A High Level Approach to Successful IT Shared Services Implementation

While launching shared services is not for the faint-of-heart, taking a high-level approach helps identify what's important to focus on. Joanie Walker and Michael LaMonaca continue their 'Shared Services for IT' series.

Over the course of the last several decades, large companies have sought to control costs and improve service quality by consolidating business support operations into a single shared service organization. A shared service model for IT can offer tremendous improvement in efficiency and significant cost reduction. Additionally, companies and organizations can benefit from an improved location strategy, IT and system improvements, process simplification and assigning the right job or task to the right skills.

Keeping these in mind, there are very solid process based approaches to creating a shared service organization. The decision to implement an IT Shared Service model requires a comprehensive understanding of the technical services landscape. Various shared service solutions must be evaluated in order to select those that will best meet the needs of the business. Organizations must utilize a structured approach to align the new model with business requirements and constraints in order to truly maximize the benefits they seek to realize. It is important to follow a logical path that allows the business to clearly identify a number of inputs to the new organization—from the scope of services all the way through market demand and risks.

While an IT Shared Services implementation is not an easy task, it can be simplified by following a well thought out process such as the following 11-step guide:

Step 1: Comprehensive Definition
Understanding specifically what is, and what is not, part of the service is key. It may also be useful to describe the incentives for the service and what is driving its need and capability – what specifically links the service to the business unit’s strategy to set expectations? Outline the service’s value proposition and business value to the organization to gain buy-in both from those who are responsible for delivering the service as well as its customers.

Step 2: Current State Assessment
In order to be successful, a current state analysis must be conducted to understand the possible service groups and bundles that could be consolidated as well as understanding the objectives, drivers, and constraints of the business itself.

During the assessment, define the scope of current IT service offerings and the markets or end users impacted: service functional health, operational health, and service architecture/ technical health. Understanding the current demand for service, consumption trends and service bundles using the criteria mentioned above all help to establish an early roadmap for success.

Step 3: Future State
To visualize the desired Future State of Service, you’ll need to ask the following questions:

• What enhancements should be added and what service elements should be retired?

• What are the key characteristics of the services and how will they mature over time?

• How will the new organization differentiate itself because of these services?

• What are the critical success factors? What are customers looking for?

• How will the organization know that it is meeting or exceeding its performance expectations?

• What metrics should be put in place and measured to illustrate success against performance expectations?

Step 4: External Market Analysis
Develop an external market analysis and status of the service in your respective industry. Conduct research on what the industry is doing in order to provide credibility and a benchmark comparison. At this point, look for trends in IT outsourcing—what types of solutions are your primary competitors implementing in order to deliver outstanding quality and meet customer expectations? This is also an excellent opportunity to document any legal, regulatory and compliance concerns.

Step 5: Internal Market Analysis and Demand
Define the future internal market for the service; who are the potential end users? You may consider defining all of the end user segments - knowledge workers, executives, sales, etc. Where is their potential for increased services under the new model? Is there a likelihood of a reduction in demand for these services?

Step 6: Define Service Requirements
Defining the service requirements are a critical component of the preparation process. With careful definition you should arrive at a detailed outline of the capabilities and customer service requirements for Functional (Fitness for Use) and Non-functional (Fitness for Warranty) usage. At this stage, the process design of the services should be documented with clear specifications within the service level agreement (SLA) based on how you plan to support and respond to your customers in a timely manner.

Step 7: Determine Costing and Billing/Build Business Case
Research, analyze, and document cost components such as investment costs, ongoing operations and support costs in order to build your business case. Carefully project return on investment (ROI) expectations and total cost of ownership (TCO) in order to prepare for the Capital Appropriations Request (CAR). The CAR will be most likely be needed for your finance organization along with the business case justification.

Step 8: Conduct a Risk Assessment
Conducting a risk analysis will help to ensure you don’t compromise security and compliance features. This may also provide you with a better understanding of the organization’s readiness and willingness to adopt the service.

Step 9: Change Management & Communications
A change management and communications plan will be critical to the success of a new Shared Services Organization. The key is to enlist champions and advocates within the organization – individuals who will endorse and promote the scope of the change and be actively supportive of what you are trying to accomplish. These change agents will help you identify key stakeholders for program sponsorship.

A regular communication schedule is essential to identify those channels that will be leveraged to set expectations across the broader organization, to keep all stakeholders informed, and to allay concerns created by a lack of information. And, if the migration to this includes the adoption of new systems, develop and schedule training for users of those systems as well. If you ignore the impact or creation of a unique culture within your shared services environment, you will have ignored a significant risk.

Step 10: Governance
Determining the governance and program management structure is also a key component to the success of a new Shared Services Organization. Governance specifies the decision rights, processes, and accountabilities that drive the desired behaviors of project teams and service delivery teams in support of business objectives. Key success activities related to governance are:

• Define and document roles and responsibilities.

• Define standardized decision framework and thresholds of authority.

• Utilize new governance processes for decision making, accountability, and issue identification.

• Understand and commit to manage risks, while delivering on the most important goals for the Shared Service.

• Define and capture metrics; report results to the governance body (decision makers).

• Provide the required business resources to enable decision making.

Step 11: Roadmap
It is helpful to create a roadmap -- a visual plan for project timelines and estimated resource requirements for the various phases of the Shared Services initiative. For each service intended to be under the umbrella, the road map includes timelines for service development, a pilot plan, controlled introduction, and general availability of the service.

An IT shared service model can offer greater efficiency and lower costs. An effective focus on process improvement can lead to substantial year-over-year productivity gains after the initial establishment. Ultimately, organizations must utilize and execute a structured and well-coordinated IT shared services implementation strategy in order to realize their own strategic goals and business benefits.

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Read Part 1: Why Shared Services for IT: 5 Benefits for Greater Efficiencies