Is Shared Services possible in the Public Sector?


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Understand from four perspectives on what it takes for Shared Services to be successful in the public sector. We had interviewed four leading practitioners respectively from Horizon Health Network, University of California, Berkeley Lab and Chazey Partners, who had shared their real-life experience about the challenges and the key successful factors of driving transformation and Shared Services initiatives in the public sector environment. Read more in here:

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Is Shared Services possible in the Public Sector?

  1. 1. FOUR PERSPECTIVES ON: WHAT DOES IT TAKE FOR SHARED SERVICES TO BE SUCCESSFUL IN THE PUBLIC SECTOR? © Chazey Partners 2013 Chazey Partners Practitioners’ Corner │ Public Sector Practice
  2. 2. 1 Customers of Public entities, both citizens and businesses today have higher expectations of service levels and expect a positive customer experience along with better returns on the taxes they pay. To address this, the public sector has been striving to implement and optimize Shared Services approaches to achieve a better consolidated back-office operation. While the comments of ‘Government is late to the party of Shared Services’ are still on-going, we are seeing a number of great case studies in North America. To support the event of ‘Shared Services & Process Improvement for Higher Education, Healthcare & Government 2013’ in San Diego, Chazey Partners has interviewed four practitioners in the public sector and put together this roundtable report on what it takes for shared services to be successful in the public sector. PERSPECTIVES: Wade Crosson, HR Shared Service Center Manager, Berkeley Lab Andrea Seymour, COO, Horizon Health Network Grant Farrell, Managing Director USA, Chazey Partners Jim Leedy, Executive Director UCPath Center, University of California TOPICS: What Role Should Shared Services Play? ……………………………………………………. 2 Why Has the Public Sector Been Slow to Adopt Shared Services? ………………. 3 What Are The Keys to Successful Shared Services? …………………………………….. 5 What Makes the Public Sector Unique? ……………………………………………………… 7 Chazey Partners Practitioners’ Corner │ Public Sector Practice
  3. 3. 2 WHAT ROLE SHOULD SHARED SERVICES PLAY? Andrea Seymour COO, Horizon Health Network “Government typically has fragmented services with a large amount of duplication, inconsistent practice, and inefficient use of resources. Shared Services allows you to shift decentralized delivery services into a single organization, introducing consistency of services, single policies, and improving the implementation of those single policies. It creates a vast amount of opportunity to optimize resources, reduce overall headcount cost, achieve better ROI and improve public services.” Grant Farrell Managing Director USA, Chazey Partners “The global recession has put significant pressure on public organizations to provide better service with a reduced budget. Customers of Public Bodies, both citizens and businesses, today have higher expectations of service levels and expect a positive customer experience along with better returns on the taxes they pay. To address this, the public sector must find ways of improving the efficiency and effectiveness of its service delivery. Adopting a Shared Services model can streamline processes, drive efficiency, reduce waste, push down costs and improve public service delivery to customers, both citizens and businesses.” Wade Crosson HR Shared Service Center Manager, Berkeley Lab “Shared Services could be considered a forward-thinking approach to how business can be done differently (more effective and efficiently) in the public sector, which results in a better consolidated back office operation and deployment of more up-to-date technologies. Secondly, leveraging economies of scale, Shared Services helps Public Sector organizations perform more with less in response to budget concerns.” Jim Leedy Executive Director UCPath Center, University of California “Shared Services should be viewed as an enabler to allow the Public Sector to perform many of their administrative functions in a more efficient model than is currently in existence today. In addition to the improvements in efficiency, Shared Service Centers over the longer term operate in a more cost effective manner, which allows the Public Sector to spend their scarce resources more wisely.” Chazey Partners Practitioners’ Corner │ Public Sector Practice
  4. 4. 3 WHY HAS THE RATE OF ADOPTION BEEN SLOW? Andrea Seymour COO, Horizon Health Network “There are a number of reasons that prevent the Public Sector from operating like a business. The first one is the political cycle. For example, in Canada, the Government Election cycle is every four years. However, the time invested in setting up Shared Services is typically longer than a political cycle. Therefore, it is even more critical for the Public Sector than the Private Sector to establish Shared Services with a clear roadmap and ROI in order to get traction and sustain its operation. The second reason is the complex and sophisticated systems of accountability, leadership and reporting structures in the Public Sector. Having multiple decision makers slows down the levels of leadership agreement and engagement. Therefore, it is often difficult to have a unified voice or agreement from the top as local autonomy can be impacted by a shared service approach.” Grant Farrell Managing Director USA, Chazey Partners “Shared service adoption in Canada and the US has taken place at different paces. Canada is in a different position than most other countries in that it has more mature Shared Services in the public sector than in the private sector. I think this is much to do with the innovation that there is in the public sector in Canada. This combined with the relative lack of bureaucracy in Canada making it easier to make decisions and follow them through. However in the US, until the financial crisis of 2008 adoption of Shared Services in the public sector was patchy at best. Once budgets were tightened following the crisis of 2008 public sector bodies suffered budget cuts and had to look to ways to do more for less. Standardization, elimination of waste, reduction in duplication of effort was all necessary in order to drive efficiency savings. Shared Services which was gathering momentum in the private sector was viewed as a solution. Public sector bodies that are often viewed as resistant to change could benefit from the experiences of the private sector.” Continued >> Chazey Partners Practitioners’ Corner │ Public Sector Practice
  5. 5. 4 Wade Crosson HR Shared Service Center Manager, Berkeley Lab “There are a number of reasons for this. The first is cost. It takes an investment in technology and resources to reshape the work, which is extremely difficult to justify with public funds in the Public Sector. This requires diligence to demonstrate the return on investment. Secondly, lack of internal resources with required skill sets to perform transformation. The third point is that there is an inherent skepticism about corporate approaches to running business in the government sector. Last but not least, it is challenging in the public sector to reallocate resources, restructure organization, and redefine roles for longer term employees. These challenges need to be addressed to respond to the fast evolving skill sets required in the new service delivery model.” Jim Leedy Executive Director UCPath Center, University of California “The Public Sector usually has a very high degree of governance which can be an inhibitor to moving forward with new initiatives. Within the Public Sector, Higher Education is typically a very collaborative environment that can lead to longer decision making timeframes. Process convergence is also typically much more difficult to achieve in higher education due to the autonomy that many locations have historically had in running their business. And finally, Shared Services may also be viewed as a threat to jobs within the various functional groups being impacted and may lead to longer periods of evaluation.” Chazey Partners Practitioners’ Corner │ Public Sector Practice
  6. 6. 5 WHAT ARE THE KEYS TO SUCCESS? Grant Farrell Managing Director USA, Chazey Partners “The cornerstone of successful Shared Services is a robust Customer Relationship Management Framework supported by a strong governance structure. With good governance in place the right people will be doing the job which will ensure the process run smoothly. By implementing the correct technology combined with the right people and efficient processes the customer will have a positive experience.” Wade Crosson HR Shared Service Center Manager, Berkeley Lab “Executive leadership support and buy-in are clearly critical for the implementation of Shared Services, which involves a great amount of change management and service delivery model transformation. Investment in technology also plays a key role. Taking my organization as an example, we are a research institution, investment in the research side has historically outweighed investment of technology on the administrative and operational support side. It took a concerted effort to develop a strong business case to invest in cutting-edge technology solutions to meet changing business needs. We are now in the process of replacing our core HR system, which is a significant investment for us. However, it is going to strengthen our HR services delivery to meet the new demands. What’s more, it is equally key to address the skills transformation needed from the staff who are going to deliver services in the new model.” Jim Leedy Executive Director UCPath Center, University of California “The change management effort involved in projects of this nature is huge. In order for Shared Services to be successful, there needs to be a strong level of Executive Sponsorship and a very well defined and agreed upon scope of services for the Shared Service Center. In order for Shared Services to be successful in the public sector it should be based upon a Customer Relationship Model, which has embedded in it several key factors. These include (but are not limited to) Service Partnership Agreements, Key Performance Indicators/Metrics, a culture based on continuous process improvement, and an engagement model with the customer that supports ease of issue escalation and performance issue resolution.” Chazey Partners Practitioners’ Corner │ Public Sector Practice
  7. 7. 6 Andrea Seymour COO, Horizon Health Network “In my view, there are 5 critical success factors for shared services in the Public Sector. First: Top-down leadership. Without substantive commitment, intentionality and support from the top, shared services initiatives will struggle. Second: Solid vision with an achievable and realistic plan. That means integrating internal resources and knowledge with external expertise and capability. When I worked on shared services project for The Government of New Brunswick (GNB), I had worked with two external consultancy firms, one of which was Chazey Partners who brought us external specialized skill to do knowledge transfer. Third: True collaborative transformation approach. That means engaging the community involved in decisions that affect go forward approach. Without collaboration, the shared services team will come to an agreement with service recipients on the mechanics but will undoubtedly run into roadblocks on implementation. Strong change management and relationship building mitigate the impact of those roadblocks and contribute to a smoother and more harmonious implementation. The key words, as they relate to shared services implementation in the Public Service, are really transparency and collaboration. Fourth: Collocating your people. It is difficult to do but to achieve consistency of processes, you have to move people out of where they are in order to build and sustain new processes and assure adherence to a single set of policies. Collocating people gives you a chance to leverage resource utilization, and create Economies of Scale through process standardization and consistent policy and procedure application. We were fortunate to have Chazey Partners as our partner who were instrumental in helping us to develop and implement a solid approach towards the changing of reporting lines and structures. Fifth: Strong project management philosophy and model. It is critical to create a Shared Services project environment with common language, repeatable processes, and structured methodology and approach across multiple functions and organizational levels. Taking the GNB project as an example, we were a project team of 5 who set up 5 shared services streams introducing 4 technologies and affecting 28 departments and agencies, over a three year period. The services introduced include AP, Payroll, IT services, IT infrastructure, and Print Optimization. Solid project management was critical to our success.” Chazey Partners Practitioners’ Corner │ Public Sector Practice
  8. 8. 7 WHAT MAKES THE PUBLIC SECTOR UNIQUE? Andrea Seymour COO, Horizon Health Network “In the public sector, the drivers and external factors are different. There are different decision making cycles due to the bureaucratic structure and the political cycle. In addition, recognition, influence and collaboration are requirements when establishing a shared services centre in the public sector. Our perception of public sector SS organizations is that they are mandated, driven from the top down to contribute to the bottom line. For instance, in the Government of New Brunswick, we were mandated to achieve our saving with no layoff of staff, and no mandatory relocation of staff between communities. We were able to use attrition to achieve 30% cost reduction in Account Payable, and a 25% headcount reduction on payroll, but had to do this through natural attrition of department staff.” Grant Farrell Managing Director USA, Chazey Partners “The overall goal of improving efficiency and offering a better customer experience at a lower cost is the same for both the Private and Public Sectors. With the public sector we have to be aware of constraints that are outside our control (e.g. legislation). Public Sector transformation tends to take longer as the decision making process is more drawn out than the Private Sector.” Wade Crosson HR Shared Service Center Manager, Berkeley Lab “We must be nimble, flexible, and responsive to the needs of the customer. There needs to be a balance point between the old way of doing things and the ideal future state. In our experience we have a difficult time making drastic changes, which drives us to do a phased implementation and focus on incremental progress. It is also important to apply CRM concepts to understand customer requirements and reconcile the difference between what customers want vs. what they truly need.” Jim Leedy Executive Director UCPath Center, University of California “When moving forward with Shared Services in the Public Sector, one must be aware of the governance model (in higher education), customer segmentation, and the multitude of diverse business processes which may be impacted by your project. Ensure that a voice of the customer mechanism exists for your project and that there is a clear understanding of who makes decisions. Never underestimate the amount of change management effort required to achieve business transformation and standardization of processes.” Chazey Partners Practitioners’ Corner │ Public Sector Practice
  9. 9. 8 For more articles about the Public Sector Practices Please visit our website at or subscribe to our monthly enewsletters for the latest updates Meet Our Practitioners Phil Searle CEO & Founder Chazey Partners +1 408 402 3008 David O’Sullivan Co-Founder & Partner Chazey Partners +353 (0) 86 384 8573 Grant Farrell Managing Director United States Chazey Partners +1 862 812 7851 Christina Exarchou Head of HR Practice EMEA Chazey Partners +30 6944 525622 Esteban Carril Managing Director, Latin America Chazey Partners +54 (911) 3085 5140 Emer O’Kelly Regional Director Europe Chazey Partners +44 (0) 7703 647 360 Chas Moore Managing Director, Canada Chazey Partners +1 855 692 6229 Ext 201 Anirvan Sen Managing Director, Asia, Middle East and Africa Chazey Partners +31 649133170 / +65 85143766 Robert Towle Regional Director East Coast USA Chazey Partners +1 862 812 7851 Janey Jux Head of Public Sector Practice EMEA Chazey Partners + 44 (0) 800 6440649 About Chazey Partners Chazey Partners is a practitioners-led global management advisory business. We bring together a unique wealth of experience empowering our clients to strive for world class excellence through Business Transformation, Shared Services & Outsourcing, Technology Enablement, Process Enhancement and Corporate Strategy Optimization. We pride ourselves in having built, operated and turned around some of the world's most highly commended and ground breaking Shared Services Organizations, and for implementing many highly successful multi-sourced (shared services and outsourced) delivery solutions. Over the last 20 years, we have delivered numerous programmes globally, in the US, Canada, UK, Continental Europe, Ireland, India, Eastern Europe, South America, Singapore, Australia, China, Middle-East and Africa. Our experience covers both Private and Public Sectors, providing expertise in a wide spectrum of business functions, including Finance, HR, IT and Procurement. Chazey Partners Practitioners’ Corner │ Public Sector Practice Learn more about us at Follow us on LinkedIn, Twitter and Facebook