Ewald Comhaire
Jerry Johnson
Some claim that while the IT shared services model looks good on paper, it’s a nightmare to implement and doesn’t produce the promised ROI. Is this true? What is the actual success rate of implementations, and have they yielded real value? What is the optimum mix of people, processes, and technology needed to make the IT Shared Services model work?
Contributors
Transcript
Sanjog Aul [00:00:00]:
Good morning and welcome to CIO Talk Radio. To learn more about the show, please visit www.ciotalkradio.com. Today’s topic is Making IT Shared Services Work. Our guests for today’s show are Ewald Comhaire and Jerry Johnson. Evold is the Director for Global Infrastructure Services with HP and Crank. Jerry is the CIO with the National CIO and Director of Information Technology Services at Pacific Northwest National Laboratory in Richland, Washington. Good morning, pal. Welcome to the show.
Jerry Johnson [00:00:32]:
Good morning.
Sanjog Aul [00:00:34]:
So are we waiting for the weekend? Is this going to be a long weekend?
Jerry Johnson [00:00:38]:
Yes, we’re going to have a nice three day weekend and my grandchildren are coming to visit.
Sanjog Aul [00:00:43]:
So Ewald, you being from Belgium, do you have this concept of a long weekend or you anyway take a lot of time off here. I mean Europe people take a lot of time off, right?
Ewald Comhaire [00:00:53]:
We have, we have a little bit more holidays than you guys, but unfortunately this is not a long weekend for us. So it’s hard work for me on Monday.
Sanjog Aul [00:01:02]:
Okay, so talking about IT shared services, a lot of companies are talking about it, they’re trying to implement it, they’re having challenges with it and there are a lot of articles written, people have spoken about it. The problem here is that we are trying to try to eat the cake and have it too. What I mean by that is like we try to centralize it and when we want to centralize it, that means the business units feel that they are losing control and then we want to give it, give the control back to them and say that I’m only going to be paying for what I use. Now this in theory looks beautiful. Every problem is solved. But then most people who have tried to implement it, they have either been totally stuck with the accounting issues or there are other challenges which has prevented them from being able to adopt it 100%. So what are the problems here? Can we do an inventory?
Ewald Comhaire [00:01:56]:
Sanjog, I agree with you. It’s not easy to implement IT shared services. First of all, it’s an IT transformation and no transformation by definition is easy and most industry analysts recognize that. Quantum company called tail some good reasons why they fail. One, for example, they are so much looking into it just as an organizational model. The reality is you have to watch for changes at the people process and the technology level. Some companies try to go directly to the highest maturity model and implement things like pay per use.
Ewald Comhaire [00:02:30]:
We recommend that only be done in the more final version of maturity of an IT shared services models and finally we see a lot of customers that implement it like A traditional project where they think they can do it all by themselves with low internal health and generally most companies don’t do that on a regular basis and so it’s a reason why they fail.
Sanjog Aul [00:02:53]:
Jerry?
Jerry Johnson [00:02:54]:
Yeah, I think that there’s a number of items here. One is when you look at shared services, you have to understand first whether or not you’re going to do shared services in a free market model, if you will, in which the business units hold all the dollars and can echo dollars either to central IT or go outside versus a monopoly where they hold the dollars and they can make the decision on whether or not they want to invest in IT versus some other investment within their business unit but if they invest in IT, then they need to go to central IT. The problem with the free market model is that those business units can make uninformed price comparisons, do some bar, and ultimately diverge away from the standards that the organization may be trying to establish in order to get those cost savings and certainly the potential for less than optimal IT investments across the entire enterprise. I think the other key to IT in the free market model is that professionals are not particularly adept marketers. So if it’s a free market model and business units can go wherever they want, but the enterprise as a whole wants to encourage them to use it, they look for it basically to sell their services effectively but IT professionals, like you said, are not particularly adapt and I think that if IT sold sushi, they’d probably advertise it as being cold dead fish
Jerry Johnson [00:04:20]:
and then I think you already mentioned that the challenges of accounting and the added costs and overheads that actually come out of shared services model. And then, and then lastly, I think one of the hindrances is undesired behavior from cost sensitive customers. For example, we did some analysis here last year of our sold services for workstation backups and basically we went out in the organization of the policy for doing backups of workstation. We offered as a sold service network backups of those workstations but when we went out and looked at the organization, we found only 40% of users were actually effectively backing up their workstations and then the principal reason was, well, it’s too costly to use the sold service. So we discouraged what was a very easy way for people to meet a requirement of the organization and so we switched that away from a paid shared service to being a overhead funded service to make sure that we were protecting the organization’s intellectual properties.
Sanjog Aul [00:05:27]:
So tell me about the fact that you’ve got core IT function and the people are not changing with IT shared services. Basically, it’s a consumption model and you’re making it work. IT needs to know well in advance about each business unit’s priority and plans for the coming months. So this is so that it can scale or extend, it meets its need and have the authority to do so in advance. So the owners, who are the corporate executives should have an open checkbook, ideally to ensure that IT can scale or extend as needed. Now, this is what you would expect if you were truly considering IT as a lender but the fact remains is that we are always being forced to do more with less.
Jerry Johnson [00:06:17]:
So that’s a huge issue and a concern. Our sold services here, just to give you some background within the infrastructure pipe services, those are all done principally as core funded essential services and it’s really the information systems development that we do as a true shared service and that of course, is the place where you get the greatest variability of an organization wanting to build systems one year and not wanting to build the next year. So the challenge, as you well put it, is how do you handle those ebbs and flows of consumption. So we’ve really taken two approaches to it. One is our planning process and so the business units, while they make their own investments and make their own decisions, those decisions are made in a governance model in which they’re also engaged with representatives from other business units
Jerry Johnson [00:07:09]:
and part of that is to make sure that we’re making good, optimal decisions across the entire enterprise and not in individual silos or vacuums and it also then allows us to be able to plan a little bit farther out in the future as to what the resource needs are going to be. The other piece of it is having some way of being able to handle those peaks that I can’t handle out of my own death. Now at the laboratory here, I have an advantage in that we also do computer science as an external business and so while my organization is about 160 IT professionals, there’s about another 3 to 4 hundred IT professionals who do this as a business outside. So in a way they allow me to tap into that staff to handle some of the ebbs and flows. Now, lacking that, as most other businesses would, certainly having having a body shop or a consultancy organization on contract and be able to help you through those peaks and valleys, I think would be critical.
Ewald Comhaire [00:08:10]:
I just want to reinforce a couple of points that Jerry made that are really excellent. IT shared services is really about a better model to align the business and IT ended things like governance and the demand and supply management are really key capabilities that a shared service organization needs to build up. That is also one of the reasons why that is part of our shared services maturity models. The other thing I want to reemphasize as well is that there is indeed some investment needed to do any type of transformation but there’s been several surveys amongst them from Forrester that conclude that about 43% of all the U.S. companies and the ones that have been surveyed had a revenue greater than 1 billion. About 43% of those companies saw significant saving, anywhere between 5% and 20%.
Ewald Comhaire [00:09:02]:
So there may be some initial investment needed to get the train on the rail as to speak, but then you can see rapidly return on investment.
Jerry Johnson [00:09:13]:
Walt, could you maybe explain for me the other listeners a little bit about the maturity model that you referenced?
Ewald Comhaire [00:09:19]:
Sure. We have a six dimension maturity model which for example, which we help to understand first of all where customers are today in their maturity and then to help them progress over multiple. In fact we have fixed level of maturity. The six domains that we look at are technology and infrastructure. Are you able to share that across multiple businesses? Secondarily, how good is your information, your integrated information management? Can I measure service level? Can I do that in an integrated end to end way for my service? How well are you with demand supply management? I think the question Sanjog that you raised is excellent in that perspective as well. The governance is part of that fourth area culture and fact. People have to become more aware of IT as a business, much more customer centric, be aware of the service level that you have to that that you are offering to the business and finally two ones that are pretty obvious.
Ewald Comhaire [00:10:19]:
What’s your best practice processes to run the shared service organization? And how well does my portfolio, my IT services, how well are they designed? Are they composable for one service can be connected to another? These are the six areas that we typically evaluate and help customers evolve as they implement the model. Now, given that we are trying to
Sanjog Aul [00:10:41]:
become a vendor and at the same time we want to have the level of service level at an at least an acceptable level, how about a model where we would have at least a core set of services which are being offered to all different business units. They pay as an upfront retainer fee if you will. I’m just talking vendor customer lingo right now and also any spillovers is what gets into the hit services model. Do you think that hybrid would work so that at least it gets that minimal budget so that if there are ebbs and flows then we know that the core expense of IT is met. It sounds like a nonprofit almost.
Ewald Comhaire [00:11:21]:
Yeah, no, I think it’s a great question. Absolutely. We actually recommend a hybrid model. It would actually be a mistake to put everything under shared services. The idea is really to take the most common function that really can be shared where you have economies of scale between the business units and put that in a shared services model. If you find some really special needs, it is very appropriate to do that in a more traditional way. In fact, we recommend that and IT hybrid model will work really well. There’s no issues with it
Jerry Johnson [00:11:54]:
and I would agree 100% with you, Walton and that’s precisely the approach that we take here as well. Core services, again, things like infrastructure services, even our data processing environment where we want to make sure that we’re maintaining technical standards that allow our information to be exchanged and the like. We have some set of services which are, which could be categorized as infrastructure but are not items that appeal to everybody. So for example, a core infrastructure piece would be the network or email or telephones which everybody uses a core or a non core infrastructure fees where we charge back might be video conferencing where a very much more limited number of people use IT and you can measure their usage and charge back for it and then finally, as I mentioned earlier, we, we do charge back directly down for information systems development and, and that’s very much driven by the business units and their needs.
Ewald Comhaire [00:12:50]:
Just want to pick up something that Jerry touched, which is really important if you can balance the different chargeback mechanisms to create a wide behavior for the business. So for example, if it is a common service that is consumed by everyone, you may just use a normal chargeback a couple days chargeback to all the businesses because it’s everyone needs this service but if you find something that is more specialized or only a few businesses need, or it’s a higher level of service, you can use a different chargeback model like a subscription model or something like that that set the right behavior without adding too much complexity.
Sanjog Aul [00:13:26]:
Let’s take a quick break, listeners. We’ll be right back after these messages and talk about the human side of it. Assume that you have an employee or IT organization worker pulled out by the executive management and the IT leadership to go ahead and serve the other business unit users as customers and now they know that these people are actually not customers. They hang out with them at a water cooler and discuss different things but now they’re supposed to deal or see them in a different light. Does that really happen? It’s a more a human angle that we have to touch and see if how do you bring about that expectation and set that expectation and how do manage them to that expectation. So please stay tuned.
Sanjog Aul [00:14:07]:
We’ll be right back after these messages.
Sanjog Aul [00:17:02]:
Welcome back to the show folks. For listeners who just tuned in, today’s topic is Making IT Shared services work. Our guest for today’s show are Ewald Comhaire and Jerry Johnson. Ewald is the Director of Global Infrastructure Services with HP and Jerry is the Chief Information Officer and Director of Information Technology Services at Pacific Northwest National Laboratory at Richland, Washington. Before the break we touched the side where we are trying to have a human being who’s an IT worker to change their mindset that they become now a vendor employee, that is IT employee and serve the customer which who used to hang out with them at the water cooler discuss about different things and we are expecting that they would work with the same level of deal and responsibility as they would soon as they would if this was really a customer. So how do you literally brainwash them or how do you hypnotize them for them to really behave that way so that you can get the true value and the service level that you’re expecting from your vendor? Ewald?
Ewald Comhaire [00:18:05]:
You will, yes. It’s another great question and we definitely don’t use any voodoo to get this going but I get that for you. It’s probably one of the most difficult things to change is the culture and the testing part. What we see in most projects is that it’s 66%. Two thirds of the success is getting the culture and discussing the population. A couple of things we can do.
Ewald Comhaire [00:18:28]:
One, it doesn’t have to be looking at it from a vendor supplier relationship. In fact, we are looking to make it more like a business with looking with having them understand the things that a business employee does. For example, be aware of what products do you sell, know what services, what service levels are you responsible for, though much more understanding measuring certain things that typically were not measured before and then making up a portfolio, doing demand supply management. So there are a couple of techniques that we can learn the IT employees that are specific for a more business oriented IT organization. Of course we provide things like faucet training around ITIL processes and others, making sure that customers understand the right processes and final point is it may be that not every employee feels perfectly comfortable in a shared service organization and you may need to get some supplemental staff or switch some staff in case that would be an issue but in general, getting the staff and the culture right is probably the most challenging area.
Jerry Johnson [00:19:41]:
Yeah, I’d agree with that 100%. Management is so responsible for fostering that culture they call cultured portals because you grow that they don’t just magically appear. So within our organization, we’ve made that customer service or that customer satisfaction a one of our core values and things that we reinforce through a number of approaches. One is simply training. We subscribe to a book and some training from associates on IT at your service. That helps our leadership staff, our staff who are assigned as service managers and we actually use that term service managers to better understand the customer culture and how to approach those customers. We do make copious use of service level agreements.
Jerry Johnson [00:20:27]:
We measure, measure not just the service level agreements, but the things that you might typically see in a service level agreement like uptime and response time and things like that, but also customer satisfaction because ultimately it’s that, that customer satisfaction that’s the fundamental measure of our performance. So we can measure uptime and response time and bandwidth and all of those kinds of things, project delivery but ultimately if the customer just explains that they’re unhappy, then we failed so measuring that customer satisfaction is very important to us. We do have customer representatives, so we, we have customer representatives that work at the senior level within each of business units and on down. So they have as part of their job responsibility, customer representation. So I mean ultimately I think that management needs to help and foster that customer satisfaction, customer service culture and reward staff for appropriate behavior in that matter.
Ewald Comhaire [00:21:27]:
Just want to add something to what Jerry said is what we typically help customers to do is within management of change of projects and for example, training is a key element of that but also things like transparent communication plans, making very clear to everyone what’s expected, and also defining new roles and responsibilities. In our maturity model, we have something like 170 roles and we’re very clear on what the skills are that are needed for each of the roles in the organization, how many of each role you need, and what actually the purpose of the role is and so making that very clear in the management of changes approach is the key to success.
Jerry Johnson [00:22:09]:
Yeah, I think that role management is a real challenge and we certainly see that here. A lot of role confusion between the IT staff, particularly those in leadership roles, customer representation, portfolio management, service management and similar roles that are out in the business units and trying to reach some clarity of those and even even more important, from my perspective, some consistency in those. The business units all want to manage this a little bit different and that that makes it very challenge within IT organization then to help develop individuals and give them opportunities to move from one position to another as they develop in their career. So helping to define those roles I think is very important as well.
Sanjog Aul [00:22:54]:
Now with all the changes that you have to bring about, I see most of the changes that you’re trying to make are going to result in intangible, if you will, like customer satisfaction or service level improvement and all that being done by one portion of an organization for another portion of an organization. How do you measure whether we are going in the right direction, Jerry?
Jerry Johnson [00:23:21]:
Well, we actually survey our customers we survey customers throughout the year as we deliver services. We survey customers annually across the entire breadth of our services, not only asking their level of satisfaction with those services, but how important those services are to them. So particularly for things which are core funded, it helps us define are we investing in the right places. So if they say the most important thing to them in IT is the network, then we should expect to see that a high percentage of our budget is being spent to make sure that we’re delivering exceptional network services. If what they say is video conferencing is not important to them at all, it’s probably an area that we should be investing less in, even if they’re dissatisfied with it. So yeah, we do survey our customers annually across the board and then much more frequently upon delivery of individual services.
Ewald Comhaire [00:24:21]:
And it of course also depends on what the objectives are for your shared services organization. Most customers would like to see some cost savings as a result of implementing shared services. But what we also see, and in fact, even more just to name the Forrester research that I mentioned earlier on the cost savings, is that about 60% of those companies that implemented shared services reported that they now saw it as being more strategic to the business, much more closer aligned with partners to the business and while that may be difficult to measure, I think it’s a really important outcome as well of such a project. We also see improvements in quality of service and these can be measured by doing things like Jerry mentioned, having a survey directly to your business. In fact, benchmarking everything is something we recommend to a shared service organization because it should also look at which are the right services to do ourselves. Which services should we perhaps store from an outside provider because we cannot do IT as efficient, they’re not that strategic and making those decisions is really very important.
Sanjog Aul [00:25:34]:
Let’s take a quick break listeners. We’ll be right back after these messages and talk about the levels to which you can implement IT services specifically for the organizations who are having compliance mandates to meet and that requires some exclusivity of the IT resource resources consumption and with that being said, we cannot go halfway and still get the full value of IT security services order. But that can be challenged and let’s see what the thoughts are. So please stay tuned. We’ll be right back after these messages.
Sanjog Aul [00:29:02]:
Welcome back to the show folks. Today’s topic is Making IT Shared services work. Our guests for today’s show are Ewald Comhaire and Jerry Johnson. Ewald is the Director of Global Infrastructure Services with HP and Jerry is the Chief Information Officer and Director of Information Technology Services at Pacific Northwest National Laboratory in Richland, Washington. Before the break, we spoke about the compliance mandates which might be affecting a few organizations and they cannot allow a shared approach to the IT infrastructure that they use and have to have some exclusivity on that with such organization, does it even make sense to go the IT shared services route? Would you have a partial IT shared services model?
Jerry Johnson [00:29:48]:
So this question probably a little harder for me to respond to in my particular environment. Certainly we’re on very compliance driven, but compliance driven from a different perspective than most commercial organizations would in the sense of trying to keep the book separate. Separate, if you will. Our compliance is much more driven from safety and health and quality and federal regulations, not necessarily dealing with financial reporting but from our perspective, having a shared services model is probably a challenge to compliance success in our environment because we in fact need to better integrate across the business units in order to effectively meet the compliance demands that come towards us. But again, our environment is a little bit different and this might be one that Ewald can respond to a little bit better than I can.
Ewald Comhaire [00:30:40]:
But I think it’s first of all a little bit of a misunderstanding that in a shared services environment everything needs to be shared. For example, we have a shared infrastructure service and yes, you can reserve through that service in a very rapid way, in a very flexible way, you can reserve a shared resource which is like maybe a virtualized environment, but at the same time you can request a private resource from that same shared service. So the fact that it’s a shared service does not necessarily imply that every single element of IT needs to be shared as well. You can have a perfect flexibility and choice to the business. Now of course what you want to do is drive the right behavior, that is give you an example if a business user, and that’s actually the case in HP as well, me as a consumer. So DHP shared services from a business perspective, when I reserve a shared server, I’m actually not charged for it. It’s part of my normal IT allocation. If I do request a private server because I have regulation need, for example, then I will be charged supplementary for that private service.
Ewald Comhaire [00:31:46]:
So there is definitely one flexibility but secondarily you may have to pay a little bit of extra, I think, to use a dedicated record burst for your share.
Sanjog Aul [00:31:57]:
Now, every business user has a perception that their requirement should be a number one priority and they expect IT to treat it accordingly. Now you’ve got multiple business units. Everyone says do my thing first because I’m paying for it, because as a customer I feel that I’m the most important person on this planet. When such a thing comes and you got limited resources because your budgets are also closely you want, how would you handle first arbitrations.
Ewald Comhaire [00:32:26]:
That’s a really great question. In fact, like always, the right answer is in the middle. You need to keep a balance. First of all, the objective of a shared service organization is to get economies of scale for the things that are really terrible and very poor and common to many of the business units. If you get an or that you typically want to use an allocation based model where you know it’s part of the annual charge for IT services but then if you have really something more special or more that one business unit wants and it’s really more unique, then you know they should pay for that as a supplementary service. It doesn’t mean that you cannot support them, but it has to be allocated in a different way and that’s really also important. If you have a company with multiple businesses and not every business has the same affordability model, from an IT cost perspective, then you want to kind of align to your lowest affordability and then charge supplementary for the extra services that the more rich, should I say business unit can afford.
Jerry Johnson [00:33:27]:
From our perspective, I agree with you all that this is a challenging area. From our perspective we really do two things. One is we negotiate on an annual basis a core team or a core level of manpower that’s going to be provided to the unit for some set of projects that they have in mind for that year. And then we, we recognize the fact that there’s going to be some known unknowns that are going to occur throughout the year. And so we set aside perhaps 10% of our information systems development manpower in order to be able to handle the peaks and valleys. And then those are available basically to be able to handle these number one priorities that, that pop up and trump all the other priorities that the business unit established at the beginning of the year. So in essence contract a certain FTE level of support and then within that FTE level of support for that business unit, they have some opportunity then to shuffle the priorities around within the set of projects that they have for that period of time.
Ewald Comhaire [00:34:34]:
I can add a really good example from HP internally, I’m part of HP Services and HP Services is what has the most employees from the company. We have over 60,000 – 65,000 employees. However, from an IT complexity, we have much less processes than for example, more of our manufacturing parts of HP that need supply chain management and what have you. So if the organization with the most employees would be charged all of the IT overhead, cost, get the more that the other businesses would need, we would actually not be competitive in the market. So you always need to balance the services and what you charge back to every employee in a balanced way looking at the competitiveness of all your businesses.
Jerry Johnson [00:35:20]:
So if you were to take this.
Sanjog Aul [00:35:21]:
So if you were to take this. IT shared services model to its extreme, where we are saying that it is becoming a vendor to the rest of the organization, so let it openly compete with other vendors who could provide similar services or same services and really get the best price for the organization, is that done or is it even possible?
Jerry Johnson [00:35:42]:
Well, it kind of goes back to what I was talking about earlier, about the, the free market environment. I think probably the biggest challenge we have is not so much whether or not we have competitive prices, but making sure that they’re a proper price comparison and by that I mean that there’s a tendency in business to look at the short term. So for example, we offer selling desktop through a sold service to our organization and what they get on their desktop is a standard piece. Equipment that’s supportable by our help desk, comes configured with an operating system with the standard desktop software that can be plugged into the network and with a few keystrokes, be up on the network configured with all of the core application that has a price tag to it, which is higher than if an individual went down to the local retail store and said, I could buy a computer with the same CPU and the same memory for several hundred dollars left. So what they don’t, what they don’t understand is all of those shadow costs, if you will, that occur if they go outside of that. Now that’s a pretty simple example. But when you compare that then, or move that down into information systems development, and now you start thinking about integration with other systems, moving data into data warehouses, making that information available for business analysts.
Jerry Johnson [00:37:04]:
You can build systems within a individual business unit on the cheap, but in the long term it’s going to end up costing you more. So one of the challenges that we have is making sure that business units compare Apples to Apples when they’re looking at the cost of going outside for information systems developer services as opposed to acquiring those services from the internal organization.
Ewald Comhaire [00:37:30]:
No, I think. Yeah, sorry. No, I was just going to say that Derry made a couple of good points and, but primarily the IT shared services model is really a model where we want the IT organization to work and behave more like an internal line of business. Now we recognize for some companies that may not be the end state. Some companies go to a shared services model just as an intermediate step to become. For example, maybe an external service provider could be in a small scale with some vertical industry experience for example, we have some proof points where that’s being done in the transportation industry or in the car manufacturing industry but it could also be as a middle step to become more a business where IT becomes more enabler of business innovation. Where for example, some of the savings of going to shared services are reinvested to change the ratio between how much an IT organization spends on operation versus innovation and at one point in time, if you can reverse that and spend for example 60% on innovation and only 40% on maintenance, you actually become more an innovator or innovator support engine to the business
Ewald Comhaire [00:38:44]:
and that would be another great desired state for IT organizations to be in.
Sanjog Aul [00:38:51]:
Now assume that with all the discussion we had today, a lot of people are impressed. They’re all informed and enlightened and they want to know go about introducing IT shared services into their organization. Comes to a point where first you have to diagnose whether this organization truly is ready for adopting IT shared services and if yes, then what would be the preparations that they would do or have to go through before they would say okay, let’s kick this new thing off.
Ewald Comhaire [00:39:24]:
You all, great question. So we have a service that we call the Transformation Planning service and what it really does is a couple of things. One, it tries to understand a little bit better where do you want to be because I think Jerry mentioned already you mentioned it as well. Not every company needs to be at the highest level of maturity, needs to be a true utility with on demand side pricing and what have you. So understanding where the company wants to be strategically, what are some of the success factors is one secondarily understand where you are today and we measure that again against our six dimensional maturity model. Understanding how big the gap is from a field perspective, from staffing, from IT purposes.
Ewald Comhaire [00:40:08]:
Do they already have a service catalog? Understanding where they are and then out of our methodology comes a recommended roadmap for the customer that is always customized and so on to help lay out what you can do in a first phase, second phase until you reach the desired maturity and that service is, we have delivered that multiple times with really good results.
Sanjog Aul [00:40:34]:
Now the fact remains that you all like with HP, of course there’s a price tag attached to all the good consulting that could be done and some value can be delivered. How about companies who are not able to go through a large consulting engagement which will allow the due diligence, upfront preparation and the diagnostic. Would there be some tips for people like those who still could leverage the itch services?
Ewald Comhaire [00:40:57]:
Yeah, it’s a really great question and of course there’s not a unique one. Most of our customers absolutely that. So one of the things we have done is split the services into smaller chunks. So for example, we can do the planning service at a pretty good point. It’s not really a large scale engagement and out of that comes a plan. It doesn’t mean that you have to stay with it for the implementation. So by splitting the services into smaller easy consumable chunk that delivers value and you know really well on beforehand what goes in and what you get out is the way we try to answer that
Ewald Comhaire [00:41:34]:
really great question.
Sanjog Aul [00:41:37]:
Now Jerry, the question for you is that given that you’re on the my side of things, how would you evaluate that whether we should use inside resources to make this happen or would you look for outside help and if yes, how would you qualify who should help you with IT shared services?
Jerry Johnson [00:41:54]:
Well, that’s a great question. We’ve slowly evolved and really back and forth between the shared services model over many years here and so it’s kind of hard to sit here and think about making a decision right now we’re going to move from one model to another as opposed to evolving from one model to another. I think the other thing to keep in mind here is that it’s not clear to me anyways that the shared services model is the right model for your entire life cycle of your organization’s IT maturity. So for example, I think the shared services model for our information systems development have served us very well as we’ve optimized business processes within business units but once we start looking at trying to optimize business processes across those business units, for example customer relationship management, it becomes much more challenging to do that and the reason why is because there’s no single organization that seems to own those cross business unit processes and so you actually, we’re actually looking at maybe pulling back on a portion of our shared services model in order to help optimize those cross cutting processes but it’s not real clear to me that there’s any magic decision that you sit down with a spreadsheet and start working out numbers and say well, we’re going to move from this model to another.
Jerry Johnson [00:43:21]:
A lot of it really comes down to the dialogue and the communications with people who are stakeholders in this. I use a favorable adage that you never ever wash a rental car and the reason why is because you don’t own it. So if you want to move to this kind of a model or any kind of a model within your IT organization, you got to get the stakeholders to own it and the way you do that is there’s just those constant dialogues, communication, engagement of the stakeholders as you’re making those decisions and you start making the ultrashifting and how you’re delivering your services.
Sanjog Aul [00:43:57]:
Now, as the very I would say the core of IT is once you suppose I’ve implemented it, but to manage it and see things going in the right direction, we definitely need to have some tools or techniques to keep a close watch on where the IT shared services is going. Specifically with chargebacks and other form of financial transactions that might take place. It could become a nightmare for a top level executive to be able to handle, get a handle on where things are going. So is there something out there which allows you almost like a dashboard which will say this is an IT shared services dashboard which allows me to. I took out two pennies from this one and gave five pennies to this one.
Jerry Johnson [00:44:37]:
Now in our case, these are all things that we’ve developed ourselves over an extended period of time. We were talking earlier about a different funding model, core services, subscription services, metered services and the like. We kind of joke here that probably the best place to train new financial specialists in the laboratory because if there any way of funding IT, we use it, we use about every model you can think of. So we have developed over a period of time fairly comprehensive tools for monitoring costs and moving costs and project planning and those do roll up into a dashboard that I’m able to look at and very quickly assess where we’re at in terms of where our manpower is being expended, how we’re doing in cost, how we’re doing in our customer satisfaction and the like and I do think that those are key tools that CIOs regardless of the service model that they’re using, should be tracking.
Ewald Comhaire [00:45:33]:
You will at the highest level. We use of course our maturity model as the executive dashboard to track versus where you want it to be from a desired state and from where you are and objectively how you made progress across these six dimensions but obviously there’s a whole series of other tools that help you implement better. For example, we have a tool that help you do portfolio management where you can better prioritize the projects and their return on investment. Look at it from an enterprise portfolio of projects to some integrated solutions that for example, implement a shared service that are pre built by where customers can just buy the shared service that’s already pre built and working in the other environment is another set of tools that we can now of course for every service you need to have your individual tracking tool to see do you meet the service level, do you meet the costing for your service and what have you and there, there is a whole series of management tools that we offer to help customers implement it.
Sanjog Aul [00:46:39]:
With respect to disruptions and the dynamic pace of this industry business environment overall. You see things like outsourcing taking place and you will also have M&A happening outsourcing. You may see that you have another vendor who’s performing some development tasks and or infrastructure maintenance tasks and you would have issues there and you’re trying to blend IT, shared services with it and at the same time you will do all that work and then you will see a next round of mergers or acquisitions happening. So you had a lot of disruptors, a lot of moving target issues that you’re going to deal with. So this is my last question, but what we need to see is how much do we go into these directions and how do we best handle outsourcing of other sort of situations like this and how do we, when we have a mergers and acquisition situation, how would we handle in such a way so that we can preserve the most of our efforts so that we don’t keep spinning our wheels?
Jerry Johnson [00:47:43]:
I think that actually one of the advantages of the shared services model is that it does force you into the discipline of documenting what those services are, documenting the metrics and the measures of delivery of those services and as a result you ultimately end up with a document that can be converted into a specification for doing outsourcing. When we’ve done this in several cases where we looked at some of our internal services, developed service level agreement and basically packaged them up into a request for information that we sent out to potential outsourcers. So I think that helps create a discipline now when you get into the mergers and acquisition and again, that’s a little bit difficult for me to, to relate to in my particular business but again, it strikes me that if you, if you have a well defined set of services like this and you go through a merger of an or an acquisition, you now have a at least a starting point for dialogue for the services that can be provided out of the simple IT organization of the company which is doing the the acquisition with those who are being acquired and do some service comparisons to make the best decision.
Ewald Comhaire [00:48:55]:
I would strongly support that last point and of course within HP we have that practical experience in how that can make a merger and acquisition much more easy. Exactly. For the reason that you’ve already integrated the services across all your businesses you have very few descriptions on them. It’s a wonderful starting situation if you have to integrate another company that you have this already very disciplined type of approach. Now another area where shared services really shines is it allows much more flexibility between a 100% in sourced model where IT does everything in house and 100% outsourced model which was kind of the choice of the last 10 years where you either were in source or outsourced. It allows a model that is in between. Where an IT organization looks at what their core services are, where they are really good, where they are really an added value to the business.
Ewald Comhaire [00:49:48]:
But they may selectively decide that some services can be best outsourced to an external company and then all the discipline around how to organize that business wise, what services you need, what the definitions are, the service level helps you still keep control over the relationship with the business and then monitor and deal with the relationship of your third party. I would also say that of course no IT organization can decide that, but if your company decides to outsource like Jerry said, you are in a much better position to pass on your business requirements to the outsourcer, understand what services they want and make sure that you negotiate the right contract with the right to force and the right linkages to make the outsourcing and successful at document.
Sanjog Aul [00:50:35]:
On behalf of the show and our listeners, I’d really like to thank you Evolved and Jerry for sharing your thoughts about how an organization can gradually adopt high teacher services so that it doesn’t bite more than it can chew and it fails through the various level of maturity that you described evolve and to get the most benefit and how we can effectively meet related challenges which could prevent us from being able to get the most out of services model.
Ewald Comhaire [00:51:03]:
Thank you for hosting us.
Jerry Johnson [00:51:04]:
Yes, it was very enjoyable and had a lot of fun.
Sanjog Aul [00:51:07]:
Thanks again. Now IT services on the surface definitely looks like a dream come true. The devil seems to be in the implementation and of course the initial due diligence and how do we go about it. Then there are challenges beyond just accounting for who consume how much IT. The mindset of the people delivering and the people consuming IT needs to change and the executive management also should champion this effort to ensure adoption. There are still a number of related issues which undermine the true value of the IT shared services model. However, with the right plan and a gradual adoption approach, this dream can really come true. Thank you again for listening to CIO Talk Radio.
Sanjog Aul [00:51:53]:
This is Sanjog Aul your talk show host. Till next week take care and god bless.
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