As businesses grow and move from the startup stage to the active development mode, each of them gradually builds up its own infrastructure: HR, accounting, procurement, IT and legal support.
While there are few companies, this is almost imperceptible. When there are five or ten of them, duplication of functions, different rules and different systems begin to “cost the owner a pretty penny”.
As a solution for a group of companies, centralization of infrastructure functions is considered. But this does not mean that everything needs to be combined in one office.
Such transformations should be approached very thoughtfully. It is advisable to centralize functions that do not create a competitive advantage. On the other hand, everything that creates value for the client – sales, product, R&D, production, customer service – requires a cautious approach. Excessive centralization can make the business less flexible, slow down decisions, reduce product quality or worsen service.
There is another question that is often overlooked: how to understand that centralization has really worked?
It is worth evaluating not only the number of reduced positions and not even the budget savings. The main criteria are different:
- is there an increase in infrastructure expertise;
- have internal services become faster;
- does each company of the group receive high-quality service;
- has it become easier to launch new businesses without creating another back office.
At the Oktava Group of Companies, we do not consider centralization as a cost optimization project. It is a project to create an operational foundation that allows businesses to develop independently, relying on a common strong expertise.
And even after launching, such a system cannot be ignored. Regular checks of its effectiveness are needed in order to see in time: is centralization still working for the business or is it already starting to work for itself, dragging more and more resources.