Shared services center

A shared services center – a center for shared services in an organization – is the entity responsible for the execution and the handling of specific operational tasks, such as accounting, human resources, payroll, IT, legal, compliance, purchasing, security.

To reap the benefits a multiple shared service centers sets specific requirements to the resource allocation process in the internal organization of the firm.

A common mistake is to grant the shared service center a status equal to that of business unit or division.

This method eliminates the effect of double marginalization inherent to transfer prices and subsequently improves the performance of the firm.

At the end of the day shared service centers have to contribute to the competitiveness and the (financial) performance of the firm.

In sync with the shift in business firms from budget-driven strategy execution to strategy execution based on validated cause-effect diagrams, the specific performance of shared service centers needs to be defined through cause-effect relations, linking the customer value proposition to back-office processes and vice versa.