Shared Service

Shared service is, literally, the sharing of service.

As a result of a series of changes in accounting systems, now a business has to undertake the management that will increase profit not only of the parent company itself, but also of the entire group covered by the range of consolidation. In such a context, the one attracting people's attention as a means to reduce the cost of the entire group is the promotion of shared service in the entire corporate group.

When seen as one corporate group, various similar types of work are performed there. Be it the parent company, a subsidiary, or an overseas affiliated company, a business having a certain scale absolutely needs financial accounting and purchasing procurement work, orders processing work and system operation and others, as the work for supporting production and sales activities. And such supporting work is counted as indirect expenses, which is to be added to the cost of the business.

Such work can be done more efficiently with a fewer number of personnel by concentrating functions if they are within the same corporate group. As information technology develops, such work has come to be capable of being done anywhere physically. By installing terminals at the site of each company of the group, making inputs and outputs of business data there, and concentrating actual processing work at one place, work efficiency can be improved and the maintenance operation of systems can be unified.

By sharing these expenses for concentrated processing and expenses for the maintenance operation of systems among the affiliated companies, the overall cost can be reduced. This is the way of thinking of the shared service. The indirect expenses that can thus be reduced amount to as much as 20 - 40% of the total indirect expenses, which is a great reduction as a business.

Businesses having global business operation or businesses with a lot of subsidiaries have unified the sections that carry out such work as a corporate center. In the corporate center, a strategy center that aims at improving corporate values and a support center that aims at cost reduction by shared service are set up, thereby seeking to strengthen overall competitiveness (see Table 4-8-7).

Table 4-8-7 shows an example of seeking the strengthening of an organization by setting up a corporate center. Within the support center (see Table 4-8-9) are common sections such as accounting, personnel, systems, call center, etc., thus making it possible to carry out unified management. Moreover, by constructing systems networks all over the world, the work is integrated globally (see Table 4-8-10). Some global businesses have also appeared, within which, by implementing such shared service, the function of the support center is transferred to an area with lower personnel expenses, thus realizing the overall cost reduction.

By strengthening the strategy center, improvement in corporate values is expected, and cost reduction can be expected by the shared service in the support center.

Improvement in corporate values

Cost reduction effects

Average cost cost cost

Improve and reform in services and standards

Optimum distribution of resources

Improve and reform in services and standards

Optimum distribution of resources

Reduction of risk and increase in opportunities by means of the portfolio management Increase in sales by means of the multiplier effect

Economy of scale Employment of the lowest cost

Effective utilization of in-house resources

Economy of scale Employment of the lowest cost

Effective utilization of in-house resources

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