Why Feds Should Study Private-Sector Approach to Shared Services

Almost every day, a news story appears about issues that affect the Federal government–shrinking Federal budgets, the low rate of employees’ job satisfaction, or cyber threats against its networks. The problems facing the Federal government are steep; however, the Federal government can better serve critical mission-support functions (think: financial management, human resources, information technology, procurement, or acquisition) by adopting best practices tested and improved over the years by the private sector.

A model used by the private sector for decades is that of shared services. But first, what is shared services? A shared service is when services are consolidated, simplified, and at times performed by a another provider–in the Federal government’s case often by a Federal shared service provider–to support the mission of a business or organization.

Most commercial enterprises that were early adopters of this model now recognize that the value of shared services isn’t limited to cost savings or cost avoidance. What began as a journey for cost savings and labor arbitrage most often evolved into even greater value for an organization’s mission.

Adopting a shared-service model enables organizations to focus on the business’ core priority–shareholder value, and in the case of the Federal government–taxpayer value. At the same time, the shared service centers focus on delivering best-in-class mission support. The shared service centers create value through consolidating technology platforms (for example, using a single platform to manage a cross-functional call center managing HR, IT, and finance), identifying process efficiencies and leading practices, and building more robust career-path opportunities for mission-support employees.

The government’s use of shared services models has matured in the last decade or so. In fact, a major shared-services initiative in HR–moving from 26 government payroll systems to four in 2008–already has saved the government $1.1 billion. The savings are important, but even more important is the fact that with limited budgets, more investment is directed to mission-critical work.

Most recently, the U.S. Department of Housing and Urban Development and the Treasury Department’s Administrative Resource Center (ARC) announced a milestone in the transitioning of HUD’s financial, travel, and acquisition to a shared-service provider, ARC, making HUD the first Cabinet-level agency to reach this milestone for financial management–significant progress in the government’s use of shared services.

That milestone was followed by another–the Office of Management and Budget’s announcement of a new shared-services governance body within the General Services Administration (GSA), called the Unified Shared Services Management (USSM). USSM is a sound, much-needed step forward. To be successful, USSM needs the ability to guide the practices that can derive even greater value from continued investments in Federal shared services.

Additionally, USSM could benefit from knowledge and insights gleaned by the private sector’s decades of experience by taking the following steps:

•    Create the consolidation of Federal shared service providers.
•    Provide flexibility for capital investments for Federal shared services providers.
•    Use analytics to make business decisions and drive for efficiencies.
•    Emphasize multifunctional shared services.
•    Incorporate incentives and penalties to encourage adoption of shared services.

OMB, GSA, and the many providers and customers should continue their efforts and their dialogue with industry, and take advantage of the lessons learned by  commercial and other governmental organizations across the globe.

The Federal government should take bold and decisive steps to continue to build on the momentum of the establishment of the USSM. By moving to this next level, the government could realize greater cost savings, efficiencies, and leading-edge support services by Federal Shared Service Providers, helping the government to meet its challenges head-on while delivering on its mission.

About the Authors

Bill Beyer, principal with Deloitte Consulting LLP, and Jennifer J. Walcott, principal, Deloitte Consulting LLP, are shared services leaders with Deloitte’s Federal practice.

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