For many organizations, it takes much time and efforts to overcome resistance to change and than, start to implement "a shared services model". Another "con" of the approach is that some organizations do not need centralization of their activities. Very often employees are neglected during the development of "a shared services model", so they feel lack of motivation and lack of training which resulted in failure. "A shared services model" is not only a cost reduction method, but a new system of administration.
In changing economic environment, "a shared services model" becomes one of the most widely spread business strategies. The main problem faced by the companies today is that, in some cases, implementation of '"a shared services model" fails. And instead of benefits and cost saving companies have to make additional spending to restore their strong position. The concept of shared services is not new. It was introduced by Ulrich in 1995, but recent years, this concept becomes "a buzz word" (Shared Services, 2005). The main mistake made by some companies is that "a shared services model" is treated as universal "panacea" for managing people and organisations as it is intimately involved with the environment in general.
The issue of a "shared services model" is controversial, because it is impossible to develop a single problem solving approach for all types of organisations and management styles. In some cases, "a shared services model" shows a great potential for organisations to save costs and implement quality services. Unfortunately, there are many organisations unable to implement changes connected with and caused by a "shared services model" as well as unable to foresee limitations of this model for their performance. The preliminary research finds out that "a shared services model" has disadvantages and a negative impact on the successful implementation of quality services as organizational structure is often neglected in the operational change. So, the aim of the paper is to examine and analyze disadvantages of "a shared services model" and to determine the main factors of poor implementation of "a shared services model" which caused it to fail.
It is important to note that this is not a completely new concept, because it embodies the principles of commercial partnerships. "Organizations in other industry sectors have been using shared service centers for a decade or more to achieve economies of scale and drive greater process consistency, especially in geographically or organizationally dispersed business units" (Harris, 2004).
In 1995, David Ulrich in his article "Shared services: from vogue to value" (published in Human Resource Planning) described the concept of a "shared services model". Nevertheless, a slogan "the user is the chooser" created by David Ulrich became the core of this model. In 1997, David Ulrich published a book "Human Resource Champion" giving theoretical background of the concept and practical advice for those who want to implement a "shared service model". The limitation of his study is that he does not pay much attention to possible limitations of this model.
Another guru of "a shared service model", P. Reilly (2000), gives detailed overview of the concept in his work "HR shared services and the realignment of HR".