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Government shared services navigate a rocky road - Part 1

Shared services has had a chequered history of deployment within government, but its potential to save time and effort keeps it at the top of ICT agendas
Government shared services navigate a rocky road - Part 1

The deployment of shared services has something of a mixed history in public sector organisations in Australia.

The notion of pooling IT services from multiple government departments and agencies into a single operation appears to hold great benefits, from both a cost and service delivery perspective. And in 2006 it was reported that two-thirds of government agencies in Western countries were using shared services.

But history has shown that such efforts can quickly be derailed by the complexity of the tasks they are trying to consolidate — especially when the motivation for consolidation slides too far towards cost recovery as opposed to providing excellent service to the agencies involved.

Botching a shared service implementation can have dramatic ramifications, as evidenced by the Queenland Health’s problems with the deployment of a shared services payroll system last year that resulted in some staff receiving little or no pay.

With so much at stake it’s little wonder that few people in the public sector want to talk about their success or otherwise in the implementation of shared services.

The payroll system at Queensland Health had been built by IBM using software from SAP, but the project was the responsibility of CorpTech, a government agency operating under the Queensland Department of Public Works that is responsible for the design, build, implementation and support of whole-of-government information systems.

Australian governments should stop trying to be IT service vendors. There is no justification
The payroll implementation problems led to an auditor general’s report and a subsequent full review of shared services and of CorpTech by PricewaterhouseCoopers, followed by a review into Queensland Health by Ernst & Young.

The evolution of Queensland’s shared services strategy has been monitored with interest by Peter Carr, managing director of analyst firm, Longhaus.

“Shared services in Queensland has always been about corporate services, such as HR and payroll, but where it gets really tricky is that for those things, solutions are only going to represent the average workflows or processes from hundreds of thousands of businesses and are always going to require heavy customisation,” Carr says.

“Shared services should remain, but with a greater focus on continuous improvement. And that continuous improvement piece should be about Cloud readiness.”

Carr is also concerned about the willingness of some agencies to model themselves on the likes of IBM or Oracle; playing the role of service provider rather than user.

“Australian governments should stop trying to be IT service vendors,” Carr says. “There is no justification for it.”

Grosvenor Management Consulting director, Kent Stuart, has worked with numerous public sector agencies in the development of shared services, including assisting in the setup of internal processes and external contracts. He says some of the problems arise because the motivation for creating the service is at odds with the needs of its users.

“Shared services is topical because not a lot of these things are going particularly well,” Stuart says. “A lot of their problem is managing the requirements of the services levels, which are internal expectations. You might be able to deliver a good technical service in terms of your standard operating desktop and help desk service, but when it comes to doing infrastructure projects, when it comes to providing more tactical or transactional advice, that’s where we are finding a lot of the shared services models are not actually delivering.”

If a shared services organisation is not able to leverage its scale so that it can provide service more cheaply than the department it services, Stuart says, the departments will rail against the aggregation process — particularly if they then need to recruit staff to manage the interface between themselves and the service. And if the primary driver is a cost reduction exercise — and it often is — then the qualitative aspects of service may be overlooked.

“Often the design of the model is not correct and they haven’t focused on leverage-able scale,” Stuart says. “There is no point putting into a shared service provision anything where the complexity of delivering to multiple clients exceeds the value you can extract from leveraging scale.”

Stuart says that while shared desktop services and help desks work well, more complex tasks such as project management, where customers have specific requirements and a high degree of tailoring, can leave the shared service provider struggling to define, or subsequently prove, the value they add. It is particularly true for payroll and HR systems that may need to incorporate many different award conditions.

“If everything is bespoke, the whole scalability of the model comes into question, and I fear that that critical thinking doesn’t happen often,” Stuart says.

Read Part 2 of Government shared services layers.
Read Part 3 - WA shared services under scrutiny.

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

More about: ecruit, Ernst & Young, Ernst & Young, IBM, IBM Australia, Oracle, PricewaterhouseCoopers, Queensland Health, SAP
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Comments

Peter Dean

1

Why don't you review the success of the model in Victoria under CenITex who are the only ones who seem to have worked out how you go about this properly.

Georgina Swan - Editor

2

Good point Peter - we mention CenITex in Part 2 - and we also talk to CenITex's new CEO in the next issue of CIO magazine. In the meantime, check out this article - http://www.cio.com.au/article/388149/

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