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Benefits of shared services

Bill Emmett and Atwell Williams | Aug. 3, 2010
How shared services and business service management help you deliver increased value to your customers

Today, practically every CIO is looking for ways to increase the value of his or her IT organisation while also maintaining or reducing IT spending. One approach that many are pursuing is the elimination of wasteful redundancies and the adoption of a shared service-provisioning model.

The goal of most shared service programmes is to provide consistent service quality and delivery to multiple business departments across the enterprise at a reasonable cost, as opposed to each department providing its own iteration of the same service. Typical examples of redundant services include help desks, e-mail, and enterprise resource planning (ERP) systems.

Before going too far, however, its important to understand what is meant by shared services.  The term shared services has multiple definitions in the IT industry, but that found on Wikipedia is in line with the thoughts of most experts and analysts. Shared Services refers to the provision of a service by one part of an organisation or group where that service had previously been found in more than one part of the organisation or group. Thus, the funding and resourcing of the service is shared and the providing department effectively becomes an internal service provider. (Shared Services, Wikipedia.com, http://en.wikipedia.org/wiki/Shared_services)

For example, consider the case where an enterprise has multiple ERP systems (e.g., Oracle, SAP, etc.) across the organisation due to acquisitions or as a result of business units creating their own IT systems and support. Most likely, each business unit experiences a different level of service depending on how much money it had to spend on its particular implementation. Further, exchanging data between the systems for consolidation and reporting purposes can be time-consuming and potentially error prone.

Finally, the aggregate cost of running these multiple systems is generally higher than the combined business value delivered. This is due to redundancies in hardware, software, and administration/operation resources. Consolidating these systems into a single, shared service enables the company to leverage economies of scale while also providing a consistent level of service across the enterprise.

Sound good? If so, where do you begin?

Know your services

To get started in shared services, begin by getting a clear understanding of the services upon which your business customers rely to run the business. Some of these services may be provided by IT today and some may not. When identifying these services, make sure to think about them from the perspective of business outcome, not underlying technology. Otherwise, you may miss out on opportunities for consolidation.

For example, consider an enterprise with a single instance each of Exchange, Lotus Notes, and Google Mail. Although there is only one instance of each application, they are all providing the same business services: communication and collaboration. These become the shared service to be consolidated. The underlying technology is secondary to the business objective.

 

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