shared services in government

Shared Services in Shared Services in GovernmentGovernment

Case Studies for Moving Toward Cost Case Studies for Moving Toward Cost Savings and EfficiencySavings and Efficiency

Presented by:Presented by:Marc Wine, M.H.A.Marc Wine, M.H.A.

GSA USA Services Intergovernmental SolutionsGSA USA Services Intergovernmental Solutions33rdrd SOA for E-Government Conference SOA for E-Government Conference

May 2, 2007May 2, 2007

Shared Services Throughout the Shared Services Throughout the WorldWorld

The objective is to allow an organization to share the The objective is to allow an organization to share the systems that perform common functions, with the systems that perform common functions, with the benefit of providing those services more efficiently benefit of providing those services more efficiently and cost-effectively by:and cost-effectively by:

Providing economies of scaleProviding economies of scale Standardization of best practicesStandardization of best practices Enabling organizations to concentrate on their core Enabling organizations to concentrate on their core

functionsfunctions

Silos & StovepipesSilos & Stovepipes History - large scale automation of History - large scale automation of

government processes in the 1950sgovernment processes in the 1950s Agencies developing their own Agencies developing their own

applications and systems to support applications and systems to support common business and administrative common business and administrative functionsfunctions

This practice led to extensive duplication This practice led to extensive duplication and stove-piping, with widely varying and stove-piping, with widely varying levels of quality, reliability, efficiency, levels of quality, reliability, efficiency, and effectiveness in providing common and effectiveness in providing common services.services.

Re-engineering Business Re-engineering Business for Customer Needsfor Customer Needs

Government initiatives introduced in the Government initiatives introduced in the 1990s addressed the inefficiency and 1990s addressed the inefficiency and duplication of services, leading to the shared duplication of services, leading to the shared services concept as a way to minimize waste. services concept as a way to minimize waste.

Early shared services efforts were focused on Early shared services efforts were focused on consolidation; however consolidation; however

The real benefit of shared services lie in The real benefit of shared services lie in reengineering business to enable best reengineering business to enable best practices, and in creating a shared service practices, and in creating a shared service organization that works in a cooperative organization that works in a cooperative environment with its clients, providing environment with its clients, providing services based on customer needs. services based on customer needs.

Private Sector Demonstrated ResultsPrivate Sector Demonstrated Results

Since the 1980s, corporations have used shared services to Since the 1980s, corporations have used shared services to reduce costs and improve internal service delivery. A 2001 reduce costs and improve internal service delivery. A 2001 study 2001 by PriceWaterhouseCoopers, showed the savings study 2001 by PriceWaterhouseCoopers, showed the savings potential from the elimination of redundant work and potential from the elimination of redundant work and infrastructure by moving financial services into a shared infrastructure by moving financial services into a shared services center environment.services center environment.

Shared Service Center Finance Function SavingsShared Service Center Finance Function SavingsFinance Function Savings Realized inFinance Function Savings Realized in SSC EnvironmentSSC Environment Invoicing Customers 40%Invoicing Customers 40% Accounts Payable 40%Accounts Payable 40% Accounts Receivable 50%Accounts Receivable 50% General Accounting 75%General Accounting 75%

Likely Prospects for Shared Likely Prospects for Shared ServicesServices

Human resources Human resources Finance, information services (e.g., Finance, information services (e.g.,

help desk)help desk) Logistics and materials management Logistics and materials management Customer support service functions, Customer support service functions, Training and educationTraining and education Information technologyInformation technology

Overview of Federal Shared ServicesOverview of Federal Shared ServicesOMB DirectionOMB Direction

In 2006, OMB directed agencies to include in their annual budget In 2006, OMB directed agencies to include in their annual budget submission plans for migration to shared services when existing submission plans for migration to shared services when existing technologies require updates or replacements. technologies require updates or replacements.

In FY2004 and 2005, OMB identified prospective investments in agency In FY2004 and 2005, OMB identified prospective investments in agency budget submissions totaling over $11 billion for development, budget submissions totaling over $11 billion for development, enhancement or modernization of such systems. enhancement or modernization of such systems.

OMB will not support development of new, or upgrading of existing OMB will not support development of new, or upgrading of existing agency-specific systems. agency-specific systems.

OMB estimates that there will be cost savings of about $5 billion over the OMB estimates that there will be cost savings of about $5 billion over the first 10 years from consolidation of common systems and streamlining of first 10 years from consolidation of common systems and streamlining of business functions that are common across federal agencies.business functions that are common across federal agencies.

Promises for Real Promises for Real BenefitsBenefits

OMB’s fiscal year 2008 budget proposal lays out the benefits of its efforts OMB’s fiscal year 2008 budget proposal lays out the benefits of its efforts to consolidate back-office information technology systems across to consolidate back-office information technology systems across government. It will:government. It will:

Encourage federal agencies to move away from maintaining their own IT Encourage federal agencies to move away from maintaining their own IT systems in areas such as financial management and human resources, and systems in areas such as financial management and human resources, and toward using service centers shared with other agencies.toward using service centers shared with other agencies.

Support service centers run by a federal agency or a private sector Support service centers run by a federal agency or a private sector contractor.contractor.

Introduce shared service centers hosted by multiple agencies in Introduce shared service centers hosted by multiple agencies in information systems security – for security training and for meeting the information systems security – for security training and for meeting the reporting requirements in the Federal Information Security Management reporting requirements in the Federal Information Security Management Act. Act.

FEA Roadmap to Government FEA Roadmap to Government TransformationTransformation

The Navy Marine Corps The Navy Marine Corps Intranet (NMCI) Intranet (NMCI)

A wholesale paradigm shift in how A wholesale paradigm shift in how the Navy and Marine Corps approach the Navy and Marine Corps approach information sharing and information sharing and communications. To connect more communications. To connect more than 500,000 Sailors, Marines and than 500,000 Sailors, Marines and civilians to engage in synchronized civilians to engage in synchronized military operations, a fully integrated, military operations, a fully integrated, secure network was needed to handle secure network was needed to handle voice, video and data transmissions. voice, video and data transmissions.

(NMCI)(NMCI)AccomplishmentsAccomplishments

NMCI links more than 300 bases in six countries on a single, global secure NMCI links more than 300 bases in six countries on a single, global secure network. network.

NMCI reduces expenses and improves productivity by consolidating 1,000 NMCI reduces expenses and improves productivity by consolidating 1,000 individual information technology contracts and 10 operating systems into individual information technology contracts and 10 operating systems into one and reducing in half the number of routers, switches, servers and one and reducing in half the number of routers, switches, servers and legacy applications.legacy applications.

NMCI manages four network operating centers, three enterprise help NMCI manages four network operating centers, three enterprise help desks, nearly 50 server farms and connectivity for approximately 6,000 desks, nearly 50 server farms and connectivity for approximately 6,000 BlackBerry® wireless devices.BlackBerry® wireless devices.

NMCI improves network security by trapping, quarantining and NMCI improves network security by trapping, quarantining and disinfecting an average of 70,000 viruses per month. NMCI detects more disinfecting an average of 70,000 viruses per month. NMCI detects more than 5.2 million monthly unauthorized intrusion attempts to penetrate the than 5.2 million monthly unauthorized intrusion attempts to penetrate the NMCI external boundaries. Cryptographic Log On authentication was NMCI external boundaries. Cryptographic Log On authentication was added for higher security.added for higher security.

The Department of Navy deployed 5,381 NMCI seats in support of The Department of Navy deployed 5,381 NMCI seats in support of Operation Iraqi Freedom. Operation Iraqi Freedom.

Department of Housing and Urban Department of Housing and Urban Development (HUD)Development (HUD)

HUD migrated to a shared services provider for Human Resources instead HUD migrated to a shared services provider for Human Resources instead of spending $15 million to $18 million over a six-year period to build their of spending $15 million to $18 million over a six-year period to build their own comprehensive and automated human resources solution agency-own comprehensive and automated human resources solution agency-wide. wide.

In compliance with OMB’s Human Resources LoB initiative, HUD In compliance with OMB’s Human Resources LoB initiative, HUD transferred human resources functions to the Treasury Department’s “HR transferred human resources functions to the Treasury Department’s “HR Connect,” which had a proven track record and a project management team Connect,” which had a proven track record and a project management team in place, and could be deployed within only six months. in place, and could be deployed within only six months.

Within six months of implementation, over 64% of HUD employees were Within six months of implementation, over 64% of HUD employees were on the system and over 28,000 paperless transactions were conducted. Four on the system and over 28,000 paperless transactions were conducted. Four legacy systemslegacy systems were retired and savings of $10 million were projected were retired and savings of $10 million were projected over 10 years. over 10 years.

HUD uses SOAHUD uses SOA

HUD implemented a single enterprise content HUD implemented a single enterprise content management solution for correspondence, management solution for correspondence, documents and records management, and its documents and records management, and its organizations now can share the capability to organizations now can share the capability to find and use information across the enterprise.find and use information across the enterprise.

SOA allows governments to think of processes SOA allows governments to think of processes and IT systems in terms of a few generic and IT systems in terms of a few generic electronic actions that need coding only once electronic actions that need coding only once and can then be re-used many times, in and can then be re-used many times, in dynamic fashion after integration and dynamic fashion after integration and deployment. deployment.

SOA Enables Strategic Investments SOA Enables Strategic Investments

Five Beneficial Ways:Five Beneficial Ways: Facilitating business process reengineering Facilitating business process reengineering

and best practice enterprise;and best practice enterprise; Allowing innovation across business sectors;Allowing innovation across business sectors; Supporting information sharing in a Supporting information sharing in a

consistent, trustworthy, and repeatable consistent, trustworthy, and repeatable fashion;fashion;

Driving the use of common terms, definitions Driving the use of common terms, definitions and languages for information sharing; andand languages for information sharing; and

Permitting information-sharing as a web Permitting information-sharing as a web service with consistency, reliability, and service with consistency, reliability, and security for aligning business policy with security for aligning business policy with automation processes.automation processes.

U.S. Department of Justice U.S. Department of Justice NIEMNIEM

National Information Electronic Model (NIEM), created by the National Information Electronic Model (NIEM), created by the U.S. Department of Justice, lays the foundation for effective U.S. Department of Justice, lays the foundation for effective information sharing across multiple domains and disciplines information sharing across multiple domains and disciplines such as the intelligence community and law enforcement. such as the intelligence community and law enforcement.

NIEM offers shared services for automated protocols allowing NIEM offers shared services for automated protocols allowing disparate systems at the federal, state and local levels to share, disparate systems at the federal, state and local levels to share, accept, exchange and translate information in support of accept, exchange and translate information in support of homeland security, public safety and counter-terrorism homeland security, public safety and counter-terrorism initiatives.initiatives.

Agencies that choose to participate in NIEM will be prepared Agencies that choose to participate in NIEM will be prepared to participate in major national information sharing systems to participate in major national information sharing systems that are or will be based on NIEM standards. that are or will be based on NIEM standards.

State Shared Services State Shared Services InitiativesInitiatives

Wisconsin Immunization Registry (WIR)Wisconsin Immunization Registry (WIR)To expand the Medicaid Management To expand the Medicaid Management

Information Information System and to record and track immunizationSystem and to record and track immunizationdates for children and adults. The WIR has beendates for children and adults. The WIR has beenadopted by a number of other states, including adopted by a number of other states, including Minnesota, Arkansas, North Carolina, Virginia,Minnesota, Arkansas, North Carolina, Virginia,Georgia, New Mexico, Puerto Rico and the VirginGeorgia, New Mexico, Puerto Rico and the VirginIslands. Islands.

Oklahoma Behavioral Health CollaborativeOklahoma Behavioral Health Collaborative

Single Eligibility, Claims Payment, and DataSingle Eligibility, Claims Payment, and DataSharing system -- Leading to changes acrossSharing system -- Leading to changes acrossmultiple agenciesmultiple agencies

Uniform electronic health records system that provides immediate Uniform electronic health records system that provides immediate access to consumers and providers to needed clinical information that access to consumers and providers to needed clinical information that supports better treatment and outcomessupports better treatment and outcomes

Clinical datasets that will lend themselves to comparisons and analysis Clinical datasets that will lend themselves to comparisons and analysis with national datasets such as NOMSwith national datasets such as NOMS

Data tracking of outcomes measures that will assist our agencies in the Data tracking of outcomes measures that will assist our agencies in the national movement towards pay-for-performance standards.national movement towards pay-for-performance standards.

Around the GlobeAround the Globe

The UK Shared Services Team was created The UK Shared Services Team was created following a government efficiency review following a government efficiency review and charged with cutting $40.4 billion ( 21 ₤and charged with cutting $40.4 billion ( 21 ₤billion) from government back-office costs billion) from government back-office costs to enable greater spending on front-line to enable greater spending on front-line services. The government estimated that services. The government estimated that its shared services initiatives should result its shared services initiatives should result in a 20% reduction in human resources in a 20% reduction in human resources and financial costs across the government, and financial costs across the government, a savings equivalent to about $2.7 billion a savings equivalent to about $2.7 billion ( 1.4 billion) a year.₤( 1.4 billion) a year.₤

The UK Reported Progress Implementing Shared The UK Reported Progress Implementing Shared Services in 2005Services in 2005

Transport for London Human Resources Transport for London Human Resources Shared Services Center reduced human Shared Services Center reduced human resources spending by 30% in the first year of resources spending by 30% in the first year of operation.operation.

National Health Service Shared Services National Health Service Shared Services Finance Business Service has produced Finance Business Service has produced finance savings of an average of 34% for 108 finance savings of an average of 34% for 108 Health Trusts with a further 60 Health Trusts Health Trusts with a further 60 Health Trusts due to sign up to the service by March 2007.due to sign up to the service by March 2007.

The Ministry of Defense’s People Pay and The Ministry of Defense’s People Pay and Pensions agency has produced a 40% cost Pensions agency has produced a 40% cost reduction.reduction.

The Western Australian State GovernmentThe Western Australian State Government

Leading the way in adopting a shared services approach to the delivery ofLeading the way in adopting a shared services approach to the delivery ofgovernment corporate services Setting up Shared Services Centersgovernment corporate services Setting up Shared Services CentersThe State Government’s specific objectives for shared services include:The State Government’s specific objectives for shared services include:

greater visibility and transparency of service levels, costs and performance;greater visibility and transparency of service levels, costs and performance; significant financial savings, achieved through aggregation, standardization, significant financial savings, achieved through aggregation, standardization,

simplification and automation of “back office” corporate service activities, simplification and automation of “back office” corporate service activities, which can be redirected to higher priority operational areas; i.e. Health, Law which can be redirected to higher priority operational areas; i.e. Health, Law & Order and Education;& Order and Education;

an increased agency capability and focus on core service delivery;an increased agency capability and focus on core service delivery; greater ability to leverage investment in information systems and ICT greater ability to leverage investment in information systems and ICT

infrastructure;infrastructure; facilitation of improved information and knowledge management across facilitation of improved information and knowledge management across

Government;Government; increased access for agencies to specialist corporate support skills; andincreased access for agencies to specialist corporate support skills; and enhanced career opportunities for staff in a professional corporate services enhanced career opportunities for staff in a professional corporate services

organization;organization;

Findings and Future TrendsFindings and Future Trends

Information sharing and Information sharing and collaboration in the development of collaboration in the development of innovative information technology innovative information technology has increased in the public sector has increased in the public sector over the past few years and is at the over the past few years and is at the heart of shared services approaches. heart of shared services approaches.


The key challenges to providers of The key challenges to providers of shared services are relatively simple shared services are relatively simple and straightforward: being and straightforward: being responsive to the specific needs of responsive to the specific needs of each customer, but providing each customer, but providing standard, proven best practices.standard, proven best practices.


Shared services can provide a Shared services can provide a common platform for cooperative common platform for cooperative efforts where they are needed to efforts where they are needed to support a national goal.support a national goal.


Best practices emphasize:Best practices emphasize: Collaborating using common standardsCollaborating using common standards Open communications Open communications Innovation Innovation

Barriers that can be managed and overcome:Barriers that can be managed and overcome: Focus on consolidation rather than improving Focus on consolidation rather than improving

service and cooperation, service and cooperation, Not fully understanding customer Not fully understanding customer

requirementsrequirements Not aligning shared services with customer Not aligning shared services with customer

goals aregoals are


Successful and use of shared services will depend on:Successful and use of shared services will depend on: Customer focus Customer focus Transparency and choice Transparency and choice Metrics and accountability Metrics and accountability Ensuring professional development Ensuring professional development

DiscussionDiscussionFor additional informationFor additional information

Contact Marc Wine: [email protected] Marc Wine: [email protected]