Many CIOs are just beginning their journey to a shared services model — consolidating common functions and systems to reduce costs and improve efficiency.
In today's competitive global economy, however, merely consolidating functions fails to deliver the flexibility and responsiveness companies must have to survive.
Driven by the need to find new and better ways to compete, firms are increasingly turning toward what Forrester calls global business services, which we define as:
Full-life-cycle, enterprise-wide business services that unify standardized, non-differentiating business functions into a common foundation for enabling flexibility, responsiveness, and a focus on business results.
The global business services organization doesn't sprout fully formed from a single seed.
It emerges through a three-stage evolution:
- First firms adopt the traditional shared service model, eliminating costly and unresponsive redundancies through consolidation of functions like finance, HR, IT, and real estate
- Companies then turn to standardized business processes to optimize the performance of the consolidated functions
- Finally, the functions themselves are reconstructed — joined together in various ways to form global business services — like procurement, employee workplace services, or research and development
Most of today's IT organizations are ill-prepared to help their firms deliver global business services. From an IT organization and management perspective, this means that CIOs must make six changes.
1 Transform investment management from project portfolio to business services portfolio
It's frequently up to IT to change the language and focus of investments. As long as the IT organization obliges the other business functions to talk applications, they will.
To make the change to services, CIOs can work at several levels. Some CIOs have begun using business capability maps, creating a high-level view of what the business thinks it needs to do to succeed and linking that to processes, functions, and goals — and only then to technology.
These maps can then be used as heat maps to highlight where global business services can be delivered. Other CIOs are moving to a services focus in IT's infrastructure and operations (I&O) organization.
These CIOs are adopting a business services portfolio approach to communicating the I&O spend as it relates to these same business capabilities — based on the ITIL concept of using services automation tools to link hardware, software, and IT's people-based services to the business services they automate.
2 Refocus the IT organization to manage business services
Few firms have tried to structure all of the IT organization based on business services delivered — at the line level, the focus still is on the skills and job at hand, like server or network management.
But IT's operating model has to change at the top, with the approach for resource management, strategy, and sourcing based on service delivery as value streams.
This places the services above production and investments — and software, hardware, and networks at the bottom.
3 Reform business relationship managers into business services orchestrators
The IT organization's next-generation relationship managers have to own IT's relationship with the global business services organization.
While they continue to drive technology-based investment projects, they also have to engage IT in coordinating and integrating with third-party service providers — including as-a-service or BPO offerings contracted both by the business and by IT.
Frequently this means helping the other business organizations understand and embrace the changes required to make the global business services successful.
4 Mature the IT vendor-management team to create a global procurement service.
IT's own vendor management has to mature significantly to be able to bring the vendors into the global service delivery model as described above.
In addition, IT's vendor management has to work across a matrix of other organizations in order to help deploy and participate in a global business service for procurement.
5 Transform the data center into a business services stack
To integrate and operate within the complex matrix of functions that collectively create the global business services model, IT's I&O capabilities have to stabilize, standardize, and automate.
I&O needs knowledge about assets and costs and to be able to rapidly provision solutions to match rapidly shifting needs.
This means moving to an increasingly consistent workload model to enable flexible cloud sourcing options.
It also means being able to run automated provisioning solutions.
Both of these must be supported across each individual business service, including any third-party solutions that are part of the global business services offerings.
6 Restructure the core systems to better enable services
Today's technology was designed for a functional world and needs to be restructured to support the requirement of global business services to deliver flexibility, responsiveness, and results.
IT can use an abstraction layer like service-oriented architecture to postpone restructuring, but in the long term, IT needs to deliver more consistent workloads to make cloud a real option, flexible middleware to allow for rapid integration, and core systems delivered as component applications that can be reassembled more easily.