Shared Services vs. Outsourcing: Can I Have Both, Please?


    Ephraim Schwartz’s June 5, 2006 InfoWorld column, "Reality Check," sets up a sparring match between somebody who represents the outsourcing industry and somebody who represents the shared services industry.

    Apparently, these two approaches to achieving cost savings in computing are at odds. "Two Ways To Cut Costs" is kind of like those quotes that surface every now and then where you say to yourself (or to your blog, if you’re like me), "How could those guys be so short-sighted?!"

    The outsourcing side is represented by Chris Carrington, who leads Capgemini Outsourcing North America. Schwartz says of him, he "believes only outsourcing can make a company truly accountable for performance. As he sees it, IT departments and the various organizations that create business processes within a company are all separate silos, each with their own management teams and budgets. There is no incentive to reduce someone else’s budget. But when they bridge all of the silos under common ownership, Carrington says, companies see tremendous savings."

    The shared services side is represented by Joachim Frank, VP of the enterprise infrastructure practice at HP Services (no slouch in the outsourcing arena, by the way). Schwartz writes, "Frank says a shared service is easier to manage and it allows IT to offer an SLA to help keep it on track."

    Am I missing something, or are these two approaches so vastly different that they couldn’t co-exist in the same organization? Why couldn’t you have shared services to handle certain functions (development of the next release of that inventory system that’s going to be deployed at all stores worldwide) while at the same time using outsourcing for other work (maintenance of the existing inventory system, help desk, email)?

    I suppose this is an instance where the connection breaks between our grasp of the truth and our grasp of what our companies would want us to say for print.

    Perhaps it is a "philosophical decision," as Schwartz points out. But I bet in a year, he writes a column about how these two approaches to handling IT work co-exist quite nicely at this-and-such company.