The case: hybrid shared service center.

There are mainly 3 targets that organizations follow when choosing to insource into their Shared Service Center: cost, control and quality. Experienced organizations want to leverage their capability and improve on those lines to better serve their internal and external customers but also extend their value chain, increase employee motivation and simultaneously cut-down the cost dramatically. Indeed, you can cut down your operational cost by 20% to 70% depending on the starting position, target and sourcing strategy and hence on the current service model, contract situation, services in scope, skills and location and many more parameters.

I want to take the example of an hybrid IT offshore shared service center, a model which is generally adopted by experienced organizations that already have an offshore organization and intend to insource additional services from one of their suppliers into their shared service center.

These mature organizations normally already have governance bodies within their shared service center as Control Centre (Change Management, Problem Management, Service Reporting, Incident Management, Downtime Management, Process and System Monitoring, etc.) Service Transition, Service Desk and Support Enablement but also back office services as Recruiting, Finance, Supply Chain, Network and Infrastructure services and IT Helpdesk. They follow the ITIL methodology (just a summary of best practice IT governance) but only as far as governance is required to achieve the 3 targets and strategic KPI set.

Transformation types.

I could now stop writing here because we may conclude that moving services into an existing scalable governance structure is just a “shift and lift” activity. My experience draws a different picture and I want to share why and what to do.

There are mainly 3 types of transformation to consider and manage: the immediate onsite and offshore and the post go-live offshore transformation.

Immediate onsite transformation.

Within the onsite organization the leadership style and coordination layer must be adapted. Managing a supplier as a 3rd party requires different governance, strategic KPI and capabilities than managing an offshore team. This applies even if the same SLA and KPI are transferred from the supplier to the own offshore organization. Services provided by the supplier are normally a black box. Suppliers pricing model is mostly ticket based and not based on staff augmentation. So, you don’t get to know much about their governance and you have limited influence on the ticket resolution.

Immediate offshore transformation.

Within the offshore organization most of the transformation is happening after service go-live to minimize the risks and impact on the customer side. However, during knowledge transfer and service ramp-up mandatory transformations are implemented either to fit the target structure or to maximize the benefit (low risk transformations). Not to underestimate is the willingness  and motivation from the new team to take over the service. Typically the delivery and operations model need to be adapted significantly to meet customer needs.

Post go-live offshore transformation.

The larger offshore transformation is rather taking place after go-live, once the services have been initially stabilized. The learning curve of the offshore team is brought up to the next level, to strive for excellence and sustainable results. KPI and SLA are adjusted and harmonized. E2E Process knowledge and ownership but also employee empowerment is reinforced. Cross- and up-skilling takes place. Regular governance, service review and feedback meetings are run to discuss problems and agree on an improvement action plan. Dispersed or virtual collaboration is further improved. Improvement ideas, new and accumulated ones, are evaluated and implemented. Opportunities are leveraged to automate processes with an invasive or non-invasive technology.

Summary: what you should do.

In summary, the onsite transformation shall not be ignored or underestimated while focusing on building the offshore site. It is a key element to the overall success and targets set. Consider executing a change impact analysis and action plan for both the onsite and offshore organization. Consider as well leveraging the momentum of change within the target organization. This way you can ensure an overall smooth service ramp-up but also increase your employee acceptance and motivation for the change. Consider as well deploying a Continuous Improvement framework to enable the organization to solve simple and complex problems. ITIL’s Problem Management framework is only a snap shot of what Continuous Improvement can deliver to your organization.

by Cristian Margaretic

Topics: SSC, Transition, Transformation, Hybrid delivery model, Continuous Improvement