Friday, May 15, 2015

Three Steps Bring Agility to Corporate Services

If you want to increase the agility of your back-office functions, you need to consider three essential steps. All are a bit on the immature side in the market today, but all are also evolving quickly.

1. Adopt a Services Catalog. While the term may conjure images of a restaurant menu, a Services Catalog enables informed decisions around service design, sourcing, and lifecycle management. A Services Catalog applies the disciplines of product/category management to the world of back-office support functions.

A well-designed Services Catalog provides an assortment of building blocks. These blocks represent capabilities that are managed through a holistic lifecycle. By this I mean that they are created, deployed, scaled and eventually retired in response to competitive requirements in the markets you serve, even if those markets are frames by internal business units.

We are still early in the adoption of a Service Catalog governance model for IT or for a Shared Services organization. There is, however, an obvious nexus for the application of a Service Catalog – it’s the point of intersection among the demand-side business and the supply-side support functions.  This is not a tool, but rather a management discipline.

2. Embrace and empower the role of DevOps in their support for business partners. This is a cultural shift, not a technology job description. Firms that adopt such a mindset are demonstrating true progressiveness in capitalizing on a generation of knowledge workers who are central to innovation. 

The Service Catalog has the potential to conjure fears of overly structured and tightly disciplined constraints that restrict innovation; DevOps is the perfect offset to such fears.

I ask every one of my clients whether their organizations utilize DevOps techniques to accelerate the business-to-IT agenda. Over the past several years, I’ve seen the positive responses increase dramatically.

The DevOps role is to make change happen both quickly and efficiently within the operating parameters of business expectations for resilience. Those are tough hurdles to meet: rapid innovation, with positive effect, without undue risk. But the mission of DevOps is to drive speed to effect.

3. Create a mature and transparent Charge Back mechanism. This is another term that evokes images of bureaucratic cost allocations within the hairball of corporate structures. In reality, it’s actually an essential discipline for effective governance through a program of change. 

Most companies recover the costs of back-office operations by applying allocations of those costs to their market-facing business units. The most common techniques for making the allocation decisions are to spread the costs based on such factors as net revenue, or headcount, or office locations. While the accountants might favor the mathematical ease of these algorithms, most business leaders detest allocation-based cost recovery approaches.

Achieving progressive capabilities in back-office support functions demands high correlation between the needs of the business and the form of the associated support. That fidelity implies choice. Those choices – such as the quality of the office space, the speed of response, etc. – carry varying costs.

A modern Charge Back mechanism empowers innovation by making clear the effects of decisions around business options. A business unit that can lower costs and/or increase revenues will enjoy those benefits directly.  Like the prior points, this is less about a tool than it is about a management philosophy.

When combined, these three ingredients – Service Catalog, DevOps, and Charge Back – will improve your organization’s agility. Without them, agility is just a pipe dream.

Peter Allen has many years of operating experience as a top executive of rapidly-growing multi-billion dollar companies and in assessing sales and marketing effectiveness. He is now a Boston-based Managing Director at Alvarez & Marsal.


Image: dark_ghetto28/Flickr