Presentation winning strategies for shared services in the public sector

The Path to the Operational Excellence in the Public
Sector: Unveiling the Winning Strategies for
Successful Shared Services
SSON SHARED SERVICES & PROCESS IMPROVEMENT FOR HIGHER EDUCATION,
HEALTHCARE AND GOVERNMENT
Thursday, November 14th 2013
San Diego, California

©Chazey Partners 2013

North America | Latin America | Europe | Middle East | Africa | Asia

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Agenda
Chazey Partners Profile
What Exactly is Shared Services?
Some General Trends in Shared Services
Why Shared Services in the Public Sector?
Maturity of Shared Services in the Private and Public Sectors
Examples of Shared Services in the Public Sector in the last few
years
Specific Challenges for Shared Services in the Public Sector
Shared Services key trends and best practices in the Public Sector
Critical Success Factors
Winning Strategies for Successful Shared Services in the Public
Sector
North America | Latin America | Europe | Middle East & Africa | Asia-Pacific

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Who We Are
Chazey Partners is a specialist advisory/consulting business, that brings together a
unique wealth of expertise in implementing and operating world class business
support and Shared Services Organizations (SSOs) around the globe
We pride ourselves in having built, operated and turned around some of the
world’s most highly commended and ground breaking Shared Service
organizations
We have operationally and as consultants delivered numerous programmes
globally, over the last 20 years, in the US, Canada, Latin America, UK, Ireland,
Continental Europe, India, Singapore, Australia and China, amongst others
We provide advice, guidance, support and implementation expertise, covering
strategy setting, business case production, programme management, outsourcing
assessment, implementation, process optimization, technology enablement,
training and change management

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Who We Have Worked With
OUR CLIENTS …

NUIG



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WHAT EXACTLY IS SHARED SERVICES?
Shared Services
…is the organisation that provides non-core Services to the
“business”, employing a specialist team, geographically
unconstrained, and focusing on the requirements of the internal
customer/client. This involves a philosophy and approach totally
unlike traditional “corporate”-driven centralisation.
The goal of Shared Services is to provide high quality, non-core, but
mission critical, services (which can include both repetitive common
processes and more specialized professional services) to the
business at lower cost and more efficiently than the business could
otherwise provide for itself.
Shared Services achieves cost savings and higher quality of service
by leveraging organizational re-alignment, economies of scale,
technology, lower cost locations, standardized end-to-end
processes and best practice.

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Some General Trends in Shared Services (1/2)

Shared Services Concept started in mid 1980’s. Concept initially driven by
private sector multinationals
Shared Services and Outsourcing initiatives typically result in “cost savings
of 20% to 50% on processes in scope (HfS-PWC report June 2012)
"In today's business environment, nine out of every ten enterprises have
shared services and 97 percent manage outsourcing relationships". (HfSPWC report June 2012)
Mainly Finance driven early on in Europe/HR driven in North America
Multi-process Shared Services much more a reality today


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Some General Trends in Shared Services (2/2)
Internal and external borders are crumbling, “the new borderless”
business environment means growth is not limited by physical borders.
(The Hackett Group Press Release, January 29, 2013)
Evolution to a Global Business Services model (The Hackett Group, 2012
survey of SSON members)
“Moving up the value chain” evolving away from a focus on transaction
processing and data input toward more strategic activities
More prevalent today in midsized companies and businesses, not
confined to larger multi-nationals

Captive v Outsource, On-shore v Near-shore v Off-shore


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WHY SHARED SERVICES IN THE PUBLIC
SECTOR? (1/3)
Why not? Has worked well in the Private Sector for 25+ years, and is also
working in the Public Sector today.
Significant funding issues today … everywhere. Shared Services can
deliver potential “triple benefit” of efficiency/effectiveness/control

The same basic challenges and significant opportunities around
implementing Shared Services in the Private Sector are also there in the
Public Sector….but need to be adapted and applied differently.
Cost savings from the “back office” can be used to fund core and front line
services.


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SECTOR? (2/3)
When thinking about the possibilities for shared services in the public
sector remember that the scope across the “back oﬃce” is very
signiﬁcant. This is just the same as in the private sector.
In terms of the public sector (and it is just the same in the private sector)
one needs to determine what needs to be physically close to the internal
“customer” or “client” vs what can be done remotely.
Need to think about who your “client” is – internal and external. Also
need to think about “citizens” as key stakeholders.
Although public sector adoption of shared services has grown, the results
achieved do not yet approach those in the private sector

North America | Latin America | Europe | Middle East &Asia-Pacific
| Africa | Asia-Pacific

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SECTOR? (3/3)
While the private sector has embraced shared services over the past 20 years
plus, the public sector has, until recently, been slower to do the same.
The budget issues in the public sector are global in nature. As an example
Canada's population, as in many other “developed” countries, has an aging
population that requires increased health care, as well as public expectations
to improve the efficiency of the National Health system.
US, France, UK and many other European counties as well are seeing spiraling
health care costs.
Shared services is increasingly being seen as part of the solution to the new
socio-economic challenges such as the impact of an ageing population,
increased international competition, and a more difficult economic
environment.

North America | Latin America | Europe | Middle East &Asia-Pacific
| Africa | Asia-Pacific

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Shared Service Maturity at a
Country/Regional Level
Maturity of Shared Service Centers
10
9
8

Maturity Index

7
6
Private

5

Public
4
3
2
1
0
US

Canada

UK

Europe

Latin America


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Shared Service Maturity at a Country
Level
Maturity of Shared Service Centers
10
9
8

Maturity Index

7
6
5
Private
4

Public

3
2
1
0


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Examples of Shared Services In The Public
Sector In The Last Few Years (1/7)
In the United States the President’s Management Agenda directs federal
agencies to fulfil goals with maximum efficiency. The US office of Management
and Budget (OMB) issue directives advised turning to shared services to
meet those directives.
The US Department of Heath and Human Services (DHHS) Shared Services
“Program Support Center” (PSC) provides support services to all components
of the U.S. Department of Health and Human Services (HHS) and other Federal
government agencies worldwide. PSC has a broad range of 44 services and
products
The Interior Business Center of the Department of the Interior is a federal
shared services provider for the Department of the Interior and other federal
agencies. Service offerings include Acquisition Services, Customer Support
Center, Financial Management, HR, Indirect Cost Rate negotiations with nonfederal entities, and IT Services


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The U.S. Department of Agriculture’s National Finance Center (NFC) in
New Orleans, La., is an OPM-approved shared services center that
provides payroll and human resources services to more than 655,000
Federal civilian employees in 172 Federal agencies.

Australia and New Zealand have Shared Services operating at the federal
and local government levels. Auckland Health Board consolidated back
office functions that supports major hospitals.
UC Berkeley administration division began in 2008 to move to a shared
service model for HR, and successfully opened its center on July 1, 2010.
The center serves 3,000 clients across 3 major divisions.
UC Berkeley approved a project in 2012 to implement shared services for
Finance, Research, and IT.


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UK Home Office and the UK Ministry of Justice are saving budget through their
Shared Service Programs. The Home Office has reported savings of £13m per
annum and Ministry of Justice reports £20m per annum.

In the UK up to 40% of local authorities (in 2011) were bringing forward their
plans to move to a shared model. More than 220 UK Councils have been involved
in shared services over the past 5 years, resulting in over £156m ($234m) of
efficiency savings, according to the Public Policy exchange (February 2013).
US large Federal Agencies that have either completed or are in the process of
creating shared services include the United States Post Office and NASA.
NASA SSC has five lines of business: Finance, HR, Procurement, IT and Agency
Support. The NASA SSC paid off its initial investment of $35 million in 3 years and
has ongoing projects to save $20 million annually, $209 million cumulatively by
2015.

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The Government of Ontario launched its IT transformation initiative in 1998.
It reports that at maturity it saves $100 million annually, representing 10% of
the total IT spending, and between 20–25% of IT infrastructure spending.
The Government of Australia has developed a data center strategy to
consolidate data centers, which support over a hundred agencies, from 2010
to 2025. Anticipates avoiding $1 billion in future costs
The Government in Ireland is actively pursuing Shared Services for the Public
Sector, as outlined in its Public Sector Reform White Paper, November 2011


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UCPath in the University System in California is rolling out an HR shared
service center in Riverside, CA, to provide HR services (payroll, benefits, HR
and academic personnel solution) for all 190,000 UC employees. Completed its
design phase on December 15, 2012.
Ohio’s Department of Education, the Ohio Office of Budget and Management,
issued an action plan for schools and government called “Beyond Boundaries”
in June, 2012. It lists 10 recommendations to encourage shared services
among units of governments. It was reported in an article in the Columbus
Dispatch, June 14th 2012, that nearly $1 Billion in savings have already been
realized by 51 collaborative efforts involving schools and governments across
Ohio.


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Shared Services Canada (SSC) was created on August 4, 2011 to provide email,
data center and network services to 43 federal agencies. SSC will manage
approximately one-third of the Canadian federal government's IT budget and 95%
of its IT infrastructure spending.
Health Shared Services Saskatoon (3S Health) was created in April 2012 to provide
province-wide shared services for employee benefits, procurement, payroll,
scheduling and laundry services. The organization is projecting $32.5 million
savings in 2012/13.
UK Cabinet Office announced in March 2013 that it had entered into a contract
with a BPO partner to operate the first Independent Shared Service Centre on
behalf of the UK Government. This is a result of their Next Generation Shared
Services Strategic Plan published in Dec 2012, which outlined how departments
will share functions such as HR, procurement, finance and payroll to deliver
potential savings of between £400m and £600m per year in administration costs.

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Six London councils: Barking & Dagenham, Brent, Lambeth, Lewisham,
Havering and Croydon announced they plan to implement shared services
for HR, finance, payroll, pensions and procurement in 2013. The councils
expect to save £18m ($27m) over the first four years of the project.
(ComputerWeekly.com, August 2012)
National Health Services (NHS) Scotland started the roll out of a single
shared services platform for finance across its 22 health boards in
2012.(SharedServicesLink.com, August 2012)
Columbia called for proposals in 2012 to assist with the design and
implementation of shared services strategies in public administration. It is
also looking at plans to implement “Government Online”.


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Some Specific Challenges in the Public
Sector (1/2)
“Shared Services” not yet well understood. Sometimes linked with
outsourcing. Sometimes with privatization.
Often, there can be real “politics” involved
Involves “doing something different”, and some in “leadership positions”
may be cautious about impacting the status quo.
Investment funding can be more difficult to come by, especially in these
economic times. May require non-traditional funding techniques
Decision making and change has historically been slower in the public
sector

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Some Specific Challenges in the Public
Sector (2/2)
Public sector may not want to consider offshoring or business process
outsourcing as a potential part of the solution, due to fear of losing local
jobs and control.

How to actually fund shared services can also be a challenge
The tenure of elected officials can be a “short” one, but is this that
different to the Private Sector?
Technology (or lack of) can be a limiting factor. Public sector often
restricted by very manual processes and lots of paperwork. But
interestingly spend on technology seems very high (Hackett). Herein
therefore also lies part of the opportunity!


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Critical Success Factors
 Service orientation in place
 Structured way of dealing with
customers
 Customer satisfaction levels
understood
 SPAs in place
 Reality versus perception
 Account management

Customers

Critical
Success
Factors

Technology









ERP implemented
Document Scanning Solution
Workflow
Automated Payments
Elimination of Side Systems
Self services tools
Automated Score Cards

 Processes documented
 Standardized, controlled &
repeatable activity
 Recharging methodology
 Benchmarking capability –
internal/external
 Metrics:
(i) Control Based
(ii) Efficiency & Effectiveness

Processes

People






Skilled Leadership in place – do not compromise on competencies
Team shape & stability – process shaped/spans of control/staff – perm v temps
Team members – culture, values & behavioral competencies assessed
Team morale, reward & retention
Working environment conducive to team working


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Winning Strategies
1) Senior level Executive sponsorship is key. Make sure that key executives
understand and support the roll-out.
2) It is really important to distinguish between “solutions” vs “quick fixes”.
3)

Distinguish between “wants” vs “needs”. It is the requirement – i.e. the
“need” - that is ultimately important. Not the “want” to perhaps simply
replicate current processes.

4) Proper base-lining and a clear business case is very important.
5) Do not underestimate the change management required for any such
initiative, including a turnaround.
6) Consider a multi-faceted communication and advisory approach.
7) Carry out regular communication with all relevant stakeholders.
8) Assign your best resources and people to the project. Make sure they are
available.

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Winning Strategies
9) Remember, an ERP system is an “enterprise” system for use by the
business. It is not a technology solution owned, or to be used exclusively,
by the IT department.
10) Generating and supporting a culture of innovation and continuous
improvement is vital.
11) Follow the “80/20 rule for Shared Services ERP” when deciding whether
to use “vanilla” ERP functionality. If your core ERP can provide you with
80% of the functionality that you require as standard then you should go
with this every time.
12) Have regular, meaningful Steering Committee meetings of key
stakeholders. This should be an active Committee and not just a chore to
get through unscathed every week.
13) Remember that training is key.
14) A robust KPIs, Measures & Metrics Framework should be in place

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Winning Strategies
15) Try to cleanse the data as much as possible before each main cut-over or
clean-up. The quality and volume of data should be worked on early in
the project and not left to the last minute.
16) Engage targeted expert outside help. Neither abdicate responsibility for
the project to a third party consulting firm nor try to do the whole thing
“on the cheap”.
17) Make sure your team includes regional and local expertise and be
prepared to travel to meet and work with users.
18) Remember always that the project does not end with “Go Live”. There
needs to be adequate support post go-live and also continual training
and re-training.
19) Keep working towards your goals and be relentless in pursuit of them.
Shared Services initiatives are a significant commitment both in terms of
resources and energy.

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Thank You
Phil Searle
Founder and CEO
Chazey Partners
Office: +1 408 402 3008
Mobile: +1 408 460 0785
philsearle@chazeypartners.com

Grant Farrell
Managing Director
Chazey Partners, US
Office: +1 866 337 4699
Mobile: +1 408 767 1285
grantfarrell@chazeypartners.com

Chas Moore
Managing Director
Chazey Partners, Canada
Office: +1 855 692 629 ext 201
Mobile: +1 250 469 4168
chasmoore@chazeypartners.com

Robert Towle
Director - East Coast
Chazey Partners, US
Office: +1 866 337 4699
Mobile: +1 862 812 7851
roberttowle@chazeypartners.com


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Contact Us

www.ChazeyPartners.com


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Presentation winning strategies for shared services in the public sector

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