The hordes of companies and governments moving to shared services are dizzying. So many have combined back offices, human resources (HR), information technology (IT), finance, and contact centers that most companies assume this is a good thing.

But where is the evidence?

The theory behind most shared services claims that if an organization combines two similar functions, it can achieve economies of scale. It is why many organizations maintain that simplification, standardization, and centralization are all the right things to do. Certainly budget and financial folks salivate at the prospect of combining “like functions.” But this is yesteryear thinking based on mass production and industrialized service design.

Service organizations see the visible cost savings that can be achieved through shared services. What they don’t see are the hidden costs of poor design, and the poor flow that results. The problem is that costs are not in scale, but in flow.

 …