Implementing shared services in the US

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With gridlock in Congress, a recent government shutdown and funds continuing to be tight, US policy-makers face a variety of challenges. EY’s Dan Murrin says the implementation of shared services offers an important route forward.

With the phrase “doing more with less” morphing from slogan into reality, how are government agencies responding?

In recent years, the world’s largest economy and wealthiest nation found itself caught up in the spiral of the financial crisis.

The recent US Federal Government shutdown, together with the sequestration — automatic federal spending reductions that took place earlier this year — are perhaps the most obvious examples of this dramatically changed environment.

With the phrase “doing more with less” morphing from slogan into reality, how are government agencies responding?

One key shift is the increasing recognition that governments, particularly at the federal level, should move to a shared service model to deliver efficiencies in providing financial management and support services. The idea of deeper shared services or cooperative arrangements between state, federal and local levels of government has also gained substantial traction.

Effective implementation of shared services in the public sector results in:

  • Cost savings
  • Human resource efficiencies
  • Better service for the end customer
  • Access to new capabilities

In addition, government agencies can focus more on their core activities, improve their performance and focus their resources on high impact areas targeted toward delivering results for the community.

Shifting gears

Despite these advantages, the implementation of shared services across the different tiers of US government has faced several challenges:

  • Significant cost overruns and delays in modernizing large-scale financial systems
  • Fragmented financial systems that are unable to produce consistent data across government and are difficult to update
  • Complex systems requiring many expensive, custom modifications

These problems prompted the Office of Management and Budget (OMB) to issue guidance that requires federal agencies to move to a shared service provider (SSP) when they modernize their financial systems.

However, such shifts pose some risks, such as:

  • Greater possibility of a private firm mishandling transactions or exposing sensitive data
  • Risks associated with dismantling a government agency’s capacity to perform the service or activity

Rules of the game

There is no one silver bullet to implementing shared services successfully. However, there are some important rules to follow in order to maximize the chances of success:

  • Benefits to all stakeholders must be made clear
  • Business cases must be strategic, offer a clear plan and provide incentives for all stakeholders beyond aggregate cost reductions.
  • Strong and active high-level leadership and support is required, alongside appropriate consultation and participation
  • Implementation strategies must be credible and provide certainty around the benefits they deliver
  • Strong change management and transition skills are required
  • Governance structure must be well set, implying a clear delineation of roles and responsibilities between the purchaser and provider of shared services

As the winds of change sweep across government agencies large and small, the implementation of shared services is just one example of the way government in the US is revolutionizing itself.

Such change is rarely straightforward but, with the benefits so clear, now is the time to embrace this opportunity and help make government ready for tomorrow’s challenges.

Read the full article: Collaboration nation