A shared services model pulls support work that every business unit does on its own (finance processing, payroll, HR administration, IT help desks, procurement) into one internal unit, a shared service centre (SSC), that serves the whole organisation like a supplier. A literature review by Schulz and Brenner (2010) found no single definition, but the common traits are consolidation of support processes, cost reduction as the main driver, internal customers and a separate unit run like a business.
Good candidates are high-volume, rule-based and similar across units: transactions, payroll, standard IT support. Work that differs by market or needs local judgement stays in the units.
02
Standardise before you move
Consolidating ten versions of a process into one building does not save much; agreeing one version and one system does.
03
Run it like a supplier
The centre publishes a service catalogue, signs service-level agreements with business units and often charges them internally, so cost and quality are visible.
04
Keep governance with the customers
A board of business-unit leaders sets priorities, so the centre does not become a distant head-office function.
Where you see it today
Governments sharing back offices
The UK Cabinet Office launched a Shared Services Strategy for Government in March 2021, organising departments’ corporate services around five shared services centres and publishing design principles for what good looks like. Public-sector definitions of an SSC differ from private-sector ones, a literature review found, which changes how such centres are judged (Schulz and Brenner, 2010).
AI assistants on the service desk
A study of 5,172 customer-support agents found that a generative AI assistant raised issues resolved per hour by 15% on average, with the largest gains for less experienced staff (Brynjolfsson, Li and Raymond, 2025). Shared service centres, built on high-volume standard requests, are among the first places this kind of tool lands.
From centres to platforms
Many large companies now describe their shared services as global business services, adding analytics and automation to transaction processing. The trend is toward self-service portals and software bots in front of the human team, with people handling exceptions.
The standardisation dividend
AI agents work best on processes that are documented and consistent. Organisations that already standardised their back office in a shared centre have the clean processes and data that automation needs; those with ten local variants do not.
Shared services vs other ways to organise support work
Decentralised
Who does the workEach business unit, its own staff
Main trade-offClose to the business, but duplicated and inconsistent
Centralised head office
Who does the workA corporate function
Main trade-offConsistent, but can be distant and slow to serve units
Shared services centre
Who does the workAn internal unit serving units as customers
Main trade-offScale and standards, if service levels are managed
Outsourcing / BPO
Who does the workAn external provider under contract
Main trade-offLower cost and flexibility, less control
AI-first service layer
Who does the workSelf-service and AI agents, people for exceptions
Main trade-offSpeed and scale, needs clean processes and oversight
How to use it
List support processes by volume and variation; start with the high-volume, low-variation ones.
Agree one standard process and system before moving any work.
Write service-level agreements with each business unit and report against them monthly.
Put AI assistants and self-service in front of the most common requests, and measure resolution time and quality, not only cost.
Give business units a seat in the centre's governance, so priorities follow their needs.
The Business Engineer lens
Shared services were built to win scale in back-office work; AI turns the same standardised processes into the first candidates for automation. The Business Engineer sees the SSC as the organisation’s process library: the cleaner it is, the faster AI agents can be put to work on it.
It consolidates support work such as finance processing, payroll, HR administration and IT support into one internal unit that serves all business units like a supplier.
What is the difference between shared services and outsourcing?
Shared services keep the work inside the organisation in a dedicated unit; outsourcing hands it to an external provider under contract.
Why do organisations set up shared service centres?
Cost cutting is the driver named most often in definitions; centres are also expected to standardise processes and serve internal customers with measurable service levels.
How is AI changing shared services?
AI assistants and self-service handle common requests first; one large study found a generative AI assistant raised support agents' issues resolved per hour by 15% on average.
The shared services model is a strategic organizational framework in which common support functions and services are consolidated into a centralized unit, often referred to as a “shared service center” or “shared services organization.” This centralized hub serves multiple internal clients or business units within an organization. The goal is to standardize and optimize these support services to achieve cost savings, operational excellence, and improved service quality.
Shared services typically encompass a wide range of functions, including:
Human Resources (HR): Recruitment, payroll, benefits administration, and employee development.
Finance and Accounting: Accounts payable, accounts receivable, financial reporting, and procurement.
Information Technology (IT): Helpdesk support, software development, infrastructure management, and cybersecurity.
Customer Service: Call center operations, customer support, and issue resolution.
Supply Chain and Procurement: Inventory management, supplier relations, and procurement processes.
Marketing and Communications: Brand management, advertising, and content creation.
Facilities Management: Maintenance, security, and workspace management.
The shared services model is applicable to various types of organizations, including corporations, government agencies, educational institutions, and nonprofits. It offers a structured approach to optimizing resources, reducing redundancy, and enhancing service delivery.
What is the Shared Services Model?
The Shared Services Model involves consolidating various administrative and support functions from multiple departments into a single, centralized unit that serves the entire organization. This model is designed to streamline operations, eliminate redundancies, and achieve economies of scale.
Key Characteristics of the Shared Services Model
Centralization: Centralizing administrative and support functions to serve multiple departments.
Efficiency: Enhancing operational efficiency and reducing costs.
Standardization: Implementing standardized processes and practices across the organization.
Service Orientation: Focusing on delivering high-quality, customer-centric services.
Importance of Understanding the Shared Services Model
Understanding and implementing the Shared Services Model is crucial for improving organizational efficiency, reducing costs, and enhancing service delivery.
Improving Organizational Efficiency
Streamlined Processes: Standardizes and streamlines processes across departments.
Eliminating Redundancies: Reduces duplication of efforts and resources.
Reducing Costs
Economies of Scale: Achieves cost savings through economies of scale.
Resource Optimization: Optimizes the use of resources, reducing operational expenses.
Enhancing Service Delivery
Consistency: Ensures consistent service delivery and quality across the organization.
Customer Focus: Enhances focus on customer needs and satisfaction.
Components of the Shared Services Model
The Shared Services Model involves several key components that contribute to its effectiveness in optimizing operations and improving service delivery.
1. Centralized Service Center
Hub of Services: A centralized unit that provides administrative and support services to the organization.
Specialized Teams: Teams with specialized skills and expertise to handle specific functions.
2. Standardized Processes
Consistent Procedures: Implementing standardized procedures and workflows.
Best Practices: Adopting industry best practices to enhance efficiency and quality.
3. Service Level Agreements (SLAs)
Performance Metrics: Establishing SLAs to define service expectations and performance metrics.
Accountability: Ensuring accountability and transparency in service delivery.
4. Technology and Infrastructure
IT Systems: Leveraging advanced IT systems and infrastructure to support shared services.
Automation: Implementing automation to streamline processes and reduce manual work.
5. Governance and Leadership
Strategic Oversight: Strong governance and leadership to oversee the implementation and management of shared services.
Change Management: Effective change management to facilitate the transition to a shared services model.
Implementation Methods for the Shared Services Model
Several methods can be used to implement the Shared Services Model effectively, each offering different strategies and tools.
1. Planning and Assessment
Needs Assessment: Conducting a thorough needs assessment to identify functions suitable for shared services.
Feasibility Study: Performing a feasibility study to evaluate the potential benefits and challenges.
2. Design and Development
Service Design: Designing the shared services structure, processes, and workflows.
Technology Integration: Integrating necessary technology and infrastructure to support shared services.
3. Transition and Migration
Change Management: Implementing change management strategies to facilitate a smooth transition.
Phased Rollout: Adopting a phased rollout approach to gradually implement shared services.
4. Training and Development
Skill Development: Providing training and development programs to equip staff with the necessary skills.
Continuous Learning: Promoting a culture of continuous learning and improvement.
5. Monitoring and Evaluation
Performance Monitoring: Regularly monitoring and evaluating the performance of shared services.
Feedback Mechanisms: Establishing feedback mechanisms to gather input and make improvements.
Benefits of the Shared Services Model
Implementing the Shared Services Model offers numerous benefits, enhancing organizational efficiency, reducing costs, and improving service delivery.
Enhanced Organizational Efficiency
Streamlined Operations: Streamlines operations and eliminates redundancies.
Standardization: Ensures consistency and standardization across the organization.
Significant Cost Savings
Economies of Scale: Achieves significant cost savings through economies of scale.
Resource Optimization: Optimizes the use of resources, reducing operational expenses.
Improved Service Quality
Consistent Quality: Ensures consistent service quality and delivery.
Customer Satisfaction: Enhances customer satisfaction by focusing on service excellence.
Increased Flexibility
Adaptability: Increases organizational flexibility to adapt to changes and challenges.
Scalability: Allows for scalable operations to meet growing demands.
Challenges of Implementing the Shared Services Model
Despite its benefits, implementing the Shared Services Model presents several challenges that need to be managed for successful implementation.
Resistance to Change
Cultural Barriers: Overcoming cultural resistance to change within the organization.
Behavioral Change: Encouraging behavioral changes to support the adoption of shared services.
Complexity of Implementation
Coordination Issues: Coordinating the transition and integration of multiple functions.
Resource Allocation: Ensuring adequate resources are allocated for implementation.
Technology and Infrastructure
System Integration: Integrating various IT systems and infrastructure to support shared services.
Data Management: Managing data security and privacy concerns.
Maintaining Service Quality
Consistent Delivery: Ensuring consistent service delivery during the transition period.
Performance Monitoring: Continuously monitoring and maintaining high service quality.
Best Practices for Implementing the Shared Services Model
Implementing best practices can help effectively manage and overcome challenges, maximizing the benefits of the Shared Services Model.
Foster a Collaborative Culture
Inclusive Culture: Promote an inclusive culture that values collaboration and mutual support.
Employee Engagement: Engage employees in the planning and implementation process.
Enhance Communication
Transparent Communication: Maintain transparent communication to build trust and reduce uncertainty.
Regular Updates: Provide regular updates on the progress and benefits of shared services.
Align Goals and Incentives
Unified Goals: Ensure that goals and objectives are aligned across departments.
Aligned Incentives: Align incentives and rewards with collaborative behavior and achievements.
Promote Leadership and Vision
Strategic Leadership: Encourage strategic leadership to oversee the implementation and management of shared services.
Clear Vision: Develop and communicate a clear and unified vision for the organization.
Implement Robust Governance
Governance Structure: Establish a strong governance structure to oversee shared services.
Performance Metrics: Develop and track performance metrics to measure the success of shared services.
Future Trends in the Shared Services Model
Several trends are likely to shape the future of the Shared Services Model and its applications.
Digital Transformation
Automation: Leveraging automation to enhance efficiency and reduce manual work.
Artificial Intelligence: Implementing AI to support decision-making and improve service delivery.
Data Analytics
Data-Driven Insights: Using data analytics to gain insights into service performance and areas for improvement.
Predictive Analytics: Employing predictive analytics to anticipate and address future needs.
Globalization
Global Shared Services: Developing global shared services centers to support international operations.
Cross-Border Collaboration: Enhancing cross-border collaboration and integration.
Sustainability
Green Practices: Promoting sustainable practices within shared services operations.
Resource Efficiency: Focusing on resource efficiency and environmental impact reduction.
Agile Methodologies
Agile Practices: Implementing agile methodologies to enhance flexibility and responsiveness.
Iterative Processes: Using iterative processes to continuously improve and adapt shared services.
Conclusion
The Shared Services Model is a strategic approach that involves consolidating and centralizing support functions to optimize efficiency, reduce costs, and improve service quality. By understanding the key components, implementation methods, benefits, and challenges of the Shared Services Model, organizations can develop effective strategies to enhance efficiency, reduce costs, and improve service delivery. Implementing best practices such as fostering a collaborative culture, enhancing communication, aligning goals and incentives, promoting leadership and vision, and implementing robust governance can help maximize the benefits of the Shared Services Model.
Key Highlights
Shared Services Model:
A strategic framework where core support functions are centralized in a shared service center to optimize resources, reduce redundancy, and improve service delivery.
Applicable to various types of organizations, including corporations, government agencies, educational institutions, and nonprofits.
Key Functions of Shared Services:
Human Resources (HR)
Finance and Accounting
Information Technology (IT)
Customer Service
Supply Chain and Procurement
Marketing and Communications
Facilities Management
Key Principles of the Shared Services Model:
Centralization: Centralize support functions.
Standardization: Implement standardized processes and service levels.
Customer Focus: Tailor services to meet client needs.
Cost Efficiency: Achieve cost savings and resource optimization.
Service Level Agreements (SLAs): Define expectations and performance metrics.
Continuous Improvement: Commit to ongoing process enhancement.
Technology Integration: Leverage technology for efficiency.
Advantages of the Shared Services Model:
Cost Savings: Reduce overhead and achieve economies of scale.
Enhanced Service Quality: Standardized processes lead to consistent quality.
Focus on Core Activities: Business units concentrate on core functions.
Resource Optimization: Allocate staff and assets effectively.
Flexibility and Scalability: Adaptable to growth or changing service demands.
Knowledge Sharing: Foster innovation and efficiency.
Risk Mitigation: Enhanced security, compliance, and risk management.
Implementing the Model:
Assessment and Planning: Evaluate existing functions and develop a detailed plan.
Leadership and Governance: Appoint experienced leadership and establish governance structures.
Technology Infrastructure: Invest in necessary technology and data tools.
Service Level Agreements (SLAs): Collaboratively define SLAs.
Change Management: Communicate the transition and provide support.
Continuous Improvement: Cultivate a culture of ongoing improvement.
Metrics and KPIs: Define KPIs for performance measurement.
Successful Examples:
Multinational Corporations
Government Agencies
Higher Education
Healthcare Systems
Nonprofits
Challenges and Considerations:
Resistance to Change
Initial Costs
Data Security
Complexity
Service Quality
Customization Needs
Conclusion: The shared services model is an effective strategy for organizations to optimize resources and enhance service delivery. Careful implementation and a focus on key principles can maximize its benefits across various sectors.
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Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
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