Location, Location, Location!
Welcome to our new Subscribers and thank you for your messages following the previous Edition. Based on messages it appears that quite a few Subscribers are considering Finance Shared Services for the first time in 2025 and one of the stand out questions was 'where to stick it?' This Article can be viewed as a follow on to yesterday's Captive v Outsourcing Article, a Second Half if you will.
Before I get to that it was an interesting day with Ruud Van Nistelrooy confirmed as leaving Old Trafford. A man who knew well 'where to stick it' in the back of the net. Ruud we salute you on a job well done and thank you for restoring some Pride to the Club. As I have successfully forecast the Erik Exit, the Ruud takeover and the English Euros performance I wish to state unequivocally that Man Utd will be Top 4 by Christmas and breathing down the necks of Liverpool by end of January. For all other advice you can check with the Pollsters...
As we head into the International Break and what seems like interminable Election coverage, the UK, the US and now Ireland, its important to remember that we will always have football but Politicians come and go.
This Newsletter was conceived to help the CFO's of mid sized UK Businesses Transform their Finance functions, touching upon their ERP Strategy and Finance Shared Services as part of a wider Finance Transformation program.
On that basis I can propose to you, for the purposes of this exercise, that you have probably c.150 staff in Finance in multiple locations across the UK. One of the questions you will ask yourself and me, if you have decided on the Captive Shared Services route is where to locate it.
I am here to reassure you if you are cost conscious, show me a CFO who isn't...that the vast majority of UK Businesses in your situation locate at the centre of critical mass. This will invariably mean their existing Head Office, even when and I know this will shock you, if that Head Office is in London.
I am well aware, as indeed are you, that London is expensive and that costs drop proportionally as you advance through the major Cities of the UK and in to its Regions. Therefore, this would appear counter intuitive to the Consulting 101 argument that you have to deliver major (or obvious) workforce savings from a Shared Services program. Why wouldn't you want to deliver workforce savings? Why would you locate in London?
However, many do, for perfectly valid reasons pertinent to their Organisational circumstances, Risk Profile and the cost in £ and service delivery disruption to establishing an SSC outside of London if they already have a large footprint within it. This can be anywhere from the City to Watford.
I am here to reassure you that to establish a brand new facility to house your Captive SSC in the UK is a rarity, a complete Outlier and do not feel compelled to go down this route. The largest Businesses will have popularised this by creating new Centres, but do not be fooled, at your Headcount levels place it at the existing centre of critical mass and instil the discipline of Shared Services into your teams. Culture does not require a new Building and you can quote me on that in any National Daily.
Their are UK cities with a collection of Shared Services such as Birmingham and Manchester but I do not think this has anything to do a concerted Policy to attract them. Please correct me if I have missed this.
The bulk of these Businesses had a Head Office in these Cities and opted to go down the Shared Services route, they were not, in the vast majority of cases, attracted to those Cities where they had no original footprint.
This in my opinion at a Policy level within both Cities is a missed opportunity and they should view Dublin by comparison which actively promotes its Shared Services facilities and skilled workforce. Now I mention my home City because I wanted to nicely Segway into Nearshoring which I referred to yesterday.
Many UK businesses established a Dublin Office as a hedge against Brexit and some have now chosen to 'fill out' this footprint they have established. It is a perfectly valid option for the UK CFO of a mid size business, particularly those trading into the EU to establish a Nearshore Shared Services base in Dublin.
As the US Election result may indeed adversely impact Foreign Direct Investment (FDI) into Ireland and potentially even reverse some of it this may create even more advantageous opportunities for UK firms.
I will come back to this in more detail in a later Edition, as there are many factors to consider if you opt to go outside of the UK. For now all you need to remember is that you do not need a brand new building to create a Finance Shared Services Centre in the circumstances outlined above as they relate to you.
Reach out to discuss more in person.
Best Regards,