The Devil in the Details
Getting the benefits of shared IT services, however, requires a lot of negotiation and hand holding. These partnerships are fraught with challenges ranging from contractual issues to security and liability concerns.
Interim discussions among the top research universities touched on some of the potential difficulties they would face, including how service-level agreements would be structured and how the group would resolve differences when participants are split on adding new technological capabilities, says MIT's Grochow. "There would have to be a significant amount of attention paid to this," he adds, referring to the myriad legal questions inherent in a shared services arrangement.
Issues such as where competitive data or a set of applications resides physically takes time to resolve, notes CHF International's Odeh, as does developing a level of trust between participants. Entrusting IT operations to an outsourcing provider with an established track record "is one thing," says Steven John, CIO at H.B Fuller, a specialty chemical manufacturer. "Sharing IT resources with another entity is a higher degree of risk," he adds. Running a shared service or hosted application "isn't a core business for the organization and the participants typically don't have the experience running such an operation."
From 2001 to 2007, John was the CIO at Agriliance, a former joint venture between Land O'Lakes and CHS, which was the largest distributor of pesticides and fertilizers in North America. As one of the parent companies of Agriliance, Land O'Lakes ran the IT infrastructure for the joint venture. Eventually, the two firms shared some software licenses. Both companies were happy with the relationship (it dissolved in 2007 when the partners decided they could make more money on their own).
"I think it worked because it involved a parent company and a child company," with clear lines of authority and accountability, says John.
There are barriers inherent in corporate culture, as well. For about a year, officials at Franklin W. Olin College of Engineering in Needham, Mass., and nearby Wellesley and Babson colleges have been exploring different ways to share their existing IT resources under a possible barter-type arrangement where no cash changes hands. The discussions have covered a range of options, including the possibility of extending to Wellesley the fiber-optic connection that already links the Olin and Babson campuses so that the three schools could share storage and other systems. It would also improve the experience of students who cross-register across the three campuses. Workgroups studying the viability of sharing business continuity platforms, archiving and storage plan to present their findings to a group comprised of VPs for academic affairs, administration and finance by October. "Everything is on the table" if there are cost-savings or other efficiencies that can be achieved, says Joanne Kossuth, vice president of operations and CIO at Olin.
Yet institutional challenges may arise when it comes to prioritizing and implementing the recommendations of the workgroups. On one hand, says Kossuth, "there's a built-in need that people have to own everything related to their organization. It's hard for people to [share services] because they're vested in their job functions and they're vested in their organization's ownership of that function."
IT leaders also worry about creating additional work for staffers who would have to run any shared environments. "We have to try to figure out ways to do this without making it overly burdensome for staff at the respective schools," Kossuth notes. Then there's the popular conviction that you can't (or shouldn't) trust anyone who isn't on your payroll.
Among executives in the utilities sector, there's an embedded belief "that they need to control their own destiny," says Michael J. Carlson, former vice president and CIO at Xcel Energy, who recently left to lead smart grid operations for GridPoint.