What is Shared Service Center (SSC)
A Shared Service Center is an accountable entity within a multi-unit organization tasked with supplying the business unit, respective divisions and departments with specialized services (Finance, HR transactions, IT services, Facilities, Logistics, Sales transactions, Support) on the basis of a Service Level Agreement (SLA) with a costs charge out on basis of some type and system of transfer price.
Shared service centers are deployed for a variety of reasons:
- to reduce costs of decentralization, to increase the quality and professionalism of support processes for the business;
- to increase cost flexibility for supporting services;
- to create a higher degree of strategic flexiblity.
Reported cost reductions of costs of services organized in shared service center are as high as 70% of the original costs, but average about 50%.
Shared service centers are not to be confused with corporate staff departments. Different from staff departments, shared service centers have measurable outputs (by quantity and quality), with costs per unit of service provided. Tasks not organized in shared service centers include corporate control, corporate legal, management development policy, IT-governance and other support typical for the statutory duties of the executive board.