As a form of collaborative work, the sharing of services is an approach used by all kinds of organizations to systematically pool their resources in order to enhance access to mutually worthwhile programs and services and reduce costs. However, shared services go beyond that by strengthening the bonds of cooperation among participating organizations and drawing on their collective resources to achieve higher levels of performance.
Shared services can be categorized into three main groups: shared physical resources, shared staffing, and shared programs and services. In a typical shared services arrangement one or more of the participating organizations provide specific services to the other participants who are clients. Service providers are identified based on their expertise, capacity and other factors. In some cases services may also be shared by outsourcing them to a third party.
By working collaboratively and sharing services, organizations can derive a number of benefits, both qualitative and quantitative. With respect to qualitative benefits, shared services make it possible for organizations to have access to programs and services that would otherwise be unaffordable or unavailable. By working collaboratively and sharing services, organizations strengthen their bonds of cooperation, enhance their communication, and better share information. This results in the generation of more coherent policy development and implementation, and greater consistency, overall. Further, when mission-based not-for-profit organizations create shared services programs instead of outsourcing services, they build long-term systems that tend to keep the associated resources, knowledge and skills in-house. Shared services can also help to standardize processes across organizations for greater uniformity, timeliness, and faster service overall.
With respect to quantitative benefits, shared services make it possible for organizations to exploit economies of scale that can result in lower per‑unit prices and generate savings available only to larger institutions. In addition, through the elimination or reduction of duplication and redundancy, shared services organizations can further reduce costs, and free up staff resources allowing them to be deployed in mission-critical areas where their knowledge and expertise can be put to its best use.
For smaller associations in particular, the sharing of programs and services can help mitigate the risk associated with relying on the expertise of a single individual to perform mission critical services. For service providers, the sharing of services can provide an opportunity to build on existing expertise and resources and increase the performance capacity. The critical mass afforded by sharing programs and services may allow the service provider to further invest and improve the quality of the programs and services provided.
There are a number of circumstances where organizations can benefit from shared services including:
- when the organization has multiple dispersed locations
- where duplication of work is identified
- where information and other systems are incompatible within or between organizations
- where there is limited access to programs and services
- where administrative costs are high and negatively impact the delivery of programs and services
- where access to programs and services is negatively impacted
As mentioned previously, shared services can provide significant quantitative benefits, including potential cost savings, and revenue opportunities, but the qualitative benefits of shared services should not be overlooked and should be factored in as an equally important determinant of whether or not shared services should be implemented.
In part three of this series, the implementation of a shared services program will be covered including alternative management models, and things to keep in mind to ensure a successful execution.