Shared Services Center

A shared services center is the organizational unit, and often the physical location, through which a company delivers consolidated support services to its business units. Instead of each division running its own accounting, payroll, IT support or procurement team, the shared services center performs that work for everyone, using standardized processes and common systems. Large organizations often operate one or more centers serving regions or the entire company.

Shared services centers are one of the most common ways to implement a shared services model. They concentrate expertise, create economies of scale and give organizations a single point of accountability for the cost and quality of support services. For IT financial management, they are both a major consumer of technology and, when they include IT functions, a major provider of it.

Definition of a Shared Services Center

A shared services center is a business unit that provides standardized support services to multiple internal customers under defined service agreements. It typically operates with its own management, budget and performance measures, and it may be located wherever skills and costs are most favorable.

Centers can be single-function, such as a finance shared services center, or multi-function, handling finance, HR, procurement and IT support together. Larger organizations sometimes call multi-function centers global business services, emphasizing their broad scope and global reach.

A shared services center is different from a center of excellence. A center of excellence concentrates specialist expertise and sets standards, while a shared services center concentrates the delivery of routine, high-volume work. Many organizations have both, with the center of excellence defining how a process should work and the shared services center carrying it out.

Typical Services

Finance services commonly delivered by shared services centers include accounts payable, accounts receivable, general ledger accounting, expense processing and financial reporting. HR services include payroll, benefits administration, onboarding and employee records.

IT services often include the service desk, end-user support, application support and infrastructure operations. Procurement services may cover purchase order processing, supplier onboarding and contract administration. Many centers also manage outsourced providers that perform parts of this work.

The scope of a center tends to grow over time. Organizations often start with transactional work, such as invoice processing, and later add more complex activities, such as financial analysis or HR advisory services, once the center has proven it can deliver reliably.

Location Strategy

Organizations choose shared services center locations based on labor costs, availability of skills, language capabilities, time zones and risk. Some locate centers onshore, close to headquarters. Others place centers in neighboring countries or in lower-cost regions further away, choosing the same kinds of locations used in nearshore outsourcing and offshore outsourcing while keeping the work in house.

Many large organizations operate a network of centers in different regions, allowing them to provide services around the clock and in multiple languages while balancing cost and resilience.

Importance of Shared Services Centers in IT Financial Management

Shared services centers rely heavily on technology, from enterprise resource planning systems to workflow, automation and service management tools. Their efficiency depends on that technology, and their costs include a significant share of technology spending.

When a center provides IT services, it also becomes part of how technology costs are delivered and allocated to the business.

Technology as an Enabler of Efficiency

Standardized systems are what allow a center to serve many business units efficiently. A single finance platform, a common service management tool and automation of routine tasks reduce the cost of each transaction the center handles.

Investment in these systems is usually justified by the savings they produce, such as fewer staff needed per transaction or faster processing. Measuring unit costs, such as cost per invoice processed or per support ticket, shows whether those savings are being realized.

Allocating Center Costs

Because a shared services center serves many business units, its costs must be assigned to them. This is usually done through cost allocation or chargeback based on volume measures, such as invoices processed, employees paid or tickets resolved.

Transparent allocation helps business units understand the value they receive and encourages them to manage their demand, such as by submitting cleaner invoices or adopting self-service tools that reduce the center's workload.