How can you effectively outsource IT to a shared services model?

With new technology (or info on what technology can do for everyone) getting closer to everyone, technology as a solution for every business issue without looking internal processes and data availability & quality makes IT Managers life stressful. In this scenario, outsourcing IT services to experts make sense but either dedicated or as shared services, unless the client IT has strong governance capabilities, it will be a major challenge to meet the business expectations and this will lead to even more stress to IT CxOs. Build strong governance capabilities and outsourcing (dedicated or shared) will be a smoother. Without internal capabilities to govern and proper org change management, any kind of outsourcing will be a major challenge.

In my experience, outsourcing IT to a shared services model requires first understanding fully what you mean and what you intend to do. Is the intent to shift responsibility for IT service delivery away from business/country operations to a captive shared services delivery organization? ... to an external service provider? … to something in-between? … to just support captive shared services? If this is not clearly known, then the path forward will be as confusing as the rest of the article as the considerations and concerns will differ based on the intended outcome.

Involves careful planning, clear communication, vendor management, and leveraging standardized processes to optimize cost, enhance efficiency, and ensure seamless collaboration between internal teams and external service providers. It requires a strategic approach to align business goals with the capabilities of the outsourcing partner, continuous monitoring of performance metrics, and adapting to evolving technology landscapes while maintaining a focus on data security and compliance

Feels like a section "1.5 Decide what to outsource" is missing in this article. Any IT function that is a core strength of the company, a differentiator and a competitive advantage should NOT be outsourced in my view. It's OK to use external companies to ramp up resources for development, or do so in partnership but ownership of all decisions for mission critical applications should stay in-house. That way the subject matter expertise and knowledge remains with the company.

The provider should reflect the ability and desire of your organisation and stay relative in size and opportunity- in my experience a provider too large for your business will result in lack of attention, a provider too small will hinder growth.

Establish clear communication channels and governance structures for regular monitoring and management of the services. This ensures alignment with your business goals and timely resolution of issues.

The shared model will be as good as the knowledge transferred and process/procedure agreed for use. Your internal and external customers may or may not be aware of shared change, this is at company discretion, however their ability to continue operations and complete tasks must not be impacted, continual operation will decide the success.

Although point 5. attempts to mention outcomes. But it’s essential to map the existing shared service outcomes with business outcomes. SLA mapped to business SLA further mapped to business outcomes is key . After mapping; one must build the ability to measure, improve and co-create value for business while partnering with shared service provider is key. Savings from shared service cost needs to invested in better observability of service outcomes.

Feels like this article is mixing creating shared service model with outsourcing to an external company. I built shared services at my prior company, and common/shared/global services can be created using internal teams or with help of an external company. And you can outsource IT services even if a service is not shared within the company by multiple group. They are two independent strategy decisions.

You may need to alter and adjust your processes and expectations to align with shared service. The fact that it is shared means that not everything can be bespoke and customized to your needs. This service works well for more standardized way of operations. Security is another critical component to consider as you share with multiple other customers.

To effectively outsource IT to a shared services model, clearly define goals and service scope. Select a reliable provider with relevant expertise and establish detailed SLAs. Plan the transition carefully to minimize disruption and ensure regular communication. Set up governance for oversight and insist on compliance with regulations. Encourage a partnership approach, allow for flexibility in the contract, and focus on continuous improvement and risk management. Provide training for staff to adapt to the new model.