In the last few years many corporate groups reorganized their IT-Services and established IT Shared Service Centers (IT SSC). These IT SSCs primarily delivered IT services internally; nevertheless some IT SSC provided IT services to external customers as well. These external market activities failed in most cases. In spite of the relevance to organizations, little research has been done investigating the reasons for such failures. In order to address this issue, we have conducted a qualitative study with eight IT SSC cases and five experts interviews. We have triangulated the results between the case studies and the expert interviews and we have identified two set of factors, one explaining IT SCC successes in internal markets and the other explaining IT SSC failures in external markets. The enabling factors for the successes of IT SSCs in internal markets include having the same corporate culture, knowledge of the parent organization and its processes, lower transactions cost, lower average cost, no dependence on external IT service providers, better data protection, improved IT opportunities and obligation to provide services. The factors explaining external market failures include the lack of experience with acquisition, no professional sales and marketing, lack of investment funds, weak unique features of IT services, reassessment of strategic group portfolio by the parent company, higher IT service costs, and inconsistent business models. These findings are relevant to managers of IT SSCs to make decisions on their corporate strategy, as well as to researchers to utilize these findings as a starting point for future research on IT SSCs.
Schulz, Veit; Herz, Thomas Ph.; Rothenberger, Marcus A.; and Brenner, Walter, "IT Shared Service Center and External Market Activities" (2010). AMCIS 2010 Proceedings. 532.