Shared business services and the evolution of the multi- divisional corporation

The concept of consolidating common service activities into a discrete Shared Service Centre (SSC), where expertise and technology can be brought to bear on work processes and information flows, is an emerging development in the continuing evolution of the multi-divisional form (MDF). Proponents for the SSC claim that significant efficiency savings can be achieved through process re-engineering, the elimination of shadow systems and location cost arbitrage. Whilst, similar claims are made for third party outsourcing, the SSC enables a quasi-market feel to relationships with its ‘customers’ in the business units, and crucially allows management to retain hierarchical control over service activities. There is however little literature on the practical forms of governance arrangements that might enable an individual SSC to play a role in supporting the combination of styles of market and hierarchy within an organisation. Two particular issues are the form and operation of a Service Level Agreement and the freedom of divisions to choose from a range of service sources. Through e use of case study data this article explores the potential of the shared service model to contribute to the continued hybridisation of the MDF, as organisation designers seek to align structure and process with ever changing strategic imperatives.