Media articles

From shared services to excellence: The strategic role of finance centres

Rajaram G
insight featured image

In the last few years, shared services companies (SSCs) have evolved into Centres of Excellence (CoEs), often reporting directly to global CXOs or Boards of Directors. The strategic significance of these centres is evident from their pivotal role in cost optimisation, process efficiencies, standardisation and large-scale digital transformation.

In this transformative journey, finance CoEs have emerged as crucial players. However, what is an CoE? Let us find out before we delve deep.

A Center of Excellence (CoE) is a centralised team or group within an organisation that possesses specialised knowledge, skills, and resources in a particular area. The primary purpose of a CoE is to promote excellence, innovation, and best practices within an organisation by providing expert guidance, support, and resources related to a specific function or discipline. A CoE is commonly established in various domains such as technology, finance, human resources, marketing, and more.

A CoE, often referred to as a “knowledge centre,” enables organisations to utilise their knowledge for cost-cutting and improving service levels. Similar to SSCs, a CoE also streamlines operations, allowing fewer individuals to handle tasks and reducing fragmentation to enhance overall productivity with fewer resources. However, unlike SScs, which primarily focus on reducing the cost of services delivered to organisational units, CoEs aim to leverage capacities rather than just necessary cost-cutting. Many times, CoEs increase expenses in pursuit of using knowledge and experiences to reduce the total cost.

In the ever-evolving landscape of SSCs, a paradigm shift is underway, propelled by a synergy of domain expertise and advanced technologies. No longer confined to transactional roles, these centres are transforming into strategic value hubs, adept at navigating market volatility and ensuring resilience against future uncertainties.

The illustration below highlights commonalities and differences between an SSC and a CoE.

In the case of a Finance CoE, their benefits can resonate throughout the organisation — from process standardisation impacting bottom-line growth to digital adoption enabling capability arbitrage. Finance COEs elevate customer experiences leveraging first-party data and insights across functions. With financial planning and compliance at the core, these COEs empower organisational scalability, shifting from why, to how and where to establish them.

Here's a comprehensive overview of the role of a Finance CoE and its impact on different aspects of the organisation:

  1. Financial reporting and analysis:
    • The CoE ensures generation of accurate, timely, and standardised financial reports, providing stakeholders with reliable information for decision-making.
    • Leveraging advanced analytics tools, a CoE conducts in-depth financial analysis, offering insights that drive informed decision-making.
  2. Budgeting and forecasting:
    • The CoE streamlines budgeting and forecasting processes, improving accuracy and allowing for better resource allocation and financial planning.
    • Through continuous monitoring and analysis, the CoE helps identify and address variances between actual and projected financial performance.
  3. Internal controls and compliance:
    • The Finance CoE contributes to the development and implementation of robust internal controls, managing financial risks and ensuring compliance with regulatory requirements.
    • It supports internal and external audits by providing documentation, insights, and expertise, facilitating a smoother audit process.
  4. Internal audit:
    • The Finance CoE provides specialised knowledge and guidance to internal audit teams, ensuring they have access to latest industry standards and regulatory requirements.
    • By centralising expertise, the CoE helps in identifying and managing financial risks effectively, ensuring that internal audit processes are robust and aligned with organisational objectives.
  5. Process optimisation:
    • The CoE identifies opportunities for process optimisation within financial workflows, reducing manual efforts, minimising errors, and improving overall efficiency.
    • Standardising financial processes ensures consistency and helps in adapting to changing business environments.
  6. Technology integration and automation:
    • The Finance CoE explores and integrates new financial technologies, driving digital transformation and enhancing the efficiency of financial operations.
    • It leverages automation tools to streamline routine tasks, allowing finance teams to focus on more strategic and value-added activities.
  7. Training and development:
    • The CoE supports the continuous development of finance professionals by providing training programmes and resources, ensuring that the team stays abreast of industry best practices and emerging trends.
  8. Change management:
    • During periods of organisational change, the Finance CoE provides guidance on financial implications, supporting effective change management and minimising disruption.
  9. Cross-functional collaboration:
    • The CoE fosters collaboration between finance and other departments, ensuring that financial strategies and initiatives are aligned with the overall organisational strategy.
  10. Continuous improvement:
    • Through ongoing analysis and feedback, the CoE contributes to the continuous improvement of financial processes, adapting to changing business needs and external factors.

While CoEs provide several advantages, setting up a Finance COE comes with inherent challenges, ranging from understanding the value extracted from these centres to navigating regulatory complexities across geographies. Finding and installing the right talent, along with budgetary constraints, further complicates the set-up process. However, working within an existing mature ecosystem proves to be the most effective strategy. Finance is the second-most mature function within Indian global capability centres (GCCs), with a quarter of GCCs in India already establishing more than one Finance COE, providing strategic support for global headquarters.

The golden path of Indian Finance COEs unfolds as a transformative journey, where domain expertise converges with technological prowess, positioning India as a global hub for strategic Finance CoEs. Embracing this shift holds the key to unlocking unparalleled value, scalability and resilience for organisations venturing into the realm of Global Business Services.