Sourcing Lecture 6 Directing and Shared Services

ITSM Specialization Sourcing2012-2013Prof. Frank Willems

Lecture 6: Shared Service and Directing Sourcing

Agenda

• Shared Services• What is directing• Processmodel for directing• Roles within the directing organisation• Learning Task 3• Questions and answers

Shared Services

Definition and goal of a Shared Service Center (SSC)

• We speak about an SSC as supporting processes within an organization on an approximately similar way, are delivered in a new, semi-autonomous unit and on the basis of agreements it provides services to other units

• The goal of an SSC is generally to improve the service quality while also cutting costs

• SSC versus centralization is service-oriented versus task orientation

Shared Services plotted on the Kraljic model

Purchasing Risk

Is it a standard or a specialized product?

Wh

at

is t

he

ext

en

t to

wh

ich

th

e p

rod

uct

/ s

erv

ice

ad

ds

valu

e f

or

the

bu

sin

ess

Le

ss a

dd

ed

va

lue

La

rge

ad

de

d v

alu

e

Standard Specialized

StrategicLeverage

Bottleneck Routine

Shared Service

Centers

3th

Generation sourcing

6

Measures in perspective

Measures at task level:

Stopping investments

Orcutting down on current

initiatives

Measures at a process level:

Collaboration and

joint investments

Measures at a functional level:

Concentration, integration, mergers,

Take-over or outsourcing

Saving potential

Short term

(0,5-1 year

Medium term

(1-2 years

Long term

(2-5 years)

Stopping projects

Cutting down on training and learning

Cutting down on engaging external consultants

System optimazation

Collaboration regarding purchasing, support, etc.

Optimization and standardization of processes

Integration, mergers and concentration

Outsourcing of parts of the organization

Shared Services Centre

Full outsourcing

Capitalizing

effects

Concentration leads to economies

of scale

Internal SSC

Insourcing/

External Supplier

Co

sts

Volume

Efficiency-

effects

Economy

of Scale

8

Are the trends moving up and down?

Co

sts

Volume

Startingpoint

Impact Scale

reached Impact Scale

reached

Complexity Costs

will increase

Yes, to take maximum concentration and complexity there will be need for new solutions.

Potential services for a SSC

Facility Management

- mailroom - copying and printing service- archive - purchase - catering

Customer Service- sales service- Telephone Service (call center)

Administration- financial administration - pensions administration - Payroll

Personelmanagement (HRM)- recruitment and selection - Personnel administration- Training

ICT Services

- Application Support- Helpdesk - Management and Operations

control - Training

Real Estate Management - Building Management- Security Management

Sales and marketing- Ad coordination - Direct mail - Sales- Tele ordering - Order administration

Variants of Shared Services

supportfunctions

Management

primairy functions

Shared Support

Process

Shared Business Process

Shared

back-offices

The components of Shared Services

How to manage the

environment, where the

process is cut and

who is responsible for

what processes?

What is the proper organization, which staff

and how are we ready for the future?

How are technology, process and organization knotted

together?

The core of the service

Kantoorinformatiesystemen

Bedrijfsinformatiesystemen

TechnischeInformatiesystemen

Functioneel

Specifiek

Generiek

Fysiek

ICT infrastructuur componenten

User Support enApplicatie Management

SystemManagement

ICT infrastructuurlaag

ICT functionaliteit

NetwerkManagement

ICT Functie/processen

Kantoorinformatiesystemen

Bedrijfsinformatiesystemen

TechnischeInformatiesystemen

Functioneel

Specifiek

Generiek

Fysiek

ICT infrastructuur componenten

User Support enApplicatie Management

SystemManagement

ICT infrastructuurlaag

ICT functionaliteit

NetwerkManagement

ICT Functie/processen

SSC 1

SSC 1

SSC 3

SSC 3

SSC 2

SSC 2

SSC 4

SSC 4

Opstellen

van Business

Cases

Opstellen

van Business

Cases

Inrichten

van

processen

Inrichten

van

processen

Managen

van

projecten

Managen

van

projectenGovernance

Governance

Regie

Regie

Architectuur

Architectuur

Processes

OrganizationSystems

Customers

Name the change components

Ontwikkelen

maatwerk

Ontwikkelen

maatwerk

Beheer

infrastructuur

Beheer

infrastructuur

Beheer &

draaien

pakketten

Beheer &

draaien

pakketten

Support/

Helpdesk

Support/

Helpdesk

Ontwikkelen

maatwerkSSC 1

Beheer

infrastructuurSSC 3

Beheer &

draaien

pakketten

SSC 2

Support/

HelpdeskSSC 4

Response, context

and vision of SSC's

clear and design

direction activities

Target focus on

service domains

ICT -

governanceGovernance

RegieRegie ArchitectuurArchitectuur

Opstellen van Business

Cases


Cases

Inrichtenvan

processen

Inrichtenvan

processen

Managenvan

projecten

Managenvan

projecten


Cases


Cases

Inrichtenvan

processen

Inrichtenvan

processen

Managenvan

projecten

Managenvan

projecten

Make Governance

agreements

Professionalize

demand

ICT -

governance

Governance

RegieRegie

ArchitectuurArchitectuur

Transform

demand management

ICT -

governance

-Governance

RegieRegie ArchitectuurArchitectuur

SSC 1

SSC 1

SSC 3

SSC 3

SSC 2

SSC 2

SSC 4

SSC 4

Opstellen

van Business

Cases

Opstellen

van Business

Cases

Inrichten

van

processen

Inrichten

van

processen

Managen

van

projecten

Managen

van

projectenGovernance

Governance

Regie

Regie

Architectuur

Architectuur

An Change approach for Shared Services

Change idea

….

Intervention-oriented communication about plan and implementation

Support by Change help desk

Assessment by Change board

Consultation with Sounding board groupCIO

Client …

Characteristics

of interaction

Characteristics

of employees

Characteristics of

products, pro-

cesses & structureClients,

Governance &

suppliers

History

Rea

son

Environm

ent

View on changeKick off

Change analysis

+ Culture scan

DD MM YYYY

Change goals

Aligning structure and processes

Organizing control and and prepairing SSC implementation

Contracting and realizing SLA’s

Culture change and competence development

Learning to collaborate

Inter-

ventions

And (re)

planning

Reconsider-

Ing

goals

Measuring

progress

Plateau 2

Inter-

ventions

and (re)

planning

Reconsider-

ing

goals

Measuring

progress

Plateau 1

14

Example of a Target Efforts Networkfor the SSC Change Programme

More innovative power

and sharing knowledge

More innovative power

and sharing knowledge

Higher efficiency

pension processes

Higher efficiency

pension processes

Better quality

ICT services and

products

Better quality

ICT services and

products

75% Reuse

pension processes

and systems

(FO & BO)

75% Reuse

pension processes

and systems

(FO & BO)

20% Faster

market

introduction

pension

products

20% Faster

market

introduction

pension

products

30% Cheaper

implementation

processes

30% Cheaper

implementation

processes

20% Less

duplication

20% Less

duplication

60% Knowledge

pension products

more accessible

60% Knowledge

pension products

more accessible

95% Reliable

service in

accordance

SLA

95% Reliable

service in

accordance

SLA

MissionMission

GoalsGoals

Measurable

goals

Measurable

goals

Projects

and activities

Projects

and activities

Mission

Develop a Shared Service Center that is a

knowledge-and information-engine around pension products,

by sharing forces to deliver better innovation

and deliver at lower cost high quality

products and services to

Directing

What is directing

Directing is about linking demand and supply.

You must know what the customer (commissioner and the user)

wants, then translate it into a solution with the

necessary resources (sources) to

achieve and then arrange

that the services

is provided.

And to be able tot do that to you really need the right competences. The director will lead

Use the three columns of the 9-gridfor setting up the directing area

Beheren en exploiteren ICT

services

Beheren en gebruiken

informatievoozieningen

Ontwerpen en exploiteren

bedrijfsvoering

Implementing

Ontwerpen en

plannen ICT service

Ontwerpen en

plannen informatie

voorziening en regie

Ontwerpen en

plannen

bedrijfsvoering

Organizing

Bepalen strategie

ICT service

Bepalen strategie

informatie


Bepalen strategie

bedrijfsvoering

Aligning

ServiceDirectingManagement

Business

Directing

Supplier organization

Beheren en exploiteren ICT

services

Beheren en gebruiken

informatievoozieningen

Ontwerpen en exploiteren

bedrijfsvoering

Implementing

Ontwerpen en

plannen ICT service

Ontwerpen en

plannen informatie


Ontwerpen en

plannen

bedrijfsvoering

Oganizing

Bepalen strategie

ICT service

Bepalen strategie

informatie


Bepalen strategie

bedrijfsvoering

Aligning


Use the three rows of the 9-grid model to design the chain

View and governance

Planning, organization and

projects

Implementation and

operational service delivery

Management and

exploitation IT and

FM services

Management and

use facilities

Use and exploitationImplementing

Design, build and

implement IT and FM

services

Design and

implementation

facilities and

information supply

and control

Design and

implementation

Organizing

Specify IT and FM

services

Specify strategy

facilities and

information supply

and control

Specify strategyAligning


Then a complete framework for managing sourcing is designed

Implementing Management and

exploitation IT and FM

services

Management and

use facilities

Use and exploitation

management

Design, build and

implement IT and FM

services

Design and

implementation

facilities and

information supply

and control

Design and implemantation

management

Organizing

specify IT and FM

services

specify strategy

facilities and

information supply

and control

specify strategy and

management

Aligning


Then match the directing activities with CMMi acquisition at the 9-grid

Monitoring quality

Performance mgt

and analysis

Project Monit. &

Control

Supplier mgt.

Change

management

Purchase &

tenders

Governance

Account Mgt.

Strategy & Collaboration

Service Portfolio

management

Architecture Management

Demand

Management

Demand & failure

settlement

Account &

Demand mgt.

Management

Contract &

Supplier mgt.

Processmodel for directing

• There are three primary process chains in the directing organisation:– Innovation Management, develop new services – Change management, implementation of changes to existing

services (doing projects, etc.) – Service management, performance and direction on the

existing services

• The processes are derived from the CMMi-ACQ model. By process chain KPIs (Key Performance Indicators) set.

Process chains for the directing organisation

23

ImplementingManagement and

exploitation IT and FM

services

Management and use

facilities

Use and exploitation

management

Design, build and

implement IT and FM

services

Design and

implementation

facilities and

information supply and

control

Design and

implemantation

management

Organizing

specify IT and FM

services

specify strategy facilities

and information supply

and control

specify strategy and

management

Aligning


The chain shows three dominant lines

Performanc

e mgt an

Project Monit. &

Control

Supplier mgt.Purchase &

tenders

Governance

Account Mgt.

Strategy & Collaboration

Architecture Management

Demand

Management

Demand & failure

settlement

Innovation

Managing changes

Service continuity

Explanation process model for demand/supply

• Directing organization is focussed on matching present and future customer IT service needs and demands with (contracted) services from supplier(s).

• The total organization should be seen as a logistic process (coordination between supply and demand). Each activity in this logistic process must be indicated either as a coordination of daily business or as a change in services rendered or as an innovation in services being supplied

• The activity is then attended to by the appropriate person/office in the logistic process and brought to a good result

The process model more detailed

SupplyDirectingCustomer/

Demand

Delivery of services

Incident management

Measurement & analysisOpera -

tional

meeting

Tactical

meeting

-

Change process

Innovation

Request for

change of

Product or

service

Request for

New product

or service

complaints

within SLA

Management of complaints

Results customer satisfactionsurvey

Monitoring

KPI’s

complaints

outside SLA Improvement

services

/ solve

incidents

Reports

Structural

problems

Proposal for impovement

supplier

Proposal for renewal

supplier

Proposal for improvement


Governance

Service portfolio mgt

Architecture mgt

Procurement & tender

Strategy & coorporation

Monitoring KPI’s


reports

S

t

r

a

t

e

g

i

c

T

a

c

t

i

c

O

p

e

r

a

t

i

o

n

a

l

Stra

tegical

meeting

Project monitoring Monitoring KPI’s


complaints

Service & incidents

Bounderies of soucing andIT supply


Demand


Incident management


tional

meeting

Tactical

meeting

-

Change process

Innovation

Request for

change of

Product or

service

Request for

New product

or service

complaints

within SLA



Monitoring

KPI’s

complaints


services

/ solve

incidents

Reports

Structural

problems


supplier


supplier



Governance


Architecture mgt



Monitoring KPI’s


reports

S

t

r

a

t

e

g

i

c

T

a

c

t

i

c

O

p

e

r

a

t

i

o

n

a

l

Stra

tegical

meeting

Project monitoring Monitoring KPI’s


complaints Service & incidents

The Innovation process (1/2)

Start

Global AnalysisInitiation Detail Analysis

Contracting

3 Agree terms and

contract with supply

Inventarisation of customer requirements

1a Develop

customer

requirements

1b Develop

Product

requirements

1c Analyse and

validate

requirements

Prepare Project

2a Estimate

planning and

forecast

2b Develop

projectplan

2c Get commitment

for the project

go

No go

Input

Service portfolio

management

Input

Governance

Architecture

management

Output

Functional Design

Input

Strategy &

colaboration

Output

Business case with

P.I.D

Input

Procurement and

tenderprocess

Demandmanager

Demandmanager

Projectmanager

Contractmanager

Suplly mgt

Output

Contract

go

No go

go

No go

The Innovation process (2/2)

Productintegration Verification

5a Prepare

verification

5b

Testing

5c Check selected

products

6a Prepare

productintegration

6b Ensure interface-

ompatibility and deliver the

product

The innovation process

Input

Developed

products

Decision making

about testgroup

& test environment

Input

Testresults

Output

Acceptation

products

Demandmanager

Contractmanager

Demandmanager

Contractmanager

Suplly mgt

Develop technical solutions

4a Select product-

component

4b Develop the

design

4c Implement the product

design

Projectmanager

Supply mgt

Input

Contract &

Functioneel Design

Manag

ement

Preparation & test ImplementationDevelopment

The Change process

Start

The change process

Initiation

Manage

ment

Alternative analysation and choice of

solutionReq. management

1 control

requirements

2 Evaluate alternative

solutions

Demandmanagement

Contractmanagement Configuration mgtProjectplanning

3 Develop

projectplan

4 Track and

manage changes

Product integration

5 Prepare

product-

integration

6 Ensure interface-

comptability and produce

solution

Demandmanager

Demandmanagement

Supply

Contractmanagement

Development Implementation

No go

go

No go

go

Analysation

The Incident process

Start

ICT Management stage

1st line support

Administration ClassificationIncident

entry

Incident solved

Yes

No

2nd line support

Design and

specifications of the

solution

Solution or

escalation

Intake

Frontoffice

2nd

line support

1 Registration

Classification

call

2 Relationship

call

10 Decline

call

11 Decline

user

5 Escalation

6 Analyse

Incident 1st

line

support

8 Solve

Incident 1st line

support

3 Inform

coördinator

4 Take

Care

existing

incident

Measure

exceeding

Supply mgt

7 Assign

Incident

9 Manage

progress

ja

Nee

ja

self

The incident management process

Supply Front Office Supply Back Office

Deeper

investigation

incident

Distribution and

administration of activities

and solution

Roles within the directing organisation

Management and exploitation

IT and FM services

Management and use

facilities

Use and exploitationImplementing

Design, build and implement

IT and FM services

Design and implementation

facilities and information

supply and control

Design and implementationOrganizing

SpecifyIT and FM

services

Specify strategy facilities and

information supply and control

Specify strategyAligning


The areas of responsibility plotted on the 9-grid mgt framework

Sourcing

management

Project mgt and

collaboration

mgt

Account and

Portfolio mgt

Contract mgt

and performance

monitoring

Sourcing

Services

Information

management

Functional

Application

mgt

Governance and

architecture

Directing roles in Governance and Architecture area

• The Director (CIO) will carry the ultimate responsibility for overall information and ICT chain and is sparring partner for the management of ICT-related issues

• The information architect designs and implements organisation-wide information architecture (applications, hardware, networking, datacom)

• The business architect designs the business processes and frameworks and enter the correct application of the process frameworks. Together with the ICT architect, a risk analysis in case of changes in processes or applications will be made

The information management area

• The Information Manager advises on solutions in the field of ICT for business to better support in achieving their objectives. It is a long term vision and planning and should develop a framework for planning and assessment of renewal and modification of information systems.

Account and Portfolio mgt areas

• The ICT consultant advises organisation-wide, sought and unsolicited, on solutions in the field of ICT business in order to better support their goals using ICT solutions

• The Information Analyst focuses on analyzing and advising on how the information flows within the customer organisation can be supported by the current system landscape

Project mgt and collaboration mgt

• The Project manager executes projects in the field of ICT (from the initiation tot the transfer to the existing organization)

Contract mgt and performance monitoring

• The Contract Coordinator focuses on the creation and implementation of the supplier strategy, mapping product / vendor combinations and building and maintaining existing relationships

• The Purchaser focuses on the procurement of services, and if products and people at the right price, performance levels, and compliance are buyed with contractual agreements is that can be monitored

• The Demand Manager focuses on developing and maintaining relationships with external ICT suppliers and on the steering / leading the team in - and outside staff responsible for the daily operation (including Service Desk and Field Services)

Sourcing management area

• The Service Level Coordinator is responsible for monitoring and managing the delivery of agreed ICT products and services by external parties as defined in Service Level Agreements on quality, availability and cost.

• The Project & Change Coordinator, will direct on all new and ongoing projects and (big) changes regarding the ICT systems (internal and external capacity, content, planning, budget, priority)

Sourcing Services area

• The keyuser provides the functional management of one or more applications tailored to the specific business processes. The key point of the users are from a group of users to use a specific application and the application of this application within a sector or management.

• The process specialists support the key user for the translation of the process of sector specific management or automated applications. They are experts in the field of process and work within the framework of the business architect suggests.

The Functional application mgt area

• The Functional Application Manager provides the functional management of one or more applications tailored to the specific business and focuses on analyzing and advising on how the information flows within the organisation can be supported by ICT applications. He/She will also support in testing and implementation of changes.

• The Technical Application Manager is responsible for the availability and performance of the ICT systems

The roles plotted on directing model


Demand


Incident management


tional

meeting

Tactical

meeting

-

Change process

Innovation

Request for

change of

Product or

service

Request for

New product

or service

complaints

within SLA



Monitoring

KPI’s

complaints


services

/ solve

incidents

Reports

Structural

problems


supplier


supplier



Governance


Architecture mgt



Monitoring KPI’s


reports

S

t

r

a

t

e

g

i

c

T

a

c

t

i

c

O

p

e

r

a

t

i

o

n

a

l

Stra

tegical

meeting

Project monitoring control& Monitoring KPI’s


complaints

Service & incidents

ICT consultant

Information analist

Business architect

Functional application mgt

Application mgr

Purchaser

Contract

manager

Superuser

Projectmanager

Informationmanager

Information architectProject and change coordinator

Director(CIO)

Demand

manager

Roles and ideal change colorsBased on change management apporach of Prof. De Caluwé

SupplyCIOCustomer/

Demand


Incident management


tional

meeting

Tactical

meeting

-

Change process

Innovation

Request for

change of

Product or

service

Request for

New product

or service

complaints

within SLA



Monitoring

KPI’s

complaints


services

/ solve

incidents

Reports

Structural

problems


supplier


supplier



Governance


Architecture mgt



Monitoring KPI’s


reports

S

t

r

a

t

e

g

i

c

T

a

c

t

i

c

O

p

e

r

a

t

i

o

n

a

l

Stra

tegical

meeting

Monitoring KPI’s


complaints

Service & incidents

ICT consultant

Information analist

Business architect

Functional application mgt

Application mgr

Purchaser

Contract

manager

Superuser

Projectmanager

Informationmanager

Information architect Project and change coordinator

Director(CIO)

Demand

manager

Some principles for directing competences

• 1st generation sourcing and directing asks for CMMI level 2• 2nd generation asks for CMMI level 3• 3th generarion asks for new competences in managing

colaboration and CMMI level 4• 4th generation asks for personal leaderschip and at least CMMI

level 4

• Directing competences are professional projectmanagement, managing change management, account management and supplier management all at the desired CMMI level

StrategicLeverage

Bottleneck Routine

Business Proces

Outsourcing

Backoffice

outsourcing

Outsourcing

workplace mgt

Business

development

Shared Service

CentersDataCenter

outsourcingFacilities

outsourcing

Workinnovation

1e generation sourcing 2

e generation sourcing

4e generation sourcing



Crowd

sourcing

Operations

outsourcing

At the end…

• Setting up a directing organisation (the new ICT organisation) is a radical change….use the change colours

• Filling in the roles is changing competences and changing people

• A clear process model will help to implement the directing activities

• Always use the three models to find a language of communication during the Change Operation; 9 grid, Kraljic and CMMI

Sourcing definition

The dynamic planning and organizing of

the supporting processes, people,

resources and capabilities,

needed to obtain

the business

goals

Which sourcing models should be known?

4

7

Strategisch?

Yes

Impact on

business

Risks to be

managed?

Mature service?

Stabiel?

UitbestedenOutsource

ZelfZelfImprove first and

purchase capacity

from external source(s)

High/average

Yes

Yes

No

No

Yes

Yes

Under control?

Capacity required

Improve together

outsource if necessary

Cooperation

advantageous?

Low

Cost reduction

important?

No

No

Start

cooperation

No

3rd generation and strategic or

leverage Kraljic segment

2nd generation and strategic or

bottleneck Kraljic segment 2nd/3rdgeneration and bottleneck or

routine Kraljic segment

1st/2nd generation and routine

Kraljic segment

Decision tree for the sourcing solutions

The sourcing solutions plotted on the Kraljic model

Purchasing Risk

Is it a standard or a specialized product?

Wha

t is

the

exte

nt to

whi

ch th

e pr

oduc

t / s

ervi

ce a

dds

valu

e fo

r th

e

busi

ness

Less

add

ed v

alue

Larg

e ad

ded

valu

e

Standard Specialized

StrategicLeverage

Bottleneck Routine

Business Proces

Outsourcing

Backoffice

outsourcing

Outsourcing

workplace mgt

Business

development

Shared Service

CentersDataCenter

outsourcingFacilities

outsourcing

Workinnovation

1st

generation sourcing 2nd

generation sourcing

4th

generation sourcing

3nd

generation sourcing

2nd

generation sourcing Crowd

sourcing

Operations

outsourcing

Five ways of thinking about change

Understand what underlying patterns drive and block an organization’s

evolution, focusing interventions to create space for people’s energy

Create settings for learning by using Organisation Development interventions,

allowing people to become more aware and more competent on their job

Bring the interests of the most important players together by means of a process

of negotiation enabling consensus or a win-win solution

Motivate and stimulate people to perform best they can, contracting and

rewarding desired behavior with the help of HRM-systems

Formulate clear goals and results, then design rationally a systematic approach

and then implement the approach according to plan

Something changes when you . . .

‒ Change is in the eye of the beholder

‒ Each viewpoint has its ++ en --, ideals and pitfalls

Red print

Green print

Blue print

White print

Yellow print

The five colors at a glance

Yellow-print Blue-print Red-print Green-print White-print

Something changes when you

in a/an

and create

bring common interests together

power game

a feasible solution, a win-win situation

think first and then act according to a plan

rational process

the best solution, a brave new world

stimulate people in the right way

exchange exercise

a motivating solution, the best ´fit´

create settings for collective learning

learning process

a solution that people develop themselves

create space for spontaneous evolution

dynamic process

a solution that releases energy

The result is...

by a/an...

aimed at...

forming coalitions, changing topstructures

facilitator who uses his own power base

positions and context

project management strategic analysis

expert in the field

knowledge and results

assessment & reward, social gatherings

HRM expert

procedures and working climate

training and coaching, open systems planning

facilitator who supports people

the setting and communication

open space meetings self-steering teams

someone who uses his being as instrumentpatterns and meanings

Result is…

Safeguarded by…

The pit-falls lie in…

partly unknown and shifting

decision documents and power balances

dreaming and lose-lose

described and guaranteed

benchmarking and iso systems

ignoring external and irrational aspects

outlined but not guaranteed

HRM systems

ignoring power and smothering brilliance

envisaged but not guaranteed

a learning organisation

excluding no-one and lack of action

unpredictable

self-management

superficial under-standing and laissez faire

10-04-2023