Also, the service being delivered has to be as good, if not better, than what IT organizations are currently providing in-house, says Gary Curtis, global managing director for Accenture Technology Consulting (he is not involved with NetHope). Curtis has worked with multinational companies to restructure IT operations, including incorporating shared services within some of them. He notes that whether a shared services provider is an independent company that's established by member firms or a member hosting an IT service, it "has to pass the same test" as an outsourcer, such as an audit to demonstrate it has the proper controls and governance in place for operating the service.
Finally, to address privacy and security concerns, it's important for shared services participants to be clear up-front about the types of data that need to be kept private and the information that can be shared freely among members, says Grainger-Happ. Confidentiality arrangements should be written tightly to prevent one or more participants from taking proprietary information or processes away from any of the other members, advises Scott.
The attorney goes further, cautioning that participants install strong accounting and internal controls to prevent any members from filching funds. That's actually happened: Scott points to a group of insurance competitors who formed an organization to provide shared technology services only to discover missing money about eight months ago.
In the end, CIOs have to decide which, if any, IT activities could be shared or operated by another business in order to drive down operating costs and free up precious resources for more ground-breaking endeavors. "Do we want 100 people working on developing and maintaining a hotel reservation system?" asks Starwood's Thompson. "Or do we want 100 people focused on building innovative solutions for our company?"
Thomas Hoffman is a freelance writer based in New York.
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