Print this Page

Email this Page

Download Briefing

Computacenter Homepage

Centralising IT services has many advantages and is technically straightforward – but that’s not to say it’s without its challenges

As companies have extended their national and international reach through expansion, merger and acquisition, many today find themselves with a thorny problem: whether and how to implement a centralised model of shared IT services that extends across remote locations and, in many cases, across international borders.

The potential benefits of centralised IT are tantalising – a significant drop in ongoing IT costs, increased efficiency, improved management control and standardisation of systems, processes and service-level agreements. But at the same time the challenges can seem daunting – and they are not so much technical as cultural and managerial. Mark Peter, Computacenter’s international senior service manager, says: “From an IT perspective, there are very few problems with working across borders. You can provide a service just as well from, say, Barcelona to the UK as you can within the UK itself. One notable exception to that is China, because of the country’s network filtering, which can cause performance problems. But the main challenges presented by centralisation are around culture, language, local understanding and providing effective remote management of the services you are offering.”

Range of services

The range of IT services that can be centralised effectively has grown considerably over the past few years. At the same time as the cost of high-speed, cross-border networking has dropped, security, reliability and functionality have increased. As well as basic IT services such as the delivery and support of standard hardware and software configurations, and call centre-based operations such as helpdesks, it is now feasible to virtualise and centralise higher-level functions such as the remote management of networks, systems and applications, and delivery of ‘on demand’ remote storage and processing power.

While some larger organisations have developed certain central IT services in-house, most companies choose to work, at least to some extent, with a third-party supplier or suppliers. Such an approach can provide them with flexible, consistent service levels that take advantage of those suppliers’ expertise, experience and economies of scale. Security concerns, once a key obstacle to the take-up of remote third-party IT services, have also diminished as suppliers have increasingly adopted best practice, such as the international security standard ISO-17799, and focused on ensuring customers’ confidence in the security of their products, processes and services alike. However, you still need to take care that your chosen partners are appropriately accredited and trustworthy.

Extra agility

The cost benefits of IT centralisation are well rehearsed, but the other big driver is the ability to gain flexibility and business agility. If you have implemented a standardised, centralised model of IT service delivery, it will be far easier and quicker to make changes to your processes and services in future, thus giving you the ability to adapt as needed to the changing business landscape. In addition, by reducing IT inefficiencies through the introduction of centralised standard services, you are able to free up local resources to concentrate on more innovative and value-adding activities that can really benefit the business bottom line. It’s an IT truism that 80 per cent of resources go on ‘keeping the lights on’. In a centralised IT environment, there are fewer day-to-day demands on local IT managers, and that 80 per cent figure can be cut to a far more modest proportion.

You will also be better prepared to take advantage of future developments in remote IT services. Analysts predict the range of high-level services available remotely will continue to grow as companies increasingly adopt service-oriented architectures (SOAs) based on standard web technologies, giving them access to true on-demand applications and services remotely from a variety of suppliers. Taking full advantage of the flexibility such developments could give your organisation will be far trickier if you are running many incompatible systems and processes across different regions and countries.

According to The CIO Census 2007, a survey of 112 of the UK’s top IT leaders by senior IT management forum CIO Connect, the three key concerns of CIOs today are: delivering improved IS services at a reduced cost, aligning the IS strategy to the business and facilitating business change and new ways of transacting business. It’s no wonder, then, that many are looking at IT centralisation and consolidation, given the potential benefits already stated. But before an organisation embarks on such a programme, it needs to be clear not only about the benefits it wants to see as a result, but also about precisely what services it intends to centralise, how it will ensure the consistency and quality of those services, and – crucially – how it obtains the buy-in of the local organisations affected by the changes.

Appropriate change

Mo Siddiqi, Computacenter’s director of international operations, says: “It’s about being realistic. You need to think about the culture of your organisation and consider what speed of change is appropriate and what model is most appropriate. For example, for an area like China it’s pointless having a centralised support desk in another part of the world because costs in the region are so low you might as well use local people. Your aims will depend on the structure of your organisation.”

If you have a devolved culture where a lot of decisions are taken locally, it may be difficult for you to gain global control without a clear imperative. “In that kind of cultural environment, some of our customers have implemented centralisation faster by reducing the bottom-line objectives for each country,” says Siddiqi, “in other words, giving those countries easier or more achievable goals, but in return for them agreeing to adopt a change process or standardised environment at an agreed pace.” He goes on to note that specific vertical markets also have different requirements and are at different stages of consolidation and centralisation. “For example, the petrochemical industry is ahead of the curve because most businesses in that sector have very large, global operations. They started the process of consolidation more than 10 years ago. The next wave was manufacturing. We’ve previously dealt with a lot of large manufacturing customers with distributed operations – in China, for example. More recently, much of the interest in IT centralisation has been coming from the financial services industry, whose requirements tend to be more local, with the benefits harder to realise.”

In other words, the specific challenges you face when it comes to centralising IT will depend on the size and structure of your organisation, as well as on where you are in the process. Siddiqi says: “For example, an organisation might have differently-sized operations in different countries. In certain countries or regions where it has a large presence, it may well have existing contracts and investments in different systems – particularly if it has grown through acquisition. That’s one of the challenges we see a lot. Other organisations (including a lot of financial services businesses) have almost the opposite problem – a large number of small offices in multiple countries. These smaller offices have similarly high service requirements to a larger office, particularly if key people in the organisation are working there, but it’s typically very expensive to support such an environment. The challenge for an IT director is to achieve control of IS so you can deliver consistent service levels to all parts of the business.”

Conducting extensive requirements analysis among local organisations is one way to identify and address issues before they become serious obstacles. However, it goes beyond this.

“It’s about more than just requirements analysis,” says Siddiqi. “It’s very much about ensuring political buy-in to the change process and the key to that is communication, communication, communication.”

You need to effectively explain the benefits that will be obtained by a programme of IT centralisation. And those won’t necessarily be quick-win financial benefits. They’re more likely to be the longer-term benefits of a consolidation process – giving local organisations a consistent, standard level of service that maximises their ability to do their jobs efficiently as well as reducing costs and freeing up resources to grow the business. At the same time, you need to be honest with local organisations that elements of the service may not be as personal and ‘friendly’ as they were before centralisation.

Tread carefully

You must also tread carefully and be prepared to be flexible. Siddiqi says: “Sometimes a company can embark on the process with a very black and white attitude. In our experience clients need to show flexibility when going through a programme of centralisation. They must be prepared, at least for a time, to adapt their strict approach to meet specific requirements in local countries.”

For example, if you implement a central helpdesk, that may require a significant change in working style for users, who may be used to having a local support team rather than having to call a central desk. He adds: “One potential way to smooth the transition – and something we’ve done in the past for customers – is to provide a local backup engineer for a six-month transition period. As well as making the users more comfortable, it gives you someone on site to help coach them to appreciate and move to the centralised approach.”

Cultural compatibility

Another issue you need to consider when centralising IT services is cultural compatibility between local organisations and the country providing the central service.

Siddiqi says: “One of our customers recently transferred some of its operations supporting its Spanish organisation to a trusted local supplier in Chile, in order to reduce costs. However, the company ran into huge problems because of the working culture in Chile. People were simply not responding to the requirements of the Spanish business quickly enough – the supplier was just not in line with European business requirements. Not understanding the need to deliver operations from a culturally compatible location is one of the biggest failure points in IT centralisation and consolidation projects.”

But perhaps the biggest cultural issue you need to overcome is the perception by local organisations that they are ‘losing control’. Addressing that perception requires all the things already mentioned – effective communication of benefits, strong leadership and sponsorship from senior management and a willingness to work collaboratively with local organisations to ensure the process meets their local requirements. If you fail to convince them, the programme could actually end up having the opposite effect to that which you intended.

As Mark Peter says: “It is possible to centralise and actually increase your day-to-day service costs if the local businesses fight you to try to maintain that control. As early as possible, therefore, the local management has to buy into the central model. You achieve that buy-in through effective executive sponsorship and also by spending the time and effort to standardise in a way that maintains support for those local organisations. The key is to demonstrate to them right from the start that you have the right attitude. So even if you don’t fully understand the specific issues of a country or region, you show a willingness and ability to drill down and understand their issues to build a contract that meets their needs.”

For example, there are practical issues like language differences in software to contend with. Peter says: “Typically, for example, an organisation will have a different HR system in every country and in many countries that has to be in the local language. Software is a lot easier to build and support than it used to be, but you’ve still got to be able to build in enough capabilities to be able to manage those requirements that are, and will remain, specifically local.”

You also need to contend with local differences in the life cycles of hardware. Peter says: “If you are covering the globe, trying to standardise on a single platform can be very tricky. Products are introduced and discontinued at different times in different part of the world, so it is quite difficult to have global standard without some local variation at the hardware level. When building a standard image or environment, you’ve got to take those differences into account and keep on top of the changes in each local area.”

Legal issues

Legal differences pertaining to areas such as employment, taxation, data privacy and reporting requirements may also cause you headaches. Siddiqi says: “You need to understand the taxation requirements and the flow of money in any international contract or structure. In addition, laws covering workers’ rights in different countries can have an impact on service levels. Transitional behavioural change among employees is often also quite difficult to achieve and requires a lot of HR consultation and approval through social plans and unions.” While some of the challenges of centralisation seem daunting, they are by no means insurmountable, particularly if you work with partners skilled and experienced in this area. As we see in the Solutions feature (pg.14), there are approaches organisations can use to address these challenges as well as ways they can be helped in planning and implementing different international models of centralised IT service delivery and management.