Written by Claudia Pirko, Regional Vice President Australia and New Zealand, BlackLine
In Australia, the shared service centre model is nothing new but, for many organisations, the efficiencies and cost savings promised by the model have failed to materialise. Continuous accounting and robotic process automation may see that change.
Is your organisation operating a shared services centre (SSC) or considering setting one up? Or perhaps you’ve already been there and found the benefits less compelling than you expected them to be?
You’re not alone. A commonplace arrangement across both the public and private sectors in Australia since the 1990s, SSCs have enjoyed a chequered history in this country.
Who can forget Western Australia’s disastrous flirtation with the model, finally terminated in 2011, after six trouble-plagued years?
Described by then Premier Colin Barnett as ‘one of the greatest bungles of public administration in WA’, the state’s SSC cost five times more than anticipated to run, with the final bill for winding it up expected to reach as high as $1 billion.
More recently, the federal government shuttered a $210 million shared service centre, which serviced 11 agencies and departments and had a staff of 600, in 2017, just three years after it opened. A contributor to the decision to close the doors was an Australian National Audit Office report in 2016 which found the Centre’s payroll service was three times costlier to run than those of some high performing departments.
Weighing the benefits
So why go there in the first place? For every horror story, there’s a good news equivalent that doesn’t make the headlines, or see heads roll. SSCs allow organisations to consolidate and standardise common processes – think payroll, purchasing, invoice processing and the like – add new divisions or business units and expand into new markets without the need to establish the requisite infrastructure from scratch.
Their primary purpose is to relieve inhouse finance personnel of the burden of overseeing repetitive but necessary tasks; freeing them to focus on strategic, value-adding activities.
SSCs can also enable their clients to access new generation software and solutions, without taking on the challenges, risks and high capital costs associated with an internal implementation or upgrade.
Across Australia, we’ve seen some well managed SSCs enjoy significant productivity boosts, as a result of their embrace of cloud technology and the automation of many repetitive, manual finance and administration tasks.
In keeping with their counterparts elsewhere in the world, some are repositioning themselves as proactive business enablers, rather than mere transaction crunching bureaux.
It’s a trend noted in Deloitte’s 2019 Global Shared Services Survey Report, which highlights the fact that SSCs are morphing from providers of what their clients ask for, into generators of tangible business value.
‘SSCs organisations are and will increasingly become more global, complex, and digital, as they seek to provide nimble and efficient services, stronger customer service, and high impact business outcomes,’ the Report notes.
Looking ahead to the SSCs of tomorrow
Robotic process automation (RPA) – the automation of simple, rules-based business processes – represents a prime opportunity for SSCs to cut costs, achieve compelling economies of scale and slash errors rates to near zero.
Because of its utilisation of machine learning technology, RPA represents a significant advancement beyond the automation tools and programs of yore. It can be harnessed to deal with processes involving an element of higher-level decision making – think transaction processing and controls monitoring. The process of identifying and remediating exceptions can also be automated, with the result being a significant saving of human hours.
RPA is also integral to the continuous accounting model which is steadily taking root in organisations and enterprises that want to enjoy granular, up-to-the-minute visibility into financial assets and resources.
Australian SSCs whose infrastructure and processes support this model will be best placed to deliver the efficiencies and improvements the public and private sector customers of tomorrow will expect and demand.