What are shared services?
Shared services are an internal delivery model in which one team provides defined support activities to several business units or locations. Finance, human resources, procurement, information technology and administration are common starting points.
The unit operates through a service catalogue, process owners, service-level agreements and measures. Business units remain customers and retain decisions requiring local market knowledge.
McKinsey describes these groups as handling back-end work so business units can focus on customer- and product-specific activities, at agreed levels of cost and quality.1
How can shared services improve efficiency?
Shared services improve efficiency through less duplication, common processes, specialist capability, consolidated purchasing, cleaner data and better automation economics. Managers see enterprise demand instead of funding separate teams with different practices.
- Scale: one team handles common transaction volumes.
- Standardization: fewer variants reduce errors, training time and rework.
- Specialization: staff develop deeper process and system knowledge.
- Controls: common data and workflows support consistent approvals.
- Capacity: business teams spend less time on routine administration.
- Insight: enterprise reporting reveals demand, cost and service gaps.
Deloitte’s 2023 survey found that cost reduction, capability development, business value and process standardization were leading objectives for global business services.2 Shared Services Canada likewise links consolidation and standardization with economies of scale, less duplication and operational efficiency.3
Which activities belong in shared services?
The best candidates are repeatable, rules-based, measurable and similar across units. Keep strategic choices, sensitive judgement and customer-specific work near the business unless a specialist enterprise team clearly improves the result.
| Good candidates | Usually kept near the business | Reason |
|---|---|---|
| Accounts payable, payroll and expense processing | Capital allocation and financial strategy | Transactions repeat; strategic trade-offs differ |
| Employee records and routine onboarding | Complex employee relations | Administration can be standardized; judgement cannot |
| Supplier data and purchase-order support | Critical supplier selection | Processing benefits from scale; selection needs operating input |
| Tier-one IT support and access requests | Product technology decisions | Common requests suit a queue; product choices need market context |
Shared services differ from outsourcing because employees may remain inside the organization. They differ from basic centralization because the unit has defined customers, services, prices or cost allocations, standards and service commitments.
How do you build shared services in 7 steps?
Build from facts about work and demand, not an assumed head-count target. Standardize before automating, migrate in waves and include business leaders in governance.
- Baseline work. Record volumes, cost, cycle time, errors, systems and customer pain points.
- Segment activities. Separate common transactions from local, strategic or regulated judgement.
- Choose the model. Define scope, location, reporting lines, funding and retained business roles.
- Set service commitments. Publish the catalogue, request channels, service levels, escalation and process ownership.
- Simplify first. Remove unnecessary steps and data variants before selecting technology.
- Move in waves. Pilot one stable process, support employees and customers, then expand.
- Review value. Track the baseline, realized benefits, service quality and unresolved demand.
BDC warns against automating a poor workflow and recommends simplifying processes, removing waste and tracking KPIs before expecting technology to produce results.4 ISO’s process approach similarly links defined processes, measurement and continual improvement with accountability and consistent results.5
How should shared services performance be measured?
Measure efficiency and customer outcomes together. A lower unit cost is not a win if requests age, errors rise or business teams create shadow support because the official channel cannot meet their needs.
- Cost per invoice, ticket, employee or transaction
- End-to-end cycle time and first-contact resolution
- Error, rework and exception rates
- Service-level attainment and backlog age
- Internal customer effort and satisfaction
- Hours released to customer-facing or strategic work
- Benefits realized against transition cost
“A shared service earns trust when the business can see who owns the result, what service to expect and how problems will be resolved. Centralizing work without that promise only creates a more distant bottleneck.”
What risks can weaken a shared services model?
Main risks include excessive standardization, unclear ownership, poor transition support, hidden local work and savings claimed before service stabilizes. One-size-fits-all rules may conflict with provincial, contractual or customer requirements.
Give every end-to-end process one owner. Let business units challenge performance through governance. Define exceptions narrowly, price demand transparently and protect knowledge during staff moves.
A Canadian SME rarely needs a large global business-services structure. A compact hub serving several branches may be enough. The model should fit the company’s organizational structure for growth and its documented roles and responsibilities.
What does shared services look like in a Canadian SME?
Consider a distributor with branches in Ontario, Alberta and British Columbia. Each location processes invoices, maintains supplier records and answers routine employee questions differently. The company creates a six-person hub for those common activities while branch leaders retain pricing, customer and supplier-performance decisions.
The pilot covers accounts payable. The team uses one intake channel, common vendor data and a five-day service commitment. Leaders compare cost per invoice, exceptions, payment timeliness and branch effort with the baseline for 90 days before adding employee administration.
What should executives do first?
Select one high-volume support process repeated in at least two units. Map its variants, measure present cost and service, identify required local judgement and test whether one accountable team can deliver a better result.
Before changing reporting lines, confirm how the proposed model will align structure with business strategy and support the capabilities that matter most.
Praevion Consulting Inc helps Canadian organizations define service scope, governance, processes, measures and implementation waves. If duplicated support work is slowing growth, contact Praevion Consulting Inc for an operating-model discussion.
Frequently asked questions
These answers help leaders test the model before changing reporting lines or buying systems.
Are shared services the same as outsourcing?
No. Shared services describe how common work is organized for several internal customers. Employees may remain in-house. Outsourcing transfers defined work to an external provider under a contract.
Can a small business use shared services?
Yes. Two branches can share bookkeeping, procurement administration or IT support. The team can be small, but it still needs clear scope, ownership, service expectations and measures.
When should work remain decentralized?
Keep work local when it depends on customer relationships, market knowledge, rapid site response or regulated judgement that cannot be safely captured in a common process.
How long does implementation take?
A narrow SME pilot may take several months. Broader programs take longer because processes, data, roles, technology and employee transitions must be designed and stabilized in stages.
References
These sources support the model, efficiency levers, implementation practices and measures.
- McKinsey & Company, “Does the global business services model still matter?”
- Deloitte, “2023 Global Shared Services and Outsourcing Survey.”
- Shared Services Canada, “2016–17 Report on Plans and Priorities.”
- Business Development Bank of Canada, “How to combine continuous improvement and technology.”
- International Organization for Standardization, “The process approach in ISO 9001.”
