Assignment Question

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Lesson 3

1-1

as Prentice Hall

Chapter 7

“collaborative strategy in which a subset of existing business functions are concentrated

into a new, semi-autonomous business unit

that has a management 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.”(Bergeron 2003)

Involves more than just centralization or consolidation of similar activities in one location. Must embrace a customer orientation. Sufficient management discretion and autonomy must exist within this type of organization. Must be run like a business in order to deliver services to internal customers.

Shared services promise:

Parent organization’s perspective Reduce cost and improve services. Reduce distractions from core activities. Potentially create an externally focused profit center.

Shared business unit’s perspective

Increased efficiencies Decreased personnel requirements Improved economics of scale Professionalism Uniformity of service Personnel development Control

Shared business unit’s perspective

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

Additional costs associated with bureaucracy Loss of control experienced by independent business units An increased communication burden Extraordinary one-time costs at start-up

The push for shared services can come from IT or the business.

Motivations from the business are for example:

-- Become a “globally integrated enterprise”

-- Outsource noncore activities

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Motivations from IT are for example:

-- Cost savings and/or control

-- Drive agility

-- Create a rationalized and simplified application portfolio

“The differences between the business vision for shared services and the IT vision, unless aligned, is a recipe for disaster”

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Business Unit Business Unit Business Unit

Security Mgmt

Usage Mgmt

SLA Mgmt

Security Mgmt

Server Mgmt

Storage Mgmt

Desktop Mgmt

Network Mgmt

Multi-Tenant

Business Services

Common Business

Service Delivery

Processes

Common Supporting

IT Infrastructure

Components

Create a transparent process for goal alignment:

The centralization process alone should produce sufficient economy of resources (i.e., IT goal) to enable enhanced quality of services (i.e., business goal).

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Develop a comprehensive investment model: -- These investment models require sophistication,

understanding, and a commitment from the business as well as IT to make it work.

-- “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.”

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Redraft the relationship with the business: A customer service orientation must therefore be instilled within the shared services organization to guarantee satisfaction of the client remains the key goal.

“Shared services model must build ”internal sales and marketing” competencies, which require resources focused on communicating with current and prospective customers.

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A shared service model for IT arises from the desire of business for a more customer-centric and responsive IT organization.

IT shared services model can satisfy IT and business goals but key challenges arise during the development and implementations of the shared service.

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