Move Toward StandardsBy Michael Fillios | Posted 2008-06-06 Email Print
Taking a strategic view of shared services.
The HSC has played a pivotal role in developing, implementing and supporting the business model of Tesco, which operates in 12 countries. This includes a common set of business processes and IT systems that can meet the needs of various countries where Tesco sets up shop. The payoff: standardized core processes and systems that drastically reduce the time and cost of rolling out operations in new regions─most recently the United States.
A 32-member team developed an application that provides continuous replenishment of the shelves at more than 2,000 Tesco stores across the United Kingdom and the rest of the world. The team pulls sales data on 48‚000 different product lines every hour. This enables Tesco to adjust delivery quantities as little as five or six hours before the goods arrive at the store.
These accomplishments underscore the critical necessity for any shared-services endeavor: the need to be managed as one with the business. It is this need for intimacy between what can become opposing camps–business and technology–in any organization that distinguishes shared services from routine outsourcing. A disconnect between business and technology will easily negate any expected benefits from shared services.
The more integrated these units are with the company’s strategic goals, the more useful they can be in a constantly changing environment. They must distinguish between commodity and strategic services, align and package services around business processes, and orient service designs and service levels toward the customer experience. In doing so, they improve their overall value/cost contribution to the business and enable their customers in the business to optimize their own value in turn.
The journey to shared services isn’t easy. In fact, it is more than just a new internal unit. It is a mindset. Let’s use the term SOE (service-oriented enterprise) to recognize that the entire organization must now think of its activities as providing a service to a customer, whether internal or external. This will force a rethinking of demand on the part of internal customers; paying for a service means rationalizing a supposed need in terms of the organization’s overall strategy and its external customers’ needs.
The SOE’s purpose is more than simply moving people together into one location and giving them one system. Successful implementations integrate processes, people, information and automation to deliver a totally new set of capabilities. It is, as are all important endeavors, a political act.
An SOE realizes value far beyond the original goal of reducing operating costs. Organizations that find ways to make shared services work─overcoming the many people, process and technology challenges that shared services can entail─are well-placed to seize competitive advantage.
Michael Fillios has been at the intersection of business and technology for 20 years. He has led executives around the world in advancing their maturity in managing business and technology together. He is the chief solutions officer of BTM Corporation, a provider of solutions that help organizations improve the business value of technology. © BTMCorporation