Shared services catch on, but need to scale to digital proportions

At the IT level, services are shared more than ever, thanks to cloud.

"Shared services" is one of those elusive goals that make ROI projections look good, but implementation turns out to be a headache. The idea of shared services is that common applications and data sets can be accessible and reused by multiple departments or teams, without the need to reinvent the wheel every time. A recent survey among 1,295 members of the Society for Information Management (SIM) finds the shared service concept has been finally catching on.

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Photo: Joe McKendrick

The SIM data shows that over the last two years, the average percentage of IT services offered as shared increased by more than 50 percent -- from 42 percent in 2016 to 63 percent in 2018. More than 90 percent of organizations used at least some shared services. Tellingly, 37 percent of organizations indicated they deliver more than 90 percent of all IT in a shared service model.

The SIM report authors say cloud adoption has a lot to do with the continuing embrace of shared services -- 79% of executives report their cloud adoption has been on the rise.

Shared services is proving to be a viable option for IT services -- but will this model work at a higher level -- namely, as digital shared services? Here's where things get problematic, as it's difficult to scale digital services beyond the proof-of-concept stage, relates Rashi Agarwal of Boston Consulting Group in a recent post. "Even at many forward-thinking organizations, digital applications are largely limited to pilots," he states. "Most companies only have a handful of bots and AI algorithms actually in place and operational. Many are still in the proof-of-concept stage -- they are generating very promising early results, but they're still essentially experiments. And when it comes to scaling those initiatives up at an enterprise level, companies run into problems. Organizational silos, inertia, and established cultures and mindsets all get in the way."

At the IT service level, there is movement toward shared cloud services, the SIM survey finds. While Software-as-a-Service (SaaS) is remained the most prevalent shared service (71 percent of all shared services in 2016 and 69 percent in 2018), Infrastructure-as-a-Service (IaaS) has dropped considerably from 24 percent in 2016 to 16 percent in 2018. This decrease is offset by increases to both Platform-as-a-Service (PaaS) (4 percent in 2016 to 9 percent in 2018) and Process-as-a-Service (1 percent to 5 percent).

"This indicates that organizations are finding strategic benefits from cloud investments that keep IT service delivery aligned with the diverse needs of various business units," according to the SIM survey's authors. (The full results of the SIM survey will be available in December.)

For achieving that scale for digital shared services, Agarwal makes four recommendations to get started:

  • Redesign processes end-to-end from the customer's perspective. "Rethink processes end to end, using a customer-centric perspective," Agarwal advises. "For example, what does the 'hire-to-exit' process look like from an employee's perspective? How does a supplier experience the 'procure-to-pay' process? Usually, that entails an enterprise-wide effort to break down organizational silos."
  • Take a holistic view of the technology and tools needed. Such tools can vary from Robotic Process Automation to blockchain. "Companies need to determine the right point on the spectrum for their needs.They also need to determine which vendors to work with. What is needed is a holistic view across multiple tools and applications, to see how all the pieces fit together."
  • Build foundational data capabilities. Data is "the raw ingredient that organizations need to fuel these applications. It takes a significant amount of data to create and train the algorithm to recognize patterns and make predictions based on those patterns."
  • Get the right talent in place. "If companies are to scale up their digital initiatives, they need a core nucleus of people that understand the technology, can apply it to different problems across business units, and begin to pollinate those skills to the broader workforce."