Jul 31 2008

Unlocking the Potential of Shared Services

Take a look at six keys that can help agencies reap the most benefit from joining forces.

Shared services have moved beyond the political agenda of the president to become an economic priority that is critical to the transformation of the government.

Although the current administration and the agencies deserve congratulations for leading this effort, the next administration will have an opportunity to accelerate shared serv­ices to the next level and realize their full promise. And that promise goes beyond performance improvements and cost savings — though sufficient motivation alone — to other related benefits that may be necessary to unlock this potential.

Before looking at how to get more from shared services, let’s define the term’s use in the federal community: Simply stated, shared services bring together functions that are duplicated across organizations and deliver these services more efficiently and often more effectively. Shared services can take many forms: all organizations serviced by one, all serviced by a few or some serviced by some in a distributive model.

Shared services can cross agency boundaries (the Financial Management Line of Business), or they can be defined within an agency (patent processing). They also can be a function of linked business processes, with governance by multiple management organizations that have a vested interest in the parts as well as the whole (the Integrated Acquisition Environment). Finally, at the macro-level, the General Services Administration and the Defense Logistics Agency provide another type of shared service to agencies as acquisition makers. IT fundamentally drives all of these services, and as emerging technology accelerates innovation, shared services will increase in importance and public value because the cost of providing them will continue to decline.

But to get there requires turning some keys and responding positively to challenges:

Key 1: Drive change management

In the 1975 classic Zen and the Art of Motorcycle Maintenance, author Robert Pirsig writes, “If you destroyed government as we know it today, it would grow back the same way because you need to first change how people think.”

Consider the paradigm change if common business activities were deemed candidates for shared services unless justified otherwise. As part of the criteria, invoke the Pareto principle: If the shared service can meet 80 percent of the agency’s requirements, use it and find a way to do without the balance or satisfy the 20 percent in another way.

Clearly, trust, accountability and questions of ownership are related stumbling blocks that impede institutionalization of shared-service providers and prevent the effort from reaching the tipping point that will accelerate implementation.

Key 2: Invert the staffing model

Establishing a competitive shared-services environment underscores the need for each shared service to maintain a competitive advantage.

For decades, the government’s hiring strategy has been focused on staffing levels sufficient to address maximum workload periods. In a competitive landscape, this excess capacity would prove too costly to maintain, so ensuring the right staffing levels becomes a significantly higher priority.

Key 3: Collaborate more for better results

Success in accelerating shared services is dependent on better congressional support and a broader governmentwide perspective on operational effectiveness.

Further, emphasis needs to be more on collaboration and less on “constitutional turf” between the two branches of government. Instead, agencies need to work with lawmakers to review horizontally organized program results as opposed to the more traditional vertical lines of oversight.

Key 4: Establish a new funding model

Begin an effort to establish a governmentwide working-capital fund for investment in shared-services activities.

The authorizing language for the current centers of excellence prevents or limits them from adequately funding

enhancements or scaling to meet expanded federal customer requirements.

A substantial, one-time capital investment would create a working-capital fund focused entirely on shared services and the underlying systems. Additional resources would facilitate and accelerate shared-service implementations. The fund could be reimbursed by a fixed marginal component based on a transaction fee paid by customers using shared services.

fact: 24 agencies, 49 states and many local jurisdictions have posted more than 150,000 data sets and 2,500
acquisition plans on GeoData.gov
Source: OMB

Key 5: Incentivize senior executive participation

As Indiana Gov. Mitch Daniels, former director of the Office of Management and Budget, says, “If you are not keeping score, you’re only practicing.”

It’s time to include important initiatives at the enterprise level in the performance plans of senior-level political and career executives. Metrics have become a part of IT project and program management. But what about gauging managers’ success and compensation against established criteria?

Additionally, review major IT investments against existing shared-services implementations to see if they could be modified to take on a new project. Although OMB does this now by limiting agencies’ resources, agencies need to own the effort and operate more like a board of directors. There are numerous federal interagency councils, such as the President’s Management Council, that could take on this charge.

Key 6: Embrace enterprise service management

An effective shared-services environment requires the integration of common services enabled by IT. In a federal world of growing complexity and cross-boundary requirements, delivering value requires a cohesive framework to orchestrate and maximize many capabilities and suppliers.

The emerging world of ESM can help agencies ensure that missions and processes are aligned, focus on IT development that supports a shared-services strategy and leverage assets wisely. But OMB must address policy issues that preclude commercial partners from being part of the governance process when they also have operational responsibilities.

None of these keys will be easy to turn. But they will help agencies overcome the scale and complexity of these implementations, and the ultimate payoff will be a government that can build on current management successes.

Photo: Elizabeth Hinshaw