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Shared Service Center (SCC)

The term shared services refers to the merging and centralization of an organization's service processes. Similar processes from different areas of a company or organization are combined and provided by (a) central office(s) or department(s). The provider is usually referred to as a Shared Service Center, or SSC for short. The departments that use the services are in a kind of customer relationship with the SSC. A distinction is made between:

 

  • Onshore - In Germany
  • Nearshore - In Eastern Europe
  • Offshore - Asia Pacific

 

An SSC is certainly justified in some areas, such as in the area of ​​calls, where incoming calls can be processed centrally for a large number of companies in a cost-effective manner. This service cannot be compared, in which technical areas (purchasing, finance, controlling) have to be covered. It is very important to know that the employees of an SSC are input staff (data typists) who usually transfer amounts of data into a system in a short time, including scanning documents. In order to take account of the desired savings effect, an SSC is often placed in Eastern Europe. It is clear that in the case of accounting, for example, specialist knowledge is completely neglected, since these people are not available in the quality we are used to in our own company, also for cost reasons. However, as is erroneously believed, professional competence cannot be intercepted with a corrected setup within the ERP software. On the contrary, the expertise that is lost in accounting due to the release unexpectedly has to be made up for in accounts payable, for example, which is downright impossible. A buyer rightly sees his raison d'être in the negotiation of purchase prices, framework agreements and, if necessary, in the creation of purchase requisitions in the system. An evaluation according to HGB or other accounting regulations or the adjustment of incoming invoices that cannot be posted, because this does not appear congruent with the purchase requisition, is completely beyond his knowledge and is also not in his interest.

 

Mutual accusations of blame between the SSC and the specialist department are the result, which over time leads to more and more quality losses in controlling up to the failure of the unqualified certification of the annual financial statements by auditors. The booking quality has long been out of focus and can no longer be corrected afterwards. The cost-saving potential is also massively overestimated, since the quality losses caused by an incomplete process must be constantly supported by employees in the operative business and maintained in parallel in order to ensure sustainable information security. You will not find these periods of unproductivity for quality and information assurance in any cost center accounting, which would also show significantly higher costs than they had before the SSC was founded. Mental and linguistic influences through clerical work in the European abroad are not yet taken into account.

 

A Kienbaum study has also determined the productivity between Germany and Eastern Europe country-specifically up to 3:1. If you then take the lower salary level in Eastern Europe as a basis and multiply it by the loss of productivity by 3, you quickly arrive at the same personnel costs, and that without specialist qualifications. The demand for a salary increase in the 2-digit percentage range is added. Conclusion: Only the gentle transition to an SSC with a guarantee of technical competence within the respective company at the location, taking into account all previously adapted processes, can take into account the savings potential of an SSC. Regional placement is an important element and should by no means only be considered from the pure aspect of personnel cost savings. Technical qualifications are by no means to be considered in every country under the same standard as in Germany.
 
The opposite is the normal case. Technical advice is therefore not only necessary in the design and presentation, but also in the direct implementation by the same consultant in order to ensure the complete and relevant implementation of the SSC. Without elementary assurance of technical competence in the company as well as the continuing authority of the unit (not only at group level) to issue instructions via the SSC, a necessary quality standard cannot be maintained. The timely and sustainable transfer of expertise to the SSC is crucial. The stabilization and optimization of the core processes is the pivotal point for the successful implementation of a shared service. This advance payment is essential.