Tangible benefits of a Shared Service Center

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In building the business case for shared services, there will always be a combination of both tangible and intangible benefits.  As I mentioned in my previous post, it's often difficult to sell a proposed shared service center strictly on the tangible benefits as there are usually many projects competing for capital when measured on ROI alone. 

Having said that, it's still critical to properly document the tangible benefits in any business case.  What are some of the major benefits?

  • FTE reduction
  • Labor cost reduction by moving to lower cost areas
  • Consolidation of facilities and related costs as multiple operations converge
  • Economies of scale as the span of control is increased
  • More efficient spending with vendors as spending is consolidated
  • Reduction in working capital required through more efficient operations
  • Lower turnover of personnel and reduction in subsequent hiring costs due to greater career opportunities
  • Possible tax benefits by moving to special economic zones

In subsequent posts, I'll discuss each of these in greater detail, but the point is that the tangible benefits of moving to a shared services organization are very real.  These cost savings should be carefully documented and positioned as a central part of any business case.