Understanding Innovative Funding Models in Shared Services
Let’s face it.
Funding shared services can feel like navigating a maze, right?
You’ve got stakeholders breathing down your neck, operational costs skyrocketing, and the demand for innovation only piling on more pressure.
But what if I told you that innovative funding models could change the game?
I’ve spent over 20 years in the shared services and outsourcing industry, and trust me, I’ve seen what works and what doesn’t.
Let’s peel back the layers and dive deep into innovative funding models.
The goal here is to provide clarity, actionable insights, and relatable stories.
By the time you finish reading, you’ll not just have information, but also a sense of how to make these models work for your team.
Why Innovative Funding Models Matter
So, what’s the big deal with these funding models in shared services?
Gone are the days when funding decisions were dictated solely by budgetary constraints.
Today, it’s about agility, adapting to market changes, and ensuring services align with overall business strategy.
Here’s why you need to pay attention:
- Cost Efficiency: Innovative models allow you to do more with less.
- Flexibility: Adapt funding structures based on service demand and economic shifts.
- Stakeholder Engagement: Creating buy-in with transparent funding helps in support and resource allocation.
- Risk Management: Diversifying funding sources helps mitigate potential risks associated with over-reliance.
Types of Innovative Funding Models
Let’s cut to the chase: what are some of these innovative funding models you can consider?
Here I’ll break down a few of the most effective options that I’ve encountered over the years.
1. Cost-Per-Transaction Model
This model charges stakeholders based on the number of transactions they process.
It encourages efficiency, as teams will strive to reduce costs while improving service delivery.
Picture this: if your finance team could process invoices more quickly and efficiently, they’d reduce their overall costs. This is a win-win situation.
2. Shared Savings Model
It’s all about incentives!
In this setup, savings achieved through process optimization are shared among stakeholders.
This model cultivates a collaborative mindset. When I was leading shared service centers, we saw significant results simply by sharing financial gains. It motivated teams to think outside the box.
3. Activity-Based Costing
This isn’t just number-crunching; it’s about being strategic with your resources.
It allocates costs to specific activities, revealing the true cost of service delivery.
If you know what each service line really costs, you can prioritize and allocate funds more effectively. You can’t manage what you can’t measure, right?
4. Outcome-Based Funding
Talk about pressure—but in a good way!
With this model, funding is tied to specific outcomes or performance metrics.
Teams are driven to succeed because their funding depends on their execution. Let me tell you, it’s a motivator.
I’ve seen teams transform their focus when their funding hinged on their ability to deliver results.
The Role of Technology in Funding Models
Technology plays a pivotal role in executing these innovative funding models.
Tools like RPA can streamline processes, reducing operational costs, and fostering efficient service delivery.
Use data analytics to monitor performance against funding and refine models as needed.
One of my favorite experiences was when we integrated a financial dashboard that tracked our ROI in real-time.
This transparency not only helped in understanding costs but also aligned our teams further as we rallied around numbers we could see.
Engaging Stakeholders in the Funding Process
Engaging stakeholders is critical to laying a strong foundation for any innovative funding model.
The key is active communication and collaboration.
Here’s how you can ensure stakeholders are on board:
- Transparency: Always show how funds are allocated and the value delivered.
- Regular Updates: Keep stakeholders informed about changes, improvements, and performance metrics.
- Feedback Loops: Foster an environment where stakeholders can share thoughts on funding methods.
Measuring Success: KPIs & Metrics
You’ve set up your innovative funding model, now what?
It’s all about measuring success.
Here are some KPIs you should consider tracking:
- Cost Savings: Track total savings from each initiative.
- Service Delivery Time: Time taken to process and deliver services.
- Stakeholder Satisfaction: Use surveys to gauge satisfaction levels post-implementation.
- Return on Investment (ROI): Analyze the effectiveness of your funding model over time.
Challenges and Solutions
It won’t always be smooth sailing.
Here are common challenges you might face while implementing innovative funding models and some solutions to overcome them.
1. Resistance to Change
Change is hard.
When you introduce a new model, expect some pushback.
Engage in conversations, advocate for the benefits, and give people a chance to voice their concerns.
2. Lack of Understanding
If stakeholders don’t grasp the funding model, don’t expect buy-in.
Conduct workshops or info sessions to break it down. Use relatable stories and examples to make the concepts stick.
3. Measurement Difficulties
Sometimes, deciding what to measure can get murky.
Set clear definitions of success upfront.
If necessary, consult a subject matter expert to hone in on the right metrics.
Final Thoughts on Innovative Funding Models
Innovative funding models can shift your shared services strategy from mundane to transformative.
They bring more than just financial benefits; they create a culture focused on collaboration, efficiency, and results.
Although the path may feel challenging at times, the potential rewards make it worthwhile.
If you’re looking for more material to help steer your shared services strategy, I highly recommend checking out THEGBSEDGE.
It’s the best blog on shared services, covering everything from transformation to innovation and leadership.
Remember, the key to successful funding isn’t just in the numbers.
It’s about understanding the broader story they tell and how they drive your organization forward.
