1. © 2014 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This publication may not be reproduced or distributed in any form without Gartner's prior written permission. If you are authorized to access this publication, your use of it is subject to the Usage Guidelines for Gartner Services posted on gartner.com. The information contained in this publication has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information and shall have no liability for errors, omissions or inadequacies in such information. This publication consists of the opinions of Gartner's research organization and should not be construed as statements of fact. The opinions expressed herein are subject to change without notice. Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner is a public company, and its shareholders may include firms and funds that have financial interests in entities covered in Gartner research. Gartner's Board of Directors may include senior managers of these firms or funds. Gartner research is produced independently by its research organization without input or influence from these firms, funds or their managers. For further information on the independence and integrity of Gartner research, see "Guiding Principles on Independence and Objectivity."Usage Guidelines for Gartner ServicesGuiding Principles on Independence and Objectivity John Kost, GVP, CIO Research Shared Services Discussion with UC IT Leaders 29 July 2014 Amos Auringer, Executive Programs

2. © 2014 Gartner, Inc. and/or its affiliates. All rights reserved. Overview Best Practices and Case Studies Gartner - 4 types of Shared Service Models Functions and Characteristics Decision making Information and Knowledge Processes and Tools Success Factors 1

3. © 2014 Gartner, Inc. and/or its affiliates. All rights reserved. Achieving Success With Shared Services 2 Typical shared services opportunities Service Area Typical 1 st generation Typical 2 nd generation Typical 3 rd generation FinanceAccounts Payable, Accounts Receivable, Fixed Asset Accounting, Travel and Expense Reporting, General Accounting, Billing/Invoicing Customer Collections, Loss Prevention, Risk Management Centers of excellence, Analytics, R&D, Business process improvement, Innovation Legal, Real Estate and Tax Lease Administration, Property Management, Construction Services, Tax Accounting Legal Services, Use Tax Compliance HRPayroll, Benefits Administration, Recruitment, Personnel Administration Training Compensation, Performance Evaluation Management Travel Management ITNetwork Support, Data Center Operations, Desktop Support ERP Support Application Development Project/Program Management Customer Management Call Center ManagementCustomer Satisfaction Management, E-Commerce/ Direct Sales Supply Chain Management Commodity PurchasingLogistics, Strategic Sourcing, Purchasing Card, Vehicle Management, Custom Compliance

4. © 2014 Gartner, Inc. and/or its affiliates. All rights reserved. There are five typical value drivers of shared services Example Benefits Efficiency Harmonization Customer Focus Capabilities Service Quality Within one year, 25% reduction in overall payroll costs Within one year, all staff using the same sales process Within six months, sales staff spend 50% less time on administrative duties Within 18 months, able to apply advanced analytics across all student transactions 10% fewer customer complaints

5. © 2014 Gartner, Inc. and/or its affiliates. All rights reserved. Achieving Success With Shared Services Design your shared service model for success by answering nine questions WHY? WHICH? HOW MUCH? WHO? HOW MANY? Reason & Expected Value Which Services in Which Order Sourcing Structure & Customer Engagement Model Funding and Chargeback Value Question Design Questions Execution Questions WHO DECIDES? Sponsorship and governance HOW TO CHANGE? Leading staff and customer change WHEN TO STEP UP? Planning evolution of services and careers HOW TO LEAD? Developing as a shared services leader

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14. © 2014 Gartner, Inc. and/or its affiliates. All rights reserved. 4 Shared Service Models 13 Centralized - applied for commoditized services - high degree of standardization Hierarchical - an institution positioned at a higher level and has significant advantage with technology, capacity, skills, relationships, service maturity - strong ability to influence and drive economies of scale Peer-to-Peer - a peer/partner institution provides service - same attributes as a Hierarchical Model Fully Joint - Limited number of users (10 or less), improves slow decision risks - Stakeholders consider themselves peers - Collaborative culture

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16. © 2014 Gartner, Inc. and/or its affiliates. All rights reserved. Achieving Success With Shared Services 15 How much? Get the benefits of financial discipline and minimize the resistance effects TechniquesBenefitsChallenges No chargebackNo admin needed, no resistance effects No true BU costing, no demand discipline Cost allocation, but no recoveryGives visibility to senior managementDoesn’t discipline requests, or usage Cost recovery based on high-level business metrics (e.g. revenues/ costs) Easy to measureMay be seen as unfair, customers don’t have control, doesn’t aid true costing Cost recovery based on usage metrics (e.g. seats, storage, bandwidth) More accurate ‘true costing’Can generate resistance and negative behaviours (e.g. password sharing) Direct chargeback of BU-specific services Accurate, easy-to-measureOnly applicable for some services Partial chargebackCreates discipline, limits resistanceSome cost must be absorbed, hence Affordability-adjusted chargebackAllows small BUs to adoptLarger BUs suffer, true costing is skewed Two sets of accounts (one encourages right behaviours, one for true costing) Limits resistance, keeps true costingExtra admin, limited demand discipline Provide tiered services and ratesMore choice for customersExtra complexity to provide Include margin for innovation/ refreshNo need for central funding, truer TCO picture Makes it more expensive Expose to market prices through selling outside More credible pricing, economies of scale, more innovation Distraction effects, unfair comparison (less degrees of freedom than vendors) Penalize BUs for poor forecastingImproved forecasting, reduces volatilityMay damage relationships BU – Business Unit

17. © 2014 Gartner, Inc. and/or its affiliates. All rights reserved. Who decides? Create inclusive and outward-facing governance Ensure outward-facing governance. Shared-service governance must be not be viewed as only about decision making for the shared-service organization, but also in a more outward-facing way—with shared-service staff having positive involvement in all enterprise governance bodies: corporate, business units and support functions. Secure senior executive sponsorship. Because of the horizontal nature of shared services, political and priority conflicts are almost guaranteed. The issue of sponsorship was raised by every case-study company we talked to, and the consensus was this: Don’t agree to participate in a shared-service initiative without sponsorship. It is a precondition of success. Continue investing in sponsorship to keep it at the necessary level—don’t let it dwindle over time. Balance broad input with tight decision making. Since governance affects multiple constituencies, make sure representatives of these constituencies provide input relating to shared-service decisions. At the same time, keep the decision-making group small and tight, and the communication of decisions clear and comprehensive. You must make sure that decisions are made recognizing business units’ needs, but you must also be able to make tough decisions so you don’t end up building a monster to satisfy everyone’s whims. Provide relationship management. Strong relationship management must exist to inform, back up and supplement senior-level governance. E.g., ABN AMRO’s shared-service organization has relationship management in place for each functional area and each geography. The imperative in any enterprise is to have relationship resources facing each major internal customer group and, ideally, internal prospects as well.

18. © 2014 Gartner, Inc. and/or its affiliates. All rights reserved. Achieving Success With Shared Services 17 Create a complete shared services business case template Business Case Section Content Executive SummarySummarizes the opportunity in less than a page Rationale and sponsorThe major reason that a shared services initiative is being considered, including who is the senior sponsor, and why this is more important than other initiatives in pursuing the enterprise’s strategy. Recommended model and alternatives Details of the shared service model, including how many SSCs, optional usage versus mandatory, financial model, governance mechanisms Implementation approach and timeline Which services will be introduced when. Expected benefitsBenefits by phase (using template on page xx), ideally including expected, best, worst cases Expected costsCost model, again ideally including expected, best worst cases Financial analysisFinancial measures, such as ROI, NPV, IRR. Aligned with enterprise standards. Risk analysisMajor risks associated with chosen approach, and how to mitigate. Sourcing approachWhich aspects will be sourced internally vs. externally, which partners will be used, how they will be managed. People planOrganization structure, and skill needs over time AppendicesAny necessary supporting information

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