Blog: Disruption and economic uncertainty are building the case for standardising back-office functions and sharing services
With uncertainty around Brexit, a slowing economy, falling real wages and rising costs due to a weak pound, some UK industries are under more pressure than others. According to PWC’s latest CEO survey, 88% of construction and manufacturing CEOs are concerned about uncertain or volatile economic growth. For these industries, creating a more dynamic company structure to better cope with change will be high on the agenda.
The onus is on addressing underlying challenges in productivity and profitability. That means ensuring back-offices are efficient and standardised so they can to deliver reliable management information quickly to inform business strategy.
Shared services are an effective way to achieve standardisation while at the same time leveraging economies of scale.
This generally refers to the consolidation of back office functions – like finance and accounting or transactional HR – into a small number of centres equipped with standard processes and IT infrastructure. For companies operating across multiple territories, introducing a global shared service model can allow multi-lingual teams in one location, to prepare and support work for other countries, ready for when those markets wake up – relieving pressure points across the global network.
It’s not a new concept. Since 2011, Arvato has provided a globally-consistent contract-to-invoice service across four lines of business for Microsoft, via a shared service network. Prior to our relationship, Microsoft had used seven different vendors across four continents, which meant processes had become fragmented. The inconsistencies created by this were adversely impacting operating costs, productivity and customer satisfaction. Microsoft selected Arvato as its partner to standardise these global processes. We now process around 90 per cent of the company’s revenues, from six locations, which has enabled us to achieve significant cost savings, and enhance the customer experience.
De-fragmenting a business’ back-office in this way can achieve a range of gains, not just in terms of efficiency and speed of delivery, but also future-proofing a company’s way of working.
We’re in a moment in time at which the pace of new technology entering the market is head-spinning. And, it’s easier to introduce transformative technology into a back-office when systems, processes and teams are already consolidated. We’re rolling-out Robotic Process Automation (RPA) software and Artificial Intelligence (AI)-powered tools in our shared services centres to optimise speed and accuracy, but also to free-up human resources to focus on customer service and innovation.
For a global tech client, we've automated the 4-eye quality check for over 80,000 invoice-to-cash cases per year. This process was previously completed by agents in two regions, accessing up to five different systems, and manually validating up to 500 attachments per case. By removing 85% of the manual effort, we’ve achieved 100% accuracy, reducing high-risk incidents to zero and achieving savings of $600,000 for the client.
All this points towards growing demand for the shared service model. Of course, the question of where to base these services will be dependent on the individual business’ global footprint. Yet, with new locations in Eastern Europe with strong language and ICT capabilities emerging as credible competition to the traditional offshoring locations of India and South-East Asia, this increase in choice is good news for UK firms.