Shared-services organizations are growing in popularity for some obvious reasons. First—as is evident at Verizon—the cost savings can be huge. Second, shared services give businesses a chance to rethink existing processes from scratch and redesign them based on the latest best practices. Both of those benefits are attractive to executives in all parts of an organization.
But one of the biggest reasons that shared services are catching on among executives is that they operate in terms that any executive can relate to. The shared-services organization is a business within a business. It must maintain and meet service-level agreements with other business units. It assigns pricing to its services and requires that business units budget for the services they want. It tracks results and reports metrics just as an outsourced provider might.
In other words, it demystifies IT operations for decision-makers and reports back to them in terms they value.
“You want your shared-services center to compete for the business just like a third-party service provider would and win the business based on a series of commitments it makes and that you can measure,” says Stan Lepeak, head of global research at EquaTerra. “[The shared-services organization] can say, ‘We’ve sold you these cost savings, and we’ve delivered on it.’”
The model can also protect IT from being pushed to take on more than it can handle. That creates accountability all around, and accountability is something that decision-makers cherish.
“If you want additional services, you have to pay for them, just like you would a third party,” Lepeak says. “It can help the shared-services center not be in a position where, just because you’re part of the company, you have to do everything everyone asks. That’s where you can get into trouble—because you’re trying to be everything to everyone and you end up not being anything to enough people who matter.”