Page 36 - The Pakistan Accountant January-March 2018_Neat

Signature Qualification CA that Empowers to Lead PAKISTAN Accounting Shared Services – A Comprehensive Glimpse by Danish Akbar The Concept Management. This concept entailed the consolidation of non-core Since inception, organisations have tried to enhance their support services (like finance, HR, IT, etc.) and handling them productivity by instilling efficiency and effectiveness in their separately from the core business of the organisations. Such style of work. Whether it is the production of goods, delivery of consolidation may result in the formation of a separate entity services or the provision of support services to the core business, that can benefit from standardisation of processes and use of perfection has always been a key vision of organisation. enterprise solution systems. Unlike outsourcing, it brings forth the concept of creating internal customers (also known as business In the famous and often quoted 1776 book, Wealth of Nations, units) and providing services to them from a centralised location. economist Adam Smith had introduced the concept of enhancing productivity via specialisation of labour. In the industrial revolution The Philosophy and Objectives era, it was indeed a striking concept; division of workforce The primary objective of the concept of Shared Services has been activities into simplified task that could be repeated over and over cost efficiency and process effectiveness. again, thus creating a learning curve effect for the labour. This in turn resulted in two things: more and better units or efficiency and In this context, cost efficiency is achieved by using a central effectiveness of process. location with qualified/trained workforce and a standardised process that can be used to provide services to various functions However, this concept of division and specialisation of labour within the organisation as well as to the external customers. Such meant that an organisation had to move towards a wider and locations can be used to provide services globally as well, resulting decentralised operating model. Along with increased production, in substantial cost savings for the users. this model resulted in increased costs and duplicated supervisory positions. Hence, the productivity was limited by a cost constraint As far as processes are concerned, there is a strong emphasis on and resulted in a trade-off between division of labour and cost of Business Process Reengineering (BPR) and the removal of non- decentralisation. value added processes. These are coupled with implementation and monitoring of strong internal controls which further solidifies As a result, the concept of Shared Services was given in 1990s the standardisation of value added processes, thus achieving by Bhavesh Shah, an Indian writer, in his book, Industrial specialisation. 34 The Pakistan Accountant January - March 2018