Sharing is saving: impact of a finance shared service environment.

• Author: Johnson, Kathy
• Position: Systemupgrades

While outsourcing customer services, manufacturing or the like has been a part of corporate operations for some time, the recent economic downturn has seen accounting and finance shared service centers become popular.

Companies such as Agilent Technologies, InterContinental Hotels Group, Federal Express and the New link Times implemented shared services years ago. Additionally, over the past three years, my former company (Los Angeles News Group) has implemented shared service centers for accounts payable and finance operations encompassing general ledger accounting, credit/collections, payroll arid accounts receivable (billing of revenue and posting of cash receipts).

We moved to a shared service environment for the same reasons as other companies: reduce cost and increase process/procedure efficiencies. These efficiencies generally result from specialization and standardization of tasks that can otherwise be redundant when carried out in multiple locations. These redundancies are generally eliminated through centralization. Influencing the management of local entities is limited, however, as the core competencies and leadership expertise remains with the divisional unit.

Business decision makers usually think of finance executives as drivers of value within an organization and strategic: partners of the operating units. Financial value-oriented data (financial statements, product profit and loss statements) and financial analytics/statistics create an organizational culture in which strategic decisions regularly depend upon metrics and financial analysis.

The finance role is embraced and considered to be an important strategic resource. This role enables organizations to effectively plan and increase the probability of meeting short-and long-term goals.

The thought of removing direct access to these resources from department leaders is scary for finance professionals and leaders who depend on their expertise.

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The creation of' a shared services center in an accounting environment usually involves a company-wide cultural and operational process transformation:

* Financial support for local operations is handled from a distance instead of on site as direct access to these personnel may not be as convenient.

* Transactional How is changed.

* Communication methods are impacted as more discussions are handled via email, over the phone, etc. rather than lace to Ike.

The new process can depict a hands-off, transactional...