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WORMING YOUR WAY THROUGH THE LITERATURE ON SHARED SERVICES Back  
Before you pick up the phone to a consulting firm, have you really researched the area? Kilian Maxwell reviews some of the literature currently available on the topic.
As shared services has become a new and popular concept form of organisational design in many organisations today, it has become increasingly imperative to review the various literature currently available on the topic. This researcher has been given the unenviable task of burying myself into the literature to establish the facts on shared services from the hype generated in the consulting offices around Europe! This critique comments upon just some of the books and articles available on the area, as well as the increasing number of websites dedicated to the area.

Consulting Literature on Shared Services
It must firstly be pointed out that there is very little non-advertorial literature presently available on shared services. In other words, most of the publications specifically on shared services have been put together by management consultants, who let's face it have a self-interest in promoting the area. Their research is primarily collected from existing clients and consulting projects and so overall should be interpreted with some caution.

Although there does not seem to be a single journal specifically dedicated to shared services (besides the akris bulletin which I will mention later), articles have been published in Finance, Finance Dublin, The Economist and to a lesser extent Financial Times and Business & Finance. While Finance and The Economist typically target top level management assuming a high, almost academic level of knowledge on the area, the Financial Times and Business & Finance approach the subject from a more basic level with fewer assumptions made as to the knowledge of the reader on the topic.

For the practitioner or interested reader in the area, I would advise the IDA's publication 'Achieve European Competitive Advantage- Establishing Shared Services Centres in Ireland' as well as 'Ireland- a Leading World Location for Shared Services', a special report with Finance, 1998. Finance's notes from their Conference on Shared Services held in Dublin Castle in March 1998 are also worth perusing, particularly for the CEO contemplating setting up a SSC in the future.

BOOKS ON SHARED SERVICES
Over the course of the last couple of years, books on shared services have now begun to appear on the shelves. The first I have chosen to review has received much publicity as the first definitive book on shared services. Written by Marcie Krempel, it is entitled 'Shared Services: a New Business Architecture for Europe', Economist Intelligence Unit, 1998.

Krempel is a management consultant who has published this 90 page report based on a survey covering 120 companies and drawing extensively on her experiences with Elizabeth Arden, the cosmetics group owned by Unilever, which has recently set up a pan-European shared services structure. Her survey found that 27 per cent of European companies were already using shared services, while 48 per cent had implementation in hand or planned. Some 19 per cent had decisions pending. She notes that 98 per cent of the respondents cited lower costs as the main benefits, while 78 per cent cited improved services and 68 per cent standardised processes across Europe. The report argues that the shared services trend has further to go, with areas such as cash management and accounting often left at the country or business unit level.

This book must be commended as the first major report specifically written on shared services. It includes interesting chapters on the risks and benefits of shared services and the relevant legal and tax structures. However, it has a number of major flaws. For instance, the results of the survey might overstate its adoption, since executives with an interest in the field are more likely to have replied. There is no satisfactory definition of shared services contained in the report, which adds a certain fuzziness to the survey results. I also believe that the author lacks objectivity and has placed too much reliance on the Elizabeth Arden case-study as a basis for evaluating shared services. The book is also relatively short in length and questionable value for money at a RRP of 395 pounds sterling!

A better read, in my opinion, is 'CFO- Architect of the Corporation's Future', by PriceWaterhouse, John Wiley Publishing, 1997. The PriceWaterhouse financial and cost management team organised a world-wide study (CFO-2000) covering CFOs of 300 leading multinationals to explore how the best CFOs make a fundamental difference in their corporations. Noting that there was little research conducted on this area, they conclude that a 'New breed of CFO is revolutionising the traditional position occupied by the finance function in the organisation. Presiding over processes that cut across the business, these CFOs set strategy, lead crucial change initiatives and act as real partners in decision-making with their CEOs'. They note that this change is driven by cost reduction, information and communication technology and delivering value. While their survey indicates that many CFOs see shared services as a streamlining and restructuring device enabling corporate management to focus on core competencies, they also make the important point that many organisations have not made it work.

Overall, this book is a extremely instructive and stimulating. The structure of the book is compiled in such a way that the results from the PWC survey have enabled the authors to introduce the concept of shared services as a tool of the CFO. They introduce many new and interesting concepts to the debate, including the 'finance value chain' which defines the processes that finance professionals typically take and the time they spend performing those activities. They conclude that financial strategy is the main driver in the process but operational management takes up too much time. This enables them to hypothesise on the future role of the CFO. From the point of view of the interested CEO or CFO contemplating shared services, there is much to learn and the reader is not made to feel in the same way as Krempel's book that he/she is being 'sold' the concept of shared services. The 'CFO checklist' at the end of each chapter also assists the practitioner through the maze of shared services.

THE CYBER-LIBRARY
The WorldWideWeb has become a valuable resource tool for the journalist, consultant or academic learning about the area of shared services. With increasing numbers using the Web, the upside is the increase of sites dedicated to shared services including Finance's own website, www.finmag.com. However, the internet has equally become slower so it is imperative one knows where to search.

The definitive website on shared services currently operational is without doubt www.akris.com. It has been set up by Andrew Kris, who has over 25 years of experience in the management of global corporations. He is based in the Netherlands and is a partner with Amrop. Kris believes akris.com combines the authoritative views of world experts with is own experience in creating, leading and consulting on shared services for marketing, HRM, IT etc.

The website is very user friendly with so much information available at your fingertips. News on shared services centres around the globe is updated regularly. The visitor can participate in surveys and may register to receive the akris bulletin- a bi-monthly update on shared services- absolutely free of charge. One can equally download presentation slides on an array of issues given by Kris himself at conferences world-wide. In addition, the user can avail of the literature review and resource library Kris has compiled which guides you through much of the literature available on shared services. However, it should be borne in mind that many of the references relate to publications which are not presently available in Ireland.

The other website which I have found to be particularly useful is www.hopper.com. From here, one may register and enter the IQPC Forum which has been specifically set up as a resource and information exchange library for shared services and is also free of charge. The user can also use the Shared Services Advisory Forum which provides networking and research opportunities with shared services experts. One may pass on information, ask questions and offer solutions to issues and problems emanating from shared services.

THE NEED FOR THEORY
Reviewing reports published and websites set up by consultants is all well and good, but where has the shared services concept come from? When consultants sell you stories of 'globalisation', 'the need for core competencies' and 'the re-engineering of the finance function'; what do they mean? The need for a theoretical framework to understand and interpret the motivation behind shared services is integral to its successful planning and implementation. The important areas of research are as follows :
* Globalisation Theory : The globalisation of economic activity is a very complex phenomenon, yet its presence is upon us. I would advise reading some of Kenichi Ohmae's work, seen by many as the world's guru on global strategy. In particular, read 'Planting a Global Harvest', published in the Harvard Business Review, July-August 1989, which is relevant to shared services.
* Foreign Direct Investment : Since shared services centres require much capital investment in the selected location, one should examine the various criteria considered when deciding on FDI. Michael Porter has written much on this area, including his book entitled The Competitive Advantage of Nations, published in 1990 by HBS. Peter Dicken's book 'Global Shift', 2nd Edition, Chapman & Hall, London, 1992 is also particularly helpful in this area.
* Organisation Structure Theory : It goes without saying that shared services is a tool of organisational design and structure. As companies evolve, so too must their organisational and control systems. Many authors including Bartlett, C.A., & Ghoshal, S., believe the 1990s mean a new approach to design is needed. In their 1989 book, 'Managing Across Borders- The Transnational Solution' published by HBS, they see the 'transnational' as the new utopian model to implement which combines centralisation and decentralisation. Does shared services fit the equation?
* The Theory of Core Competencies : As consultants working on shared services projects for clients continuously speak about core competencies, it is the duty of the client to find out himself or herself what they actually mean by core competencies. Originally conceived by C.K. Prahalad and Gary Hamel in their paper, "The Core Competence of the Corporation" and published in the Harvard Business Review, May-June 1990, it has generated enormous impact and influence on American management with the largest number of reprints in the history of the Harvard Business Review. One should also consult on some of the critiques on it, including Michael Porter's "What is Strategy?", Harvard Business Review, November-December 1996.

CONCLUSION
And you thought shared services was simple...?! It has not been my objective with this article to encourage stressed out executives to bury themselves like worms into the deep mucky foundations of the literature on shared services. Rather I expect executives to be capable of seeing through the subjectivity and hype of much of the papers. Whether shared services is the latest management fad, one can only hypothesise at this early stage. What is certain, however, is that shared services will only work if executives, consultants and project teams fully comprehend the reasons behind and implications of shared services. As the cliché goes: 'The early bird catches the worm'. Paradoxically, through research, CEOs can ensure they play the role of the bird and not simply the poor worm!

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