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How Can IT Shared Services Drive Innovation?

How Can IT Shared Services
Drive Innovation?

  March 11, 2020      Steven Middeldorp

Shared services are the consolidation of business operations that are used by multiple parts of the same organisation.  Shared services are cost-efficient because they centralise back-office operations that are used by multiple divisions of the same company and eliminate redundancy.

Some companies use a chargeback system to bill divisions that use the service.  Other companies absorb the cost of shared services as part of the continuing cost of running the business. Most organisations today used a shared services model for finance, human resources management and information technology.

The goal of a shared services delivery model is to allow each business department to focus its finite resources on activities that support the department’s business objectives. Technology, as an innovator, has ever been the driver for shared services within an organisation since it can be expensive to implement, maintain and train team members to operate.

About a hundred years ago, an Underwood typewriter cost $100 and typists were highly trained employees.  Instead of having each department within the company have its own typists, a centralised department for typists was seen as being more cost-efficient – so the typing pool was born. This was the first example of a shared service centre (SSC).

Organisations have been aiming to lower costs by using synergies and sharing services across multiple departments for decades. Never has the value proposition been more compelling than today, in the midst of a period of a hyper-competitive business environment.

Shared services have played an important role in this value adding effort. By centralising back-office operations, shared services have brought down costs while providing constant quality across functional areas such as HR, accounting, IT, marketing and customer service.

This has become an area of focus for corporations around the globe. A CIO is under even more pressure from the board to better explain how IT is contributing to the business, as there are clearly identifiable IT services that can be benchmarked against those of your competition. ClearCost IT Financial Management software has built-in benchmarking abilities that compare actual data from similar companies within your industry, find out more here.

A CIO must re-consider sourcing strategies for IT services, giving consideration to migrating the financing of shared services away from a central annual budget to a more transparent financial cost model based around consumption. A comprehensive and defensible Bill of IT for each department across your organisation that is sharing your IT service can be produced by ClearCost’s ITFM Bill of IT solution.

Many organisations are redefining their service models and modifying their governance procedures to better align with the overall business strategy. That means the shared services centre can play a part in addition to the usual administrative and support services by assisting the business to transform their enterprise IT services into third platform technologies which consist of various pillars: mobile, big data/analytics, cloud and social technologies. The third platform can help enterprises build new digital services that drive innovation. Conventional shared services centres have a strong foundation in service management leaving them well placed to leverage that know-how in producing cutting edge technology services.

To drive innovation, your shared services centre will need to create their model for service delivery where the objective of each service becomes providing IT value at a cost. From this cost data, your CIO can more accurately quantify IT’s contribution to your organisation.

Armed with this data, shared services managers can now experiment with a service/consumption-based accounting model – something that can be automated with the right kind of ITFM software, which is able to analyse IT costs at a more granular level. The shared services centre must audit its sourcing strategies, appraising the sourcing of external services against internally running them in terms of costs, risks, and value creation.

The organisation itself must foster the development of a culture based on shared values, attitudes, outcomes and operations that rewards innovation and risk-taking. Such a nurturing culture can empower the shared services centre to conduct itself as a responsible, synergistic and transparent service provider that drives innovation.

CategoriesBlog

TagsIT Financial Management software, ITFM, ITFM software, IT Financial Management tool, CIO, CFO, IT Financial Management, IT cost optimisation, Bill of IT, TBM, Technology Business Management

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