Driving High Performance in Government:
Shared Services in the Public-Sector
David A. Wilson
Managing Director, Accenture
State & Local Government
NYS Forum Small / Medium Agency and Local Government Committee
Discussion Topics
Introduction: The Imperative to Change
Shared Services Defined
Shared Services Benefits
Key Challenges
Getting Started on Shared Services
Public Sector Shared Services Research
Conclusion
NYS Forum Small / Medium Agency and Local Government Committee
Government business processes and IT must
transform to provide more value for citizens
Demand for High Performing Governments:
•Growing fiscal pressures requiring governments to hold
the line on expenses and taxes
•Citizen expectations for improved services are rising
•New technologies create an imperative to “keep up” with
change
•Major programs and traditional methods of service
delivery are being challenged, often under the rubric of
reform and consolidation
•Responsibility and accountability for programs is
fragmented across government boundaries
•Transparency of information and accountability for
performance is creating demand for measuring,
comparing and documenting performance results
•Demographic trends are requiring governments to do
more with fewer employees
Change around the margins won‟t suffice anymore –
transformation of traditional operating models is required
NYS Forum Small / Medium Agency and Local Government Committee
Discussion Topics
Introduction: The Imperative to Change
Shared Services Defined
Shared Services Benefits
Key Challenges
Getting Started on Shared Services
Public Sector Shared Services Research
Conclusion
NYS Forum Small / Medium Agency and Local Government Committee
Shared Services Defined
Consolidation of IT and administrative functions into a stand-alone support
organization
Only mission is to provide IT and administrative functions efficiently and effectively
Requiring a dramatic redesign or transformation of the technology infrastructure,
organizational structure and workforce
Shared Services elevates importance of IT and administrative tasks to highest
management levels and takes on a front office perspective
High performance culture with a strong focus on service excellence (i.e customer
service rather than just cost focus)
Provider and customer has clearly defined responsibilities via service level
agreements and key performance indicators
Typically sited in a low-cost, high-skills area
Shared services can be WITHIN an enterprise or ACROSS jurisdictional boundaries
* Accenture report - Focus On Value: The Case for Shared Services in the Public Sector
NYS Forum Small / Medium Agency and Local Government Committee
The objective of Shared Services is to optimize the
delivery of cost-effective, flexible,
reliable services to all clients
Achieving Higher Performance
Combines the best of both models:
Eliminates redundancy through process
and technology standardization
Consolidates and redesigns non-core
support functions into service centers
Redesigns the retained organization and
responsibilities in the operating units
Drives shared responsibility for results
using 2 way Service Level Agreements
Operates like a business with high focus
on client service and cost management
NYS Forum Small / Medium Agency and Local Government Committee
Shared Services creates a stand-alone support
organization that performs as a utility to efficiently
serve the specific needs of the enterprise
– Admin Functions Operating Model Spectrum –
Balanced-Shared
Function Centralized Fully Decentralized
Services
Governor Governor Governor
MIS HHS Transp HHS State Police Transp HHS Police Transp
Shared
Services
HR
FIN other State Police Aging Patrol DMV
Aging Patrol DMV
Child
HR Invest. Const
Child Supt Invest. Const Supt
Mental
Dispatch Aviation
FIN Mental Health Dispatch Aviation Health
Each function serves
all departments HR HR HR
IT
FIN FIN FIN
other
MIS MIS MIS
other other other
NYS Forum Small / Medium Agency and Local Government Committee
– Shared Services vs. Centralization –
Attribute Traditional View Objectives of Shared Services
of Centralization
Customers Treated End Users Clients (can include departments, end customers, vendors,
as… etc.)
Governance Department Manager Independent Unit -- Client Advisory Group (organizational
construct varies with organizational objectives)
Location Capital, Central High Skill, Low Cost Area
Admin Office
(typically)
Primary Focus Cost Control Service Excellence, High Performance, Cost Control,
Continuous Improvement (service and costs)
Service Responsibility Central Administration Shared between SSC (Shared Service Center) and Clients as
stated in Service Level Agreements
Service Management Optional Service Level Agreements, Key Performance Indicators,
Performance Reporting
Customer Contact Ad Hoc Multiple channels (voice, email, web); Contact center staffed
Management with customer service reps; Contact Management software;;
Client relationship managers
Typical Management Recruiting, Workload Performance Measurement, Continuous Improvement, Client
Processes Management, Cost Relationship Management, Communication, People
Management Development
NYS Forum Small / Medium Agency and Local Government Committee
Centralization to Shared Services
Enterprize End-to-End
Process
Transition from Centralization to Visibility, Governance
Full Value of Shared Services Service/Cost
Many organizations stop here leaving Transparency
value behind an decreasing the likelihood
of sustainability and scalability
RANGE OF BENEFITS
Performance Mgmt.
Metrics, Targets, Scorecards
SLAs
Clear 2-way
services agreed by
clients Benefits of centralization recede due
to lack of shared accountability for
performance and increase in
shadow cost over time
Re-engineering Lack of Clarity
Simplified, standardized Services, Costs
system/process
Traditional Culture -
New Location Tenure, wages, back-office
Wage and real estate arbitrage mentality
Exceptions Increase
Consolidation
Re-organization and de-layering
Shadow Cost Increase
CENTRALIZATION SHARED SERVICES
NYS Forum Small / Medium Agency and Local Government Committee
Ideal processes for Shared Services have low strategic
impact and significant economies of scale
– Example Decision Matrix –
ILLUSTRATIVE
Low Accounts Payable
Cost Accounting Benefits
Minimal Risk: Easy to Administration
combine with minimal
Moderate Risk: Low risk, business risk
but potential benefits are Contract Writing
limited
Cash Management IT
Strategic Help Desk
Importance
at Dept Level
Order
Autonomous: Any change
Management
will be difficult and could
put critical functions at risk
Employee Distribution
Selection
Risk Management
High Risk: High opportunity to
centralize, risky if
Budget Formulation implementation is unsuccessful
High
Little Economies of Significant
Scale
NYS Forum Small / Medium Agency and Local Government Committee
Likely Candidates for Shared Services
Human Payroll Processing Hire to Retire Travel & Expense
Resources Compensation Benefits Administration Self Service
Records Training & Education
General Ledger Accounts Receivable Cash Management
Finance Accounts Payable Planning & Budgeting Internal Audit
T&E Processing Purchasing
Information Standards Applications Development Telecommunications
Services Technology/ Development Data Center Operations Hardware & Software
Desktop Support Application Maintenance Acquisition
Logistics/ Strategic Sourcing Warehousing Transportation
Materials Asset Inventory Management
Management Management
Customer Call Centers Non-Emergency Order Management
Service Service Calls
Credit & Collections
Legal Litigation Support and Risk Management Regulatory
Affairs Coordination Insurance Compliance
Communication Svcs Media Relations
NYS Forum Small / Medium Agency and Local Government Committee
Leading Shared Service centers focus on
several, common design elements
– Shared Services Best Operating Practices –
High
Maximize economies of skill , utilize performance metrics, and develop
Performance
knowledge capital for a world-class organization
Organization
Institute a culture and process review based on benchmarking and
Continuous
performance management where increased efficiencies lead to lower costs
Improvement
and higher quality
Greenfield Establish a new organization and culture from the ground up and capitalize on
Site lower real estate/wage rate locations
Service
Level Ensure service partnerships between SSCs and users supported by objective
Agreements performance measures
Efficient
Business processes standardized and streamlined across enterprise
Business
competencies, consolidated to leverage economies of scale
Processes
Labor Saving Invest in automation technology (ERP, workflow, imaging) to reduce
Technology dependence on manual labor, standardize systems across entities
NYS Forum Small / Medium Agency and Local Government Committee
Discussion Topics
Introduction: The Imperative to Change
Shared Services Defined
Shared Services Benefits
Key Challenges
Getting Started on Shared Services
Public Sector Shared Services Research
Conclusion
NYS Forum Small / Medium Agency and Local Government Committee
Shared Services provides a variety of benefits
Centers of excellence allow for
the development of specialized
skills which can be leveraged
A focused, specialized, service- Economy of across the organization
oriented support unit ensures Skill
that operating department
needs and issues are addressed Responsiveness
in a timely manner
Shared
Services Economy of Consolidated functions and
Benefits Scale processes eliminate
redundancies and minimize
the cost of transaction
processing activities
Standardized practices and Standardization
compatible data provide a Flexibility
common language and feel to
diverse operating units and
facilitate analytical decision-
making
A shared services utility acts as
an organizational infrastructure
to ease reorganization of
operating departments
NYS Forum Small / Medium Agency and Local Government Committee
Economic Value will be realized by fundamentally
changing the cost structure of the function
“As is” cost Structural changes “To be” cost
structure in cost base structure
Facilities • Co-location with other facilities
• Switch to low-cost locations
Economic
costs Value/savings
realized
• Systems rationalisation
Systems • Greater process automation
costs • Investment in leading-edge IT capabilities Facilities
• Maximum interfacing costs
• Switch to low-cost locations Systems
• Rationalize salary mix within finance staff costs
• Better leverage of high performers within a
Personnel larger team
costs • Automation of core processes
• Rationalization of services provided via
definition of service level agreement Personnel
• Continuous improvement / service culture costs
NYS Forum Small / Medium Agency and Local Government Committee
Where do Shared Services Benefits Come From?
Example Value Levers Relative
Impact
Reengineering – Simplified, standard systems / High
processes
Consolidation, re-organization and de-layering High
New location – wage and real estate savings Med - High
Clear, two-way services agreed to by SSC and clients Med
Performance driven organization (metrics, scorecards) Med
Enterprise, end-to-end process ownership / governance Low
Reduced manual activity though enabling technologies Medium
Multi-tier service request management Low
Typical Net Benefits: 15% - 30%
…and an additional 2-3% annual Continuous Improvement benefit
NYS Forum Small / Medium Agency and Local Government Committee
Typical cost reductions for certain enterprise-wide processes
range from 25-50%
Transaction Processing Economies Typical Shared Services
% Cost Reductions
Fortune Shared
Productivity Improvements
100 Service
Item Mean Mean Payroll 35%
Journal Entry $1.10 $0.34 General Accounting 55%
Payables 45%
A/P Invoice $8.00 $4.44
Purchasing 25%
T&E Report $20.00 $5.00
Capital Budgeting 35%
Payroll Check $6.00 $2.77
Receivables & Credit 25%
Fixed Assets
Human Resources 35%
Line Item $5.40 $3.75
0% 10% 20% 30% 40% 50% 60%
A/R Invoice $16.00 $7.80
Source: Accenture Experience
Source: Society of Management Accountants of Canada, 1999
NYS Forum Small / Medium Agency and Local Government Committee
Discussion Topics
Introduction: The Imperative to Change
Shared Services Defined
Shared Services Benefits
Key Challenges
Getting Started on Shared Services
Public Sector Shared Services Research
Conclusion
NYS Forum Small / Medium Agency and Local Government Committee
Unique Public Sector Shared Services
Challenges
• Public Sector governance structures are
fragmented (i.e. separately elected officials)
• Statutory barriers
• Political challenges related to workforce
changes and project risks
• Up-front investment requirements/payback
versus election cycle
• Inter-entity consolidation – giving up control
and jurisdiction
• Lack of visibility and awareness of the problem,
lack of skills to implement/few US public sector
examples
NYS Forum Small / Medium Agency and Local Government Committee
Discussion Topics
Introduction: The Imperative to Change
Shared Services Defined
Shared Services Benefits
Key Challenges
Getting Started on Shared Services
Public Sector Shared Services Research
Conclusion
NYS Forum Small / Medium Agency and Local Government Committee
Shared Services Roadmap
Performing a benchmark, identifying the best opportunities for shared services, and
building a quantitative business case are imperative.
10-12 Weeks
Assess Design
3-5 Months Build
6-12+ Months Deploy
• Define the Shared • Design the Business • Develop Shared Service
Services Vision and Processes Mgmt Processes
Strategic Objectives • Design the Organization • Build Performance Support
• Perform Data • Design the Enabling and Training Materials • Execute Deployment Plan
Collection and Technology • Build-out Facility • Confirm Service Level
Benchmarking • Select Location and Real • Recruit Shared Services Agreements
• Develop the Operating Estate Personnel • Conduct Training and Work
Model • Develop Hiring Plan and • Draft Service Level Shadowing
• Develop the Recruit Shared Services Agreements • Develop / Deliver
Implementation Plan Leaders • Develop Key Performance Deployment
• Develop the Business • Develop Communications Indicators Communications
Case Plan • Develop / Deliver Build • Test Shared Service
• Plan Workforce Transition Communications Center Readiness
• Develop Training Plan and • Build the Organization • Execute Workforce
Management Development • Conduct Deployment Transition Plan
Program Planning
• Design Facilities
• Design Service Mgmt
Framework
NYS Forum Small / Medium Agency and Local Government Committee
Hackett Public Sector Benchmarking Participants as of March 1, 2008
State Benchmark Status
Tennessee FIN, HR, IT, PROC Completed
Arizona FIN Completed
Delaware FIN, PROC Completed
Colorado FIN Completed
Other Public Sector
Massachusetts FIN Completed •Nassau County, NY
•King County, WA
Mississippi FIN, HR, IT, PROC Completed •Miami/Dade County, FL
Alaska HR Completed •City of Portland, OR
•City of Glendale, AZ
Georgia FIN, IT Completed •City of Calgary, AB
•Univ System of GA
Alabama FIN, IT, PROC Completed •Univ of N Carolina
•Univ of VA
New Jersey FN, HR, PROC Active •Univ of MA
Oklahoma FN Completed
Ohio FN, HR, IT, PROC Completed
West Virginia FN, HR, PRC Active
Discussion Topics
Introduction: The Imperative to Change
Shared Services Defined
Shared Services Benefits
Key Challenges
Getting Started on Shared Services
Public Sector Shared Services Research
Conclusion
NYS Forum Small / Medium Agency and Local Government Committee
Accenture’s Public Sector Shared
Services Research Study Objectives
Research Objectives
Determine to what extent shared services is becoming an important delivery
model for public sector organizations
To understand the meaning of shared services in the public sector context
To assess the extent to which governments are using shared services - and if so,
what is the maturity of the shared services model
To identify the drivers, challenges, benefits and critical success factors for shared
services initiatives
To understand how political, organizational, cultural, business process and
technological factors can contribute to a successful shared service journey
To identify leading practices in Government and understand what governments
can learn from each other in planning and implementing shared services.
NYS Forum Small / Medium Agency and Local Government Committee
Research Approach
Two distinct strands of research : Survey of 143 Senior Government Executives
and 11 “deep dive” case studies
Total number of interviews
List of Case Studies conducted: 143
USA 24
UK 18
•United States Postal Service (US)
•Defence Finance and Accounting Service (US) Australia 17
•State of Massachusetts (US)
•New York City South Africa 15
•Queensland Government (Australia)
France 13
•New South Wales Government (Australia)
•Province of Alberta Government (Canada) Canada 11
•Ontario Shared Service Bureau (Canada)
•State of Hessen (Germany) Sweden 11
•Eastern Health Shared Service (Ireland)
•Ministry of Defence (Singapore) Singapore 10
Italy 9
Germany 6
Ireland 6
Netherlands 2
Spain 1
0 5 10 15 20 25 30
NYS Forum Small / Medium Agency and Local Government Committee
Survey respondents said meeting efficiency targets, citizen
demands for improved services, and pressure to reduce costs are
their top operational challenges
Key strategic or operational challenges facing governments today
Low priority High priority
Meeting government efficiency targets 2 32 109
Citizen/ business demands for service improvement 3 8 24 108
Pressure to control/ reduce internal cost 5 38 100
Improving accessibility and quality of service delivery 1 10 44 88
Maximising ROI on IT and systems expenditure 3 17 38 85
Don't know /Would not say
Responding to regulatory/ legislative requirements 1 19 40 83 Rated 1
Rated 2
Need to achieve more customer focus 2 10 56 75 Rated 3
Keeping abreast of new technologies 1 20 60 62
Scarcity of required skill sets" 1 33 52 57
Need to provide new services 2 28 65 48
Need to generate more revenue/ funding 7 73 28 35
Pressure to adopt private sector best practice 27 85 31
Staffing shortages 2 59 60 22
0% 20% 40% 60% 80% 100%
N=143 Note: Respondents asked to rate a range of challenges on a three point scale, where 1= low priority, 2 = medium priority and 3=
high priority
NYS Forum Small / Medium Agency and Local Government Committee
Four Key Findings
Four key findings emerged from our research:
Governments regard shared services as a vital tool for meeting their challenges:
– More and more government agencies are gravitating toward shared services for their administrative
processes.
– A higher number of organizations than we expected responded that shared services was already on
their agenda.
– 66 percent of the government executives we surveyed reported that they had already implemented, or
were in the process of implementing, shared services.
Most governments in-source their own shared services centers
– In-sourcing is by far the most popular sourcing choice for government agencies implementing shared
services
– Governments are uncomfortable going it completely alone when it comes to implementation
The unique nature of governments sets up some very specific challenges to shared services
– Moving to shared services means committing to transformation – while the benefits are striking, the
changes can be wrenching.
– A fundamental lack of awareness and the necessary managerial skills to tackle a transformational
change program is the main issue for many.
Few have achieved the full potential of their shared services
– Many governments have started to implement some key components of a true shared services
operating model, but few have implemented them all. Thus, few have achieved the full potential of
their shared services.
– Government organizations are at different stages on the journey to demonstrating leading-practice
shared services delivery.
NYS Forum Small / Medium Agency and Local Government Committee
Shared Services is seen as an important tool that can
help governments address their key challenges
How important do you rate shared services as a
way of helping you to address your key strategic
and operational challenges
5%
10%
• 63% of our survey respondents
28% rate shared services as
„extremely‟ or „very‟ important as
a tool for addressing their
current businesses challenges
• Only 15% of respondents viewed
22% shared services as relatively
unimportant as a business tool
35%
Not at all Not very important Somewhat important N=143
Very important Extremely important
NYS Forum Small / Medium Agency and Local Government Committee
66% of respondents said they either have implemented
shared services, or are implementing now
Does your organisation currently use a shared services model for any internal
processes or functions, or are you considering using shared services?
• Surprisingly, a large proportion (66%) of the
Yes, already using government executives we spoke to as part of
shared services or 94 this survey responded that they had already
implemented, or were in the process of
currently implementing implementing, shared services.
• A further 28% said that they are considering, or
would consider, implementing shared services in
the future.
• Only 9 respondents (6%) said that they would not
Yes, am considering or consider shared services, though 3 had already
would consider using 40 considered and rejected it. Reasons given for not
shared services considering:
- Bureaucratic inertia and skepticism of senior
executives
- Decision outside control of individual
organization, though in one case it was
being discussed at state govt level
- Service delivery already thought to be at
No, would not consider optimum level
9 - Concept simply not understood within
using shared services
government (French respondent)
- Did not fit with internal culture
- Moving towards decentralisation of
corporate services
- Sheer size and complexity of government
0 20 40 60 80 100 would make it very difficult to implement
N=143 Note: We defined ‘shared services’, as the consolidation of administrative or support functions (such as HR, Finance, IT, Procurement)
into a single, standalone organizational entity whose only mission is to provide services as efficiently and effectively as possible
NYS Forum Small / Medium Agency and Local Government Committee
IT, Finance, HR and Supply Chain are among the
services most-commonly delivered by shared
services centers
Which processes/functions currently fall within the scope of
your shared services arrangement
IT 2 5 14 73
Finance 5 13 18 58
Human Resources 1 13 24 56
Supply chain/purchasing 3 8 28 55
Property/ Facilities management 4 13 24 53
Documents/ Records management 2 12 37 43
Legal 4 20 27 43
Customer Interaction/ CRM 10 27 25 32
Number of respondents
Don't know Would not consider sharing Would consider sharing in the future Share today
NYS Forum Small / Medium Agency and Local Government Committee
N=94
Shared Services organizations most typically serve
multiple agencies within a government, though other
models are also used
Which organizational model best describes your shared services arrangement
SSO supports many/all agencies
within a single government entity 37
SSO supports multiple divisions
24
within one agency/organisation
SSO supports variety of
agencies/departments operating
21
in a cluster with common
characteristics
SSO supports several different
2
governments
More than one of these 4
None of the above/other 6
N=94
0 10 20 30 40
NYS Forum Small / Medium Agency and Local Government Committee
Most Shared Services centers are staffed
with internal government employees
Which statement best describes the sourcing arrangement you
have adopted/are adopting
In-sourcing: Government
employees staff the shared 47
services organisation.
Co-sourcing: Government
works with a strategic 16
business partner
Public-private joint venture 8
Business Process
6
Outsourcing:
Combination of sourcing
11
arrangements
None of the above/other 5
Don't know/ would not say 1
0 10 20 30 40 50
NYS Forum Small / Medium Agency and Local Government Committee
N=94
Early Results of the Innovators
Despite the numerous challenges, some leaders have already begun
achieving significant benefits through their shared services operations:
We found that many had already made considerable savings with their
shared services
– The United States Postal Service has saved US$71.4 million and reduced the
cost of its finance function by 16 – 18 percent
– Queensland, Australia, whole-of-government shared services saved Aus$10
million, despite the fact that no savings were even expected in the first y ear.
– In Ireland, Eastern Health Shared Services took 15 percent out of operating
costs between 2002 and 2003
We found that shared services leaders are also achieving other, more
strategic returns
– The Commonwealth of Massachusetts human resources shared services
reduced FTE requirements by approximately 100, significantly reduced hiring
times (which increased client satisfaction), reduced duplication of training
curricula and automated processes, reducing the need for staff intervention.
NYS Forum Small / Medium Agency and Local Government Committee
Discussion Topics
Introduction: The Imperative to Change
Shared Services Defined
Shared Services Benefits
Key Challenges
Getting Started on Shared Services
Public Sector Shared Services Research
Conclusion
NYS Forum Small / Medium Agency and Local Government Committee
Conclusion
Many governments have already recognized that
shared services can be a strategic tool for meeting
their technology infrastructure and administrative
services challenges
While shared services is a proven model in the private
sector, and is increasing common in the public sector,
the unique nature of governments sets up some very
specific challenges to shared services
Shared services‟ time has come in the public sector – it
is no longer a matter of “should we”, but rather “how
and when”?
NYS Forum Small / Medium Agency and Local Government Committee
For more information:
Shared Services Whitepapers: www.accenture.com/financeadmin
Focus on Value: The Case for Shared Services in the Public Sector
Driving High Performance in Government: Maximizing the Value of Public
Sector-Shared Services
Public Sector Shared Services: Focus on Governance
Creating Public Sector Value in a Rapidly Aging World
David A. Wilson contact information
Telephone: 612-277-5070
Email: david.a.wilson@accenture.com
NYS Forum Small / Medium Agency and Local Government Committee