Globalization is a significant factor in today's business strategies, as companies in mature markets

seek growth by expanding their operations in the emerging markets of Asia, Latin America, Eastern
Europe, and the Middle East.

These multinational companies (MNCs) have to extend their existing portfolio of IT applications,
infrastructure, and services to support their global business strategies.

However, managing globally distributed IT resources is challenging.

Ineffective global IT structures result in the duplication of resources, proliferation of IT systems,
increased complexity and risk, and the compromise of key business requirements such as agility.

MNCS managed their global IT structures with using three common structural elements to link the
enterprisewide IT leadership which are shared services, centers of excellence (CoEs), and value
managers (VMs), the goals of each element were the same across the firms. The objective of shared
services was to achieve scale economies; the objective of CoEs was to drive innovation; and the
objective of value managers was to enable responsiveness.

1. IT Shared Services are structural units that consolidate common IT functions (for example,
helpdesk, operations, development) to achieve scale by providing standardized services. Such
sharing eliminates unnecessary duplication of IT resources and improves utilization of IT assets.

IT shared services achieved scale by brokering and incentivizing the use of standardized IT
services across the firms, thus removing cost, duplication, and complexity

2. IT Centers of Excellence (CoEs) are also known as competency centers or centers of expertise.
CoEs are units that contain strategic IT capabilities identified by the firm as important sources of
value creation and service innovation. CoEs are specialized units where the MNCs pool expertise
physically or virtually across the globe. they serve as strategic resources that focus on designing and
developing new solutions, such as, to innovate, and to develop depth in critical expertise.

3. Value Managers (VMs) are groups of IT managers that seek to maximize the value of IT for
specific business units. VMs, sometimes called customer relationship managers, focus on the IT
needs for business units, business functions, and large or fast growing geographical markets. They
build deep relationships with these business customers and support their needs for responsive IT
globally. VMs are organized so that the voices of its key customers can be heard, consolidated, and
appropriately channelled for prioritization.

The said scenario shows that IT is not just viewed as technology supplier. It has been
seen to add value to the organization and provide strategic capability. It helped the
businesses to focus on their user-consumer and services thus becoming service-
oriented to provide customer-driven to user problems and opportunities.
CEO: Arriving to solutions is so costly and is inefficient since we have 4 business units
which are fertiliser unit, plastic unit, nutrition unit and chemical unit. And in each unit we
have hired 3 persons for 3 different functions which are finance, ICT and HR in which
to sum up, we have to give compensation to 12 employees. Can you have a suggestion
for such problem?

Management Consultant: Ma’am, in this new trend of management accounting we

already have what we called shared services on which we can consolidate the
operations of different business units. We can do it on our company but also, we can
outsource them.

CEO: How does it work?

Management Consultant: For example, these business departments that we have, the
HR, finance and IT can be into one body and those functions that overlap in each
business unit shall be on one industry on themselves.

So, there will only be 3 main industries. Thus, having to compensate 3 persons in the
future compared to 12 persons we have now, we can achieve economies of scale
through increasing quality, productivity and cost – efficiency for our company. Also,
ma’am adapting shared services can help us grow and increase our business.

CEO: How is that so?

Management Consultant: Through shared services, we can now focus on our customers
and marketing and not considering how IT, finance, and hr gonna work.

CEO: It is indeed a good suggestion. Let us resume our meeting next week for the
financial benefits of your suggestion.