Shared Business Model

Shared Service Model is collaborative approach to pool in all the resources into one. This approach allows the economies of scale, pooled experience, associative responsiveness, partnerships with in the organization for low cost and high quality. An internal business unit works as a service provider to the business clients that fulfills the non-core businesses and fragments the core business with higher epxertise within the pool of intelligent resources, with other business units of the same organization. Business organizations request products and services within the organization from the one of the business unit so called 'Shared Service Provider'. The various business units are billed interally and their costs are recovered through revenue generation. Since, these clusters of internal business units have to show profitability for their own existence. They normally buffers up some margins in the cost offered to the 'Shared Service Provider', which is a wrong practice. As it reflects the overall cost of the project that can be relatively higher then the actuals. These services are SLA driven and are renegotiated from one client to another. The measurement from internal and external benchmarks ensures that the shared service ogranization is constantly improving.

Also, the bigger organizations have widen their horizons to get into similar partnerships with OEMs to enjoy low cost, expertise, and efficieny in overall execution of the projects. This has certainly benefitted the cusotmers with a quality of service on one hand and lower cost on the other with a structured break up of fat cost that could have come from one business unit earlier.

However, the shared services model has it's own limitations. Unlike outsourcing, for example, which can be used with companies of any size, shared services can live up to its potential only when the parent corporation is above a minimum size. Whether or not shared services makes sense for a particular business application depends on the business, the corporate culture, the applicability of alternative business models, the economic health of the company, the wants and needs of corporate senior management.