When it came time to begin conducting internal control audits under Section 404 of the Sarbanes-Oxley Act, Daryl Bowker was one of the few finance executives across the nation who actually knew he

was prepared. Several years earlier, his company–ITT Industries Inc., with $8 billion in revenues–had made a bold decision to centralize treasury operations and transaction-related processes to gain the usual efficiencies. It created a shared service center (SSC) 300 miles away from its White Plains, N.Y., headquarters, where a staff of 80 would handle virtually all transaction details, most of the company's investment activity and non-credit banking relationships. "We centralized to reduce risk and improve control," notes Bowker, ITT's director of shared services. "When Sarbanes-Oxley came along, we were already ahead of the game."

While shared service centers may have started as cheap labor pools for call centers or data processing, the next generation of SSCs is being regarded as control central–the heart of transaction-related activities for companies and the key intersection between corporate treasury and finance and the business units. "By centralizing financial operations," notes John Alarcon, general manager of North American operations for XRT Inc., a provider of treasury systems, "you can manage working capital better, improve visibility of all financial flows, get better forecasts, rationalize your banking activities and probably reduce fees by making fewer payments but negotiating better prices by aggregating business."