Are IT Shared Services Dead? | Sherpas in Blue Shirts

For the last 30 years, companies have built shared service organizations, and IT shared services units have been the best known of these. IT shared services have created a lot of value for companies, delivering high-quality, low-cost IT capacity. But today they’re almost like zombies – resembling a body that’s alive but really isn’t. How did this happen, given the value that IT shared services have created for companies for many years?

The way IT shared services created value is through a series of functional disciplines such as infrastructure discipline, security discipline, applications maintenance discipline, applications development and project management discipline. IT shared services was tasked with and delivered high-quality, low-cost capacity in those disciplines.

The problem for IT shared services is that the world is waking up to digital transformation.

As the capabilities of the digital revolution become apparent, it’s clear that IT is integral to how companies or business units compete and win in customer experience and market share. However, the expectations for IT have shifted. Instead of providing access to a low-cost, high-quality utility or function, the focus now is to integrate technology into day-to-day business in a different and more compelling way – and doing it fast. And the innovations in cloud, infrastructure as a service, SaaS, etc. deal neatly and well with alignment and speed issues.

IT cost and reliability are still important, but businesses now focus on customer needs and experience and the speed at which IT can respond to those needs. Today, in the functional-disciplines model of IT shared services, projects often take a year to 18 months. This is unacceptable to business stakeholders focusing on customer experience and value.

The challenge of IT aligning with the business stakeholders and operating at speed is killing shared service organizations, as they are not designed to deal with alignment or speed issues.

So the question is: Can we operate IT shared services in today’s environment? There’s a line of thought that says, no, not in the way they are currently constructed. Rather than organizing by functional disciplines, organizations need to align technology services directly with the business units along service lines.

In many leading organizations today, business units are no longer buying IT services such as data center, application development, security or other functions from centralized IT. They are standing that down and, instead, aligning the technology end to end into the business units. This is an IT-as-a-Service model.

This model slices through layered IT organizations, reorganizing services according to business functionality. The result of the tight alignment between IT and the business is far more flexibility to move quickly to adopt new functionality and also scale IT consumption to actual usage. The model is very close to functionality on demand.

The IT-as-a-Service model is powerful. As it grows in responsibility, I believe it will completely disrupt IT shared services as we know it.

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