White paper: Reduce and reuse services to reap ROI - a step-by-step guide to implementing shared services

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1 One of the most common buzz phrases in the business world right now is shared services. But what does that really mean for today's network-enabled organizations, and is the shared service model right for you? At their most basic, shared services are tasks performed by a dedicated unit of a business at the request of other departments. A human resources department, for instance, can be viewed as a service shared by the rest of the business. As this example shows, the concept is far from new, but modern networked businesses can structure a far greater and more specific array of business activities into a loosely coupled set of shared services. And when implemented correctly, shared services reduce duplication, save money, support detailed performance metrics, augment security, and increase efficiency. But what does that really mean for today's network-enabled organizations, and is the shared service model right for you? This white paper will provide a set of guidelines to help you determine whether and how your business should implement a shared services model. Using the example of a payment-processing system throughout to help illustrate the points, we will give you an overview of the benefits you can reap, potential challenges on the migration path, and insights into where and when shared services can be of greatest benefit to your organization. Shared services defined A service is a clearly defined task, performed on request, and a shared service is a service made available to an entire organization. The shared services delivery model is built around loosely coupled services that fulfill specific business objectives. Shared services are usually implemented by new IT systems, but they entail more than just technology; they often involve a wholesale remodeling of business processes. Shared services can be: Hosted by separate business units Centralized at a single service-provider hub Outsourced to another company

2 As the last point indicates, shared services need not be internal; they can be purchased from or sold to other enterprises. For example, the Secure Channel managed security services, provided by a consortium led by Bell, is a service which is shared across federal government departments and agencies, with the possible future extension to provincial governments. Imagine an enterprise with a dozen regional units, each of which has to pay vendors and contractors. Historically, each region has handled such payments independently. Instead, a new business unit could be created that processes payments for the entire enterprise as a shared service. If implemented correctly, such a service would reduce duplication, be reusable by new regional units as the business grows, and pay for itself through greater efficiency. Do you need shared services? The key indicator that you could benefit from shared services is duplication. Whenever multiple business units are performing the same task, consider converting that task into a shared service. However, just because a task can become a shared service doesn't mean it necessarily should. Because of this, it's important to specify in advance what the advantages of a new shared service will be, and how they will be measured. The benefits can be tangible, such as time saved or costs reduced, or intangible, such as reduced complexity or increased employee morale. Consider our payment-processing example. Duplication exists across the enterprise, and the benefits of converting payment processing into a shared service are numerous: Fewer employees doing the same work Fewer payment errors Greater security, at a single point of control Centralized measurement and reporting Much easier implementation of business rules (e.g., a rule that payments of $10,000 or higher must be verified by a senior manager) A single centre of accountability The services can be easily reused by any new business units This is clearly a case where a shared service makes sense.

3 Six ways to maximize the benefits of shared services Once you've decided to convert a task into a shared service, you need to define and implement the new service. There are six keys to a successful transition, which we will illustrate using our payment-processing example: 1. Focus on business objectives In our example, it could be tempting to create separate cheque processing and electronic transfer services. But shared services should always have business objectives, such as "pay a vendor", not functional objectives, such as "perform a bank transfer" which would more accurately describe cheque processing and electronic transfer services. 2. Separate what from how The internal details of how a service is performed should be hidden from its customers, who specify only what is done, not how. A request to our payment-processing service should consist of only the amount, the payee's details, and whatever authorization is required: implementation details, such as internal accounting procedures, or whether the money is sent as a cheque or a funds transfer, should be invisible to the user of the service. 3. Define processes and procedures A shared service requires well-defined, well-documented procedures to support the service, and a carefully specified internal process to implement the task in question. 4. Be conscious of security Centralization makes oversight much easier, but a poorly implemented shared service can become a single point of failure. For example, an error that paralyzes payment processing would previously have only affected a single region, but now would affect the entire enterprise. This risk should be mitigated by careful design and extensive testing.

4 5. Decide how the service will be funded There are several ways of funding a new shared service, including: Dedicated funding as a new business unit Shared funding from all of its users A payment model, in which the service provider charges its users on a per-request basis 6. Decide whether to outsource If all the expertise you need is already available within the enterprise, it makes sense to keep a shared service internal. But for more complex domains, such as the ever-changing field of networking, consider outsourcing to a business that may already offer the services you need. What existing shared-service frameworks can you use? There are a number of existing frameworks that can be leveraged to support a shared-services model. They can be used independently or to complement one other. Service Oriented Architecture (SOA), popularized by many organizations, is an IT architecture that focuses on modeling IT systems as a linked collection of services, with an eye towards maximum reuse and flexibility. The key to SOA is that all of an enterprise's IT assets are linked and loosely coupled with well-defined interfaces, and so can be used independently or combined to achieve business objectives The IT Infrastructure Library, or ITIL, is a detailed and highly refined set of best practices for IT infrastructure and operations, with a particularfocus on managing ongoing operations The Zachman framework provides a formal method for modeling an enterprise and its components. It is particularly useful for distinguishing between business models, system models, and technology models; these distinctions in turn help identify and define potential shared services

5 Deploying shared services The implementation of shared services can be challenging. Such a transition can require a whole new perspective of how the enterprise works. It's best to begin with relatively small, well-defined support services. Once the growing pains are worked out, you should then think about converting core business processes into shared services. Take advantage of the fact that shared services give you a single point of measurement. In our example, the new payment processing service makes it easy to access full and immediate data on all payments made by the enterprise. Compare this newly available data against historical values to measure the costs and benefits of the new service. Conclusion When properly implemented, shared services can be of immense value to an enterprise. They reduce duplication, heighten security, increase business flexibility, provide a single point of oversight, and can be reused across an organization. But a cost-benefit analysis should always be carried out before moving forward. To understand how you could implement a shared service model holistically or for specific services within your enterprise, please take a look at our shared diagnostic tool or contact your account representative. The Bell professional services offering for shared services includes audits and assessments, program design, migration, and on-going compliance audits. Bell Canada All rights reserved.

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