ITaaS and Shared Services: What’s the Difference?

The IT-as-a-Service (ITaaS) model often creates confusion among organizations that have traditional shared services IT models. After all, weren’t Cloud computing  networkingshared services designed to deliver IT services to the business in the first place? Wasn’t that the whole point?

While shared services can provide a helpful foundation, ITaaS essentially reflects a new business model for IT. With ITaaS, IT moves beyond a focus on just delivering IT services, to providing a portfolio (or “market”) of internal and external business services that are optimized for business demand. These services are packaged, priced, and delivered in a way that makes them comparable with what business users can find in the market themselves.

So what does this mean in practice? What fundamentally changes with ITaaS? When comparing the two, the most effective ITaaS models tend to differ from traditional shared services organizations in five distinct ways:

1.  Agility vs. Cost – a primary goal for many initial IT shared services organizations was to drive cost efficiency through centralization and scale. In many cases this process also led to IT outsourcing, with its reliance on the “service tower” model that facilitated cost segmentation and benchmarking. ITaaS, instead, is primarily about enabling business agility and reducing cycle times. ITaaS organizational models, processes, and tools are all primarily focused on how to best enable the business to experiment, innovate, and grow.
2.  Service Taxonomies –classic shared services models tend to package offerings around technology, such as network, infrastructure, or applications. ITaaS service descriptions instead are aligned to the needs of end users and describe services in business terms. Services are packaged in a way that makes it easy for business users to make informed decisions on their own, with little or no IT involvement.

3.  Self-Service – in traditional shared services models, user requests for new services are handled by the help or service desk via a central ticketing system or service request portal. In ITaaS models, users are able to directly provision services on their own. While self-service provisioning may not be feasible for every service, the goal of ITaaS is to enable self-service as widely as possible.

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4.  Chargeback Approach – shared services organizations often charge back services to business units using cost allocation model agreed upon during the budgeting cycle. Allocations are commonly based on revenue, size, or other factors that are deemed to be drivers correlated with IT resource consumption. In ITaaS models, costs are instead charged back based on actual resource usage. While this requires the business and IT to develop new demand-forecasting competencies, it also provides needed levels of cost transparency.
5.  Service Orchestration – shared services models tended to focus on delivery of a static, stable set of defined services based on mature platforms. ITaaS is instead focused on brokering and orchestrating new types of services across both external and internal vendors. To enable self-service access to a dynamic portfolio of internal and 3rd party services, ITaaS models require a new generation of IT automation and cloud management solutions.

Shared services can be thought of as an initial, early step on the path to ITaaS maturity. While many of the processes, competencies, and tools can be leveraged going forward, shared services organization need to recognize that ITaaS is a new, distinctly different model.

About the Author: Scott Bils

Scott is a Senior Director in the Dell Technologies Consulting Services organization. In his role leading the Americas Digital Transformation Practice he is responsible for services in the areas of Cloud Native Applications, DevOps / Infrastructure as Code, Big Data Analytics and IOT. Scott blogs and speaks frequently on the topics of application, cloud and digital transformation. Prior to Dell Technologies Scott co-founded a leading boutique consultancy focused on helping large enterprises and service providers navigate the issues associated with cloud and ITaaS transformation. Scott was also the Founding CEO at Conformity, a venture-backed provider of the first enterprise-class management and governance platform for cloud applications. Prior to Conformity Scott held senior executive roles at Scalable Software and Troux Technologies, and also worked at McKinsey and Co. and Accenture. Scott holds a Masters Degree in Business Administration from the University of Chicago and a Bachelor of Arts Degree in Finance from the University of Illinois at Urbana-Champaign.