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Key Challenges in Shared Services

Shared services business model is based on the concept of consolidation of common services across an organization under a shared services center to reduce cost by optimizing resources and increasing productivity. Though, it isn't a new concept it has been accepted well only recently for its cost benefits.

Implementation of shared services has become very tempting for organizations as economies have been shrinking in last few years. However, there are certain key challenges which organizations should keep in mind for successful implementation of shared services.  In the following paragraphs, we have provided major challenges and the possible solutions to overcome those.

1. Strategy

Developing the right strategy is the key challenge for using shared services within the organization. Central belief for using shared services is to save cost. Decision maker mostly fails to see what user wants from the services and how much is the cost required to provide the services. There is high probability that strategy focused only on cost may lead to ineffective usage of shared services.

Strategy focused only on cost saving might not lead to an entirely successful implementation of shared services. In this approach the usefulness of shared services to the consumers is neglected leading to them remaining unsatisfied. It makes difficult to achieve the long term benefits through extensive use of shared services. Thus, shared services strategy has to be consumer centric rather than an organizational one. When strategy is to provide what consumer wants then the whole direction of implementation changes. Strategy shouldn't only appreciate tangible benefits of reduced cost and resource usage but should also take into account the intangible befits such as user satisfaction and its impact on controlling cost.

2. Transformation

This is very important issue while implementing shared services. Lots of resistance can be observed from the people who might directly or indirectly get affected as their roles may change, to the extent of their jobs becoming redundant. Also, while redesigning the processes the people who control them may show too much resistance because their importance in the 'value chain of processes' gets reduced. As the roles and importance of people in the value chain changes, there is certain amount of unlearning and learning required for the end users. Therefore, it is necessary to take enough precautions so that the changes in the organization are communicated well and accepted by everyone. Transformation towards shared services organization has to be well planned and implemented such that it should be welcomed rather than rejected.

Employees, users and stakeholders need to be well informed about the reasons and benefits of shared services. Transparency needs to be adopted at every step and they need to be involved when it is related to them. 

3. Resources, Systems and Processes

Fundamentally, shared services model is focused on the optimization of organizational resources, systems and processes. Thus, it is necessary to find out all possible ways to do it without affecting the user needs from shared services. It's essential to eliminate the redundant and duplicate resources, systems and processes.

Integration of heterogeneous systems and processes is necessary so that data can flow smoothly across systems. This helps in avoiding duplication of data and efforts required to update or provide same data for multiple systems.

It's necessary to understand that the optimization of resources isn't a onetime activity rather it's a continuous action, thus the organization has to be innovative always. Organizations must always look for cost effective solutions in shared services, and improvements in management and operation processes.

4. Technology

Shared services wouldn't be cost-effective without maximizing the use of technologies. It's imperative to use the popular technologies such as cloud, social networking, mobile computing and analytics. Current technologies offer lots of features and facilities to make shared services self-reliant so that dependence on human support can be reduced. However, it's important to understand that selection of right technology is important and their usage should justify control on the cost.  Technology should be capable enough to integrate the systems. It should be able to manage the business processes and work flows. It should support the implementation of rich user experience across multiple devices.

It's essential to understand that the ERP solutions form the backbone of shared services for managing the processes and data across the organization. However, it doesn't mean that ERP is the replacement for shared services. 

5. Service Experience

User loyalty is critical for the success of shared services and is derived from the service experience. Users always judge the services while consuming. Their judgment derives their satisfaction and loyalty towards the service. Therefore, services have to de designed scientifically to create rich service experience. We advise reader to read our white paper on "service experience." In this paper, we've explained our framework on generating service experience.

Controlling the impact of service touch points is very important as they may otherwise dim the experience. Service level agreement (SLA) extensively affects experience. Hence, SLA metrics should be within acceptable level for users.  It's necessary to conduct periodic audit of SLA and if required metrics have to be tweaked to meet user expectations.

Experience is also affected by shadow processes as it delays service delivery. Thus, those have to be eliminated. Workflows have to be well planned such that it shouldn't require intervention by user or support executive. This helps to create positive impact on experience for consumer.

User should have single access points to the shared service centre and should able to service themselves through a single window or platform. It reduces their cognitive load, thus their sentiment always remains positive towards the service. 

6. Automation

Every interruption in the process for the decision making delays the delivery of service. Thus, human interventions have to be reduced. When there is a human intervention it reduces the quality of service. Shadow processes cause major disruptions in smooth delivery of service. Unmanaged work flows also postpone delivery of service. Therefore, wherever possible automation has to be done.


There are many concerns while implementing the shared service. Rather than discussing each issue, we have presented only those challenges which highly affect the shared services. If those problems aren't tackled well they may lead to failure of shared services. While, all issues discussed here are equally important, we believe that priority should be laid on managing service experience. 


(Authors: Dr. Manish Godse & Dr. Indranil Roy Chowdhury)


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