Automation, outsourcing and shared services: Alternatives or complements? Waleed Hanafi November 5, 2001

Outsourcing Motivators Outsourcing is the answer – what is the question? Fear Capability Capacity Cost Complexity

Traditionally IT run as a cost centre IT Governance Traditionally IT run as a cost centre Annual un-equal fight over budgets Business managers unable to challenge IT professionals “Alignment” becomes issue IT staff do not feel part of the business Effort to keep plant running may not be reflected in business performance

Money stays with the business Models for Governance First Principles Money stays with the business The consumption of IT services and products must be in control of business Demand is managed through pricing Transparency and clarity required to ensure IT costs are understood and controlled Core infrastructure is Corporate, and funding should be outside the day to day competition for resources Network,Email, voice, security

Mature Organization required to use Outsourcing Have to be able to manage internal resources before you can manage external Requires disciplined structure Understand what services are required Understand what form (quality, quantity, performance) services take Service Definitions Service Catalogue Service Level Agreements Contract for Service

Escaping from Projects IT people buy stuff IT people run projects When projects fail, or stuff doesn’t work, IT people run bigger projects We don’t need another hero Drama queens and adrenalin junkies By changing mind-set to services, we accept that there is an on-going requirement Boring and successful

Dealing with Shared Services No real mystery Already buy electricity, dial tone, water, garbage collection Either we know what we want, or the industry has to be very clear about what it delivers – standards IT Vendors have refused (so far) to accept normal commercial practices (quality, warranty, responsibility, pricing) Shared Service vendor adds a layer between IT vendors and you

We all understand what a phone is, but what is a data network? The Great Dilemma The person buying the service must be able to understand the service being delivered We all understand what a phone is, but what is a data network? Is there competitive advantage in maintaining technical expertise? How do you stay current when the outsourcer is doing all the work? How do you attract and retain top people when they don’t get to play?