Is Gov The Lean, Mean, Shared Services Machine?

If you imagine government in its ideal form, it would have very few overlapping programs and departments. It would be a lean, mean, efficiency driven machine. But that government ideal is difficult to create.

Our nation faces a variety of challenges: strengthening national security; protecting the environment, agriculture and natural resources; caring for Americans’ health as costs rise and the population ages. Solving these problems requires expertise, capabilities and resources that reside in many organizations across government; they need to be shared, not duplicated.

Louis Heinzer is a principal for Deloitte Consulting in their federal practice. Deloitte and the Partnership for Public Service teamed up to create a roadmap to better utilize shared services, “Helping Government Deliver. Transforming Mission and Support Services.“

Heinzer told Chris Dorobek on the DorobekINSIDER program that shared services are starting to make an impact in government.

I think there is more of a movement towards shared services now and a broader conversation about not just looking at things from a single line of business. There are some areas, especially human resources, that are at the forefront of consolidation and the move towards shared services. Finance is coming along pretty well, too. IT is starting to move, but there are broader conversations now on the Hill, OMB, and other across agency groups that have come together to talk about how do we actually tackle back-office shared services. We want to get economies of scale across all the back office functions so we can actually take resources and move them into the mission themselves,” said Heinzer.

Is budget the big driver for shared services?

“Budget is a big part, but also the changing of the workforce. As the broad market for the workforce is turning more towards a professionalized workforce, we are seeing the need for more professional type of resources in the marketplace. Having more positions focused on the mission and more of those budget resources go towards mission related areas as opposed to support services, I think that is one of the biggest drivers,” said Heinzer.

Are there differences between shared services at the federal level compared to state and local?

“Especially at the state and local level there are some states that are looking at shared services from a macro view. They are looking to have one HR organization across all the different entities of a state government. Federal is sort of looking at shared services as more of a marketplace. Because of the size and complexity of the federal agencies, they are actually creating a marketplace where people are competing. Agencies are competing with each other to cross-service each other which will drive a little more innovation. They are almost trying to create a mini-market where it drives itself into becoming more efficient. Whereas the state and local governments don’t have the overall bureaucracy or complexity of the federal government, so it is more of a mandate to move to a single provider,” said Heinzer.

NASA has created a shared service center – could this be duplicated in other agencies?

“As NASA’s overall mission has changed in the past 10 years, they were looking for ways to basically take out costs. There were about 10 NASA centers that had their own HR, finance and IT departments. NASA saw a lot of redundancy in what was being done across the centers. Things were being done differently, they had different IT platforms and a lot of additional overhead that was needed. As they were becoming a slimmer organization to change their mission they consolidated all of those functions into a combined shared service center that didn’t just service HR or IT, but HR, finance, IT and procurement. Through the center they were able to increase satisfaction overall and reduce the cost of those overall services,” said Heinzer.

“My business is so unique I need my own service?” It is a common mantra, how do you get around that?

“You still get a lot of that thinking, I think a lot of the determination sometimes by certain organizations not to change because they feel ownership of a product. They have already made large investments in developing their own back office services. They have pride of ownership and there hasn’t been that stick yet to make them use shared services. However, the budget is becoming that stick where it is forcing people to relook at what is the core mission of their agency,” said Heinzer.

• Key Insight: “In most cases shared services does save money. It could be a reallocation of resources to better fit the agency’s needs. It could be a hard dollar savings, just in pure IT spend. It is also looking at the intangible benefits like how much faster is it now to hire someone because we have centers of excellence that you can now go to that are now experts in hiring the best IT specialists or the best engineer. So there is also better services the mission is getting in order to better deliver to whoever the stakeholder it might be. Some stakeholders say this is mine, I want to keep it and own it and they become the owners and champions of that business case. That really drives the ownership from the business case to implementation,” said Heinzer.

How do you do the business case correctly? Three things to keep in mind:

1. “You have to have buy-in from the entire organization. You can do the business case from a chief management officer perspective and then let the mission know you are going to consolidate the services, it is getting all the mission areas involved in saying what do you really need from an end perspective, from HR, from finance, from IT. You have to get them to buy-into what the future state looks like,” said Heinzer.
2. “You also have to keep people accountable for the business case itself. Putting in performance drivers and putting in that change agent that will drive success across the agency. We see that when you spend enough time upfront, having a good design and a lot of buy-in, it makes the implementation a lot easier. People are actually dragging the implementation team along instead of the implementation team dragging folks along,” said Heinzer.
3. “You need to create a roadmap so you can get to the idea that is outlined in the business case. Identifying who those champions are and having a working group that is both cross-functional and cross-mission as well will make that implementation more successful. Change management is what causes transformations to fill,” said Heinzer.

Are there legitimate reasons why you wouldn’t consolidate some services?

“A lot of times what we are seeing is agencies that are not open in the market where they can get cross-service by another agency, they may look internally to create a center for excellence. It is not about looking at the external market from another perspective to see how they can use one of their centers for excellence or shared services providers, but it is more about if it is not in a marketplace where I can go out and get it, maybe we can do it internally, better, faster, cheaper. That way we can provide a better market for our stakeholders,” said Heinzer.