The Secret Sauce of Shared Services

Gunjan Trivedi is executive editor at IDG Media. He is an award-winning writer with over a decade of experience in Indian IT. Before becoming a journalist, he had been a hands-on IT specialist, with expertise in setting up IP-WANs. Reach him at gunjan_trivedi@idgindia.com

In my opinion, adoption of a shared IT services model should be looked at from two very simple aspects. First, the attributes that IT leaders need to adopt the model; and second, what they should and shouldn’t do.

The concept of shared services isn’t new. What used to be once called consolidation or centralization of business services in the early 80’s, is exactly the same notion that has now evolved to this fancy new name.

What has changed, though, is the fact that there have been multiple factors at play over the last three decades that have reshaped the concept and given shared services a new identity. Among them are significant improvement methodologies—such as BPR and Six Sigma—that stressed on getting more out of business processes. This, coupled with the oscillating waves of the economy, added to the urgency to do more with less. In the meanwhile, organizations gained remarkable maturity in identifying, realizing, and adjusting the foundational blocks of the people-process-technology triumvirate. Also, exceptional advancements in information and communications technologies strengthened the model’s backbone and enabled the outreach of shared services. 

But, as I said, it isn’t new. Not even the function of shared IT services. At least, theoretically. The concept is deep-rooted in the fact that businesses have been taking this route to reduce operational costs, increase efficiencies, and enhance their organization’s architectural ability to transform into a service-oriented enterprise.

However, despite shared services’ proven track record, multitudes of Indian conglomerates have hardly got their feet wet yet. Perhaps, we are yet to find the right secret sauce.

In my opinion, adoption of a shared IT services model should be looked at from two very simple aspects. First, the attributes that IT leaders need to adopt the model; and second, what they should and shouldn’t do.

Once these requirements are recognized, shared services can be then divided into three distinct stages. Stage one is when an enterprise has a singular focus or single-function shared services. Stage two deals with multi-function shared services. And stage three is all about comprehensive, enterprise-wide, shared services that aren’t limited to back-office functions.

These stages are quite permeable and do not have air-tight compartments. As organizations approach this model, one stage may merge into the next or enterprises may tread along two stages at once. However, the leadership competencies required at each of these stages vary.

Stage one calls for its leader to be highly analytical and to have team leadership skills while maintaining a critical focus on execution and results. The next stage asks its IT leaders to bring in strong communication skills, sharp customer orientation, and build relationships across management, business units, and geographies. In stage three, IT leaders should be able to develop people, be visionaries, and think strategically to not only solve problems but also improve the way problems are solved.

No matter at which stage an organization is in, the required leadership qualities or competencies get incrementally added for each layer. For every subsequent stage, a leader must assume the fundamental qualities required for the foundational layer and then keep adding on.

The success of a shared services model also depends heavily on certain fundamentals. Today, CIOs can’t afford to not measure costs or SLAs as comparative benchmarks before moving on, or not document processes and workflows or not have adequate risk monitoring and governance. You need to know your starting point, your end goal, and the path you take.

Another common implementation problem is to keep fighting the battles of yesterday instead of tomorrow. One needs to embed flexibility and foresight to the methods and processes that continually solve business problems.

It’s quite easy to fall prey to over-standardization of technologies and processes, or moving just the transactional processes to shared services while leaving out higher-end knowledge processes. It is also quite easy to believe a fallacy that processes that have already been homogenized would automatically fit for purpose.

Ironically, it is evident that none of it is any secret at all. Organizations have been leveraging these ingredients successfully while embarking on conventional enterprise-wide projects of various shapes, sizes, and forms.

But the biggest challenge en route to shared services is sheer inertia. To get over our fear of disruption and move ahead, I think, all we need is to just refresh, recalibrate, and realign our ‘secret sauce’.