Posts Tagged ‘sharing IT help desk’

Why do shared services fail?

September 19, 2012

There are a plethora of reasons why Shared Service models fail. However, understanding the key reasoning should help an organisation navigate what is often thought of as a painful and costly process. It is this thought which often persuades organisations to steer clear of 3rd party suppliers and adopt or continue with more costly and less efficient models.

Reading a piece of news about a shared IT service which failed to produce the expected cost-efficiencies or even created extra costs is far from unusual nowadays – the latest concerns being the Government’s new shared models, but many other cases have populated the press. However, this doesn’t mean the model is wrong: if implemented correctly and with the right metrics in place, it can deliver a whole new world of efficiencies, cost savings and value to organisations in both the public and private sectors. But to understand how to achieve success we first need to ask ourselves: why does a shared service fail?

Business Demand

The first consideration needs to be the driver for changing the existing Service. If the driver is purely cost then a Shared Service model will work for any organisation; however, it will be at the expense of quality of Service.

As we are all aware the current financial climate is proving a major constraint to all business sectors. This is especially apparent within the Public Sector and has led to a demand for low cost Service at the sacrifice of quality. Whilst it should not be the case (certainly given the critical nature of aspects of the sector such as the NHS), there is view that the user communities are more accepting to a low quality of Service. This enables a supplier to construct an operation which will provide a Single Point of Operation (SPO), but to meet the demands for cost savings they will often provide staff who can be either under-skilled, underpaid, unmotivated or a combination of the three. Typically such Services will be shared by a large number of organisations operating across different specialist areas. It will also be driven by the largest participants as they provide the greatest source of income for the organisation. This is likely to see an SME participant suffer due to the revenue extraction from a much larger organisation. This is by no means a slight on any such supplier – after all they are filling a void in the market place, and as long as an organisation understands these basic elements, this should alleviate many concerns.

Whilst the Private Sector is certainly not immune to the downturn, the demand for quality remains, just at a lower cost. This has led to the upturn in the number of household names investigating all possible efficiency savings. From Off-Shoring to Near-Shoring the options are many; however, the favoured from the user still remains within our own shores, just at a more efficient price. The success of shared models within the Private Sector is linked to a restriction on the number of active participants and a commonality in user demand.

Commonality

Where participating organisations share synergies such as profile/type of User demand and common infrastructure, the success of a Shared Service Model has a head start. The more diverse each participant’s environments, the more complex the solution and the harder it is for a supplier to deliver a consistently high quality of Service at an efficient price.

One Size fits all?

There are suppliers that will lead you to believe they have the exact solution which will meet your requirements and will roll out a price list of the Services provided and the cost of each aspect of the Service.

The simple answer is: One Size does NOT fit all! Every organisation is different and it is this approach which has led to Outsourcing being given a bad name in certain quarters. Every Service has to be built from the ground up and if a supplier is happy to quote you a price without having a clear understanding of your business drivers, infrastructure & strategic roadmap then you should be considering whether they are a suitable partner.

Wrong metrics

To understand if a shared IT service is being successful and creating benefits, you need to decide which metrics to use to assess its success. The cost savings of a shared service are normally calculated on a cost-per-call basis. Of course if you only take that into account, the savings are evident – but that is not the only factor to take into consideration. By sharing IT Support with a number of other organisations, with different systems, environments and requirements, it is difficult to enjoy the same levels of service a dedicated service can provide. You will typically get a reduced commitment from a supplier compared to what you would have in a one-to -one relationship; so things like first time fix rates, percentages, response and resolution time will be generally lower.

Delays, downtime and other inefficiencies actually increase or create new costs even if the general expenditure related to the service is low. That might be why the expected cost savings are not met by many organisations – expectations have to take into account many other factors as well. This does not mean there aren’t any benefits and cost savings compared to a dedicated service; they just have to be more realistic.

Hidden costs

On paper, a shared service will always be the cheaper option as it is designed to be marketed on a cost per call basis. However, expect additional costs for anything else you want on top of that. You buy a volume of tickets for a cheaper price, but when you break your threshold, you pay more per call – like going overdrawn in your bank account. If you’re a major organisation and you want to be able to control your costs, you are stepping into an unknown when entering a shared service model. It is important that the supplier is transparent on any additional costs you might encounter so that you are able to calculate a realistic expenditure that you can expect from the service.

Also, in a shared service, there is a very heavy reliance on process and knowledge coming through to the supplier from each customer, and any break in that knowledge will cause issues – and there is going be costs associated with that. So make sure your supplier talks you through and documents how such activities will be handled.

The successful shared service

There are definitely benefits in using a shared IT service, but in order to achieve them it is important that the model is implemented correctly. Generally speaking, a golden rule is that shared services work best when there are just a small number of organisations sharing, of similar type and sector and with similar environment, systems and needs. A good example of a successful shared service is one shared by similarly-sized legal firms which will have the same issues – mainly supporting standard devices, Document Management, email, digital dictation and so on, but without being in competition with each other on what concerns their technology offering, such as banks.

As for the service provider, it is important that the company used is transparent with what concerns cost and service expectations, and that they are committed to align their service to the customers’ existing SLAs at the very least, if not make an improvement.

Thanks to this, organisations can use the shared service in a cost-effective way to gain more efficiency, access higher skills for a lesser price, and at the same time not have to worry about the day-to-day management of their IT function as it will be well taken care of by another company. This way, they can focus on the core of their business and on how to use IT more strategically to enjoy even greater success.

Pete Canavan, Head of Support Services

This article was published on Sourcingfocus: http://www.sourcingfocus.com/site/opinionscomments/6270/

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Sharing the IT Service Desk: sharing cost, sharing quality

May 4, 2010

The importance of IT, just like that of public transport, seems only to be truly appreciated when it stops working properly and stranded users are left to reflect on the value of a more efficient system. The IT quality issue can become particularly important when inefficiencies and disruptions not only slow down the system and create delays, but get in the way of business operations or, even worse, cause losses. As many organisations might have unfortunately already experienced, an extra minute of downtime might lead to money loss, system malfunction can cause loss of data and lack of proper data protection measures can bring information security breaches, causing not only costly fines, but damage to the organisation’s reputation that might not be repairable.

The problem is that high-quality IT support is not always seen as affordable, especially when an organisation needs a bespoke, hyper-efficient, extremely secure service that can understand and meet the needs typical of their particular industry. In reality, however, there are ways to access an excellent service at a cost well within that of most IT budgets. Sharing an IT Service Desk with other organisations within your sector is an easy way to gain access to high levels of IT skills and expertise which are at the same time tailored to your organisation. Staff working for two or more organisations with similar needs, structure and business culture can acquire deeper knowledge of the environment, and the organisations taking part in the share can benefit from shared experience, avoiding the dangers incurred by others.

There are obvious concerns regarding this solution. Organisations might think their data and intellectual property are not secure or that sharing with someone that might well be a competitor could damage them or negate any competitive advantage their IT might bring. Furthermore they could argue that sharing support personnel might mean that there will be less attention towards their business or worse, that resources will be stretched thin due to dealing with the increase in incidents.

In fact the structure of a shared service desk should, if managed by the right provider, guarantee an improvement in service levels when compared to an in-house desk. Service Level Agreements and Key Performance Indicators will ensure the provider is always hitting the levels your organisation requires while having access to a central pool of staff trained to follow best practices and experienced in your specific industry can only improve performance. Take into account the fact that the shared aspect of the service means all of this will be delivered for a reduced cost, and the benefits in terms of efficiency also become apparent.

Despite its obvious benefits, a shared service is not for every organisation. The primary benefits are seen when the sharers are similar organisations and as such there are valid concerns when it comes to how a shared service might compromise any advantage IT might bring over competitors. Due to this there are industries and business sectors where a shared service may not be appropriate – retail or banking for example – but for organisations in the public sector or industries where collaboration is commonplace, such as Law firms, the likelihood of competitive advantage being affected is slim.

Organisations which realise that the kind of service they need to provide might be out of reach when the cost is shouldered alone are likely to turn to this innovative solution more and more in the future, identifying it as a valid alternative to full-scale outsourcing or off-shoring, where the cost advantage is often to the detriment of performance levels. While clearly not applicable to every organisation, as a model, shared services can be used as a route to bypass the dangers typical of services that achieve cost-reductions by cutting down on quality.

 

 

Pete Canavan, Head of Support Services

This article is featured on Director of Finance: http://www.dofonline.co.uk/management/cutting-costs-on-it-service-support-051004.html