Shared Services Special
July 23, 2013

Do shared services really save?

As the concept of shared services grows ever more popular in organizations across the globe, their usefulness has become a point of contention for some critics. Shared services have seen success in some areas – Ontario and New Brunswick, for example – but in others, they have been less than effective. Because of this, some critics believe shared services aren’t worth the time and money.

Supporters, however, insist that shared services can provide long-term benefits to organizations.

One of these touted benefits is a reduction in cost as services are centralized: by consolidating departments into a central system, operations will be tighter and less money will need to be spent on staff and resources. In theory, it makes a lot of sense, and some governments have put the theory into practice with great success. The government of Ontario, for example, managed to generate $225 million in new revenue between 2004 and 2008.

But critics say that the investment required to implement shared services is not worth it – and it would seem that the experiences of some governments around the world back up their claims. Some state governments in Australia have hemorrhaged money after implementing shared services; one example is Queensland, which, in the span of five years, had reportedly spent $400 million and still required an investment of another $836 million to get the system running properly. Even the government of Ontario experienced failure the first time it attempted shared services.

And of course, there’s the issue of efficiency. Supposedly, shared services will cut down on duplication of tasks across departments. Rather than have each department be responsible for its own services, such as HR and financial services, it makes more sense to centralize and have all departments serviced by a single entity. That way, employees who would otherwise be occupied with HR are free to spend their energy on more important projects.

Critics, however, suggest that shared services do not always result in the decrease of duplication, and can in fact cause a greater overlap of work or hinder efficiency. As has been seen in some areas, shared services can cause confusion among staff that aren’t prepared for the transition. The state of New South Wales in Australia is a perfect example: in 2012, a report commissioned by the Coalition Government found that due to lack of organization, simple tasks, such as sending out a mass-email, could not be accomplished by senior managers.

It would seem there is no right answer when it comes to shared services. What are your thoughts on this issue? Are shared services worth the initial cost and effort? Is there a one-size-fits-all solution? Or should governments come up with custom plans that are tailor-made for them? Let us know in the comments.

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