The future of shared services centers

As a result, telecommunications companies were urged to play their part. In anticipation of even stronger client demands regarding virtual communication in the future, telcos need to free up cash to roll out 5G mobile networks and fiber to accelerate their performance.

The most powerful lever to free up cash for these massive investments is boosting cost efficiencies by setting up or – if already existing – optimizing the Shared Services Centers (SSCs). Traditional SSCs were a purely transactional organization and a source of savings. Optimized SSCs cover services that are more strategic, customer-facing, and digital, such as Business Intelligence or Digital Services, and can therefore transform into a Center of Excellence. As such, they can deploy economies of scale even more than traditional SSCs and significantly help to boost cost efficiencies. These transformed SSCs will serve as a key driver for competitive advantage and exceptional customer experience in the future. 

One of the most successful examples for a transformed SSC is the Vodafone VOIS, which is home to around 22% of all employees. Set up in 2006, it was built as a traditional SSC and became the Group’s strategic partner and Center of Excellence for Intelligent Solutions, focused on adding value and delivering business outcomes for Vodafone.¹ Today, their portfolio comprises Customer Operations, Enterprise, Sales and Marketing, HR, Digital Services, Technology Operations, Business Intelligence, Finance, Supply Chain, Legal, Fraud, Credit & Collection, and Information Security. But what are the main challenges for telcos when taking SSCs to the next level?

The biggest challenge is deficiency in the processes within the organization. Unclearly defined processes without clear responsibilities and unclear interfaces to the line organization can result in a massive lack of efficiency within the SSC. Processes and their shareability need to be transparent. Given the example of the procurement department, standardizable processes such as supplier sourcing, purchasing and supplier management should certainly be bundled in the SSC. Highly strategic processes within the procurement department should certainly be kept within the line organization. But what about procurement policies and demand requirements? Under what prerequisites can these also be bundled in the transformed SSC? Transparent processes and clearly allocated responsibilities help to answer this question.

Furthermore, inconsistencies in the organizational design of the SSC can pose a threat to the success of the SSC. Does the setup allow for an effective and efficient execution of the required tasks? Are spans of control and layers appropriate for the size and the activities of the SSC?

Attracting the right skillset presents an additional challenge. These days digital competencies and IT skills are crucial to have but hard to find. The ongoing war for talent does not make things easier.

Lastly, the cultural aspect should not be underestimated. Low acceptance of the SSC among employees can cause a massive threat and could result from a lack of management buy-in, from a lack of transparent communication or from concerns about the quality and reliability of the SSC.

So how can these challenges be tackled?

A clear vision that is aligned with the corporate strategy is crucial for transforming the SSC from a purely transactional organization and a source of savings into a driver of competitive advantage and exceptional customer experience. After that, transparency in the line organization and in the current SSC needs to be gained. The current cost structure, required activities, and the future workforce are crucial areas to analyze.

Once transparency on the current status is gained, it is time to design the new SSC. The upgraded role of the SSC needs to be reflected in a new organizational structure, new processes & interfaces, new roles & responsibilities, and a refined governance to ensure smooth interactions and alignment. If needed, SSC hubs can be bundled into one SSC.

The new SSC setup will result in a customercentric service delivery model focused on providing excellent business outcomes. With this shift also comes a shift in workforce. Leveraging new technologies requires highly skilled talent and decisionmakers. Deutsche Telekom represents a prominent success case in this field. After sophisticated process mining technologies to streamline and digitize the entire purchasing process (“purchasing-to-pay”) have been developed, the company decided to stick to this newly discovered best practice. They created a Process Mining Center of Excellence, supporting different business units in identifying weak spots within their processes and optimizing them in a targeted manner. So far, this has not only led to savings in the high doubledigit millions, but also to a significant acceleration of digitization within the organization. Once the SSC design is set up, it is necessary to create organizational buy-in. In addition, tailored change management should be established, with well-prepared communication being a key factor in the success of the SSC transformation.

Of course the profound transformation is associated with great challenges. Following the key success factors below helps telcos to successfully steer SSC transformation and take their organization to the next level of efficiency. This is achieved by taking into consideration all relevant dimensions from innovative governance models to the allocation of the right skills.