Archive for the ‘Shared Services 101’ Category
Writing the Business Case for Government Shared Services
Shared services is more efficient than other models including decentralization and consolidation for delivering administrative support services. Industry and a few government agencies have documented initial savings of 20-30% over traditional models. Implementing shared services requires a capital investment for the IT infrastructure, facilities, transition costs for affected employees and start up personnel. The business case for shared service should quantify both start up and recurring costs and compare them to the savings that the new model will yield. How do you write the business case to convince agency leadership to invest in shared services?
No CommentsDoes 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 CommentsGovernment vs Industry Shared Services
What is the difference between shared services in government and shared services in industry? In truth there is no such thing as government shared services. I use the adjective “government” to denote shared services in federal, state or local government but the terminology, core tenets, IT infrastructure, and definition of success are the same (or should be) for government as for industry. This does not mean that there are not unique challenges associated with the implementation and operation of shared services in government. There are. And knowing what they are and how to deal with them spells the difference between success or failure for a government shared services organization. The differences are tactical, not strategic.
What are they?
No CommentsThe Case for Government Shared Services
The economy has not fully recovered yet. Action of an unprecedented scale and scope is needed to add to the momentum. Putting together a stimulus package isn’t easy. Building consensus on what should be done to create job is just one of the challenges. The other challenge is finding the money to finance stimulus projects. This can be done by increasing revenue (read higher taxes) or redirecting dollars from one project or line item to another. This is where shared services comes in.
Government can and should be made more efficient. The times demand it and we, as citizens, deserve it. Government efficiency means providing the same (or better service) to the public at lower cost. You can do this by: 1) pruning inefficient or ineffective programs that are at the heart of an Agency’s mission; or 2) by getting better at administrative support functions that are not at the heart of an Agency’s mission then redirecting resources to mission or other national priorities. You can do both. The first should be done. There is waste and inefficiency in Government. Virtually every Administration has said that programs that do not work should be eliminated and those dollars redirected to programs that do. This is absolutely the right thing to do but it will take time, it will be hard, and it will be controversial. Why? Because to do this you must engage each Agency in their niche. Those who must make recommendations about what funds should be redirected and where to must find or grow experts in all types of things. But the road is easier, the approach is less controversial and progress will be faster on the administrative support side.
No Comments