Leveraging Shared Services Deployments in the Public

Sector Industry

Achieving Economies of Scale and Optimizing Resources

Russ LeFevre, Vice President, Public Sector

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Business Context: Drivers for Shared Services

Increase Quality of Services while Cutting Costs

Deliver responsive, high quality, consistent, end-to-end services to all users

Implement a scalable, sustainable, and flexible IT platform for growth at incremental cost

Sustain service levels and knowledge base despite retiring workforces

Achieve Economies of Scale

Improve services and service delivery while maximizing cost reductions and cost avoidance

Group similar activities and expertise for economies of scale

Aging populations mean lower tax bases, governments must prepare ahead

Improve Productivity

Enable employees to be self reliant with less administrative and IT intervention

Standardize processes based on best practices, eliminate duplicative transactions and functions

Resource Reallocation

“Back-of-office” / public administration improvements allow government to improve services at front-line

SOA feeds shared services by emphasis of interoperability and re-use of components

Increase Public Trust & Public Value

Deliver consistent, responsive constituent services

Obtain best value from the resources available

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Financial

Human Resources

Procurement

Call Center

System & Processes

Operational / Organizational Models

Agency

Agency

Agency

Decentralized

Run agencies

autonomously

Different, separate

processes and

systems

Different IT and

functional staff

Strengthen enterprise

oversight

Same, but

disconnected

processes and

systems

Standardized

Agency Agency Agency

Shared

Services

Onsite, semi-autonomous

provider to source services

Accountable to customer

Performance monitored against

defined SLA’s / MOU’s and

targets

Service excellence focus,

financial, social and political ROI

Governance / Ownership

Agency Agency

Agency

Services funnelled to

existing agency or

department

No service level

agreements, no

performance targets

Solely cost focus,

financial ROI

Centralized

Agency

Agency Agency

Offsite

Access to commercial sector

capabilities

Cost reduction is primary

motivator

Profit center for provider

Cost and effort to manage

relationship with provider

Potential political impact

BPO /

Outsourcing

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Financial

Human Resources

Procurement

Call Center

System & Processes

Defining Shared Services

Shared

Services

Onsite, semi-autonomous provider

to source services

Accountable to customer

Performance monitored against

defined SLA’s / MOU’s and targets

Service excellence focus, financial,

social and political ROI

Governance / Ownership

Agency Agency

Agency

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Internal Agency

Internal Agency

Internal Agency

Implications

• Dependent on few highly specialized IT sources

• Cannot meet service level demands

• Difficulty changing or adding new services

• Retaining and recruiting staff difficult

Implications

• Poor controls, low compliance

• Limited governance

• Little accountability to stakeholders

• Lack of transparency

Implications

• Cannot compare information and

performance between agencies

• Service outcomes not matching policy goals

• Lack of single view of stakeholder and data

• Dispersed, unmanaged, high costs

• Resources internally-focused vs.

stakeholder-centric

• Not leveraging best practices, varying

standards

Pain: Fragmented,

inconsistent, agency-

centric processes &

information

Pain: Redundant,

incompatible,

expensive,

inflexible

technologies

Challenges Before Shared Services

Pain: Limited cross-agency

visibility and access

?

Other Agencies

/ Suppliers

/ Constituents

?

Fragmented, inconsistent processes and inflexible technologies reduce

resource productivity and service responsiveness while raising costs

Staff

Financial

Human Resources

Procurement

Call Center

Systems & Processes

Employees / Users

Technical Staff

Process Staff

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Internal AgencyInternal

Agency

Internal Agency

Typical Benefits After Shared Services

Benefits

• Consolidated information at the

enterprise level to facilitate fact-

based, informed decision-making

• Common and shared performance

indicators for quality assurance

and business process

improvement

Solution: Enterprise process

visibility and access

Internal Agency

Internal Agency

Benefits

• Enhanced service delivery via

horizontal standardization of

repeatable business processes

• Reduced bureaucracy for

front-line employees

• Achieving collaborative outcomes

• Consolidated, one “source of truth” /

single data source enables faster,

accurate service

Solution:

Uniform, consistent,

standardized

processes with multi-

channel access

Benefits

• Lower overall TCO (Total Cost of Ownership)

• Simpler and less expensive maintenance, changes and upgrades

• Reduced IT complexity and acquisition, integration and

development costs

Solution: Flexible,

adaptive technology

platform

Internal Agency

Other Agencies

/ Suppliers

/ Constituents

Unified and integrated solutions running on one open platform help

governments achieve service excellence while maximizing resources and

lowering costs

Staff

Financial

Human Resources

Procurement

Call Center

Systems & Processes

Employees / Users

Technical Staff

Process Staff

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Page 7

Erie County, New York, USA

Operational ROI - annual savings ~ $4 million

Political & Social ROI - plan to integrate 20+ local governments into one

common constituent Portal

Interdepartmental communication and collaboration improved with all

departments linked for the first time via a common set of business solutions

and processes

Computerworld Honors Award 2006

US Postal Service

Implementation of SAP HR solution, consolidating 28 systems and

standardizing 120 business processes

Supporting over 786,000 employees – largest single instance SAP HR install in

the world

Operational ROI - annual savings > $64 million

Computerworld Honors Award 2008

Success Example: US Postal & Erie County, New

York

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Success Example: Erie County, New York

Source: Computerworld http://www.cwhonors.org/case_studies/ErieCountyNY.pdf

“…Erie County government designed and implemented a shared service

technical infrastructure. This large effort included…applications/ERP.

The ERP system has been replaced by a tier 1 system from SAP. Human

resources, payroll, benefits, procurement, accounting, grants, capital

and budget were implemented in 2004.

An analysis of process savings performed 60 days post ERP

implementation reveals $3 to $4 million of reduced annual expense. The

savings were realized in the areas of payroll, human resource

management, automation of the procurement process…”

Computerworld Honors

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Success Example: US Postal

Source: Computerworld http://www.cwhonors.org/viewCaseStudy2008.asp?NominationID=723

“From an organizational perspective, by instituting the COTS solution

and the HR Shared Service Center, the Postal Service has realized the

following benefits:

• Annual savings of $50 million

• Sunset of over 30 legacy standalone systems – replaced by one

integrated system

• Establish the USPS as a leader in HR technology, self-service and

shared service center activities

• Provided a standardized IT platform for more than 50 processes that

will enable the USPS to further automate and re-design up to 200

additional business processes in up coming years

• Created the foundation to add additional human resource functionality

into HR systems

• Established interoperability arrangements for USPS employee

information as they move to/from other agencies”

Computerworld Honors