How to enable shared services within your ERP

Large organizations with multiple divisions spread across multiple locations can significantly reduce their cost by enabling shared services. For example, a single accounts payable department may handle the job for multiple business units and locations from a central place. This would eliminate the need for several accounts payable people residing under each business unit or location. Moreover, standardization of the process under a single group would also eliminate errors and improve efficiency - saving even more money.

Yet, most companies do not realize such cost savings due to their legacy system constraints. Here is why. It is very likely that these divisions and locations operate on different systems for the same function. Consolidation would require shared services people to jump from one application to another to run the same process. They would need to be set up in each system and given the right security access. Process standardization would almost be impossible as different systems would enforce different setups on the same process. In short, the intended cost savings cannot be realized. This is why shared services enablement is such a big driver for new ERP deployments in large organizations.

Let's take a look at how the new system can enable shared services. First, we need to ask what services can be shared. These tend to be inward-facing functions such as financials, human resources, IT, etc. The company can dictate consolidation and standardization of those functions much easier than the outward-facing functions such as sales, retail, e-commerce. Once the scope of the shared services is defined, we need to then look at how both shared and divisional users can co-exist in the same system. As we know by now, shared services people need access to specific functions across the whole organization, while divisional people need access to their functions within their business units and locations.

This is where the organizational hierarchies can play a big role. If you can attach security and workflow rights to an organization hierarchy, you may manage both user types. This will most likely require multiple organizational hierarchies for the same organization. For example, you can define a procurement hierarchy representing the structure of the shared services. You can then link the security rights of the shared services people to the higher nodes in that hierarchy providing them control over the procurement functions across multiple business units and locations. You can also define other hierarchies such as departmental hierarchies, financial hierarchies, etc. Similar logic can be applied to link the security rights of the divisional users to the lower nodes in such hierarchies restricting their access to specific functions within their business units or locations.

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My name is Cem and this has been another gem.