Archive for October, 2010
Does Captive = Complacency in Government Shared Services Organizations?
A captive shared services organization is a wholly-owned subsidiary of the organization to which it belongs and has no external customers. This means that the parent organization controls the processes and technology the shared services organization employs to deliver services. The SSO’s governance structure is confined to officials of the parent organization and the parent organization together with the shared services center make decisions about capital investments for the SSO. However, just as the shared services organization is captive to the parent organization, customers are captive to the shared services organization. Being a captive shared services organization and having a captive customer base simplifies things considerably for the shared services organization. Instead of multiple customers with sometimes competing demands, the SSO has only one customer, the parent agency and its business units, to satisfy. And business units are not free to go elsewhere for services offered by the SSO although the SSO may well outsource some of its services. But what is a positive for an industry shared services organization can be a negative for a government shared services organization.
No CommentsCentralization vs Consolidation
What is the difference between centralization and consolidation? Both are business models for delivering administrative support services. Although the terms are often used interchangeably, centralization of support services is not the same as consolidation and neither centralization nor consolidation is the same as shared services.
Viewing the models as a hierarchy in context with other models, decentralization is the least efficient model for delivering administrative support services. Centralization is more efficient than decentralization, consolidation even more efficient and shared services is the most efficient model.
Centralization is the aggregation of resources for delivering a service in the same location, in the same organization and under a unified command structure. Any savings or efficiencies gained by centralization are derived from reducing the number of sites where the service is performed and unifying command and control in the same organization. Centralization does not mean that processes are standardized or improved. In theory, the resources associated with the work relocate to the central site and reconstitute themselves as a team (one of many) performing the same work in the same manner but with a different chain of command. Some process changes may be needed to provide the service from a remote location but these are mostly at the customers’ end. Savings are minimal. In fact, centralization can cost more than decentralization for the same service. For example, relcating resources from many low cost areas to a high cost area like DC.
Consolidation is the unification of resources. Like in centralization, resources are moved to the same organization and same location under a unified command and control structure. But in consolidating a service you go a step further. You eliminate redundant elements (you don’t just streamline the management structure) and reorganize the remainder to improve efficiency. Consolidation is like a merger. When companies merge they typically combine IT departments. They do more than put IT resources under a unified command though. They assess network capacity, review software licensing, inventory business applications, etc. and, in the end, the enterprise architecture, data center, IT infrastructure and business processes are redesigned and optimized to meet the needs of the “new” company.
When you consolidate a service you get the savings of centralization. But you also get savings from eliminating excess capacity and reorganizing the remaining elements (with its inherent process re-engineering) to make them more efficient.
Consolidation is better than centralization but the shared services model is even better. If you are centralizing or consolidating services, you should take the view that this is not an end but a means to an end. They are tactical objectives on the way to achieving the strategic goal of implementing shared services. The policy, business, infrastructure and IT choices you make today should be made with that in mind. They should be flexible enough and scalable enough to accommodate a shared services end state.
No CommentsBenchmarking Your Shared Services Organization
Why Benchmark? Benchmarking is a proven tool for improving efficiency and reducing operating costs. Using common or industry key indicators for the service, an organization compares its indicators against the indicators for leading organizations providing the same service. Benchmarking tells you how your organization stacks up against other organizations. Just identifying where there are gaps is not enough. A good benchmarking study also tells you why gaps exist. It provides a road map for improvement by comparing processes, technology and differences in the operating environment that impact performance, efficiency and cost.
No CommentsIntegrated Project Planning – A Strategic Tool for Managing Shared Services Priorities
An integrated project plan is a tool for linking short term initiatives to an organization’s strategic plans and for making efficient use of scarce resources. An Integrated Project Plan is a framework that links all project plans. It is characterized by a single resources pool that is shared by all project plans so individual project managers can view resource allocations across all projects. This results in more realistic estimates of finish dates and helps an organization prioritize competing projects. It also guards against over extending in demand resources like IT. This is easy to do when each project manager operates in a vacuum and each project plan has its own walled off resources pool.
No Comments