10 Lessons for Shared Service Success in Government
Posted by Jessica Tatlow
Implementations to date have lagged forecasts, but the benefits of cost savings and service improvements are too big to ignore. What is the path forward?
The financial recession of 2008 ushered in a new era of tightening public sector budgets and streams of memos, reports and directives from above instructing agencies to adopt Shared Services models. The benefits of Shared Services are clearly demonstrated from the success stories to date; properly implemented, organizations can achieve higher levels of service at lower cost to taxpayers.
Most government agencies have common functional areas that could be shared for cost efficiency and organizational effectiveness. Shared Services typically replace arrangements where there is a duplication of efforts among different units. Whereas centralization implies that there is one central authority and one physical location, shared services is where one provider is responsible to multiple units and thus multiple authorities. So, the technology should allow for multiple authorities to operate from multiple physical locations and all have access to the same information.
The most obvious opportunities come from automating standard business processes, driving self-service capability for staff and customer processes, and eliminating low-value activities such as manual data entry, multiple authorization processes and reconciliations.
Rather than simply automating existing processes, however, Shared Services can be a catalyst for business process change—removing old, outdated and bureaucratic processes while gaining the benefits of technologies to improve and streamline processes. With fewer government officials doing administrative tasks better and faster, agencies can liberate more employees from mundane processing to focus on higher-value tasks.
Despite all the arguments in favor of a Shared Services model, implementations have lagged in both central and local governments. How can organizations change their practices to make better use of scarce financial and human resources? Here are our 10 lessons for successful shared services implementation:
- Have a clear vision: Make sure everyone understands why your organization is implementing a shared services model. Is it purely for cost savings through administration? For improved customer service? Setting clear goals for implementation makes for a smoother journey for all stakeholders, and may give them some motivation to help it succeed.
- Choose the right services to share: Many benefits come from standardization, including more efficient processes and less manual entry. Most organizations choose to start with simpler back-office functions before moving on to customer-facing sections of the organization. Make sure there are no fundamental barriers in terms of processes or regulations stopping you from sharing a common service with partner organizations.
- Take a clear look at the numbers: Examine the likely ROI. Cost savings are critical in a time of painful austerity measures and pressure for increased efficiency. Using comparable service levels, at what price point does it become cost effective for other organizations to discard their own infrastructures and share? How will you quantify less tangible benefits such as increasing staff satisfaction or customer service?
- Manage the shock: Moving to shared services can be a challenging time for everyone. It is critical that your organization gets buy-in from senior political and operational leaders. Mitigate concerns by engaging and involving stakeholders in the process, holding workshops, and implementing their ideas and best practices. Finally, communicate clearly and train staff so everyone is up-to-date with the system and comfortable with the choices that have been made.
- Establish a strong governance model: Make sure that at every level of your organization, everyone knows who makes the decisions. This compels individuals and teams to be accountable, speeds decision-making and ultimately helps you reach deadlines on time.
- Plan, plan, plan... and then plan some more! Establishing a shared service is not an after-hours activity, but rather a major undertaking that affects the fundamentals of your organization. Getting the planning right sets the foundation for the future, especially when working across not just organizations and departments, but administrative regions. Get your resourcing right before the project starts: you will need full-time, dedicated experienced professionals from business operations and technology partners to contribute at different times. Relationships and understandings you establish during this planning process will be critical to overcoming future challenges.
- Keep it simple: Standardize where possible, and localize where necessary. Make sure that the strategy is focused on the scope in question and isn’t too wide reaching. Set tangible goals that are realistic and achievable before taking on the next steps.
- Choose the right technology partner: Remember that you’re not just choosing a technology. Your technology service provider is going to be your partner for what may be a complex and difficult transition. Choose one that has the technical expertise and shares the same vision. Choose technology flexible enough to keep pace with the tides of change quickly, cost effectively and with minimal disruption to customers.
- Get buy-in: Some of the most expensive shared services disasters stem from a lack of customers. Change must be carefully and sensitively managed. If your initiative to share back-office functions makes participation purely voluntary, or if you tailor services extensively to meet the differing needs of individual departments, you will end up with an overly complex, inflexible, expensive system. Also consider how you will promote the Shared Services to other organizations to grow your member base. If you can demonstrate efficiencies and cost savings, organizations will come to you rather than being pushed.
- Get strong executive sponsorship: A lack of leadership on any project implementation, and beyond, can be fatal. Leadership needs to be credible and visible. It also needs to rise above any individual organization's needs and be able to look at the bigger picture.
Cost-savings through Shared Services are a tangible, quantifiable benefit of greater efficiencies and process standardization. But there should also be a focus on how Shared Services can focus energy and resources on creating better customer service and internal communication. Beyond back-office efficiencies, public sector organizations now have the opportunity to rollout improved services, greater transparency, and a more effective government for all citizens.