Today, practically every CIO is looking for ways to increase the value of his or her IT organization, while also maintaining or reducing IT spending. One approach that many are pursuing is the elimination of wasteful redundancies and the adoption of a shared service-provisioning model.

The goal of most shared service programs is to provide consistent service quality and delivery to multiple business departments across the enterprise at a reasonable cost, as opposed to each department providing its own iteration of the same service. Typical examples of redundant services include helpdesks, email, and Enterprise Resource Planning (ERP) systems.

Before going too far, however, it’s important to understand what is meant by ‘shared services’. The term shared services has multiple definitions in the IT industry, but the definition found on Wikipedia is in line with the thoughts of most experts and analysts. According to Wikipedia, “Shared services refers to the provision of a service by one part of an organization or group 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.”i

For example, consider the case where an enterprise has multiple ERP systems (e.g., Oracle or SAP) across the organization due to acquisitions or as a result of business units creating their own IT systems and support. Most likely, each business unit experiences a different level of service, depending on how much money it had to spend on its particular implementation. Further, exchanging data between the systems for consolidation and reporting purposes can be time consuming and potentially error prone. Finally, the aggregate cost of running these multiple systems is generally higher than the combined business value delivered. This is due to redundancies in hardware, software, and administration or operation resources. Consolidating these systems into a single, shared service enables the company to leverage economies of scale, while also providing a consistent level of service across the enterprise.

Sounds good? If so, where do you begin?