So often, I have heard skeptics who would criticize and cynically discard away the concept of measuring, accounting, and charging for IT services within an organization. “Why would you want to do that?“, “what good does that do?” or “there is no value in charging users for IT services“.
Businesses in today’s environment is very different from the past. The markets which businesses operates in are shrinking as they become more competitive, barriers to entry are often getting lower, and in order to grow, many businesses need to go beyond their current market to reach outside their current borders or geography. Selling a product or service to a customer in Singapore will be no more different than selling to a customer in Russia. Whatever it takes, businesses can never confine themselves into a small boundary within a geography or region or market segment. Likewise, consumers and buyers of products and services are no longer confined to a single vendor or supplier. They have ample choices. Advancement of sourcing avenues globally, proliferation of technology and Internet allows consumers and buyers to easily seek, source, compare and purchase from alternative suppliers within several mouse-clicks.
Therefore, the traditional IT function within an organization is no longer just the bunch of backend soldiers managing your email and accounting system. The IT function is slowly transforming and morphing into a business enabling function, providing critical platforms to put the business online, enabling marketing and direct selling of products online, closely coupling the use of IT to complement traditional products (such as IP-enabling products to provide remote monitoring services, data backups, control and management services, analytics services, etc.) and all this means that the traditional IT budget, which used to be a small part of the overall corporate budget, is going up. In the past decade or so, most businesses’ IT expenditures have gone up significantly, but many are still without adequate tools, processes and policies in place to address the accounting and allocating of IT costs.
IT Shared Services refers to the provision of IT services by an IT organization where that service had previously been found in more than one part of the organization or group. Thus the funding and resourcing of the service is shared and the providing department effectively becomes an internal service provider. The key is the idea of ’sharing’ within an organization or group. Hence, the concept of IT Shared Services is similar to collaboration. IT Shared Services is different from the diametrically opposite model of Outsourcing which is where an external third party is paid to provide a service that was previously internal to the buying organization, typically leading to redundancies and re-organization. One purpose of Shared Services is the convergence and streamlining of an organization’s functions to ensure that they deliver to the organization the services required of them as effectively and efficiently as possible. This concept is applicable not just for the IT services, but can also involve the centralizing of back office functions such as HR, Finance, and middle or front offices.
