Shared services market in South Africa “maturing”

Accenture Ltd. last week released the results of a survey which it conducted into the local shared services (SS) market. According to the results, while the local market is aware of the benefits of shared services centres (SSCs), it has not followed global best practice where centres have been established.

The shared services model, in a nutshell, involves consolidating non-core, common business functions into a single entity (the shared services centre). The most important characteristic of the centre, Accenture says, is that it has a client/service provider relationship with the rest of the business, governed by a service level agreement (SLA).

The Accenture survey was compiled based on interviews with executives in 28 organizations, in industries ranging from consumer goods to communications, financial services, government and resources.

Most organizations surveyed view SS as a cost-saving strategy, while Accenture notes that the true benefits of SS come from aligning the centre with business strategy, which very few local organizations have done to date. On the other hand, 40 per cent of respondents expanded services in centres within the first two years of operation, and a further 32 per cent see potential for expansion and growth.

According to the survey, local companies are adopting several models for SS, from basic consolidation of transactional and administrative work to creating a new business entity, with its own customers and profit targets.

Says Accenture associate director, government operating group, Cecil Maswanganyi: “Local companies demonstrate a reluctance to lose control of strategic functions, so, the less strategic the service, the more likely it is to be moved to an SSC.”

Local companies also prefer to locate centres close to the company head office, as opposed to using greenfields/new sites as per global best practice. Greenfields sites, says Accenture, can offer infrastructural and skills cost savings,