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ERP Guide : Shared service Implementation strategy

Tutorial by:Gitika Pandey      Date: 2016-05-20 03:24:45

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The recommended way to set up a shared service centre is by a project. According to Wilson [2004], five phases can be distinguished in this project, which in total will take between twelve and twenty-one months. In the first phase, which is called the opportunity assessment, internal performance and productivity information is gathered and compared with external benchmarks of similar services. On the basis of this information, an investment proposal is prepared and presented to decision makers.

Once the investment proposal has been approved, the second phase starts, which is called operating strategy planning. The processes that will be transferred to the shared service centre are selected, a high-level implementation plan is prepared, and a thorough cost benefit analysis is drawn up.

In the third phase, the operating plan is used as the basis for the detailed design. The location is selected; processes and procedures are analyzed and redesigned, as well as technological infrastructures. He sating for the shared service centre is mapped out, and recruitment and education plans are drawn up.

Costs and benefits are again estimated and compared to the previous plans. If they deviate significantly, the decision makers are asked to reconfirm the decision to go ahead.

The fourth phase consists of the creation of a roll out plan, which determines in which steps the transfer of the services to the shared service centre and the termination of the current services will take place.

The fifth and last phase is the actual execution of the roll out plan.

Already during the opportunity assessment of the shared service centre, the information technology required to support the services has to be on the agenda. he most important decision issue is the ERP implementation strategy. Three options exist for implementation of ERP for shared services, which are depicted in above image.

 Implementation strategies for shared services combined with ERP

The implementation strategies are characterized by the order in which they implement ERP and shared services [Shulman et al., 1999]. In above image, the first option is depicted with a dotted line. From the start of the project, first the shared service centre is set up, and after the ERP system is introduced in the organization. he advantage of this implementation strategy is the fact that the requirements that the ERP system has to meet for the shared service centre are known before the ERP implementation is started, which will make the ERP implementation more efficient.

The second option, which is indicated with a dashed line in above image, consists of an ERP implementation followed by an implementation of shared services. This strategy has the advantage that ERP knowledge is available and can be used for an optimal redesign of the processes in the shared service centre. Above image shows that this strategy was chosen by the Dutch government for its SSC HR P&S implementation plan.

Parallel implementation of an ERP system and a shared service centre, which in above image is depicted with a straight line, is the fastest but also the riskiest way to realise the expected beneits. With this strategy, double work is prevented, but as the organization undertakes two large changes at the same time, the risk of failure is high.

In below image an example is given of an organization that has selected the parallel strategy for its implementation of a shared service centre and an ERP system. he city council of Glasgow set up a shared service centre in 2004 in which 130 people were employed. The following processes have become the responsibility of the shared service centre: finance, human resource management, sales, procurement, knowledge management and business development.

Before the shared service centre could become operational, two hundred business processes had to be redesigned, and at the same time two hundred existing applications had to be replaced by one ERP system. The motive for the whole operation was an annual cost saving of ₤5 million.

 Parallel implementation of ERP and shared services

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