Overcoming Resistance: Realizing the Benefits of a Global Distributed IT Services Model

November 5, 2007 on 4:33 am | In Uncategorized |

by: Charles Arnold, Managing Director, EquaTerra
David Zink, Client Executive, EquaTerra

Are companies today suffering from a kind of psychological “resistance” when it comes to developing a distributed model for IT services delivery?
Clinical psychologists tell us that resistance occurs when patients implicitly or explicitly fight the interventions that are intended to be therapeutic for them. It is tempting to see the plethora of articles over the past couple of years dealing with the obstacles and challenges to establishing distributed services delivery models as signs that IT professionals are overly concerned with why such models might not work. Change is hard, certainly, and resistance is understandable.
We want to take a different approach to the topic by explaining the added benefits IT organizations can realize through a distributed services operating model. Such a model could involve multiple global locations in a combination of internal shared services and/or outsourced environments.
Empirical evidence demonstrates that the benefits of a distributed IT services model are considerable. If IT professionals and business users alike more fully understand the positive impact of distributed services models on both cost and value, they can be better equipped to fight organizational resistance and develop a roadmap for successful change.

Taking standardization to the next level
In IT services, standardization has been an important theme for many years. The quest for standardization began in the hardware arena as organizations became smarter about creating a common platform for their office environments – the same machines and servers. Seeing the enormous benefits of such standardization, the movement then worked its way through programming languages and applications, then eventually to processes and procedures for the entire IT industry. Consistent equipment, applications and processes resulted in more consistent performance overall.
The story of the growth of shared services models revolves around that quest to realize the benefits of standardization. As organizations deploy their standardized environment, they can group their service organizations to encourage common and consistent delivery approaches. An example in application development and maintenance follows.
With a centralized application development team or application maintenance team, organizations can be more certain that all parts of the organization are served in the same way. And, by putting their servers in a common data center, they can manage those servers more efficiently. They can create a single-point-of-contact help desk – a help function that more consistently answers inquiries, and tracks and monitors issues to help identify root causes of any problems that might arise.

Practice makes perfect, as the saying goes. When you put like next to like – application people together, client service people together and so forth – you develop specialized workforces that become experts by performing similar tasks over and over, learning from each other. You also get better leverage. Fewer people can support more services, in part, because deeper expertise means issues are identified and resolved faster.
Although this IT shared services approach does not contain an outsourcing component, certainly outsourcing has accelerated the trend toward service delivery standardization. Because service providers employ an operating model based on server groups, help desk groups and so on, pursuing an outsourcing strategy leads almost inevitably toward a common operating model for a provider’s clients.
Expanding the global footprint
The next layer of benefits from a distributed IT services delivery model comes to those companies that successfully expand the model across a greater global footprint. By creating centers of excellence, one improves the chances of success when replicating IT services around the globe. At this stage, organizations retain the sense of common IT functions working together, but they place those common groups in multiple locations around the world. By doing so, they create what is essentially a continuous service delivery engine running around the clock, instead of a service that shuts down for at least half of each day when workers at a single location go home.
What is the ultimate result of this approach? Significant reductions in the calendar time required to deliver a service. Instead of business users waiting a month for a new application or modification, they can now get it in two weeks. The total number of person hours required for development would remain the same (or might even increase a bit, given the added management time required to coordinate a global team). But from an end user’s perspective, productivity appears to dramatically and suddenly increase. Maintenance and support also can be handled in a more timely manner since companies can establish 24-hour proactive monitoring, with personnel ready to work in real-time to resolve any problems that arise.

It’s true that coordinating work across time zones introduces complexity and risk, and managing a distributed IT services model involves learning new skill sets. New tools also are required to manage complex programs, ensure handoffs are effective, and confirm decisions are based on a holistic view of operations and performance.
Yet these are not insurmountable challenges. They simply point to the need to institutionalize common governance practices, and to streamline the teams and tools managing relationships with multiple locations and providers. New, more sophisticated outsourcing governance tools are now available that automate processes and enable the work of dispersed IT teams. EquaTerra estimates that organizations with more effective distributed services management tools will save their corporations at least one percent of the annual contract value each year. These savings are a result of several factors, primarily automating routine or transaction-based processes.
Keys to maximizing the benefits of a global IT services delivery model
IT departments certainly will feel the effects of placing different groups in different global locations. They are likely to label this a “fragmented” approach to service delivery. Yet companies can take a variety of steps to ensure they realize the benefits of a global distributed services model that transitions fragmentation to synchronization.

Organizations should:
• Establish effective discipline in standardizing processes. Organizations that centralize services without simultaneously standardizing the processes around the centralized function may end up in a worse position than when they started. The advantages of a distributed services model – consistent delivery based on the increasing expertise of a dedicated team – may never materialize. Without standardization, companies may end up with the worst of both worlds. They can’t get fast service or consistent, high-quality service. Until IT decision makers believe they can win the standardization fight, they probably should not engage in the broader battle for a global, distributed services model.
• Apportion work by geography, not function. In some cases, organizations tie their hands in terms of the ability to realize the “follow the sun” benefits of globally dispersed service teams. Take a company which, for its application development function, retains tasks such as business analysis, needs analysis and high-level design work. The organization will then transfer lower-level design and coding work to a shared services location or an outsourcing provider. Although such a bifurcation sounds reasonable, what results is that companies inadvertently create a process cut-off; they aren’t really following the sun. Some work is offshore and some is onshore, but the principle of handing off similar work as one location’s day ends and another begins is lost. Companies that divide things up geographically rather than functionally are more likely to realize the benefits of more rapid service delivery to business users.
• Ensure equal levels of leadership are involved in handoffs and knowledge transfer. When companies are coordinating and handing off work, and then doing knowledge transfer, they need to make sure that those in charge of the transitions in each location are at equal levels and equally familiar with the big delivery picture. The value of the delivery model will be diluted significantly if a senior person is in one location and a junior person in another.
• Improve coordination and service to users by overlapping coverage. In our experience, a best practice among IT shops effectively leveraging a distributed services model is to create a slight time overlap during the transition from one location to another. A status call can be scheduled during that time to clarify matters and ensure the handoff is optimally made. If that overlap isn’t in place, productivity can suffer if a receiving location cannot get clarification on open points. Some service providers, particularly in India, are taking that overlap concept to higher levels, actually mapping their availability to their clients. They will have nearly a 24-hour team in place at their location to be available to clients whenever needed.

Managing expectations
Above all, organizations that hope to reap the highest benefits possible from a distributed approach to IT services delivery need to manage expectations across the IT and business-user communities. Effective and well-executed communications and change management plans, and committed leadership, are critical to success. Those in charge of the new services delivery strategy need to go into marketing mode as part of their responsibilities, making sure everyone is aware of the benefits possible in a global model.
At the same time, the precise manner in which things will change, what temporary effects those changes will have, and what everyone should do to fight through the resistance, also need to be communicated. The unknown is the scariest thing. By casting the light of knowledge and experience everywhere they can, IT executives can reach their destination more readily and realize the business results faster.