Michael Wilson posted this comment on my “Quest for Synergy” blog post:
This is not a black and white issue (i.e., there are functions that can be centralized to save money, payroll comes to mind), but in my experience customers are better served by companies when the operating unit owns all aspects of the customer experience.
My belief is this: if centralizing a function into “corporate” (where “corporate” means an entity that looks across several business units) can save money, then outsourcing should be seriously considered by the Business Unit.
The willingness of of a Business Unit to centralize, by nature, means that the function is non-strategic to the Business Unit. Why have “corporate” do these non-strategic functions? Without doubt, corporate does not have a true competency in these areas. Equally without doubt, firms exist whose sole function is to be highly competent in a particular area. ADP Total Source is an expert in Human Resources. DataVail handles database administration. Custom Call focuses on billing. I could cite many more examples.
If you believe efficiencies can be gained by centralizing, pick a firm that specializes in the functional area. Let them do the service for you. Manage them aggressively so that the maximum benefits are attained. Most importantly, keep corporate out of it.
