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Defining Shared Services and Collaborative Outcomes in the Public Sector
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Shared Services
Shared services IT deployments allow governments to focus their limited resources on value-added activities that are central to their missions, rather than on routine administrative and transactional functions. The end result is improved outcomes at a lower cost for public sector stakeholders, and ultimately, maximized public value.
However, the concept of shared services in the public sector is relatively new. Many governments are interested, but proceeding cautiously. Simply defining "shared services" is often the first step for many governments. Often, the concepts of shared services and consolidation get mixed up and used interchangeably.
Shared Services vs Consolidation
The most commonly accepted definition of shared services, based on extensive interviews with SAP government clients:"Shared services is a collaborative strategy in which common business functions are concentrated into a semiautonomous entity that has a management structure designed to deliver the same services to different groups within an organization, promote efficiency, value generation, cost savings, and improved service for the customers of the enterprise."
Put another way, a shared services delivery model provides a framework for the public sector to leverage economies of scale through the principle of automation of various public administration (“back-office”) and lines of business (“front-office”) services common to multiple agencies and departments. These services share standard end-to-end business processes and associated enabling technology and are placed into a single governance delivery structure that is customer-focused and performance-managed across time, quality and cost, typically via contractual arrangement.
The key differences between shared services and consolidation are that consolidation focuses on the delivery of IT services by taking existing organizations, services or applications and combining them into a single operation, with cost being the main driver, and no accountability to service quality or to the customer. Services are typically standardized, versus tailored to the customer and there are no performance targets or commitments in place.
Shared services, on the other hand, are customer-driven, versus centrally imposed. Shared services put a governance structure in place, usually in the form of service-level agreements (SLA's), or memorandums of understanding (MOU's). Shared service centers value and use input from customers to continuously improve service delivery and reduce costs.
The benefits of shared services include economies of scale, uniform processes, enhanced service delivery, reduced IT complexity and reduced bureaucracy for front-line employees.
Collaborative Outcomes
A new concept and benefit from shared services deployments is "collaborative outcomes". A collaborative outcome is an outcome that is common to two or more government agencies and a result experienced by stakeholders from this combination of government activities.
Managing for collaborative outcomes is a form of inter-agency, cross-organizational collaboration or joint working where the agencies involved share responsibility for, and actively collaborate, to manage towards a common outcome. An example of a collaborative outcome is between a tax agency and a child support enforcement agency. Take a custodial parent, who has a court order that they will receive child support payments from the non-custodial parent. If the custodial parent is not receiving these payments, they can contact the human / social services agency. This agency can then interface with the tax agency within the same government enterprise. The tax agency confirms the non-custodial parent’s tax obligation, and their wages and/or tax refund is identified and electronically garnished. The system then disperses electronic payment to the custodial parent. In this scenario, the collaborative outcome is the child support agency fulfill payment to the custodial parent (it's core mission), and the tax agency ensures taxpayer compliance (it's core mission).
Download Shared Services Overview
Click this hyperlink to download a more detailed overview of SAP's shared services capabilities. Shared Services OverviewView Webinar on SAP Deployment in Shared Services Model at Gauteng Provincial Government, South Africa
Click this hyperlink to view a Webinar from June 2007 from Gauteng, discussing their deployment of SAP in a shared services approach and the financial, social and political benefits they have achieved. Gauteng WebinarRussell LeFevre is SAP Vice President, Public Services Industry Solution Marketing, responsible for industry insights and strategy
Simply defining shared services within the public sector is the first step. What comments and opinions do you have on the definitions of shared services and collaborative outcomes I describe? What other examples of collaborative outcomes are there? Do you see the collaborative outcomes concept as important to your organization?
Comment on this weblog
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- An Update from Johannesburg, South Africa
2007-08-30 13:24:33 Russell LeFevre
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[Reply]
I had the good fortune to be invited by Gauteng Shared Services Centre (an SAP client) and IQPC to speak at the inaugural "Shared Services in the Public Sector Africa" conference in Johannesburg, South Africa, held August 21 - 24.
I spoke on the topic of "Maximizing Public Value Through Shared Services", and attended sessions from representatives from Gauteng SSC, as well as other governments from Africa and Europe, many of which are, or will be, implementing technology in a shared services fashion.
Some of the take-away’s and insights I gathered from the conference:
1) While financial cost savings are often the foremost targeted benefit from a shared services deployment, social and political benefits are critical, particularly in developing economies. Showing "value for money" includes qualitative results, especially those that impact constituents and society at large. These results could include faster service and less bureaucracy when interacting with government.
2) The definition of shared services varies, and it cannot be assumed everyone is in agreement. Simple consolidation is often characterized as shared services, but lacks the "customer service" focus and commitment that is manifested by a service level agreement. The SLA is the binding agreement between provider and customer, and along with governance is a key ingredient to a shared services deployment.
3) Several senior elected officials (Prime Ministers, Deputy PM's) presented, and consistently reinforced that political willpower and endorsement is a must-have for shared services to work. People naturally resist change, and often have vested interests. Governments deploying a shared services approach need to have supporters and sponsors from the legislature down.
4) Many governments use "customer perception" and "customer satisfaction" indexing and surveys as a critical KPI for shared services performance.
5) Staff may resist shared services, due to job security anxiety. Governments must communicate clearly, and often, that shared service might result in re-allocation, re-utilization and re-deployment, versus reductions in force. A key benefit of shared services is in fact improving efficiencies in one area, in order to re-allocate limited resources to another.
6) Other governments running shared services reinforced that each "customer" department still maintains some autonomy and control, and are not entirely beholden to the SSC.
7) Another benefit of running a shared service center is attracting more employee interest. Gauteng SSC for example, in the course of running a progressive organization focused on maximizing efficiencies and leveraging IT, has seen the submission of CV's / resumes rise over the past few years. More and more, Gauteng SSC is seen as an "employer of choice" with the workforce.
7) Sustaining buy-in and commitment takes continued governance, and many organizations have created CxO and similar executive-level councils that sustain the executive sponsorship of shared services.
8) A common challenge, yet critical area to map, is establishing baseline or benchmark information before deploying shared services. This information helps bolster the business justifications for adopting shared services.
9) It's important to reinforce that "customer" agencies in a shared service model understand they are not giving up control or ownership of their core missions - rather, they are freed up from redundant, low value add, administrative tasks, giving them more time to dedicate their resources to delivering service.
10) Shared services deployments aren't limited to the back-office. Governments recognize the possibilities of adopting shared services in the front-office, particularly in areas related to constituent services.
During my presentation, I introduced the topic of collaborative outcomes. The response was positive, and several attendees approached me later to provide examples. One woman from the South African Department of Home Affairs explained that her department, in the course of issuing passports, currently cross-checks with the South African Revenue Service to determine if the applicant has any outstanding tax obligations. Unfortunately, this collaboration is currently done via a manual, paper-based process and is very time consuming. Most folks in the audience agreed that collaborative outcomes would be beneficial to both the government and its constituents. In the end, I explained that SAP's business process platform helps unify the front and back-office functions of government, and serves as the foundation and enabler to help governments achieve real-time, online collaborative outcomes.
For more information on Gauteng SSC, visit their website at http://www.gssc.gpg.gov.za/index.asp
- Additional Collaborative Outcome Examples
2007-06-12 14:19:04 Russell LeFevre
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[Reply]
Since my first posting, I've been talking to various SAP government clients and industry analysts about the "collaborative outcome" topic. I've collected a few more illustrative examples -
1) Between a tax agency and department of motor vehicles. The scenario is a citizen wants to renew his expired drivers license. When he interacts with a DMV customer service agent, that agent and / or the DMV system interacts with tax & revenue agency, to determine if the citizens tax obligation has been met. If not, the clerk can hold the license renewal until the citizen fulfills his tax obligation. Once the citizen has paid his taxes, the clerk also collects money for the license renewal. In this scenario, collaborative outcomes are achieved whereby DMV only renews eligible constituents and the tax agency ensures taxpayer compliance.
2) Between a tax agency and the office of procurement. In this scenario, a government purchases goods or services from a vendor, and owes the vendor payment. As accounts payable begins the payment process, they cross-check with the tax agency to determine if the vendor owes the government any taxes. The system verifies that vendor owes taxes or not, and if so, can balance out the two transactions, either cutting voucher (making payment) for money owed, or issuing bill (collecting payment) for money due. A collaborative outcome is achieved whereby the public administration and procurement agencies either pay or bill vendor correctly, and tax agency ensures vendor fulfills their tax obligation.
Would these outcomes provide benefit to your government? Can you suggest other collaborative outcomes specific to the public sector?
- Managing from Shared Outcomes
2007-05-25 07:00:50 G. Brian Burke Business Card [Reply]
Russ,
I believe that your concept of “shared outcomes” represents a very promising approach for shared services IT strategies in government. I’d like to add that rather than managing “for” shared outcomes, as you say in your blog, I propose that governments manage “from” shared outcomes. What I mean is, begin with the inter-agency, cross-organizational collaboration process to develop shared outcomes among key stakeholders and then design the shared services IT deployment to meet those shared interests.
Two recent SAP Community Network blog posts echo a similar strategy.
Major General Hines blog on “Selling ERP to Defence” (found at: https://www.sdn.sap.com/irj/sdn/weblogs?blog=/pub/wlg/6030) talks about “selling” ERPs as part of the “capability” package in which a government is investing in. Using the General’s example, a specific defense capability represents a desired shared outcome among folks representing military, political, and even civilian stakeholders. An ERP implementation that begins with an understanding of how the technology and improved business processes can directly and indirectly enable the desired capability increases the likelihood of a successful deployment and the delivery of multiple benefits and values.
In Tony Cresswell’s recent blog on “Advancing Return on Investment Analysis for Government IT: The Public Value Question” (found at: https://www.sdn.sap.com/irj/sdn/weblogs?blog=/pub/wlg/6560), Tony emphasizes the importance of looking for the full value of government IT investments in both the internal value to government operations and the broader political and social returns to the public at large.
Similar to the “shared outcomes” concept, Tony, in describing the Center for Technology in Government’s “Public Value Framework,” writes about changing government’s perspective on IT investments to consider the “value question” from the point of view of the public rather than from inside the government. From this point of view, he adds, we can see two sources of public returns:
(1) value that results from improving the government itself as an asset to the society, and
(2) value that results from delivering specific benefits directly to persons or groups.
In summary, I think the “shared outcomes” concept deserves further exploration from the perspective that it’s not only a benefit of shared services but provides a warrant or justification for investing in shared services IT deployments and other similar strategies that deliver shared and even diverse values to multiple stakeholders.
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