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Wed 6 Mar 2019 09:16 AM

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Shared services: How UAE companies can optimise their budget and maintain quality of services

Brand View: The introduction of shared services is often accompanied by improved efficiency and service provisions, cost saving, and value generation for the company's internal customers, says Tarek Nizameddin, senior executive director at facilities management firm Ejadah

Shared services: How UAE companies can optimise their budget and maintain quality of services
Tarek Nizameddin, senior executive director at facilities management firm Ejadah.

Currently, most of the organisations are looking for creative ideas to reduce the cost and achieve maximum optimisation of operation budget without affecting the quality and performance of the services.

For governments and large economical group Shared Services create a big opportunity to achieve this.

By definition, shared services is the provision of a service by one part of an organisation or group, where that service had previously been found, in more than one part of the organisation or group.

In many countries, increased pressure for cost cutting and better quality services at competitive prices has forced governments and large groups to formulate strategies that maximise on service provision.

Downsizing, recessions and uncertainty have largely characterised existing economic environment globally. As a result, firms that have increased research and development, sales, marketing, and distribution investment costs have been forced to improve service provision continually.

The introduction of shared services is often accompanied by improved efficiency and service provisions, cost saving, and value generation for the company’s internal customers. Such desired attributes result from a reduction in information duplication process and increased knowledge and information sharing.

Historically, corporate decentralisation was successfully introduced in the 1980s with the aim of improving service delivery to customers with different desires. During this time, most organisations dismantled the centralised head-quarters business operation and established support functions. Under such structures, the profit centres paid for important service divisions such as facilities management, human resource, information technology sales and marketing, information technology, logistics and finance. To foster accountability, the powerful corporate headquarters were replaced by autonomous divisions.

The implementation of decentralised operations by many organisations created many challenges. With decentralisation, most managers were observed to create fiefdoms. Additionally, companies did not enjoy economies of scale. The negative attributes associated to decentralisation formed the basis on which the control-and-command centralisations are considered unfavourable.

In the late 90s, the concept of shared services has been born and been adopted by various nations and companies across the globe. The implementation of shared services oriented strategies has been premised on the fact that the model facilitates the saving of important resources while increasing on service provision.

In recent years, shared services have become the model of choice in providing government and other business institutions with corporate support services. Companies such as ABB, Johnson & Johnson, Chevron, Motorola, HP, GE have implemented shared services successfully. However, other institutions have not been successful even after implementing the shared services initiatives.

This has been because most of these institutions did not fully understand the basic principles of the model. Flawed plans and poor implementation strategies have also been the cause for increased collapse cases. The key here is the idea of 'sharing' within an organisation or group. This sharing needs to fundamentally include shared accountability of results by the unit from where the work is migrated to the provider. The provider, on the other hand, needs to ensure that the agreed results are delivered based on defined measures and KPIs.

Nonetheless, as private and government entities continue to implement the shared services strategies, attributes that may facilitate its success within the government bodies and large economical groups are slowly but effectively being identified. Marketing of government services offered through the implementation of the model has been identified as vital success factor.

The advantages of shared services to individual institutions are based on the fact that the model combines decentralisation and centralisation advantages whilst eliminating possible disadvantages, an argument that is agreed upon by various researchers. That is, a shared service ensures that the services provided are fully aligned with the diverse needs of the targeted institutions. The introduction of the shared services is thus accompanied by various marketplace rules.

Resistance by employees within the organisation is also considered one of the biggest challenges of implementing the shared service model. Various initiatives may be implemented to overcome this resistance.

To begin with, the organisation should adequately plan on which services to offer, practices that will be used to market such services and how the services will be implemented by the targeted institutions by developing a service level agreement. Leaders and staff shall be selected carefully and to be effective, preferences of those being targeted should be considered when establishing marketing practices.

Benchmarking the shared service offering against outside vendors is also crucial for the success of the model. The organisation should also undertake initiatives that will ensure employees understand their duties, possible obstacles and ways of going beyond such problems.

Last but not least, shared services may be acceptable to most institutions in the provision that such services match the needs and goals of such entities.

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