The CIO of a large company with global operations faced a problem. The CEO had asked him to manage the company's shared services for finance, human resources, and procurement. On the one hand, the CIO thought it made sense to have one person in charge as the company standardized its back-office activities on a common enterprise- resource-planning (ERP) platform and moved some of them to low-cost locations. Such a program fit in well with the CIO's advocacy of better integration between IT and business functions. On the other hand, he was concerned that combining commodity services with information technology would send the wrong message to the business units, since he had been urging them to view IT as a strategic function. He also worried that running back-office shared services in a strict and standard way, giving virtually no flexibility to the business units, would conflict with his goal of building a collaborative partnership with them in order to use technology to win in the marketplace.

This CIO's difficulty is becoming increasingly common. Leading companies are aggressively standardizing the back office globally, so they can operate efficiently and free business unit leaders to focus on getting products to market faster and...