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Shared services would not be possible without recent advances in IT. The shift to standardised hardware and software coupled with the emergence of the internet has enabled levels of integration and communication that were unthinkable a decade ago.

But perhaps the biggest revolution, and one that has only just begun, is the advent of a new way of thinking about IT, dubbed service-oriented architecture (SOA). This promises to finally eliminate the “information silos” that so often frustrate business transformation.

The term might seem arcane, but experts believe that only SOA can unlock the full potential of the shared services model. Put simply, a SOA allows an organisation to think of its business processes – and, thus, its IT systems – in terms of a few generic “actions” which need coding only once and can then be re-used many times.

That represents a real revolution over the way IT systems have been built in the past. It means IT departments do not have to re-invent the wheel each time a business process is changed or a new application is needed.

“SOA is the best opportunity for making software re-use work and it has arrived just as the idea of shared services is starting to take off,” says Alan Hartwell, vice president for technology solutions at Oracle.

Yet SOA is an idea that has had to wait its time. Only with the widespread use of internet technologies has it been possible to recast the IT function as a loosely-coupled collection of business services rather than as a set of hard-wired applications, each designed for a specific purpose – the conventional view.

“The fundamental difference between traditional IT and the new web-based world is that previously an application was designed to be used by specified people for a specific purpose,” says Carl Bate, chief technology officer at Capgemini. “Now, using a web browser, anyone can connect to any service, but the big challenge this creates is one of managing complexity.”

Another challenge is deciding who is in charge. “A lot of IT shared services initiatives are driven from the centre not by the users,” says Mr Bate. “That can create conflicts as the line-of-business units have their own perspectives about delivering new services.”

This issue particularly affects the growing number of shared service initiatives in the local government sector and it was highlighted in a recent discussion paper, Transformational Local Government, published by the Chief Information Officers Council.

While accepting that shared services offer many benefits, the paper warns that shared services initiatives, if implemented poorly, can conflict with many of the other objectives of local government transformation, such as devolving power to communities or delivering more responsive local services.

Nevertheless, the public sector offers some of the best examples of how IT has been used to successfully transform organisations to a shared services culture. Many local authorities have already put in place telephone and web contact handling processes that span different departments, letting customers resolve multiple enquiries at one point of contact.

CRM technology is helping overcome the “silos” problem by joining up the disparate bits of information about customer contacts and service requests. Just as important, workflow systems are helping public bodies join up their internal processes.

Web portals are helping to join up access to services across a range of government departments, while growing numbers of local authority contact centres and “one-stop shops” include representatives of other public or voluntary sector organisations, so allowing the handling of enquiries that cross traditional organisational boundaries.

Massimiliano Claps, IDC’s programme manager for European vertical markets, says the way IT is used in the public sector has matured significantly in recent years. Modernisation initiatives increasingly look beyond the publication of information on the web or the deployment of interactive services. He says the focus now is on using IT to boost efficiency, by re-engineering processes so as to create “joined-up” services across authorities and by sharing common functions.

The changing IT needs of public-sector customers have not gone unnoticed by the vendors, which now realise that they must offer solutions that stress the ability to join up processes across various departments and support the deployment of shared services.

The big problem, however, is that existing IT platforms are not geared to achieving this joined-up government effect. To achieve it with current practices and traditional IT architectures requires significant capital outlay, which is typically spent on integration and replacing existing systems. That means little funding remains to extend functionality or incorporate new organisations into the shared services culture.

SOA promises a better solution. By turning applications into services and sharing data across different platforms, it is no longer necessary to replace “legacy” IT systems to add new functions or perform costly “point-to-point” integration work each time an organisation running a different set of applications joins the shared service centre.

“With SOA, you only have to make the business processes work together, not the applications,” says Oracle’s Mr Hartwell.

As any IT manager knows, it is easier to standardise business processes rather than applications or IT systems. For example, if a “procure to pay” process is defined and implemented using SOA, then councils can share procurement and achieve potential savings, while continuing to use different IT systems.

SOA also enables a wider range of shared services models and delivery approaches. The traditional model is to consolidate into a single physical operation or physical shared service centre. But the new approach focuses on service networks, enabling efficiencies and benefits to be gained without the need for co-locating staff and resources, creating what Capgemini’s Mr Bate calls “virtual shared services”. He gives the example of the Criminal Justice IT (CJIT) information network, which Capgemini has helped develop.

“It’s very customer-centric and it’s totally distributed, just like the way the web works. That means it can share of information with other agencies,” says Mr Bate.

While it started as a traditional IT integration project, the CJIT network is now starting to take the web approach, meaning that anyone can use it and anyone can publish information to it.

“It’s like being able to Google the criminal justice system,” concludes Mr Bate.

Copyright The Financial Times Limited 2017. All rights reserved.
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