Chapter 6&7

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C h a p t e r

6 Building Better IT Leaders from the Bottom Up1

1 This chapter is based on the authors’ previously published article, Smith, H. A., and J. D. McKeen. “Building Better IT Leaders: From the Bottom Up.” Communications of the Association for Information Systems 16, article 38 (December 2005): 785–96. Reproduced by permission of the Association for Information Systems.

For IT to assume full partnership with the business, it will have to take a leadership role on many vital organizational issues. . . . This leadership role is not the exclusive prerogative of senior executives—it is the duty of all IT employees. Effective leadership has enormous benefits. To realize these benefits, leadership qualities should be explicitly recognized, reinforced, and rewarded at all levels of the IT organization. This only happens when a concerted effort is made to introduce leadership activities into the very fabric of the IT organization. Leadership is everyone’s job.

(McKeen and Smith 2003)

This quote, taken from a book we published several years ago, remains as true today as it was then. But a lot has happened in the interim. Chiefly, in the chaotic business conditions of late, IT leadership development got sidetracked. The dot-com boom and bust soured many companies on the top-line potential of IT and refocused most CIOs on developing strong processes to ensure that IT’s bottom line was kept under control (Roberts and Mingay 2004). But the wheel has turned yet again, and there is now renewed emphasis on how IT can help the organization achieve com- petitive differentiation and top-line growth (Korsten 2011).

The many new challenges facing IT organizations today—achieving busi- ness growth goals, enterprise transformation, coping with technical and relationship complexity, facilitating innovation and knowledge development, and managing an increasingly mobile and virtual workforce—call for strong IT leadership. Unfortunately, few IT leadership teams are well equipped for the job (Kaminsky 2012; Mingay et al.

Chapter 6 • Building Better IT Leaders from the Bottom Up 65

2004). Traditional hierarchical structures with command-and-control leadership are not only ineffective, but they also can actually become a barrier to the development of a high-performance IT department (Avolio and Kahai 2003). New communications tech- nologies are enabling new ways of leading and empowering even the most junior staff in new ways. These factors are all bringing senior IT managers around to a new appre- ciation of the need to build strong IT leaders at all levels of their organization.

This chapter looks first at the increasing importance of leadership in IT and how it is  changing over time. Next, it examines the qualities that make a good IT leader. Then it looks at how companies are trying to develop better IT leaders at all levels in their organiza- tions. Finally, it outlines the value proposition for investing in IT leadership development.

The Changing Role of The iT leadeR

The death of the traditional hierarchical organizational structure and top-down com- mand-and-control leader has been predicted for more than two decades (Bennis and Nanus 1985), but it’s dying a slow and painful death. Although much lip service is paid to the need for everyone in IT to be a leader, the fact remains that the traditional style of leadership is still very much in evidence, especially in large IT organizations.

There appear to be at least three reasons for this. First, until now, there has been very little pressure to change. As one manager pointed out, “We’ve been focusing on centralizing our IT organization in the last few years, and centralized decision making is inconsistent with the philosophy of ‘Everybody leads.’” Those IT managers strug- gling with the complexities engendered by nonstandard equipment, nonintegrated systems, and multiple databases full of overlapping but inconsistent data can be for- given if this philosophy suggests the “Wild West” days of IT, when everyone did their own thing.

Second, the organizations within which IT operates are largely hierarchical as well. Their managers have grown up with traditional structures and chains of com- mand. They are comfortable with them and are uncomfortable when they see parts of their organization (e.g., IT) behaving and being treated differently by their CEO (Feld and Stoddard 2004). Senior management may, therefore, pressure IT to conform to the ways of the rest of the firm. This situation has recently become exacerbated by new compliance regulations (e.g., Sarbanes–Oxley, privacy legislation) that require hierar- chical accountability and severely limit flexibility. Third, many senior executives—even within IT—find it difficult to relinquish control to more junior staff because they know they still have accountability for their results. Keeping a hands-on approach to leader- ship, they believe, is the only way to ensure work gets done right.

However, in spite of the remarkable tenacity of the hierarchical organization, there are signs that traditional leadership modes in IT are now in retreat, and there is a growing recognition that IT organizations must do a better job of inculcating leader- ship behaviors in all their staff (Bell and Gerrard 2004; Kaminsky 2012). There are some very practical reasons all IT staff are now expected to act as leaders, regardless of their official job titles:

• Top-line focus. CEOs are looking for top-line growth from their organizations (Korsten 2011). New technologies and applications largely drive the enterprise differentiation and transformation efforts that will deliver this growth. Strong IT

66 Section I • Delivering Value with IT

leadership teams are needed to take on this role in different parts of the organi- zation and at different levels. They can do this effectively only by sharing clear goals and direction, understanding business strategy, and having the requisite “soft” skills to influence business leaders (Roberts and Mingay 2004; Weiss and Adams 2011).

• Credibility. No IT leadership initiatives within business will be accepted unless IT  is consistently able to deliver results. This aspect of leadership is often called “management” and is considered somewhat less important than transformational aspects of leadership, but IT’s credentials in the latter rest solidly on the former (Bouley 2006; Mingay et al. 2004). No business organization will accept IT  leadership in other areas unless it has demonstrated the skills and competencies to consistently deliver on what it says it will do. Furthermore, distinguishing between leadership and management leads to a dysfunctional IT organization. “Managers who don’t lead are boring [and] dispiriting, [whereas] leaders who don’t manage are distant [and] disconnected” (Mintzberg 2004). We have too often forgotten that top-level leaders are developed over time from among the rank and file, and that is where they learn how to lead.

• Impact. There is no question that individuals within IT have more opportuni- ties to affect an organization, both positively and negatively, than others at similar levels in the business. The focus group felt that this fact alone makes it extremely important that IT staff have much stronger organizational perspectives, decision- making skills, entrepreneurialism, and risk-assessment capabilities at lower levels. Today, because even small decisions in IT can have a major impact on an organiza- tion, it is essential that a CIO be confident that his or her most junior staff have the judgment and skills to take appropriate actions.

• Flexibility. Increasingly, IT staff and organizations are expected to be responsive to rapidly changing business needs and help the enterprise compete in a highly competitive environment. This situation requires IT staff to have not only the tech- nical skills required to address a variety of needs, but also the ability to act in the best interests of the organization wherever opportunities arise. “We are no longer order takers in IT,” stated one manager. “All our staff are expected to do the right things for our firm, even when it means saying ‘no’ to senior business manage- ment.” Similarly, doing the right things involves being proactive. These actions take significant amounts of organizational know-how to pull off—leadership skills that rank-and-file IT staff are not noted for at present.

• Complexity. The responsibilities of IT have grown increasingly complex over the past two decades (Smith and McKeen 2012). Not only is IT expected to be a high- performance organization, it is also expected to offer change and innovation leadership, interact with other organizations to deliver low-cost services, chart a path through ever-growing new technology offerings, and offer content leadership. The complexity of the tasks, relationships, knowledge, and integration now needed in IT means that leadership cannot rest in the hands of one person or even a team. Instead, new ways of instilling needed skills and competencies into all IT staff must be found.

• New technology. Smartphones, collaboration tools, instant messaging, and social media are all changing how leaders work—especially in IT. Increasingly, staff are virtual or mobile and their interactions with their managers are mediated

Chapter 6 • Building Better IT Leaders from the Bottom Up 67

by technology. At the same time, IT staff have much greater access more quickly to the same information as their managers. New technologies change how infor- mation is acquired and disseminated, how communication takes place, and how people are influenced and decisions made. Traditional forms of control are, thus, increasingly ineffective (Avolio and Kahai 2003).

All of these factors are driving the need to push leadership skills and compe- tencies further down in the IT organization. Traditional hierarchies will likely remain in place to define authority and accountability, and leadership is likely to become increasingly situational—to be exercised as required by tasks and conditions (Bell and Gerrard 2004; Kaminsky 2012). With the demands on IT projected to be ever greater in the next decade, the need for more professional and sophisticated IT leadership is also greater than ever before (Korsten 2011). In fact, many believe that IT leadership will determine “which [IT] organizations disappear into the back office of utility services and which ones build companywide credibility and drive business growth and ability” (Mingay et al. 2004).

WhaT Makes a good iT leadeR?

In many ways the qualities that make a good IT leader resemble those that make any other good leader. These can be divided into two general categories:

1. Personal mastery. These qualities embody the collection of behaviors that deter- mine how an individual approaches different work and personal situations. They include a variety of “soft” skills, such as self-knowledge, awareness of individual approaches to work, and other personality traits. Most IT organizations include some form of personal mastery assessment and development as part of their man- agement training programs. Understanding how one relates to others, how they respond to you, and how to adapt personal behaviors appropriately to different sit- uations is a fundamental part of good leadership. One company’s internal leader- ship document states, “Leaders must exercise self-awareness, monitor their impact on others, be receptive to feedback, and adjust to that feedback.” “The higher up you get in IT, the greater the need for soft skills,” claimed one member. Another noted the positive impact of this type of skills development: “It’s quite evident who has been on our management development program by their behaviors.” An increasingly important component of this quality for IT staff is personal integrity— that is, the willingness to do what you say you are going to do—both within IT and with external parties such as users and vendors.

2. Leadership skill mastery. These qualities include the general leadership skills expected of all leaders in organizations today, such as motivation, team building, collaboration, communication, risk assessment, problem solving, coaching, and mentoring. These are skills that can be both taught and modeled by current leaders and are a necessary, but not sufficient, component of good IT leadership (Bouley 2006).

However, good IT leaders are required to have a further set of skills that could be collectively called “strategic vision” if they are going to provide the direction and deliver the impact that organizations are expecting from IT. Because this is a “soft skill,”

68 Section I • Delivering Value with IT

there is no firm definition of this quality, but several components that help to develop this quality at all levels in IT can be identified, including the following:

• Business understanding. It should go without saying that for an IT leader to have strategic vision, he or she should have a solid understanding of the organization’s current operations and future direction. This is well accepted in IT today, although few IT organizations have formal programs to develop this understanding. Most IT staff are expected to pick it up as they go along, mostly at the functional busi- ness process level. This may be adequate at junior levels, but being able to apply strategic vision to a task also involves a much broader understanding of the larger competitive environment, financial management, and marketing. “Our customers are now our end users. With our systems now reaching customers and reaching out horizontally in the organization and beyond, IT staff all need a broader and deeper appreciation of business than ever before,” said one manager.

• Organizational understanding. A key expectation of strategic vision in IT is enter- prise transformation (Korsten 2011; Mingay et al. 2004). This involves more than just generating insights into how technology and processes can be utilized to cre- ate new products and services or help the organization work more effectively; it also involves the effective execution of the changes involved. IT professionals have long known that technology must work in combination with people and processes to be effective. This is why they are now expected to be experts in change man- agement (Kaminsky 2012). But being able to drive transformation forward involves a number of additional skills, such as political savvy (to overcome resistance and negative influences), organizational problem solving (to address conflicting stake- holder interests), effective use of governance structures (to ensure proper support for change), and governance design (to work with partners and service providers) (Bell and Gerrard 2004; Kim and Maugorgne 2003; Raskino et al. 2013). Because IT people come from a technical background and their thinking is more analytical, they typically do not have strong skills in this area and need to acquire them.

• Creating a supportive working environment. Most IT work is done in teams. Increasingly, these teams are virtual and include businesspeople, staff from ven- dor companies, and members from different cultures. Motivating and inspiring one’s colleagues to do their best, dealing with relationship problems and conflicts, and making decisions that are consistent with the overall goals of the organiza- tion and a particular initiative are the job of every IT staff member. Since much leadership in a matrixed organization such as IT is situational, an IT professional could be a leader one day and a follower the next. Thus, that person must know how to create a work environment that is characterized by trust, empowerment, and accountability. This involves clear communication of objectives, setting the rules of engagement, developing strong relationships (sometimes virtually), and providing support to manage risks and resolve issues (Bell and Gerrard 2004; Kaminsky 2012; Light 2013).

• Effective use of resources. A good IT leader knows how to concentrate scarce resources in places where they will have the biggest payoff for the organization. This means not only making use of processes and tools to stretch out limited staff but also understanding where resources should not be used (i.e., saying “no”). In the longer term, using resources wisely may mean using job assignments and

Chapter 6 • Building Better IT Leaders from the Bottom Up 69

budgets to enhance people’s capabilities, identifying and developing emergent leaders, and using reward and recognition programs to motivate and encour- age staff (Anonymous 2004). Unfortunately, IT staff have often been spread too thinly, underappreciated, and not given time for training. Good IT leaders value their people, run interference for them when necessary, and work to build “bench strength” in their teams and organizations.

• Flexibility of approach. A good IT leader knows where and how to exercise leadership. “Skill mastery must be complemented with the ability to know when and where particular behaviors/skills are required and . . . how they should be deployed” (McKeen and Smith 2003). Even though this is true in all parts of the organization, leadership in IT can be a rapidly shifting target for two reasons. First, IT staff are well-educated, well-informed professionals whose opinions are valu- able. “Good IT leaders know when to encourage debate and also when to close it down,” said a manager. Second, the business’s rapid shifts of priority, the changing competitive and technical environment, and the highly politicized nature of much IT work mean that leaders must constantly adjust their style to suit a dynamic topography of issues and priorities. “There is a well-documented continuum of leadership styles. . . . The most appropriate style depends on the enterprise style and the business and strategic contexts” (Roberts and Mingay 2004).

• Ability to gain business attention. A large component of IT leadership is focused not on the internal IT organization but outward toward all parts of the business. One of the biggest challenges for today’s IT leaders is the fact that the focus of their work is more on business value than on technology (Korsten 2011). The ability to motivate business executives, often in more senior positions, lead business transformation, and gain and maintain executive attention is central to establishing and maintaining IT credibility in an organization (Kaminsky 2012; McDonald and Bace 2004). A good IT leader knows how to position his or her contribution in tangible, business terms; how to interact with business lead- ers; and how to guide and educate them about the realities of IT use. “Bringing value to the business is a very important trend in IT leadership,” stated one participant.

IT leaders will need more or fewer of these qualities, depending on the scope and type of their work. Obviously, IT staff responsible for sourcing will need a different mix of these skills than will those with an internal IT focus or those with a business focus.

Leadership Styles Vary According to the Degree of Involvement of Team Members

• Commanding. “Do what I tell you.” • Pacesetting. “Do as I do now.” • Visionary. “Come with me.” • Affiliate. “People come first.” • Coaching. “Try this.” • Democratic. “What do you think?”

(after Roberts and Mingay 2004)

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They will also be more important the higher one moves in the management hierarchy. Nevertheless, these are skills that IT organizations should endeavor to grow in all their staff from the most junior levels. Since these skills take time and practice to develop and are in increasing demand, senior IT managers should put concrete plans in place to ensure that they will be present when needed.

hoW To Build BeTTeR iT leadeRs

Everyone agrees that fostering leadership skills throughout all levels of IT is important to IT’s future effectiveness (Bell and Gerrard 2004; Kaminsky 2012; Mingay et al. 2004; Mintzberg 2004). However, the reality is that leadership development is very hit and miss in most IT organizations. Many formal leadership courses have been cut or scaled back substantially because of cost-control initiatives. When offered, most IT leadership programs limit attendance to managers. Few organizations have articulated a com- prehensive program of leadership development that includes other initiatives besides training.

Leadership development in IT is not as simple as sending a few handpicked indi- viduals on a training course. In fact, formal training may be one of the least effective (and most expensive) aspects of building better IT leaders (Kesner 2003). Any compre- hensive leadership development program has three layers (see Figure 6.1). The first, most important, and probably the most difficult one is an environment within which leaders at all levels can flourish. It is often suggested that leaders, like cream, will natu- rally rise to the top regardless of the conditions in which they work. The reality is that more and better leaders are created when organizations have a supportive process for developing them that is widely understood. What’s needed is “a culture that nurtures talented managers, rather than one that leaves them to struggle through a Darwinian survival game” (Griffin 2003). There is general agreement on what constitutes this type of culture:

A Supportive Environment

Processes and Practices

Formal Training

figuRe 6.1 Effective Leadership Development Involves More then Training

Chapter 6 • Building Better IT Leaders from the Bottom Up 71

• Well-articulated and instantiated values. Values guide how staff should behave even when their managers aren’t around. They provide a basis for sound decision making (IBM 2012; Stewart 2004). “If you’re going to push leadership down in the organization, you have to push values down as well,” stated one manager. Others noted that senior IT leadership should primarily be about forming and modeling values, not managing tasks. Values are especially important now that staff are more mobile and virtual (Cascio and Shurygailo 2003; IBM 2012). A strong value system is crucial to bringing together and motivating a large, diverse workforce and help- ing staff act in ways that support the company’s brand and values. Unfortunately, although many organizations have values, they are often out of date or not mod- eled by management (Stewart 2004).

• A climate of trust. Trust that management means what it says about values and leadership development must be established early in any program. Trust is estab- lished by setting expectations and delivering results that meet or exceed those expectations. By sending clear messages to staff and exhibiting positive attitudes about staff behavior, senior IT managers will help people feel they can begin to take some risks and initiatives in their work (Cascio and Shurygailo 2003). If people feel their culture is based on fair processes and that they can draw lessons from both good and bad results, they will start to respond with the type of high performance and leadership behaviors that are expected (Kim and Maugorgne 2003). Conversely, senior managers must take steps to weed out counterpro- ductive behaviors, such as poor collaboration, that will undermine this climate (Roberts and Mingay 2004).

• Empowerment. Empowerment thrives in a climate of trust, but leaders need to deliberately encourage it as well. In IT one of the most important ways to do this is to create mechanisms to support staff’s making difficult decisions. One company recognized this by explicitly making “We’ll support you in doing the right things” a central element in revamping its leadership promise. To make it real and visible, the company established a clear process for junior staff to resolve potential con- flicts with users about disagreements on what is “the right thing.” Furthermore, they have established committees to help manage the risks involved in IT work, get at the root cause of recurring issues, and protect the promises made to business partners. Such processes, in conjunction with values and trust, create a manage- ment system that empowers people and frees them to make appropriate decisions (Stewart 2004). By staying connected with staff as teachers, coaches, champions, and mentors, more senior leaders help more junior staff to take “intelligent risks” and sponsor initiative (Light 2013; Taurel 2000).

• Clear and frequent communication. As with other types of change, one cannot communicate too much about the need to create an environment to foster leader- ship. “In spite of all we know about communication, it’s still one of our biggest leadership gaps,” said a participant. Open, two-way communication is the hall- mark of modern leadership. Leaders and followers are gradually learning how to effectively use the electronic nervous system that now runs through all orga- nizations (Avolio and Kahai 2003). Use of information technology and multiple channels is now the norm, and redundancy is advisable because of the increased opportunities for miscommunication in the virtual world. Senior executives are using IT to communicate interactively with their most junior staff (Stewart

72 Section I • Delivering Value with IT

2004). One company has established an “Ask Phil” e-mail whereby any member of IT can direct questions to the CIO. Leadership is about developing relation- ships with people. It engages them and helps direct them to a particular goal. Learning to leverage all conduits of communication to build and sustain an array of relationships is, therefore, central to becoming an effective IT leader (Avolio and Kahai 2003).

• Accountability. Acceptance of accountability is a key component of leadership. A climate where accountabilities are clear is an important aspect of a leadership development culture (Bell and Gerrard 2004). Natural leaders often first come to senior management’s attention because they consistently deliver on what they promise. The concept of accountability is also being extended to include expecta- tions that IT staff will assist the business in achieving its growth goals and that IT will not create technical impediments to implementing business strategies (Mingay et al. 2004). Unfortunately, IT accountability is frequently absent, and this has nega- tively affected the perceptions of IT leadership in the rest of the organization (Feld and Stoddard 2004). No member of IT should be allowed to abdicate responsibility for delivering results. However, focus group members stressed that in order to cre- ate a culture of accountability, IT leaders must also provide the processes, tools, and support to produce successful results.

The second layer of a leadership development program involves building leadership activities into IT’s processes and daily work. Well-designed and documented processes for such activities as planning, budgeting, conflict resolution, service delivery, and financial reviews and approvals clearly articulate the individual elements that con- tribute to leadership in particular situations. They make it easier for more junior staff to carry out these activities and to learn what is expected of them (Bell and Gerrard 2004). They also establish boundaries within which staff can exercise judgment and take risks.

Human resources management practices are a key component of fostering leadership at this level as well. Many companies have begun to document the compe- tencies that they expect staff to exhibit in each job category and level. These typically include leadership as well as technical skills. “It gets harder to do this the higher up the management hierarchy one goes,” stated one manager. “At the more senior levels, leadership skills are much more individualized and are more difficult to capture, but we’re working on it.” Specific training and development strategies work well for each job stream at more junior levels. With more senior positions, development plans should be created for each individual.

Job assignments are one of the most important ways to develop leadership exper- tise. In fact, some experts suggest that 80 percent of the levers management has at its disposal in this area are related to how a company uses assignments and job postings to influence an individual’s experience (Kesner 2003). Job rotations, stretch assignments, and on-the-job coaching and mentoring are all effective ways to build leadership skills. Occasionally, this may entail taking risks and not always appointing the most qualified person for a particular job (Roberts and Mingay 2004). Sometimes, this should involve moving a person out of IT into the business for an assignment. All organizations should have processes in place to identify emergent leaders and take proactive steps to design individualized strategies of coaching and assignments that will fit their unique person- alities (Griffin 2003). Succession planning should be a significant part of this process as

Chapter 6 • Building Better IT Leaders from the Bottom Up 73

well. Recruiting leaders from outside is sometimes necessary, but this is a far more risky and expensive way to address succession than growing leaders from within (Roberts and Mingay 2004).

Finally, at the core of any leadership development program is formal training. Commitment to formal leadership training in organizations has been patchy at best. Training can be internally developed or externally purchased. The fastest-growing seg- ment of executive education is customized programs for a particular organization that are specifically tied to business drivers and values (Kesner 2003). In-house programs are best for instilling vision, purpose, values, and priorities. External training is best used for introducing new knowledge, practices, and thinking to leadership.

Because of the time and expense involved, leadership training should be used strategically rather than comprehensively. Often IT resources can be so stretched that finding time for development is the biggest challenge. One company reasserted the importance of training by promising its staff that it would spend its entire annual train- ing budget for the first time! This organization sees training as one tool for helping individuals make their best contributions and achieving success; interestingly, it has found that making it easier to find appropriate courses through the creation of a formal curriculum and streamlining the registration and payment processes has led to a sig- nificant uptake in employees’ taking advantage of development opportunities.

invesTing in leadeRship developMenT: aRTiCulaTing The value pRoposiTion

Although leadership development is widely espoused, many organizations have reduced their budgets in recent years, and that has hit formal training programs hard. One manager remarked that his staff knew senior management was serious about development when it maintained training budgets while trimming in other areas. However, as mentioned earlier, training is only one facet of a good leadership develop- ment program, and doing it right will take executive time and consistent attention, in addition to the costs involved in establishing and following through on necessary com- munications, procedures, and planning. It is essential to articulate the value proposition for this initiative.

Experts suggest that several elements of value can be achieved by implementing a leadership development program. Using a rubric established by Smith and McKeen (see Chapter 1), these elements include the following:

• What is the value? Because different companies and managers have different perceptions of value, it is critical that the value that is to be achieved by a lead- ership development program be clearly described and agreed on. Some of the value elements that organizations could achieve with leadership development include improved current and future leadership capabilities and bench strength (preventing expensive and risky hires from outside), improved innovation and alignment with business strategy, improved teamwork (both internally and cross- functionally), improved collaboration and knowledge sharing, greater clarity of purpose and appropriate decision making, reduced risk, and a higher- performing IT organization. When these value objectives are understood, it is possible to develop metrics to determine whether or not the program is successful. Having

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a focus and metrics for a leadership program will ensure that management pays attention to it and that it doesn’t get shunted into a corner with the “soft and fuzzy stuff” (Kesner 2003).

• Who will deliver the value? Because leadership development is partially HR’s responsibility and partially IT’s, clarifying which parts of the program should be delivered by which group is important. Similarly, much of the coaching, mentor- ing, and experiential components will be fulfilled by different managers within IT. It is, therefore, important for senior management to clarify roles and responsi- bilities for leadership development and ensure they are implemented consistently across the organization. Ideally, senior IT management will retain responsibil- ity for the outer layer of the leadership program—that is, creating a supportive working environment. At one company the senior IT team created several pack- aged presentations for middle managers to help them articulate their “leadership promises.”

• When will value be realized? Leadership development should have both long- and short-term benefits. Effective training programs should result in visible behavior changes, as already noted. The initial impacts of a comprehensive leader- ship initiative should be visible in-house within a year and to business units and vendors within eighteen to twenty-four months (McDonald and Bace 2004). Again, metrics are an essential part of leadership programs because they demonstrate their success and effectiveness. Although there is no causal link between leadership development and improved business results, there should be clear and desirable results achieved (Kesner 2003). Using a “balanced scorecard” approach to track the different types of impacts over time is recommended. This methodology can be used to demonstrate value to IT managers, who may be skeptical, and to HR and senior management. It can also be used to make modifications to the program in areas where it is not working well.

• How will value be delivered? This is the question that everyone wants to ask first and that should only be addressed after the other questions have been answered. Once it is clear what IT wants to accomplish with leadership development, it will be much easier to design an effective program to deliver it.

Conclusion

Leadership development in IT is something that everyone agrees is increasingly important to helping companies achieve their business goals. However, all too often it is a hit-and- miss exercise, depending on management whim and budget availability. It is now clear that senior IT leaders must make leadership development a priority if IT is going to con- tribute to business strategy and help deliver

services in an increasingly competitive envi- ronment. To do this, leadership develop- ment in IT must start with the most junior IT staff. An effective program involves more than just training. It must include the cre- ation of a supportive work environment and the development of processes that deliver on management’s promises. However, no lead- ership program should be implemented in a

Chapter 6 • Building Better IT Leaders from the Bottom Up 75

vacuum. There should be a clearly articulated proposition outlining its value to the organi- zation and a set of metrics to monitor its effec- tiveness. Like technology itself, leadership

development will be effective only if manage- ment takes a comprehensive approach that integrates culture, behavior, processes, and training to deliver real business value.

Anonymous. “A Guide for Leaders.” Presentation to the IT Management Forum, November 2004.

Avolio, B., and S. Kahai. “Adding the ‘E’ to Leadership: How It May Impact Your Leadership.” Organizational Dynamics 31, no. 4 (January 2003): 325–38.

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Bennis, W. G., and B. Nanus. Leaders: The Strategies for Taking Charge. New York: Harper and Row, 1985.

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Griffin, N. “Personalize Your Management Development.” Harvard Business Review 81, no. 3 (March 2003).

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Light, M. “To Discern Potential Mastery, Assess Project Management Leadership and Planning Expertise.” Gartner Inc., ID Number: G00258389, November 8, 2013.

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7 creating it Shared Services1

1 This chapter is based on the authors’ previously published article, McKeen, J. D., and H. A. Smith. “Creating IT Shared Services.” Communications of the Association for Information Systems 29, Article 34 (October 2011): 645–656. Reproduced by permission of the Association for Information Systems.

A “shared service” is the “provision of a service by one part of an organization where that service had previously been found in more than one part of the organization. Thus the funding and resourcing of the service is shared and the providing department effectively becomes an internal service provider” (Wikipedia 2014). The key idea is “sharing” within an organization. It suggests centralization of resources, uniformity of service, consistent processes for service provisioning, econo- mies of scale, reduced headcount, and enhanced professionalism. As such it has definite appeal for IT organizations, and creating them has been identified as one of the effective habits of successful CIOs (Andriole 2007).

For the business, an IT shared service is also appealing but for a different set of reasons. Although the promise of reducing costs, time, and complexity through reuse and the ability to leverage IT skills and knowledge are attractive, they rank a distant second to the ability to free up resources by transferring responsibility for a noncore activity to another organizational body. Not surprisingly, the successful creation of a shared service is by necessity an exercise in goal alignment (between the business and IT) coupled with a strategy for goal attainment.

A shared services organization constitutes an alternate business model. Therefore, the decision to adopt a shared services model entails a number of critical questions for management, such as What are the key attributes of a good candidate for a shared ser- vice? How should a shared service be organized, managed, and governed? What is the relationship between shared services and the parent organization? What can be learned from experience with a shared services model? What theoretical and practical insight is offered by published studies of shared services?

This chapter explores these questions. It begins with a review of the published literature to provide some definitional clarity concerning the shared services model

Chapter 7 • Creating IT Shared Services 89

and to differentiate shared services from other closely related models. The remainder of the chapter focuses on the key management issues surrounding the IT shared services model, including the pros and cons, key organizational factors, and identifying candi- date shared services. It concludes with an integrated shared services conceptual model and recommendations for moving toward successful shared services in IT.

IT Shared ServIceS: an OvervIew

As already noted, the key high-level concepts of a shared service are that a single group within the organization manages the service, the service is offered to any organizational unit in need of the service, and the shared service is a single-source provider. Accenture (2005) similarly defines shared services as “the consolidation of support functions (such as human resources, finance, information technology, and procurement) from several departments into a standalone organizational entity whose only mission is to provide services as efficiently and effectively as possible”. While these definitions work in general, they also raise a number of questions. For instance, how does a shared ser- vice differ from any other organizational unit that provides service to the organization (e.g., IT or HR)? How does a shared services organization relate to the parent organiza- tion? Does a shared service alter customer relationship in significant ways? How is a shared service governed?

Bergeron (2003) offers additional clarity by defining a shared service as a:

collaborative strategy in which a subset of existing business functions are concentrated into a new, semi-autonomous business unit that has a manage- ment structure designed to promote efficiency, value generation, cost savings, and improved service for the internal customers of the parent corporation, like a business competing in the open market.

This definition answers some of the earlier mentioned questions. For instance, it interprets shared services as a “collaborative strategy” that differentiates it from an organizational structure/design exercise. For example, deciding that all customer sup- port functions should report to the COO does not make customer support a shared service.

Bergeron further specifies that the shared service should be a “semiautonomous” business unit with its own management structure, which suggests a different and more “arms-length” relationship with the parent organization—one that allows suf- ficient management discretion to enable the shared services organization to attain its goals. These goals also differ within this definition with respect to their breadth and scope. Value generation, as a goal, takes the shared services organization well beyond efficiency and cost considerations; the goal of a shared services organization is to “improve the bottom line of the parent corporation, not to create a more efficient, inter- nally streamlined shared business unit per se” (Bergeron 2003, p. 5).

Bergeron’s definition also differentiates a shared service with respect to its customer orientation. In a shared services model, internal customers are treated as if they were external customers to be won or lost. With this orientation, the shared service competes aggressively for business, places customer satisfaction as a top priority,

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actively manages customer relationships, collaborates effectively on new business ini- tiatives, markets its services internally, and communicates its performance to the busi- ness on the basis of quality, price, and time. This is not the lackadaisical approach to customer service that is typical of organizations that treat their business partners as a captive audience.

Treating internal customers like external customers is a laudable goal but, accord- ing to one focus group member, a shared services organization can theoretically go well beyond this. She explained that significant advantages accrue exclusively to an internal provider. For instance, a shared services organization has existing relationships with its internal customers with whom they enjoy unfettered access. Furthermore, they share goals, strategies, and culture. They have common knowledge and are motivated by the same reward systems. Their loyalty is to the same organization and they share financial goals.

External providers, in contrast, lack these advantages but have the benefit of others. Most have credibility beyond internal providers simply because they are competitive in the marketplace. They may also have economies of scale and advanced technology that can be amortized over a broad client base. Moreover, they may have superior skills and knowledge. Her argument was that an effective shared services organization, to the extent that it develops enhanced customer relationships and a competitive mar- ket orientation while both facilitating and benefiting from internal customer access, could at least theoretically realize the “best of both worlds”. More than just the conver- gence and streamlining of an organization’s functions to ensure that they deliver to the organization the services required of them as effectively and efficiently as possible, the true shared services organization generates value for the parent organization as if (and possibly) competing in the open market.

Shared services are related to, but should not be confused with, more traditional models of delivering IT services (McKeen and Smith 2007). Carefully delineating each of the following points further aids our understanding of shared services.

• A shared service is most easily differentiated from a decentralized service delivery model. In the decentralized model, services are provided in various organizational units and managed locally. It is common in highly diversified organizations to find that each business unit has its own IT organization so that the provision of IT services can be tailored to the unique differences existing within each of the strategic business units.

• In contrast, a centralized model for IT services brings all resources under a single management structure, adopting virtualization and standardization strategies to increase utilization of key resources and to lower operational costs. There are two primary differences between a centralized model and the shared services model. First, shared services have a customer-centric mind-set (users of the service are viewed as customers, and the shared service is dedicated to providing high- quality, cost-effective, and timely service) and second, shared services are run as an inde- pendent business with their own budget and bottom-line accountability. The focus group concluded that a shared service is always centralized but a centralized ser- vice is not necessarily a shared service; that is, centralization is a “necessary but insufficient” condition for a shared service.

Chapter 7 • Creating IT Shared Services 91

• The shared services model also differs from outsourcing where an external third party is paid to provide a service that was previously internal to the buying orga- nization. While a shared services model is often viewed as a stepping-stone to out- sourcing, the focus group suggested that the decision to create a shared service should not be a de facto decision to outsource. The relationship between outsourcing and shared services is further explored later.

• A shared services model also differs from a joint venture where two or more organi- zations create a separate, jointly owned, legal, and commercial entity that provides profit to its shareholders/owners. This delivery mechanism is used frequently in various industries such as banking and finance as well as oil and petroleum. As with the outsourcing model, the service is provided by an external agency that owns the profits derived from the provision of the service.

After a lengthy discussion, the focus group reached a consensual understanding of a shared services organization. The members suggested that a true shared service must adhere to the following four principles:

1. Shared services involves more than just centralization or consolidation of simi- lar activities in one location (although this was recognized as an essential part as already noted);

2. Shared services must embrace a customer orientation (i.e., as already mentioned, a shared service cannot behave as a monopolistic provider);

3. Sufficient management discretion and autonomy must exist within the shared ser- vices organization to allow freedom to generate the necessary efficiencies to create value for the parent organization; and,

4. Shared services must be run like a business in order to deliver services to internal customers with costs, quality, and timeliness that are competitive with that of exter- nal providers.

On this last point, one member of the focus group argued that a shared services provider will never satisfy internal customers unless and until the shared services orga- nization is allowed to offer services to external customers. In his organization, despite spending a considerable amount of money on external consultants to prove that their IT shared services was competitive with that of external providers, the business “just didn’t buy it.” There seems to be a general unease among business executives about whether or not they are getting real value from their IT investments and this carries over to shared services.

The other major concern for the focus group was the interpretation of “value” as created by the shared services organization. Some members felt that “value” was the demonstration that the shared services unit could provide cost savings to their par- ent organization. Other members felt that cost savings would be insufficient to justify the creation of a shared services organization, arguing that simply centralizing services would produce similar savings. They felt that a shared services organization should be expected to generate additional value beyond efficiency—offering enhanced quality and/or differentiated services—such that value could be realized in terms of revenue generation. While no resolution emerged, it is clear that the broader interpretation of value aligns better with the group’s accepted definition of shared services.

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IT Shared ServIceS: PrOS and cOnS

A shared services model for IT has the potential to deliver significant benefits to the organization (Bergeron 2003). From the parent organization’s perspective, shared services promise to:

• Reduce costs (due to consolidated operations) and improve service (due to the customer-centric focus)

• Reduce distractions from core competency activities (due to transfer of noncore activities to the shared services organization)

• Potentially create an externally focused profit center (should the shared services decide to offer services beyond the parent organization).

From the perspective of the shared business unit, the shared services model promises:

• Increased efficiencies (due to standardization and uniformity of services) • Decreased personnel requirements (due to consolidated operations) • Improved economies of scale (due to the concentration of purchasing, HR, and

other specialized functions).

The focus group generally agreed with this list of possible benefits and suggested additional items including:

• Professionalism (due to the adoption of a customer-centric approach in dealing with clients)

• Uniformity of service (due to consistent service provisioning across the enterprise) • Personnel development (due to focused hiring, training, and skills/knowledge

development, all targeted toward service management) • Control (due to single-sourced service management).

However, there is also a case to be made against shared services (Bergeron 2003). The focus group highlighted the following limitations as being the most relevant for IT shared services:

• Becoming a disruption to the service flow • Moving work to a central location thereby creating wasteful handoffs, rework, and/

or duplication • Instilling an “us” versus “them” mentality within the provider–consumer relationship • Lengthening the time it takes to deliver a service.

The focus group also added the following:

• Additional costs associated with management bureaucracy and overhead • Loss of control experienced by independent business units • An increased communications burden • Extraordinary one-time costs at start-up that are reflected within the service

offerings.

Thus, while the list of benefits of shared services is long and impressive, the downside risk is equally imposing. The focus group also warned that the list of benefits represents “promised” benefits and that realizing actual benefits is a different matter!

Chapter 7 • Creating IT Shared Services 93

To gain a different perspective of the trade-offs between these pros and cons, members of the focus group were asked to share their actual experiences with IT shared services, highlighting failures as well as successes. Subsequent analysis revealed the following patterns of failure (from greatest to least):

• Promised headcount reduction doesn’t materialize • Customer-centric orientation gives way to indifferent service • Excessive bureaucratization of the service • Reduced headcount achieved but service levels deteriorate • Cost efficiencies are realized through “one size fits all” service offerings

The following patterns of success were identified (from greatest to least):

• Service improves producing quality, time, and cost advantages • Service quality and time/cost savings are realized • Service quality improves but without noticeable savings • Headcounts are reduced but service levels remain unchanged

The track record of the focus group was equivocal; no organization was celebrating the highest level of success and none was publicly admitting to outright failure. Explaining these differences in outcomes was the next challenge.

IT Shared ServIceS: Key OrganIzaTIOnal SucceSS FacTOrS

Interpreting the success of an organizational initiative depends on understanding the goals and objectives of those promoting the initiative. To gain some insight into this aspect of shared services, the focus group was asked what they felt was motivating the current interest in shared services and whether it was being driven primarily from the business or from IT. This allowed us not only to examine the driving factors behind a shared services model but also to highlight any differences between the business and IT perspectives. In the ensuing discussion, a significant gap emerged between the views of the business and the IT organizations with respect to a shared services model— specifically what problems it solved, the benefits it produced, and the unique challenges the adoption of a shared services model presents.

The majority of members felt that the push for shared services was coming from IT and that their IT organizations were sufficiently interested in actively promoting a shared services model. In contrast, two members of the focus group declared that the push within their organizations was definitely coming from the business. One was a large organization whose goal was to become a “globally integrated enterprise” built on shared business services. IT was no exception. Specialized IT services, located globally anywhere that would yield advantage, were offered to all business units within the organization as a shared service. The other organization was undergoing an enterprise- wide initiative to outsource noncore activities and IT had come under the microscope. Here, the focus group member stated that “our management clearly views shared services as a prerequisite for outsourcing.”

For organizations where the push for shared services originates within IT, the motivation was clearly cost savings and/or control. According to one manager, “shared services are seen as one way to reduce IT cost and/or complexity and drive IT reuse. This is being driven today out of the IT organization but we understand that our

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business partners need to be onboard for anything beyond the simplest of IT shared services”. Another manager stated that the interest was primarily being driven by her IT organization to achieve the following three key goals:

• To create reusable business functions to enable cost reduction • To drive agility by means of a set of well-defined horizontal services • To ultimately create a rationalized and simplified application portfolio.

When asked what problems a shared services model might solve, the focus group cited the following:

• Inconsistent integration patterns that lead to steadily increasing costs for solution maintenance and enhancement

• Building redundant applications using overly specific models because of the lack of a roadmap for sharing functionality

• Lack of integration, which hampers reusability and economies of scale • Increasing and perhaps unnecessary IT complexity.

The significant gap between how the IT organization approaches shared services as compared to the business is most apparent in the articulation of goals, objectives, and the ultimate justification of a shared services model. This becomes increasingly signifi- cant when coupled with the fact that the majority of shared services initiatives are being driven by IT.

In organizations where the driving force for shared services resides within the IT organization, the focus is commonly on that part of a shared service model that addresses IT problems; for example, reducing redundancy, encouraging integration, and rationalizing the application portfolio. Solving these problems, however, only addresses business problems tangentially through reduced costs and streamlined pro- cesses and fails outright to attain the goals of customer centricity and enhanced service to the business. The differences between the business vision for shared services and the IT vision, unless aligned, is a recipe for disaster. Based on input from the focus group, we build a conceptual model that bridges this gap by integrating the technical aspects of an IT shared service with the business aspects. But, before we do this, it is necessary to first discuss the key factors that constitute the basis for decision making regarding IT shared services.

IdenTIFyIng candIdaTe ServIceS

An analysis of the existing shared services within the focus group revealed very little in terms of discernible patterns. Some of the shared services were business-oriented services (e.g., payment processing or procurement) while others were IT-oriented (e.g., print management or network services). Some were comprehensive (e.g., application develop- ment, disaster recovery) while others were narrowly focused (e.g., credit authorization). Some of the services were deemed “core” while others were “noncore.” Other than enter- prisewide need, no obvious logical structure emerged from our analysis as a potential decision guideline for nominating shared services.

In general, the focus group felt that the selection criteria of candidate services for the shared services model were best understood by contrasting shared services with outsourcing. They argued that any service being considered for outsourcing could also

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be a candidate for a shared service subject to three key differences: knowledge reten- tion, control of resources, and value generation. That is, organizations appear to opt for a shared service in preference to outsourcing in order to retain critical knowledge and skills internally, to exercise greater control over these resources, or to capture additional value from the specific service rather than allowing it to accrue to the outsourcing party. The conclusion reached by the focus group was that the processes structured as shared services appear to offer a significant level of either present or future intrinsic value to the parent organization, which makes the organization reluctant to relinquish them to a third party. Services without incremental intrinsic value beyond cost savings are simply outsourced.

an InTegraTed MOdel OF IT Shared ServIceS

One member of the focus group presented his organization’s model of a shared service (Figure 7.1). In contrast to the Lacity and Fox (2008) framework, this conceptual model highlights the functional attributes of the business service, the management framework required to monitor and deliver the service, and the common technical infrastructure ser- vices that support it. It suggests that IT shared services is best viewed as inter connected layers of services; that is, business services are built on top of operational processes and common IT infrastructure, each of which deliver “services” but of a different sort. For example, a common business function (e.g., e-forms) is leveraged by multiple busi- ness entities, supported by commonly managed business delivery processes and SLAs,

Multi-Tenant Business Services

Common Business Service Delivery

Processes

Common Supporting IT Infrastructure

Components

Monitoring & Reporting

Network Mgmt

Server Mgmt Desktop Mgmt

Storage Mgmt

SLA Mgmt

Usage Mgmt

Security Mgmt

Business Unit Business Unit Business Unit

FIgure 7.1 IT Shared Service Conceptual Model

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and runs on common, highly standardized IT infrastructure. This model highlights how successful IT shared services depend on the effective coordination of each of these service layers. Although service delivery processes, such as relationship management and SLA management, are critical for the business, infrastructure processes, such as server and network management, are equally critical for the IT organization. The model also suggests that focusing on a single layer while neglecting key processes existing within other layers is likely to be unsuccessful and lead to the eventual failure of the shared service. In organizations where the shared service is being driven by the IT orga- nization with the goal of reuse, for example, the focus group suggested that the real danger is that attention will be predominantly focused on technical components while neglecting the managerial components (e.g., building effective customer relationships).

recOMMendaTIOnS FOr creaTIng eFFecTIve IT Shared ServIceS

Based on their experiences, focus group members agreed on four strategies that they believed would contribute to the successful creation of an IT shared services organization.

1. Create a transparent process for goal alignment. The group pointed out the importance of establishing a transparent process for articulating common goals. For IT managers, the key attraction of a shared service is typically cost savings and/or reduced complexity. Being able to reduce costs by means of mobilizing reuseable assets standardizing platforms and virtualizing services, and eliminating redun- dant systems while providing a uniform and consistent level of service is appeal- ing. For business managers, however, the promise of cost savings comes second to the desire for enhanced customer service through improved quality, faster response and delivery, greater financial transparency, and/or improved relationships with IT. Without goal clarity, transparency, and alignment, the shared services organiza- tion will champion one set of goals over another, creating animosity between the parent organization and the shared services provider. One manager described the experience in her firm as follows:

The centralization of the service was soon viewed by the business as a stand- in-line-and-wait for a one-size-fits-all solution . . . the fact that the business was unable to do an end-run on this delivery process was seen as unresponsive to the urgent and unforeseen demands placed on the business . . . the elimination of business priorities . . . no one on the business side wanted to hear about reduced costs of service.

The focus group suggested that the creation of a shared service need not degrade into a situation of conflicting goals. There is nothing to suggest that improved service and cost reduction cannot be tackled simultaneously. In fact, the centralization process alone should produce sufficient economy of resources to enable enhanced quality of service. The difficulty is typically built in at the outset of the shared service by failing to articulate a set of explicit goals that have acceptance by both the business and IT. Without mutual acceptance and alignment, the shared service can be doomed at inception.

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2. Develop a comprehensive investment model. Establishing a shared services organization is not a trivial task. In a majority of the cases, the existence of multiple distributed services across the enterprise (perhaps globally) presents formidable barriers to consolidation and coordination. Time differences, cultural differences, and geographical distances all complicate the process. For global enterprises, legal differences also come into play in building an effective shared services organiza- tion. The focus group suggested that the larger the organization, the more onerous the task and the longer it takes. But shared services are not just large organiza- tion phenomena. As a practical rule, Bergeron (2003) suggests, the “shared services model is a viable option when the savings from reduction in staffing are greater than the added overhead of creating a management structure to run the shared business unit.”

Administrative overhead is a significant component of the overall invest- ment in shared services. In addition, there are other substantial one-time costs associated with centralizing operations. These include the relocation of people, consolidation of technology, establishing support roles/activities, developing capabilities/skills, and building communication networks to support centralized operations. Most organizations currently have chargeback mechanisms in place for IT services but, according to the members of the focus group, these are often inadequate for a shared service. For well-defined services (like printing, desktops, or e-forms), the costs are easily identified and associated with the service levels provided. With more complex services (e.g., payroll management, disaster recov- ery and planning, records management), however, costing of the actual service requires more sophisticated algorithms to apportion costs2 for services provided. A key component is the ability to establish baselines for existing services. Without these, it is problematic to assess the incremental contribution of a shared service after its implementation.

A shared service investment model needs to account for significant ongoing costs in addition to the start-up costs mentioned earlier. Realistic implementation times range from “at least a year in simple domestic business scenarios involving one or two company locations to five years or more for a major international orga- nization with dozens of locations” (Bergeron 2003). Furthermore, cultural change can present a more formidable challenge than amassing resources (Lacity and Fox 2008). A shared business unit is first and foremost about building relationships between the parent organization and the service unit. Building effective relation- ships takes time (Smith and McKeen 2010).

The bottom line is that the investment model for the establishment of a shared service requires sophistication, understanding, and a commitment from the busi- ness as well as IT to make it work. Depending on the size of the undertaking, even reaching a breakeven point can be protracted. However, to the extent that the investment model is comprehensive and has the backing of senior management, it can withstand the ongoing challenges faced by any significant organizational transformation.

2 Difficulty arises with apportioning actual costs on a service level basis. For instance, actual costs vary over time with usage but business managers prefer to be billed on the basis of standardized rates/costs for specific services.

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3. Redraft the relationship with the business. The establishment of a shared ser- vice necessitates a different type of relationship between the business and the service provider. For instance, with a distributed service, business management has the  ability to impose priorities to reflect the demands of the business. These localized priorities, however, rarely survive the transition to a centralized service mechanism. As a result, the business typically experiences feelings of loss of con- trol with the creation of a shared service. The old adage “centralize for control, decentralize for service” applies. Even worse is the potential to develop an “us versus them” mentality, where the business feels a tangible disconnect between the urgent demands of their business and the unresponsiveness of the shared services provider. The risk of this occurring is greatly enhanced in situations lacking goal alignment.

A customer service orientation must therefore be instilled within the shared ser- vices organization to guarantee that satisfaction of the client remains the key goal. The need for an effective service orientation, particularly during the early stages of the development, is to counter the risk of the shared service being perceived as a “distant, unresponsive, and overly bureaucratic” provider. Furthermore, this orientation must be conveyed to the parent organization. This involves strengthening internal IT capabilities; changing the mind-set of IT personnel; training and motivation; and commitment from all levels of management (Fonstad and Subramani 2009). To accomplish this, the shared service must build “internal sales and marketing” competencies, which require resources focused on communi cating with current and prospective customers (Bergeron 2003).

4. Make people an integral part of the process. Lacity and Fox (2008) argue that successful shared services result from effective management of four interrelated change programs: business process redesign (i.e., what business processes the shared services organization will perform); sourcing redesign (i.e., who performs the business processes); organizational redesign (i.e., where business processes will be performed); and technology enablement (i.e., technologies used to implement and coordinate the work). The focus group agreed with the need to manage each of these programs effectively but was particularly enamored with the notion that each of these programs was appropriately viewed as a “change” process. Their experience suggested that the difference between success and failure of an IT shared services initiative was frequently the result of the effectiveness of the change process itself.

The creation of a shared services organization requires significant transforma- tion within the IT organization and directly impacts IT staff. As with outsourcing, dislocations are inevitable. As decentralized staff become centralized, reductions are expected, reporting relationships change, new skills are required, existing skills become redundant, and the overall relationship with the business becomes much more immediate and business-like with the focus on the bottom line. None of this happens automatically. Communications and marketing strategies take on new importance. Customer service is no longer a “take it or leave it” phenom- enon. Training is essential. New metrics and key performance indicators become necessary. Service level agreements must be articulated and managed. Together, this represents enormous change for IT. Bergeron (2003) suggests, “The  pace of

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cultural change, not the availability of resources or technology, generally gates the limitation.”

The focus group did not provide specific suggestions for organizations to fol- low but stressed a realization of the enormity and significance of the organizational change that accompanied the adoption of a shared services model and a call to make the “people part” of a shared services implementation the top priority. In short, a customer service orientation is built over time and through the conscious and deliberate attention of all employees. It thus needs to be planned as thoroughly as any other major organizational transformation initiative.

In recent years, the interest in adopting a shared services model for IT has grown substantially. This interest has been driven by the desire of business for a more customer-centric and responsive IT organization and by IT organizations pursuing centralization and standardization strategies. When success- ful, an IT shared services model can satisfy both goals but key challenges arise during the development and implementation of the shared service. By bringing together a number of senior IT managers with experi- ence in building shared service organizations,

this chapter has clarified what a shared ser- vice is and what it is not, identified different forms of success and failure, articulated an integrated conceptual model, and provided a number of suggestions to improve the chances of successful implementation. For those charged with developing IT shared services as well as those investi gating this emerging organizational form, this chapter provides insight and under standing for achieving successful shared services and ultimately the goal of improving overall organizational performance.

Conclusion

Accenture. “Driving High Performance in Government: Maximizing the Value of Public- Sector Shared Services.” http://www.accenture. c o m / S i t e C o l l e c t i o n D o c u m e n t s / P D F / Accenture_Driving_High_Performance_in_ Government_Maximizing_the_Value_of_ Public_Sector_Shared_Services.pdf, 2005.

Andriole, S. “The 7 Habits of Highly Effective Technology Leaders.” Communications of the ACM 50, no. 3 (March 2007): 67–72.

Bergeron, Brian. Essentials of Shared Services. Hoboken, NJ: John Wiley & Sons Inc., 2003.

Fonstad, N., and M. Subramani. “Building Enterprise Alignment: A Case Study.” MIS Quarterly Executive 8, no. 1 (March 2009): 31–41.

Lacity, M., and J. Fox. “Creating Global Shared Services: Lessons from Reuters.” MIS Quarterly Executive 7, no. 1 (March 2008): 17–32.

McKeen, J. D., and H. A. Smith. “Delivering IT Functions: A Decision Framework.” Communications of the Association of Information Systems 19, Article 35 (June 2007): 725–39.

Smith, H. A. and J. D. McKeen. “Building a Strong Relationship with the Business.” Communications of the Association of Information Systems 26, Article 19 (April 2010): 429–40.

Wikipedia. http://en.wikipedia.org/wiki/ Shared_services, May 2014.

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