Reaping Rewards of Shared Services

At its core, the concept of shared services is simple: shared services can help cut costs by reducing redundancies and streamlining processes, ultimately leading to improved service offerings and performance for companies. However, robust shared services technology platforms have yet to be seriously considered by many executives. Specifically, this hesitancy has held true for hospitality executives considering finance and accounting shared services solutions. Research recently conducted with Marriott (www.marriott.com) partner, Accenture Hospitality (www.accenture.com), reveals that hospitality executives have questions regarding the risks versus rewards of implementing a finance and accounting shared services model.

While outsourcing F&A services doesn’t have to be a high-risk pursuit, concerns persist for many operators. Will the ultimate operating cost savings and performance improvements outweigh the set-up costs and associated risk? Will hotel property owners support the switch to a shared services model knowing returns can take time to be recognized? Will they be willing to co-fund the investment? These are some of the questions that keep hotel executives from moving forward with an outsourced shared services model. What’s more, half of executives surveyed by Marriott shared that an unwillingness to be a first-mover is the strongest barrier to F&A shared services implementation.
Marriott is proof that a shared service model, specifically an F&A shared services model, can help hospitality move past these challenges, driving efficiencies and improving outcomes. Marriott has achieved significant cost redundancies by providing F&A services corporate-wide and to a large number of franchisees and acquired brands. To date, Marriott has realized 25 percent cost savings since the integration began.

The key to widespread adoption
A shift from the current norm of on-property back-office F&A operations to an above-property shared services model may be approaching. With the current back-office operating model, the high operating and capital investment costs along with the inability to keep up with technology are common complaints. Moreover, the Marriott survey revealed that 86 percent of operators believe the concept of outsourcing F&A is relevant and 70 percent say they are personally willing to consider outsourcing F&A functions to an above-property shared services model.

In Marriott’s experience, making the switch to a shared F&A services model can lead to significant streamlining and cost savings, ultimately paving the way for transformational growth. Marriott has seen this through the implementation of its own F&A shared services model: Marriott Business Services.

Streamlining processes drives growth
While few hospitality executives — eight percent according to Accenture Hospitality research — view back-office inefficiency as an inhibitor
to growth, industry first movers are re-thinking this perception, seizing on back-office improvements to enable growth. By improving processes and cutting costs in the back-office, these companies can reallocate valuable resources, key personnel and cost savings to support unique growth agendas.

Transformational growth is driven by three individual, but dependent components: people, process and technology. In the case of shared services, the  “people” move the work from a decentralized to centralized, above-property model. New “technology” streamlines and automates work. The “process” is redesigned so that similar work functions are completed in a centralized way. When these three components are working in unison, they build the foundation and guide transformational growth.