Shared Services Special
May 29, 2012

The “third platform” and its impact on shared services

We are rethinking how IT serves government – shared services, increased responsibilities for the CIO, and leveraging transformative technologies to change the organization.

Government processes seem at times to be deliberately over-engineered – reminiscent of the Rube Goldberg machines (the self-operating napkin, for example, where a series of 12 intricate levers, pulls and dominoes are used to execute the simple task of wiping one’s mouth). Shared services’ promise is to “uncomplicate” what should be simple, thereby liberating time and money.

On average, organizations spend 74 percent of their IT budgets on maintenance and support but want to decrease that to 59 percent, to free resources to better orchestrate service delivery.

But behind the scenes lurks a key challenge – getting the workforce to adapt to working laterally, at the enterprise level. This was one of the key takeaways from a large, government service delivery transformation project in Birmingham, England: working horizontally does not come naturally to people who have spent years nestled in organizational silos.
 
That poor ability to adapt has been a persistent problem for IT. The consumerization of IT also drives this concern – if Facebook, Google, Twitter and the gaming industry can adjust rapidly, why can’t our work systems be fast and flexible?

Enterprise thinking and collaboration, shared services, consolidation of IT, and the consumerization of IT affect all of the industries we track at IDC – financial  services, retail, energy, health. But what distinguishes government from them is change fatigue. Federal public sector workers feel like they’ve been trapped in a perpetual grief cycle, constantly rotating among denial, anger, depression, bargaining and acceptance at work.

The ICT industry is shifting to what IDC calls the third platform – built on mobile devices and apps, cloud services, mobile broadband networks, big data analytics, and social technologies. At the same time, the IT industry is moving from productivity and cost reduction, to higher innovation, based on the build out of the intelligent economy. What differentiates these transformative technologies is speed, proximity/intimacy with the client, and the role of business in the equation. IDC predicts that by 2020, 80 percent of the industry’s growth will be driven by these third platform technologies.

Shared services can mean departments lose direct control of the bottom infrastructure layer. Anger and resistance often result when budget and human resource capacity are transferred to shared services. Everyone still has personal connections with the people in shared services who used to work within a given department. But over time this relationship is likely to diffuse, change, and becomes less personal, especially if “siloism” is maintained.

In the battle against the cost of complexity, organizations need to simplify their applications and infrastructure portfolios. As we’ve seen from virtualization, cloud services and consolidation of applications, reduced complexity can deliver cost savings. IDC anticipates, however, that these will be offset by further complexity from investments around the four pillars: (1) capability being channeled into mobile devices and development; (2) cloud sourcing, architecture, and integration; (3) proliferation of new providers and services; and (4) massive amounts of data and new data sources (e.g., meters, sensors, and social feedback). New IT support and skills are required. Meanwhile we don’t see the legacy applications going away.

So what does this all mean for government?

First, the role of the CIO is changing dramatically. In IDC’s 2012 CIO Agenda Survey, 67 percent of CIOs see their role evolving to one of a chief innovation officer. “New project” budgets are expected to grow about 25 percent over the next three years. CIOs are focused on fostering a culture that drives more innovation, one of their top three goals for 2012.  

The departmental CIO needs to diversify, expand and think laterally. CIOs will be working at a much higher level than just the business of a particular program need; they’ll be sharing successful applications across departments. But the challenge will be how to become a more informed contributor to a better business-wide bottom line. This will occur through better business partnerships, and understanding the business of the organization and its partners.

It is no longer about IT; rather, it is about delivery. And the skill sets are intrinsically different: CIOs will need to be able to partner, to understand business and the strategic direction of the enterprise, to manage relationships.

Amidst all of this transformative change, there is hope that shared services will be the strategy to drive service and savings. While the federal government’s approach to transition to shared services has been vague in terms of communication and detail, the overarching strategy is strong and effective, something that truly distinguishes this implementation from previous incarnations. Senior leadership is committed to rational IT consolidation and deputy ministers are being measured according to their progress with shared services. There is a high level business continuity agreement in place, with more governance to come.  Most importantly though, people are working towards the bigger picture of government, not just what a given department needs.

The second area to be hopeful about is the ability to leverage the suite of third platform transformative technologies. In the enterprise-wide context, the cloud provides rapid expansion of data sharing, along with shared tools and services for manipulating and importing/exporting data for use by multiple applications, which can help take the lid off innovation. Vendors are coalescing around three key infrastructure concepts: converged, optimized and automated. Integration means fewer “things” to maintain.

Big data and analytics will be an issue for 2012. In our CIO Agenda Survey, as well as in the Canadian government benchmarking survey, we have seen business analytics jump to fourth from ninth in the ranking of IT initiatives for 2012. This is being driven by growth in digital content, most of it unstructured. Big data falls in the domain of the shared services organization while analytics becomes the domain of business.

The introduction of employee-owned mobile devices has created a crisis for IT. IDC predicts that most large enterprises will crack this issue in 2012. Even in government. IT organizations limited their risk exposure to BYOD by limiting access to data and applications and by adopting policies that allow IT to remotely wipe lost or stolen devices. But there are greater challengers in providing applications to public servants to improve their work, and delivering citizen services to mobile devices.

And, lastly, there’s been a lot of angst over cloud and social media – they create value but also created islands of info, so the question is how to bring these islands of info back into the organization. They enable the creation and management of communities, social listening, and integrated views of clients and segments. As the social enterprise develops, other key areas like customer service (community and social listening), and supply chain management will have their own social initiatives.

Shared services and the new IT will require a new set of skills and priorities aligned with enterprise needs. Innovation will demand that the organization work laterally to provide best practice knowledge across the enterprise. We see the trends as being:

•    Move to the private cloud;
•    A more sophisticated management toolbox, to enhanc

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