the bottom line."

Cost reduction was the most frequently cited driver for a number of planned shared services initiatives, including:

Shared services center relocation. Among respondents who planned to relocate one or more of their shared services facilities, 92% reported that cost reduction was an important reason for the anticipated relocation.
Changing the number of shared services centers. 48% of respondents planned to increase the number of shared services facilities over the next five years; of these, 46% reported that cost reduction was the main driver of the increase. Of the 16% of respondents who reported they planned to decrease the number of shared services facilities over the next five years, 71% cited cost reduction as the main driver of the reduction.
Driving incremental value. 72% of respondents reported that cost reduction was one of their top three priorities for driving incremental value from their SSOs in the next two years. In addition, 62% reported that improving processes - a vital contribution to cost reduction - was among their top three priorities.

Survey respondents are also placing greater emphasis on customer satisfaction than they did in 2007. "In a tough economy, shared services leaders know that they have to not only deliver value, but strengthen relationships with their customers and with corporate to work effectively," says Hogan.

In this year's study, maintaining high customer service levels displaced output quality as the most frequently cited people challenge, with 27% of the 2009 respondents identifying it as an "extremely significant" challenge. 43% of the 2009 respondents also reported that increasing customer satisfaction would be a top priority over the next two years.

The concern with cost has also not kept SSOs from striving to increase their value to the business. SSOs continue to expand into advisory services, a trend that was especially noticeable in areas that have historically been slower to migrate into shared services, including facility management, fleet management, engineering, marketing, R&D, and production planning. 57% of the 2009 respondents reported they planned to increase the number of advisory processes in their SSOs, up from 47% in 2007.

Respondents had a very positive view of the impact of their SSOs on the business. 91% of respondents reported that their SSOs had improved process efficiency, and 91% reported shared services had improved process quality. 86% reported that their SSOs had had a positive impact on cost reduction, and 85% reported that shared services had improved service levels. In addition, more than 90% of respondents reported that their SSOs had achieved consistent annual productivity improvements.

As in previous surveys, internal controls and compliance continue to be one important area in which SSOs reduce costs. 79% of respondents reported that their SSOs lowered the cost of maintaining and complying with internal control requirements (such as the Sarbanes-Oxley Act of 2002). Additionally, 85% believe that their SSOs will play an active role in the adoption of International Financial Reporting Standards.

Talent is another area in which SSOs deliver business value. 63% of respondents reported that SSO employees "sometimes" (51%) or "very often" (12%) move to positions in the business, suggesting that many companies are coming to view SSOs as a breeding ground for talent.

Participants came from companies in all major industry groups. The median annual revenue of responding companies was approximately $10.5 billion.