Enterprise Shared Services
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1 Enterprise Shared Services Dave Kirk Manager, Enterprise Initiatives Management of Strategic Technologies Division Department of Information Services State of Washington (360) Jim Silvia Regional Manager Laserfiche x187 Timothy Rehac Partner, IT Strategy & Architecture EMC Consulting
2 Agenda Welcome / Introduction Establishing Enterprise Shared Services Enterprise Content Management Shared Service Questions & Answers 2
3 Agenda Welcome / Introduction Establishing Enterprise Shared Services Enterprise Shared Services Concepts How to deploy Shared Services Case Studies / Lessons Learned Enterprise Content Management Shared Service Questions & Answers 3
4 Centralized / Decentralized Pendulum We have swung back and forth between Centralized and De-Centralized over the past 40+ years, just swinging back to Centralized is not the answer. Centralized Scale Efficiency Specialization Standardization De-Centralized Customer Intimacy Alignment Flexibility Innovation 4
5 Service Orientation A Service is A means of delivering value to customers by facilitating outcomes that customers want to achieve without the direct ownership of specific costs and risks. ITIL V3 Services have a readily identifiable consumer and provider and are contracted for at specific Service levels 5
6 The Cloud Imperative Cost / VM hr (2GB inst) Average Enterprise The Cloud Imperative Amazon EC2 Reserved Pricing 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% Utilization Sources: Amazon, EMC CIG, VMware analysis 6
7 The enterprise challenge is to coordinate service strategy across three core constituencies GOVERNMENT Health Services (human & digital) Licenses / Permits / Records (human & digital) Education (human & digital) Employment (human & digital) Public Safety (human & digital) Consulting & Solutions (human) Licensing Applications (digital) Unemployment Applications (digital) Collaboration (digital) Content Management (digital) Management (human + automation) Compute (digital) Store (digital) Network (digital) Desktop (digital) Cloud Impetrative Pressure 7
8 The Enterprise needs to govern overall service strategy Architecture Design, Development, Quality Assure and Deploy Architecture Design Development Quality Assurance Deployment Mobile Licensing Finance Licensing Collaboration Call Center HR CRM ECM Data Consumers Government Services Business Process Business Services Application Services Software Platform Infrastructure Services Infrastructure Knowledge Facilities Health Search Desktop Content Health Travel Travel & Expense BPM Security Security Identity Authorization Authentication Confidentiality Integrity Audit Service Management Enterprise Architecture /Portfolio Management and Governance 8
9 Shared Services: Core Building Blocks By combining the value provided by three supporting concepts, this model delivers on the promise of technology at the lowest cost possible. Service Oriented Organization Shared Services Focus on Efficiency, Lean Centralization of common functions Service Level Agreements Transparently charge for actual Service consumed Repeatable, process driven delivery based on Best Practices / Frameworks Professional Services Organization Model Separate Demand & Supply Management Focus on Agile, Innovation, Alignment with Business Decentralize Advisory, Relationship Management & roles requiring intimate business knowledge Run As a Business Manage the service as a business, not a fixed cost Offer services customers value, at the level they prefer Provide incentives for breakthrough methods, improve efficiency, invest in new services Competition / benchmarking ensures Market Competitive pricing 9
10 Why Ultimately Shared Services? Savings of 40 % to 50 % from IT Shared Services Savings of 56 % to 63 % from Integrated Business Services 10
11 Service Maturity Model Organizations deploying SOO go through several distinct phases of maturity. Maturity Level Level 1 Initial Level 2 Supply Level 3 Service Level 4 Demand Level 5 Market Environment Desire to move to Shared Service Strategy, desire to move to Shared Service Communicated Value proposition understood by most Business supports model, model aligns with Business Business & Technology Management Converged Organization Unknown Beginning to segregate Demand/Supply Organization Service Centers Operational Demand & Service Management functions operational Professional Services Org. Model Processes Initial, performed, inconsistently followed Managed, measured against baseline Defined, consistently followed, measured against IT organizations Quantitatively managed, benchmark against leading IT organizations Optimizing, benchmarked against "World Class" Organizations Services Offerings Undefined, Ad hoc Defined - Catalog of "What we do" Refined - Catalog of "Services" Client Centric descriptions of service packages -> Capabilities Complete catalog of Capabilities of IT & its Partners Infrastructure & Admin Unknown, none Incomplete, needs are defined Required support in place to deliver service Required support in place to run business of IT Supports optimization of service delivery 11
12 Potential Savings Opportunities Total savings of 15 % to 50 % are possible. Without acceleration, realization of full savings opportunity may be delayed up to 5 years. Maturity Level Level 1 Initial Level 2 Supply Level 3 Service Level 4 Demand Level 5 Market Savings From None Consolidation Standardization, Consolidation, Re-use, Quality Improvement Process Efficiencies, Demand Management, Re-use Process & Sourcing Optimization, Re-use, Innovation Incremental Savings Opportunity Incremental Investment Required None 0 to 10 % 5 to 15 % 5 to 15 % 5 to 10 % Harvest Some Minimal Intermediate Substantial Intermediate Minimal Timeframe (Without Acceleration) 1 to 3 Months 6 to 12 Months 9 to 18 Months 6 to 12 Months 6 to 12 Months 12
13 IT 2.0: SOO - Savings Opportunities Maturity Level Level 1 Initial Level 2 Supply Level 3 Service Level 4 Demand Level 5 Market Savings From None Consolidation Standardization, Consolidation, Re-use, Quality Improvement Process Efficiencies, Demand Management, Re-use Process & Sourcing Optimization, Re-use, Innovation Incremental Savings Opportunity None 0 to 10 % 5 to 15 % 5 to 15 % 5 to 10 % Supply Required Enablers: Service Required Enablers: Demand Required Enablers: Market Required Enablers: Consolidation / Rationalization of organizational structures Commitment to achieve savings Supply + Strategic Sourcing Enterprise Architecture (Standardized) Process Focus (Performed) Metrics Focus (Operational) Service Definition Service Level Management Funding Model (Incentives for Re-use) Service + Service Level Management (multiple service levels) Funding Model (Consumptive pricing & tiered pricing) Demand Management Metrics Focus (Financial) Process Focus (Managed) Enterprise Architecture (Optimized Core) Demand + Sourcing Optimization Metrics Focus (Benchmarking) Process Focus (Quantitative) Funding Model (Incentives for Innovation) Enterprise Architecture (Modular) 13
14 Global Pharmaceutical Company Business Challenge > Our client, a global Pharmaceutical Company, was faced with a significant need to reduce costs across their IT organization. At the same time, the client needed to shift IT spending from non-discretionary to more value add activities > Prior to this abrupt event, the internal services organizations had been charged with delivering to the business needs, but had not focused on doing so as cost efficiently as possible > IT delivered to business needs, but in a siloed, redundant, locally optimized way Results > The Company has reduced IT expense by over $ 100 Million over 3 years by adopting Shared Services across their IT organization > The IT group continues to meet its commitments to the business and has improved it s on-time / on-budget performance > The Company was able to significantly shift their spend from lights-on activities to enabling business innovation > The Company is now focused on optimizing solutions at the Enterprise level EMC Consulting Solution > EMC Consulting assisted the client in developing a new IT Operating Model that split Demand and Supply and created Enterprise Shared Services > EMC Consulting assisted the client in the transformation activities associated with implementing the new Operating Model > The client adopted EMC Consulting s Capability Maturity Model and Methodology for creating Shared Service Centers enabling a significant acceleration of their schedule > EMC Consulting supported the growth of the Shared Service Centers with additional delivery and management capacity > The Company continues to mature IT along EMC Consulting s Maturity Model and is focusing on achieving Level 4 - Demand > The Company has promoted to the CIO to also lead the other major internal service functions and is currently pursuing a Global Shared Services model for these functions 14
15 15
16 Shared Services: Adoption Challenges Why is the transformation so hard? Multi-year Transformation Not an organization model change / Need short and long term goals Command and Control to Influence Establishing Trust Changes to perception of power I have 300 people reporting to me I control $ 100 Million in spend Worship the Hero / Firefighter A lot of people have become successful by being the one person who could get things done now it takes a team to get things done Most current incentives are incenting the wrong behaviors Need Entrepreneurs not operationally focused IT Managers / Executives Any change brings risk those managing Mission Critical processes can become particularly risk averse 16
17 Lessons Learned Transformative change is difficult, success requires vision, sponsorship and a multiyear strategic plan Progress will be incremental and across a wide spectrum, a method to measure and report overall transformation progress is imperative Measuring and reporting progress of individual Service Centers can be a great motivational tool and can dramatically impact pace of change Without a clear vision of the ultimate goal, there is a risk of declaring victory too early and not fully realizing potential benefits A common framework for Services / Service Level Agreements is required to ultimately realize the benefits of Business / Technology composite services A common service request / engagement / demand management approach is important across Business & IT Services ultimately the business wants to buy business services IT Services are predominately enablers There is a tendency to want to Verticalize Service stacks this may achieve short term efficiencies but these will be more than offset by loss of flexibility / adaptability and re-use impairments 17
18 Agenda Welcome / Introduction Establishing Enterprise Shared Services Enterprise Content Management Shared Service Questions & Answers 18
19 Agenda Welcome / Introduction Establishing Enterprise Shared Services Enterprise Content Management Shared Service Questions & Answers 19
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