Shared services model puts focus on external customer

If an aspect of the organization doesn't touch the customer directly, he wants it simplified and standardized to cut costs and gain efficiencies. Shared services, or what others call centralized IT, is a means to that end. In this interview, Johns describes Owens Corning's shared services model and tells why end user self-service provisioning is his ultimate goal.

SearchCIO.com: Some consider shared services to be pooled virtualized resources; others take shared services to be a centralized IT model. What shared services model do you follow at Owens Corning?
Johns: I would say we might be considered a combination of both those definitions. We have run IT "centralized," or we have operated as one single, global organization, for 10 years now. We do have resources in Asia, Europe, Latin America and the U.S., but we operate as one global organization. We have a set of principles where we look for opportunities to leverage solutions and services across the enterprise. We have one set of global infrastructure standards that is the same for all of our 133 locations around the world. We have a single standard for a set of enterprise-wide applications.

I think you would term it "centralized," but I don't like that term because it comes with a lot of baggage. I think it means "centralized decision making," which is not what we do. In addition, we've included the operational aspect of many of our corporate systems. So, accounts payable and receivables, for example -- services that would typically be in a shared-services [business process outsourcing] BPO center in a finance organization -- we've moved those into our IT organization as well. So, when we say "shared services" or "business services," we include both IT and much of the operational aspects of many of the systems we have.

You don't look at shared services as a multi-tenant environment, like a private cloud?
I would say that our network and the way we're organized today is a private cloud, but do we look at provisioning [services] to the business? We don't need to because we have a set of standardized applications that everyone uses.

Is your data center virtualized?
We have virtualized 60% of our data center. We've also done a significant amount of virtualization in our desktop environment. Virtualization is a big part of our go-forward strategy and a big part of our cost play.

Would you say that virtualization is a key piece of your shared services strategy?
We don't have a "shared services strategy" per se. What we have is a low-cost, high-value delivery strategy, of which shared services -- or organizing in a shared services manner -- is a tool in the tool belt to go make that happen. We look at shared services more from a business perspective than an IT perspective. Any activity that doesn't touch our external end customer, we believe, provides no value -- and don't take that literally, because there are things that have to happen in corporations -- but if it doesn't touch our customer, we believe it provides no value. Therefore, we want to simplify it,standardize it, take out as much cost as we possibly can. And if applicable, we'll outsource it because, again, that's a way of lowering the cost. So, that's our broad definition of "shared services."

What are the benefits of shared services to the business?
We started with infrastructure 10 years ago. We felt that one common infrastructure was the way to run a global company. It was the most cost-efficient and effective way to operate. So, all of our employees operate off one network [and] have one single image to use. We locked down our environment very tightly. The primary reason behind that was cost. It was a much more cost-effective way to operate: one data center as opposed to 10, one set of infrastructure standards and devices as opposed to 10 or 12. So, initially it was a cost play. Today it's driven by productivity. It's much more productive for employees since everyone has the same environment, the same tool set.

What do you have in shared services today?
I would consider IT a shared service. There are also multiple accounting functions -- corporate services that would include global travel and supporting functional organizations. We're moving some of our [human resources] functions into a shared services environment. From a pure BPO, shared services point of view, I think we're pretty industry-standard in terms of what we're moving in. If it doesn't touch our end customer, we should be able to standardize it, simplify it and move it into a shared services environment.

Did you change how you charge for services as a result of having a shared services environment?
We're not big into the cross-charge game. We allocate costs indirectly to the businesses, and that is dependent on the size and scope of the business. That's how those allocations get determined. So, there is no by-service or by-usage type of chargeback. Personally, I think that's a waste of time. What value does that provide to our end customers? You can spend an enormous amount of time going through a massive exercise, and you can have a whole organization of people focused on the proper cross-charge or service charge to the business. That provides no value to the customer.

Because you have standardized your environment, is there a need for a self-service provisioning for users?
Where we'd ultimately like to go is to be completely self-service. I think the days of IT being completely in control of technology are gone or are going very quickly. So, we have to provide an environment that is the most productive environment possible to our employees. Getting to a place where employees don't have to rely on an IT organization to provision a PC or a piece of hardware, I think, is the ultimate place we want to get to. A lot of people would refer to it as consumerization. I think it's real, and I think that's the direction we need to go.