2

Theoretical Concepts and Practical

Applications of Accounting-Related
Shared Service Centres in Medium-Sized
Firms
Stefan Bantscheff and Bernd Britzelmaier

2.1 Introduction
The basic idea of shared service centres (SSCs) is to bundle corporate
group functions like accounting, information technology (IT) or human
resources (HR) in order to achieve mainly efficiency and quality improve-
ment goals. The need to remain competitive forces companies to con-
stantly search for cost reductions, more efficiency and effectiveness, which
lead to a significant amount of scholarly research (Gospel and Sako 2010;
Richter and Brühl 2017; Maatman and Meijerink 2017). A vast number
of large companies worldwide have benefited from using shared service
centres during the last few decades. According to the study of Reimann
and Möller (2013), 74% of the 102 companies with the highest turnover
in Germany, Austria and Switzerland run a shared service centre.
Due to its success, this approach has been also gaining increasing
attention from medium-sized companies, which started to implement

S. Bantscheff • B. Britzelmaier (*)

Pforzheim University, Pforzheim, Germany
e-mail: [email protected]; [email protected]

© The Author(s) 2019 13

A. Thrassou et al. (eds.), The Synergy of Business Theory and Practice, Palgrave Studies in
Cross-disciplinary Business Research, In Association with EuroMed Academy of
Business, https://doi.org/10.1007/978-3-030-17523-8_2
14 S. Bantscheff and B. Britzelmaier

shared service centres too (Suska et al. 2014). As the study of Reimann
and Wolff (2014) shows, 53% of 121 respondent medium-sized compa-
nies in Germany already run an SSC. Another 7% of this sample plans to
introduce one in the future. Despite increasing awareness in medium-­
sized companies, there is only one study that investigated SSC for
medium-sized companies (Reimann and Wolff 2014). The central ques-
tion of this study was the degree of SSC implementation in Germany. Up
until now, there is no study that describes how the companies in the
medium-sized sector actually design their SSCs and to what extent they
apply concepts introduced by scholars. In order to bridge this gap, the
purpose of our study is to explore the design, implementation and con-
trol instruments of an accounting-related SSC in medium-sized compa-
nies of Baden-Württemberg.

2.2 Literature Review

2.2.1 Characteristics of Small and Medium-Sized
Enterprises (SMEs)

There is no uniform definition of SMEs in literature. In general, the exist-

ing concepts try to describe SMEs by using quantitative and qualitative
characteristics. Table 2.1 shows the most popular quantitative definitions
to distinguish SMEs from other companies.

Table 2.1 Quantitative definitions for SMEs in Germany and the EU

Turnover in Number of Balance sheet
Definition Euro employees total in Euro
Institut für Mittelstandsforschung <50 ma <500a –
(IfM) Bonn
German commercial code 0.7–32.12 m 10–250 0.35–16.06 m
European commission 2–<50 m 10–249 2–<43 m
Europäisches Kompetenzzentrum ≤600 m ≤3.000 –
für angewandte
Mittelstandsforschung (EKAM)
Need to be fulfilled at the same time
a
 2 Theoretical Concepts and Practical Applications… 15

Besides quantitative criteria, qualitative ones are used to describe and

define SMEs. Among them, important ones are (Welter et al. 2015;
Britzelmaier 2013):

• Strong impact of the entrepreneur on the company

–– Directly by unity of ownership and management
–– Indirectly by holding large portions of the company shares (often
family business)
• Absence of capital market orientation
–– But: SMEs increasingly strengthen their equity base by going public
without losing their SME-specific characteristics
• Organisational structure
–– Flat hierarchies
–– Limited standardised processes

The enormous importance of SMEs is expressed through the following

figures: in 2016 there were 3.46 million SMEs in Germany, which
accounted 99.5% of all German companies. Almost 60% of all employees
in Germany work for an SME (IfM 2016). In order to generate cost advan-
tages, usually high transaction volumes are required. Hence, shared service
centres are particularly relevant for companies that have an appropriate
size. For that reason, to define SMEs, we used a definition similar to that
of Reimann and Wolff (2014), who used just quantitative criteria, namely
a turnover between 200 million and 7000 million Euro and at least 1000
employees. To exclude large companies and to set the turnover hurdle
closer to the abovementioned definitions, our thresholds are a turnover
between 200 million and 4000 million Euro and at least 1000 employees.

2.2.2 Shared Service Centre

Shared services or shared service centres (SSCs) represent a particular type

of organisation unit that bundles corporate group functions like account-
ing or HR to achieve efficiency and quality improvement goals and provide
specific pre-defined services to other operational units (Joha and Janssen
2014; Bergeron 2003; Borman 2008). Even though a lot of publications
16 S. Bantscheff and B. Britzelmaier

focusing on SSC exist, there is no consistent understanding of it in sci-

ence and practice (Schulz and Brenner 2010; Sterzenbach 2010). In
general, there is a widespread consensus that an SSC is an organisa-
tional unit that provides supporting processes for internal and also pos-
sibly for external customers (Fritze 2013; Kagelmann 2001; Brühl et al.
2017). Out of a literature review, Schulz and Brenner (2010) analysed
several definitions of SSC and summarised the main characteristics
associated with SSC:

Consolidation of Processes

In decentralised organisations, each unit has to carry out its own support
services. The aim of a consolidation of processes is to prevent redundant
work and to achieve synergy (Martín-Pérez and Berger 2004; Wang and
Wang 2007).

Exclusively Engaged in Support Services

SSCs are focused on support services which are non-core activities/pro-

cesses (Minaar and Vosselman 2013). Support services can be divided
into transaction-oriented processes and complex, knowledge-based pro-
cesses (Weber and Gschmack 2012; Goold et al. 2001). Depending on
the type of process, the SSC can be distinguished into Centre of Scale
(CoS) and Centre of Expertise (CoE) (Su et al. 2009; Mergy and Records
2001; Harritz 2018). Transaction-oriented processes are characterised by
their repetitive, simple and quantity-intensive character. Furthermore,
they have a low process combination and a high degree of standardisation
that shows a high potential for automation (Brühl et al. 2017; Quinn
et al. 2000). Knowledge- or expertise-based processes require a specific or
technical knowledge and are exercised by qualified employees. The vol-
ume of these kinds of processes is lower than that of transaction-based
processes. The basic idea is to bundle expensive expertise and to generate
specialisation advantages (Quinn et al. 2000; Becker et al. 2009; Maatman
and Meijerink 2017).
 2 Theoretical Concepts and Practical Applications… 17

Reduction of Costs

According to the studies of Kagelmann (2001), Suska et al. (2014),

Deloitte (2017) and Schulz and Brenner (2010), the main goal of most
of the companies is to reduce their costs based on synergy effects, opti-
mising, standardising and automating processes, and an increase of cost
awareness. In literature, average savings of 25–30% are not unusual
(Becker et al. 2009; Fischer et al. 2017). In practice, multinational firms
like Siemens, Reuters, DHL and ZTE have announced cost savings from
20% to 50% (Jereb, et al. 2009; Kleinfeld et al. 2005; Lacity and Fox
2008; Li 2016).

 ervice-Oriented Focus on Internal Clients and Alignment

S
to External Competitors

SSCs are focused on internal customers and strive to improve their ser-
vices continuously. The aim is to provide at least the same quality as
provided by external competitors at market-based prices. For that reason,
the SSCs should align themselves to external competitors (Michel and
Kirchberg 2008; Deimel 2008).

I ndependent Organisation and Operate Like a Normal

Business

Many of the definitions analysed describe the SSC as a single and sole
entity, which should be clearly separated from other areas, with its own
responsibilities and management but still be a wholly owned subsidiary
of the group. Therefore, the term “partially autonomous” has often been
used in many definitions (Bergeron 2003; Harritz 2016). The objectives
of an SSC are usually based on the individual business situation and the
general conditions within the company (Bader 2008). Basically, four
potential implementation target dimensions can be distinguished
(Kagelmann 2001; Weber et al. 2012): financial, process related, employee
related and customer related. As the studies of Reimann and Möller
18 S. Bantscheff and B. Britzelmaier

(2013), Suska et al. (2014) and Deloitte (2017) show, for most of the
larger companies, cost reduction is the main motivation to implement an
SSC. According to the study of Reimann and Wolff (2014), the focus of
SMEs lies on improving and stabilising their processes as well as their
immediate in- and output factors. In particular, improving the process
quality is a main argument for many SMEs to implement an
SSC. Furthermore, focusing on core competencies and reducing process
throughput are important process-related goals. The employee-related
target dimension is intended to ensure long-term growth as well as con-
tinuous improvement. In particular, the focus of this goal is on the
increasing motivation of employees as well as improved knowledge man-
agement (Sterzenbach 2010; Kagelmann 2001). The most important
customer-related objectives are the creation of an internal customer-­
supplier relationship and an enhancement of service orientation
(Kagelmann 2001).

2.2.3 Findings of Previous Studies

The first empirically based study on the topic was published by Kagelmann
in 2001. As part of his dissertation, he researched “shared services as an
alternative form of organisation – using the example of the finance func-
tion in a multinational corporation.” Thereby, he focused on the concep-
tual design of shared service centres as well as on a comparison with other
forms of organisation. In their study, “Controlling of Shared Service
Centres – Results of an Empirical Study in German Companies” of 2006,
Fischer and Sterzenbach primarily focused on the identification of suit-
able locations and processes as well as on the control of SSCs. The main
focus of the study “Shared Service Centre – the 2nd Generation” by
Suska et al. (PwC) (2011) was the performance measurement of the
already existing SSC. In addition, the study tried to identify which fur-
ther improvement potentials are already “in the pipeline” in existing
SSCs and how an efficient implementation of new SSCs can be designed
in the future.
In 2013, the study “Shared Services for Controlling Processes – Result
of an Empirical Survey on Status Quo and Perspectives” by Reimann
(KPMG) and Möller (University of St Gallen) was published. The study
 2 Theoretical Concepts and Practical Applications… 19

focuses on the question of the current state of implementation of SSC in

the DACH region (DACH stands for Deutschland, Austria and
Confoederatio Helvetica, thus Germany, Austria and Switzerland, usu-
ally not mentioning but also including Liechtenstein), as well as its distri-
bution, design features and objectives. In addition, the questions were to
clarify which controlling processes are suitable for an SSC and which
relevant design factors and design features these processes should have.
The thesis of Sterzenbach entitled “Shared Service Centre Controlling –
Theoretical Design and Empirical Findings in German Companies” of
2010 refers to the study conducted by Fischer and Sterzenbach in 2006.
The focus of this work is on the theoretical foundation of the SSC con-
cept as well as the development of controlling instruments for this organ-
isational form. In Table 2.2, the analysed empirical studies are shown.

Table 2.2 Overview empirical studies about shared service centre

Year Author Title Sample size
2001 Kagelmann, Uwe Shared services as 33 companies worldwide.
alternative forms of Focus on companies with
organisation more than 10 billion DM
sales.
2006 Fischer, Thomas; Controlling of shared 58 companies in Germany
Sterzenbach, service centers— that count to the top 500
Sven results of an highest turnover companies.
empirical study in
German companies
2008 Borman, Mark The design and success Qualitative study with 11
of shared services executives of shared services
centre in Australia
2010 Schulz, Veit; Characteristics of Scanned a database
Brenner, Walter shared service containing leading journals
centers and periodicals, for the
terms “shared service
center(re)”, “shared service
organiz(s)ation” and
“shared services” in
citations and abstracts, with
a focus on papers published
in scientific journals or at
scientific conferences,
yielding 185 results
(continued)
20 S. Bantscheff and B. Britzelmaier

Table 2.2 (continued)

Year Author Title Sample size
2011 Suska, Michael: Shared service 127 companies worldwide
Zitzen, centers—“the second that have already at least
Christian; generation” implemented one SSC. Blue-
Enders, chip-companies have been
Wolfgang prioritised.
(PwC)
2013 Reinmann, Shared services for 102 companies from
Andreas; controlling processes: Germany, Switzerland and
Möller, Klaus Results of an Austria, that rank to the
(KPMG) empirical survey on 1000 highest turnover
status quo and companies in the
perspectives DACH-region
2014 Reimann, Shared service center 121 medium-sized companies
Andreas: Wolff, in medium-sized with a turover between 200
Michael companies: Results mio. And 7000 mio. Euro
(KPMG) of an empirical study and at least 1000 employees
on implementation
status and challenges
2014 Suska, Michael: Shared services—The 100 companies worldwide.
Mänz, edge over The majority of the
Christiane; participating companies (80
Zitzen, percent) generated a billion
Christian (PwC) in sales in 2013. Of these
companies, 34 percent
belonged to the fortune
global 500.
2015 Fried, Andreas; Shared Services Qualitative exploratory study
Noldus, Simon 2020—Development with 10 executives of shared
(Rheinische trends in the services from major German
Fachhochschule bundling of companies and leading
Köln) administrative consultancies
activities and services
for companies based
in Germany
2017 Deloitte 2017 global shared 330 companies from 37
services survey countries.
executive summary
2017 Richter, Philipp Shared service center Literature review: 137 works
Clemens; Brühl. research: A review of in the initial search and 83
Rolf the past, present, works in a refined screen
and future
 2 Theoretical Concepts and Practical Applications… 21

In summary, it can be stated that most of the studies, books and papers
analysed relate to the dissemination of the SSC concept, the level of
implementation, the preferred locations and the success factors of the
implementation. Almost all studies focus on large companies, but only
the one from Reimann and Wolff (2014) refers to SMEs. The research
questions in this study are about the implementation status of SSCs in
SMEs and the goals of and the functions transferred to an SSC. In addi-
tion, they addressed the challenges of the implementation. One hundred
and twenty-one SMEs participated in this study (participation rate 61%),
which used an online questionnaire. The difficulty associated with this
kind of research is that the researcher has, based on the standardised form,
no or very limited possibilities to respond on new findings or interesting
topics. Finally, the Reimann and Wolff study is a general, not very detailed,
study. In addition, the analysis of the identified studies shows that only
two studies (Kagelmann 2001; Reimann and Möller 2013) are area spe-
cific. A study that addresses only SSCs in accounting could not be found.

2.3 Research Design

The literature review shows that there is further need to investigate the
topic. In order to bridge the gap derived from literature reviews, the pur-
pose of this study is to explore the design, the implementation and the
control instruments of an accounting-related SSC in medium-sized com-
panies of Baden-Württemberg. Hence, the main research questions of
this study are as follows:

• “Which conceptual considerations have to be taken into account dur-

ing the planning period of a shared service centre?”
• “How can a shared service centre be implemented and what needs to
be considered here?”
• “Which controlling instruments are suitable for shared service centres?”

Since there is still a lack of a general theory, an explorative qualitative

research design fits best here. Based on literature and existing studies, we
used semi-structured interviews, which were conducted with eight experts
22 S. Bantscheff and B. Britzelmaier

from different companies and two business consultants in the period

between June and August 2017. In order to find out if the questions are
clearly formulated and comprehensive and the duration of one hour for
the interview is sufficient, a pre-test with the head of an SSC from a large
German company was conducted. Twenty-two companies, which fulfil
the criteria of SMEs according to the definition in this chapter, and four
consultants were contacted. Eight company experts and two consultants
agreed to be interviewed. This represents a response rate of 36% (compa-
nies) and 50% (consultants). The advantage of an interview is that the
interviewer can lead the interview flexible and has the possibility to ask
in-depth questions, if necessary (Döring and Bortz 2016). This is needed
to get a deeper understanding of the complex topic and to gain new
knowledge. The interview was followed by an interview protocol tran-
script to ensure not to overlook unique aspects (Firestone and Herriott
1983). The interview transcript consists of three major parts: conception,
implementation and controlling. The generated data were processed fol-
lowing the qualitative content analysis of Gläser and Laudel (2010). The
generated data were classified into three main categories: conception,
implementation and controlling. Also, the main categories conception
and implementation were divided into further sub-categories.

2.4 Findings: Conception of Shared Service

Centres
The conception of an SSC is fundamental for its later implementation.
Key issues in the study concerning the conception area were definitions,
objectives, the appraisal of the business case and the design as well as the
infrastructure.

2.4.1 Definition and Objectives

Results of the study show that the company-specific understanding and

the defined objectives build the frame of the conception. Only by clearly
defining the objectives of the SSC, it is possible to choose the appropriate
migrating processes, locations or the employees and to put them into
 2 Theoretical Concepts and Practical Applications… 23

operation successfully. If the focus of the SSC is cost reduction, it is rec-

ommendable to transfer simple, repetitive processes to the SSC (CoS)
and search for a location with low labour cost. In case of complex tasks
that are related to a corresponding expertise and that need to be processed
in the SSC, the qualification of employees plays a crucial role.
Among the interviewees, a relatively generic comprehension of SSC is
widespread. Business experts use the term SSC to describe an organisa-
tional unit in which processes and services are bundled, that used to be
decentralised before. Legal structures seem to be less important. Therefore,
departments within the accounting function are often labelled as shared
service centre. Characteristics such as the competitiveness of the SSC or
the (partial) independence of the SSC from the mother company were
not mentioned by any of the business experts (Deimel 2008; Michel and
Kirchberg 2008; Schulz and Brenner 2010).
The most commonly mentioned objectives of the SSC are efficiency
and effectiveness increase as well as the enhancement of process quality.
By bundling processes into a centralised unit, it is possible to standardise,
automatise and continuously optimise the related processes more easily,
which will ultimately lead to cost saving. Furthermore, it is possible to
increase process stability by introducing an SSC. Sick leaves, holiday-­
related absence and increases in workload can also be intercepted easier
within the SSC. One of the consultants summed up that an SSC could
generate an important competitive advantage.

2.4.2 Implementation Process

For the introduction of the SSCs, in each company a corresponding proj-

ect team was put together. The staffing of these teams varied from com-
pany to company. However in every case the responsible employee within
the SSC as well as employee of the receiving unit should be part of the
team. This should ensure an improved communication and, at the same
time, serve as a confidence-building measure. Furthermore, it was recom-
mended to include members of the concerned companies and employees
of IT and human resources units in the implementation team. This should
also ensure the correct recognition and proper optimisation of processes
in the Enterprise-Resource-Planning (ERP) system. New employees
24 S. Bantscheff and B. Britzelmaier

also must be hired corresponding to their defined qualifications and skills

and new employment contracts should be put in place. If the introduc-
tion of the SSC leads to termination of employees, the expertise of the
human resources unit in the field of employment law will be in demand.
Besides the operative project team, three of the eight companies estab-
lished a Steering Committee for the implementation of the SSC including
executive employees of the companies. The Steering Committee monitors
the progress of the implementation process and assists the operative proj-
ect team in case of potentially occurring critical questions. Overall, the
implementation process at the respondent companies took between six
and eighteen months. Influential factors for the implementation duration
were especially the complexity and the size of the unit to be migrated.

2.4.3 Economic Efficiency Calculation

Since the implementation of the SSC is a risky project that combines not
only monetary but also human resources, it is important to assess ex ante
whether this effort really pays off. All companies participating in the
study have prepared a profitability calculation. However, these differ in
method and level of detail. Six out of these eight company experts say
that they have carried out a cost comparison calculation. In doing so, the
original actual costs were compared with the savings potential (synergies)
generated by the SSC and the associated introductory costs (investments
in infrastructure, training of employees, etc.). A remarkable cost driver is
employee compensations, which can affect the amortisation period sub-
stantially. Only two companies used the net present value method to
appraise the business case.

2.4.4 Design of the Shared Service Centre

There are several aspects to consider when designing the shared service
centre. The experts were asked about the following points:

• Selection of the processes to be migrated

• Composition, structure and third-party business
 2 Theoretical Concepts and Practical Applications… 25

• Service level agreements (SLAs)

• Infrastructure

Selection of the Processes to Be Migrated

According to one of the consultants, 60–100% of the accounting func-

tions could be centralised in an SSC. The selection of the suitable pro-
cesses to be migrated depends on the maturity of the SSC. Most experts
agree that, in the early days, simple, transactional and repetitive processes
that have a high standardisation and automation potential should be
transferred to the SSC. Examples are invoice verification, incoming pay-
ment processing or dunning. With increasing professionalism, the CoS
can evolve into a CoE and take over more complex tasks such as the
preparation of financial statements or general ledger accounting.
Furthermore, before the transformation of the processes, the digital pos-
sibilities to automate and optimise the identified processes should be
checked and evaluated.

Structure and Reporting Structure

The size and structure of the SSC typically depend on the number and
size of service-receiving units and the number of processes to be adopted.
Overall, the survey shows a very heterogeneous picture regarding the size
and structure of the SSC in accounting. Four of the surveyed companies
are relatively small SSCs, with fewer than ten employees. The largest SSC
has 100 employees, while the other two companies have between 20 and
30 employees. Especially at the small SSC, the tasks range from the
receipt of the invoice to the preparation of the financial statements. This
shows that the concepts of CoS and CoE in business practice are often
not clearly distinguishable from each other. It also shows that smaller
SSCs often use mixed forms of the two concepts. Depending on the size
of the SSC, different substructures result. While larger SSCs often have
responsibilities regulated by division, country or region, there is typically
no such division in smaller SSCs. Consequently, in these cases, there is a
flat hierarchy in which the person in charge of the SSC reports to the
accounting officer or directly to the head of finance.
26 S. Bantscheff and B. Britzelmaier

The legal and economic structure also depends on the maturity of the
SSC and the services provided there. Basically, the legal structure of the
SSC offers various possibilities. Thus, the SSC can be affiliated to a
department such as accounting, implemented as a separate department
or founded as a legally independent company. As the experience of the
two consultants shows, medium-sized companies usually start to set up
their SSCs as an own cost centre. If the scope of the processes to be pro-
vided increases over time or if additional processes from areas such as IT
or HR are bundled in the SSC, it may be worthwhile for small and
medium-sized enterprises to build up their own legal entities. All three
options were identified within our study. The smaller SSCs were largely
integrated into the accounting department. Two of the eight companies
have set up a separate company, which in addition to their accounting
activities includes other areas such as IT, HR, central purchasing and
project management. For the remaining companies, the SSC is managed
as a separate cost centre within the group. Besides the legal form, the
centre structure plays an important role as it forms the basis for the
­financial management of the provision of services in the SSC. Basically,
SSCs can be set up as cost centres, expense centres, revenue centres, profit
centres or investment centres. According to the studies by Fischer and
Sterzenbach (2007) and Suska et al. (2011), especially the cost and profit
centres have significant relevance in business practice (Fischer and
Sterzenbach 2007; Suska et al. 2011). This is also confirmed by this study.
All companies run their SSCs as cost centres. A profit centre is recom-
mended in the literature if the SSC has sufficient power to offer and sell
its services freely on the market (Weber et al. 2012; Coenenberg et al.
2016; Sterzenbach 2010).

Service Level Agreements (SLAs)

To avoid discussions about responsibilities and quality of service, it is

recommended to define SLAs. Taxation issues can be difficult if services
are provided cross-national. Half of the companies claimed to use SLAs.
Three other companies prefer to use service contracts. Service contracts
only name the services of the SSC, the associated prices and the notice
 2 Theoretical Concepts and Practical Applications… 27

periods of the contract, but no key figures or different performance char-

acteristics. Compared to service contracts, the SLAs are more detailed
and extensive. For example, the contents of the SLAs can include the
following parameters: definition of quality level, time-dependent param-
eters, specifications for processing time, types of service, scope of services,
interface definition, escalation agreements and prices of services. Two
companies operate without legal contract. In one of the two companies
using SLA, including Key Performance Indicator (KPI) for measuring
efficiency will be defined in the future.
Only two companies have a kind of process documentation with
clearly defined interfaces and areas of responsibility. Although the inter-
faces are defined in the remaining companies, these are basically verbal
agreements that were materialised either before or after a meeting of the
units or employees or have automatically resulted from the use of the
ERP system. Responsibilities and duties have to be defined, which means,
for example, that the employee in the customer service department can-
not account invoices or change credit lines. The transfer price is another
core element of the SLAs. Particularly in the early days, the consultants
recommend to use a pragmatic pricing concept that complies with tax
regulations. These are particularly relevant when services are transferred
from one country to another. To rule out the allegation of profit shifting,
the company experts recommend the transfer prices in cooperation with
tax consultants and auditors. As the study shows, it makes sense to start
with simple cost-oriented prices, especially at the beginning.

2.4.5 Infrastructure

An SSC can be established close to the mother company or geographi-

cally distant (domestic or foreign). One company runs SSCs in Denmark
and China. In selecting a location, the focus was primarily on regional
coverage. Another company decided to choose the Czech Republic as its
SSC location. In this case, low labour costs were the main argument for
the location. In both cases, the SSCs were added to an existing plant to
avoid additional infrastructure costs. The other companies have opted for
locations in Germany. Two-thirds of them have chosen their location in
28 S. Bantscheff and B. Britzelmaier

the immediate vicinity of the headquarters of the parent company. A

business consultant justifies this decision with shorter communication
channels and the resulting better controllability, which may be beneficial
to the process quality. However, higher labour costs must be accepted.
Besides the regional coverage and the labour and infrastructure costs, the
following criteria must be considered when choosing a location:

• availability of qualified employees,

• accessibility of the location,
• attractiveness of the location for the employees,
• other service organisations in the same location as well as
• subsidies.

When selecting a location where other service organisation can be

found, the issue of fluctuation often becomes relevant. Since tasks in a
CoS are often very homogenous and monotonous, the organisation
should consider how to deal with them. At this, a distinction can be
made between three viable options:

• Job rotation
The employees change their jobs after a certain period of time. The
disadvantage of this approach is that specialisation benefits
could get lost.
• Employee development programmes
Here, the employees are promoted and given the opportunity to take
on a more responsible role within the SSC in the future. However,
managerial positions are limited and not every employee can move up.
• Working with fluctuation
If a member of staff is in the company for a long time, he regularly
receives wage increases, which inevitably leads to an increase in labour
costs. In order not to lose the wage cost advantages, the consultants
consider an annual fluctuation of up to 20% as acceptable.

In addition to the choice of location, the study also highlighted the

importance of the ERP infrastructure. Furthermore, the homogeneity of
the ERP system is of considerable importance and a prerequisite to realising
 2 Theoretical Concepts and Practical Applications… 29

the benefits of the SSC. Without exception, all the companies stated that
they have already proceeded in spreading a homogeneous system. At the
same time, this also plays an important role in the choice of locations to
be migrated.

2.5 Findings: Implementation of Shared

Service Centres
One focus of the study is on the implementation of shared service cen-
tres, particularly with regard to the migration strategy, change manage-
ment and occurring challenges.

2.5.1 Migration Strategies

First, the migration sequence (processes, location, etc.) has to be deter-

mined to implement an SSC. The available possibilities need to be exam-
ined for each company individually. Thereby relevant criteria are in
particular size and complexity, region as well as the personal relationship
between the players. Another approach can be to start with a preferably
complex company to benefit from gained experiences and to smoothen
the future migration process. Additionally, the homogeneity of the ERP
systems can also be an argument for migration. Companies that are being
integrated into another ERP system, with which the employees do not
work on a daily basis, can lead to a reduction in the scaling of professional
activities and, under certain circumstances, influence the process perfor-
mance negatively. Besides the already mentioned approaches, there are
other approaches in business practice. There, the small companies are
selected at the beginning of the implementation process to gain first
experiences and to identify and correct early defects. After that, the com-
plexity and transaction volume is increased gradually.
Another approach focuses on the efficiency of the locations. Thereby
the efficiency is measured by indicators, such as document lines, which
are applied by the employees and compared to other locations. A location
will be migrated, if the inefficiency is too high or the quality of work is
30 S. Bantscheff and B. Britzelmaier

too poor. Another indicator for migrating the location is that there is no
confidence that the on-site employees will be able to better themselves in
the future. For two companies, high volume, low complexity and the
language were of crucial importance. Both companies therefore started to
migrate the mother company and consequently realised increasing returns
to scale fast. Furthermore, the advantage resulting from a successful
migration and the achievement of strategic objectives, such as the
improvement of process quality or the achievement of cost savings, is an
increase in the acceptance of the migration project within the company.
To conclude, cost savings can also influence the migration order in the
respective country. In doing so, locations with local cost advantages can
possibly be included earlier in the migration process.

2.5.2 Change Management

Experts are convinced that change management plays a dominant role in

the implementation of an SSC. An erroneous or inadequate change man-
agement can lead to an extension of the total implementation process and
in the worst case, to a project failure. An open and honest communica-
tion with the employees is therefore of particular importance. For this
purpose, it is important to explain the reasons for the migration project
with a focus on allaying fears and pointing out future perspectives of the
employees. To convince the employees, periodic meetings and workshops
can make an important contribution. A company expert emphasises that
management communication answering employees question should be
consistent. Therefore, a document including all the questions concerning
the subject and all related answers has been prepared at the beginning of
the project. This document shall ensure that every employee receives the
same answer for the same question. Otherwise, inconsistent answers
could lead to mistrust within the workforce or, in the worst case, to a
failure of the project. Another company has introduced a newsletter
which employees receive at regular intervals.
A further important aspect for the implementation of SSCs which
should not be neglected is that long-term employees, even if they are
leaving the company, are of particular importance at the beginning of the
implementation process because of their knowledge. Fifty per cent of the
 2 Theoretical Concepts and Practical Applications… 31

companies point out that there has been an exchange of knowledge

between new and long-term employees. Therefore, new employees should
be accompanied in the processes in the decentralised units. Because of the
high importance of knowledge exchange, it is a particular concern for
companies that leaving employees stay within the company until the end
of the contract. To ensure that these employees do not make intentional
mistakes or have other interfering influences on the implementation pro-
cess, it is essential to proceed sensitively in these cases. Therefore, an
appropriate solution could be a bonus for keeping up.

2.5.3 Further Important Key Components

for the Implementation

On the one hand, two companies describe the support of external consul-
tants as a key component in the implementation process. On the other
hand, contact and direct communication with other SSC can be charac-
terised as key components. These components can ensure that sources of
errors are avoided. Furthermore, two experts emphasise the importance
of taking enough time to plan and to design the SSC, because this will
lead to a benefit in the structuring of the projects as well as the imple-
mentation. In addition, reaching a consensus among management’s deci-
sions is also stated as a key component by the experts. The management
has to stand united behind the decisions and should not depart from
agreements in case of minor throwbacks. Otherwise, it will become dif-
ficult to achieve success with the project. The last three recommendations
pointed out by the experts are to keep it “simple,” “flexible” and “prag-
matic”, in cases that events occur which were not planned, as well as an
exact definition of roles and responsibilities.

2.5.4 Implementation Challenges

In company practice, it becomes obvious that especially language and

culture barriers are major challenges. Misunderstandings can easily occur
when employees work together in countries, in which problems are only
communicated indirectly.
32 S. Bantscheff and B. Britzelmaier

Furthermore, it is important to pay attention that employees are not

overstrained with the SSC. If a potential overload is not identified at an
early stage, this can lead to a decline in quality.
To conclude, it is also of importance to take care of trivial things such
as the registration in the Commercial Register, website performance,
printing of business cards and so on. Although these aspects are not iden-
tified as problems, in sum they are relatively time consuming.

2.6 Findings: Controlling of Shared Service

Centres
There are various controlling instruments, as well as key indicators, for
controlling an SSC. Both business consultants recommend a benchmark-­
based control. Thereby, the performance of the SSC is compared to that
of other SSCs in the same area of business or in comparable locations.
Costs per process or total costs of the SSC can serve as common com-
parative indicators. With these comparative indicators, those responsible
for the SSC shall get an idea of the SSC’s performance. In company prac-
tice, this approach has been applied only by one company up until now.
If performance deficits are determined against the benchmark, those
responsible for the SSC are obligated to take measures. As a consequence,
there is a constant incentive to optimise and design SSC processes effi-
ciently. This approach is particularly suitable for companies with the pri-
mary objective to achieve cost savings.
A more widely spread control method is the internal measurement of
customer satisfaction. Each company confirms that customer satisfaction
and smooth processes are essential elements for the measurement of an
SSC’s performance. Therefore, performance measurement is defined
individually. One company performs “client calls” once a month. Clients
of the SSC are called by the responsible employees and a vote is taken
about what is good or rather needs improvement. Another company has
founded a customer advisory team. In this advisory team, the SSC and
the clients meet and discuss periodically how cooperation works and
what can be improved. In both cases, direct and active communication
leads to an early identification of a decline in quality or satisfaction.
 2 Theoretical Concepts and Practical Applications… 33

Therefore, measures can be taken timely. Another advantage resulting

from both variants is that performance can be tailored precisely to the
requirements and needs of the customer because of the open communi-
cation policy of the SSC.
The business consultant recommendation to use a balanced KPI sys-
tem with quality and efficiency indicators for measuring performance is
applied only in three of eight companies. In all three cases, the perfor-
mance is measured primarily by means of quantitative indicators, such as
processed invoices per employee, retention time of the payment docu-
ment at each employee or the number of warnings.
Qualitative indicators, such as the number of subsequent adjustments
or the number of correction entries, have not been pointed out by the
company experts. A combination of quantitative and qualitative indica-
tors allows to measure the efficiency of the SSC, as well as the quality.
However, the company practices show that determining useful qualita-
tive indicators can be quite difficult.

2.7 Conclusion and Industry Implications

The focus of this study was on the conception, implementation and con-
trol of accounting-related shared service centres in SMEs. Semi-structured
interviews based on scholarly ideas and concepts were conducted with
two consultants and eight experts from different companies.
The conception of each SSC is strongly related to the perception and
the goals of the company. This influences the selection of processes to be
transferred in the SSC, the location and the know-how needed by the
employees. The primary goals for SMEs in setting up SSCs are to gener-
ate more efficiency and to increase and stabilise the quality of the pro-
cesses. To realise these goals, most of the SSCs are located close to their
parent companies. This allows for better control of the processes. Almost
all SSCs are designed as a cost centre and serve internal customers only.
Hence, they use cost-oriented transfer prices without or just a small margin.
The migration sequence of the decentralised units varies strongly
and depends on the priorities of each company. The findings show
that there is no generic process to migrate a decentralised unit. Very
34 S. Bantscheff and B. Britzelmaier

i­mportant for a successful implementation is an open and transparent

communication with the employees. The employees must be convinced
and need to understand the reasons for the restructuring. Otherwise,
the success of implementation could be endangered. Furthermore, the
homogeneity of the ERP system strongly influences the success of the
implementation. For most of the SMEs, the main challenges are cul-
tural challenges, work overload of employees and organisational effort.
Although the business consultants recommend benchmarking to pro-
vide information on competitiveness, the most used controlling method
is the internal measurement of customer satisfaction. KPIs are occa-
sionally used, but the deduction of useful qualitative indicators is seen
as difficult.
There is consensus among the experts that SSCs will continue to be of
importance in the future. However, the tasks within the SSCs are chang-
ing due to advancing standardisation, automation and digitisation.
Simple, transactional activities will be replaced by digital solutions in the
future. This development leads to an increased demand for centres of
excellence, in which subject-specific knowledge is bundled and more
complex tasks are processed.
In order to derive a robust theory from the results obtained in this
study, further research with a larger number of companies is needed. An
analysis of the relevance and requirement of CoEs in medium-sized com-
panies could also be made. The increasing digitisation could lead to the
following developments for the SSCs, whose scientific investigation
would be of interest:

• The substitution of human beings by robots (robotics process automa-

tion) will increase. On the one hand, foreign locations can become
obsolete because the labour cost advantage no longer applies. On the
other hand, the number of domestic employees is likely to continue to
decline, especially in the area of simple, repetitive processes.
• The increasing interconnectedness and standardisation of processes
and ERP systems will make it easier for SSCs to offer services to third
parties. This can lead to extended insourcing in existing SSCs, but also
to the establishment of service companies.
 2 Theoretical Concepts and Practical Applications… 35

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