Why Shared Services Transformation is Complex



Tony Saldanha
05/31/2019


Riding through the Tip O’Neill tunnel under downtown Boston the other day I recalled with absolutely zero nostalgia the mess of the “big dig” of the early 2000s when I lived in Boston. Boy! This was much nicer. The big dig was a mega project to (among other things) reroute Interstate 93 through the heart of downtown Boston via the O’Neill tunnel. The project lasted 25 years and cost $23 Bn for about 3.5 miles of tunneling in total. The project was big in every respect, although for long-suffering commuters during the transition, other terms were often employed – one of which I recall being the “skunk that keeps on stinking”. Harsh!
The sentiments may have been understandable. In contrast to the big dig, the 33.5-mile-long Seikan Tunnel which is the world's longest and deepest rail tunnel (which runs undersea in places) took only 17 years and cost $3.6 billion. Even discounting for mismanagement and corruption, the disparity in cost is striking.

Was the criticism totally justified? Certainly, the mismanagement critique was deserved, but there’s a separate mitigating factor that’s sometimes overlooked. This was a transformation project, not a clean-sheet build. That’s like the difference in complexity between changing the wheels of a bus in motion vs attaching wheels on a new bus on the manufacturing line. Changing existing ecosystems is much harder than starting from scratch. For instance, rerouting the central artery of the Interstate 93 through an underground tunnel, engineers had to contend with not just keeping traffic flowing during the construction, but also constructing in what was previously reclaimed land. That included dodging a couple of subway tunnels, underground utilities, building foundations and a few sunken ships within the reclaimed land!

This challenge of change management is one that we, as Shared Services and IT leaders, are acutely aware of. Learning about the cool technologies from Silicon Valley is all well and good, but it misses this important issue: Transforming existing Shared Services is much harder than building capabilities from scratch in new organizations. Of course, we understand the urgency of transforming our organizations in the digital world. The question is how to manage this in parallel with running a stable operation.

This is hopefully where this column comes in.

Starting this month, I will use this forum to share executive-level insights on the “how” of digital disruption as applied to existing organizations. My hope is to help you turn this incredible challenge into the biggest opportunity of your lifetime.

I’d like to start by highlighting two significant concepts.
One is the idea of a “process lock-in”. It’s a watch-out in using RPA technologies to automate processes incorrectly without first simplifying work processes.

The second concept highlights the importance of retaining and co-opting the services of your loudest and most critical innovators in your operations. The ones that perhaps aren’t as excited about following disciplined operations as about tinkering with them. (Yes, there’s an important role for them in your organization. You can make them your most important innovation assets.)


I’d love to hear and learn from you. Change leadership is hard, but it doesn’t have to be lonely! Share your own experiences in the comments section below, or via this LinkedIn post. Tony S.


1. Don’t get “locked-in” on legacy processes using RPA

What does the metric system have in common with efficient work-processes in your organization?

The US is one of three countries in the world that’s not on the metric system. OK, the fact that the US doesn’t follow the metric system is hardly a newsflash, but the realization that its companions in holding out are Liberia and Myanmar really got me interested. That is odd company. Further research into the topic led to the realization that the issue in the US was simple: It’s hard to quantify the financial gain of converting now.

This concept of the “economic lock-in” where the cost of switching (i.e. from the old measurement system to metric) prevents change, isn’t new. There are several forms of lock-in, including product lock-in (e.g. Google gives away Gmail free to lock you into its email standard) and vendor lock-in (e.g. refer any anti-trust legislation). However, there’s a newer form of lock-in that’s starting to gain prominence in the operational back-rooms of organizations: Work-process lock in. This is effectively where the cost of changing old processes to newer ones is prohibitively expensive. It’s something we are all having to face today, as the pressure to move to “digital” is unrelenting.

2. Are You Nurturing or Repelling Your Disruptive Thinkers?

In the late 16th Century, as Queen Elizabeth (not the current popular UK monarch but Elizabeth Tudor) ascended the English throne, maritime piracy was hitting its “golden age”. English pirates harassed the rich Spanish ships in the Caribbean. Unfortunately for the English, this was a game two could play, and English ships closer to home started to suffer losses. This created great economic disruption to the Crown. War with Spain was becoming inevitable. Around 1585, Queen Elizabeth took the decision to charter private ship owners to capture and loot enemy shipping under a license called a marque. These ships and their sailors were called Privateers. Queen Elisabeth thought of this as her “supplemental navy”. Although morally ambiguous at best, the Privateers served their purpose at the time fighting economic and national security disruption with a different disruptive move.

Don't worry. I’m not suggesting or even remotely condoning piracy as a strategy :-). (To be clear, Privateering was nothing more than semi-legalized piracy on behalf of the Crown). The broader point I want to make is the strategy of fighting disruption with disruptive resources. The benign privateers of yesterday are the disruptors or change agents of today. The trick is to co-opt this group of people and put them to work to win. Too often, they end up leaving their organizations instead of leading the disruption.

 


Next Month: the discussion continues


Note: Tony has capped a long GBS career at P&G, where in his last role he led the application of the kinds of innovative technologies we are all drooling over, by writing the definitive book on technoloft disruption!

Why Digital Transformations Fail – the Surprising Disciplines of How to Take Off and Stay Ahead

The book will be publicly released on July 23, 2019 worldwide, and tranalated into multiple languages. It is already available for pre-order on Amazon, Barnes & Noble, Walmart and all other online shops. You can also register for the IA World Series online event (free), in September, to participate in Tony's session and get a chance to win a signed copy.

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