Opportunities in Shared Services for Tech Companies

Shared services is an old concept. One part of a company becomes a service provider to all other parts and acts like a vendor to them. The service could be anything: purchasing, accounts payable, IT support, or maintenance, for example. Companies do this to reduce redundancy -- only one accounting department, for example, instead of one for each of the different business units. And a recent study from The Hackett Group, a strategic consulting firm, suggests that although around for many years, shared services could offer good market opportunities for high tech firms.

Doing interviews over its customer base (Global 1000, however you define it these days), Hackett found that 61 percent of them had saved 20 percent or more on costs. But the distribution of where they reduced spending was interesting, as the following graph shows:

Notice how some areas, like account payable, are handled centrally by a significant majority of the companies. And yet there are areas, such as external reporting or order entry, that would suggest a large opportunity for savings. That opportunity is actually one available to both the customer and the potential vendors. The customer gets to save however much is possible and gain other efficiencies, and the vendor gets to sell products or services. But then, it helps to remember that cost reductions are only one benefit out of multiple possible:

In approaching a potential customer, it would seem that starting with emphasizing the top few points would catch the interest of virtually all companies and at least open the door to conversation.