Shared services back on the agenda

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Emerging Issue: The Federal Government is making a renewed push for whole-of-government sharing of back-office services during 2016.

Speaking in December 2015, the Finance Minister, Senator the Hon. Mathias Cormann said the move was intended to ensure better value for money for taxpayers building on $44 million savings already realised in the 2015-16 budget. The government is running a market consultation to explore its options on how best to deal with the estimated $3.5 to $4.0 billion it spends each year on corporate service delivery(1).

Tender documents issued in December acknowledge the difficulties:

“Despite the evident potential benefits, there has been a long history of, at best, partial success in moving to shared services.”

These difficulties are explored in greater detail in the recent National Commission of Audit report Towards Responsible Government, published in 2014(2). The Commission points to a ‘top down’ approach as the source of “a general story of underestimated costs and overestimated savings” as it has driven participants towards uncomfortable and clumsy compromise on requirements and interfacing business processes. A complementary ‘bottom up’ approach, says the Commission, will help focus on benefits and draw through associated process improvements. A careful, selective and incremental pursuit of shared service opportunities is beneficial. Focusing on business processes and systems, and standardising approaches rather than incurring the costs of divergence, will be more likely to generate benefits. In turn, these benefits should be reinvested in service improvements – a component that has often been overlooked.

The Victorian Auditor-General’s report into Shared Services in Local Government, published later in 2014(3), echoes the National Commission of Audit findings. With 91% of councils in Victoria undertaking some shared services, local government has had greater opportunity to work through the challenges. Features of more successful approaches include:

  • Tracking of the planned benefits
  • Emphasising business process improvements as the enablers of IT gains
  • Senior executive leadership and support
  • Attention to partner relationships in terms of:
    • trust, cooperation and accountability
    • regular, effective communication
    • commitment and enthusiasm
    • alignment of decision-making
    • clearly defined, measurable benefits.

The support of Local Government Victoria is also critical, in the form of guidance, resources, evaluation, congruent policy and grant assistance.

Recent projects in the water sector by Marchment Hill Consulting demonstrate the potential for greater use of shared services and partnering arrangements among water authorities. Faced with similar problems to councils, water businesses need to maintain and update multiple service functions and background IT systems. Customers and the community are moving ahead fast in terms of their expectations of online portals, apps and other forms of support. Many businesses are adopting these new channels to provide their customers with quick, easy and responsive means of getting things done.

Despite the chequered history of shared service efforts, collaboration is becoming inevitable as the only way to keep pace with new customer expectations.

Footnotes
(1) Australian govt in outsourcing, shared services overhaul
(2) Towards Responsible Government
(3) Shared Services in Local Government
QSI 17-Water-EI-Shared services back on the agenda-imagePicture source: Australian Government Department of Finance ‘Whole-of-Government – Shared and Common Services Programme’ Discussion Paper, December 2015

 

 

 

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