When companies say they are implementing shared services, what do they mean?

It means they are implementing a new organizational model for internal services that includes the following key components:

Products/Services: All of the work of each shared service function is defined by products/services that are discreet, recognizable by the business units and countable. 

Charge-backs: Each shared service function charges the business unit based upon the quantity and service levels of the products/services consumed by the business unit.

Agreements: As part of the annual planning and budgeting process, each shared service obtains agreements with its customers on the quantity, service level and price of each product/service to be delivered during the upcoming year.

Management Information: Each month, the business units receive an accounting of the quantities, service levels and costs of the internal services that they consumed.

Accountability: The shared services organization is accountable for meeting its commitments (quantities, service levels and prices) to its business unit customers. The business units are accountable for the costs of the internal products/services that they consume.

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