HB5002 Das Report

Structure, Service
and Funding Review
Response to House Bill 5002 Budget Note

June 2010
[DAS Structure, Service, and Funding Review
Response to House Bill 5002 Budget Note]

Table of Contents
Background and Objectives.................................................................................................................................................1
Historical Context................................................................................................................................................................2
Project Approach.................................................................................................................................................................3
HB5002 Workgroup Efforts.................................................................................................................................................3
• Entrepreneurial Management Overview.......................................................................................................... 4
HB5002 Workgroup Recommendations.............................................................................................................................. 5
• Business Model Criteria....................................................................................................................................7
• Delivery Mechanism Criteria ..........................................................................................................................10
• Delivery Mechanism Decision Chart............................................................................................................... 11
• Delivery Mechanism Methodology................................................................................................................. 12
How Recommendations Support Budget Note Deliverables............................................................................................. 14
Wall 2 Wall Transformation Efforts: Partnering with HB5002 Workgroup ...................................................................... 16
• Process Base Lining Work............................................................................................................................... 16
• Process Improvement Opportunities.............................................................................................................. 17
• Strategic Planning ..........................................................................................................................................19
In Conclusion .....................................................................................................................................................................21
HB5002 Workgroup Members ..........................................................................................................................................22
• HB5002 Resource Council Members............................................................................................................... 22
• Services Subcommittee Members................................................................................................................... 22
• Rates Subcommittee Members ...................................................................................................................... 22
Supporting Work ...............................................................................................................................................................23
• Addendum 1: 50 State Administrative Structures Summaries .......................................................................23
• Addendum 2: Public Strategies Group’s Entrepreneurial Management Overview ........................................23
• Addendum 3: Transforming Iowa – the Iowa Reinvention Partnership .........................................................23
• Addendum 4: Entrepreneurial Management Analysis Matrix........................................................................ 23
• Addendum 5: Rates & Assessment Report ..................................................................................................... 23
• Addendum 6: Pivotal Resources’ Base Lining Report Summary..................................................................... 23
• Addendum 7: Customer and Employee Survey Results Overview .................................................................. 23
• Addendum 8: DAS’ Strategic Plan.................................................................................................................. 23

June 2010

Page 1 of 23
Background and Objectives

The 2009 Oregon Legislative Assembly’s Joint Committee on Ways
& Means passed the Department of Administrative Services’ (DAS)
budget bill, House Bill 5002, and attached a budget note that
directed DAS to convene a workgroup to review the department’s
structure, service delivery, and funding mechanisms.

The budge note’s intent is to find ways to improve DAS’ service
and policy delivery while ensuring fair and agile funding
mechanisms.  The budget note expressly called for DAS to convene
a workgroup that included representatives from other state
agencies, other branches of government, and the private sector.

The budget note gave the workgroup the following objectives:

• Provide a recommendation on the potential budgetary,
programmatic, and operational benefits of separating the
Department’s policy functions from its service functions.
• Review, validate, and report on the current methodologies
used to develop DAS assessments (which pay for policy and
oversight activities) and service charges (which pay for
services).  The report should also recommend changes to
ensure that DAS is fair and appropriate in recovering costs.
• Examine and report on the cost benefit and effectiveness of
DAS’ functions and services.  The report must also recommend
changes in service delivery or cost‐reduction alternatives for
ineffective or low‐value programs.

The workgroup must submit its report and recommendations to a
legislative committee no later than July 1, 2010.  Depending on
timing and interim activities, the report could go to either a Joint
Committee on Ways and Means or the Emergency Board.  This
timeline should allow for any recommendations that affect the
budget or require legislation to be included in agency budget
requests for 2011‐13.

The Workgroup

The HB5002 Workgroup received its charter in November 2009.  It
consists of DAS customers and staff, legislative stakeholders, and
private sector representatives.  The workgroup formed two
subcommittees, one focused specifically on services and the other
on rates and assessments (funding).  Both met and made
recommendations to the full body.  The Workgroup also set up an
HB5002 Resource Council of DAS leadership staff.   Membership
rosters appear on page 23 of this report.
Opportunity
House Bill 5002’s budget note provided DAS
an opportunity to review its organizational
structure, service / policy delivery, and its
funding mechanisms.
Options
The most promising opportunity for DAS to
clearly define its organizational structure,
improve service and policy delivery, create
competitive rates, and ensure transparent
funding mechanisms is to move to
Entrepreneurial Management.
This proposed new model uses marketplace
principles – competition and customer
control – to cut costs, increase service
satisfaction and accountability to customers.
Changes include:
Within DAS’ structure, separating policy
from the customer service components.
Identifying policy functions as “leadership”
and focusing on strategic planning and
standard setting.
Classifying customer service components
as either “utility” or “marketplace” services.
Placing the money in the hands of the
customer and funding services through fees.
Key Issues
Legislature “deregulating” parts of DAS to
allow for marketplace agility.
Developing staff to be “competition
ready,” skilled in operating a business.
“Start up” and adequate working capital
for service providers to run as a business.

Opportunity

House Bill 5002’s budget note provided DAS
with an opportunity to review its
organizational structure, service and policy
delivery, and its funding mechanisms.

Options

Entrepreneurial Management offers the
most promising opportunity for DAS to
clearly define its organizational structure,
improve service and policy delivery, create
competitive rates, and ensure transparent
funding mechanisms.

This proposed new model uses marketplace
principles – competition and customer
control – to cut costs, increase service
satisfaction and accountability to customers.
Changes would include:

• Within DAS’ organizational structure,
separate policy and regulation from
customer service components.
• Identify policy functions as “leadership”
services that focus on strategic planning,
governance, and standard setting.
• Classify customer service components as
either “utility” or “marketplace”
services.  Place the money in the hands
of customers and let them spend it.

Key Challenges

• “Deregulating” parts of DAS to allow for
marketplace agility
• Developing staff to be “competition
ready,” customer responsive, and skilled
in operating a business
• Ensuring adequate working capital for
DAS service providers to run as a
business

June 2010

Page 2 of 23
Historical Context

To understand why the 2009 Oregon Legislative
Assembly’s Joint Committee on Ways & Means
deemed a budget note of this nature to be
necessary, consider DAS’ historical context.  How
did DAS come to warrant such a review?  Why is
change needed?

The Secretary of State’s Department of
Administrative Services: Administrative Overview
(May 2003) notes the creation of the Executive
Department and the Department of General
Services (DGS) in 1969.  DGS emerged out of two
entities—the Board of Control and Functions from
the Secretary of State and the Department of
Finance and Administration’s (DOFA) Services
Division.   At the time, DOFA’s Services Division was
responsible for printing, property control,
purchasing, insurance, and general services, as well
as the then newly created State Motor Pool.

The report further states: “The Executive
Department was established in 1969 with the broad
charge of setting policy to express legislative and
gubernatorial intent, devising control mechanisms
to insure that policy was realized and evaluating the
results of governmental activities.  It was created by
combining the former Department of Finance with
the Department of Emergency Services, the
Economic Development Division of the Department
of Commerce, the functions of the
Intergovernmental Coordinator, and the personnel
program development and other non appellant
personnel functions of the Civil Service
Commission.”

DAS came into being in 1993 as a combination of
the Executive Department (policy and governance)
and the Department of General Services
(infrastructure and business services).
Consolidating agencies was a political priority
during this period.  The primary considerations
were not necessarily those of effectiveness or
efficiency.

Consequently, not much emphasis went to fusing
functions, reducing overhead, or eliminating

redundancies.  In fact, consolidation eliminated only
one position one of the two agency directors.
Though officially consolidated, DAS existed in
functional silos.

As DAS’ organizational culture matured over the
years, the agency made many efforts to better
organize its business functions, create greater
operational efficiencies, and realign service delivery
to meet changing demands.  Until now, however,
this type of comprehensive organizational review
has not occurred.

Following the 1993 merger, the general fund
supported elements of the Executive Department,
specifically the Director’s Office (DO) and Budget &
Management (BAM.)  During the 1993‐95 budget
cycle, the legislature decided that the DO and BAM
(two primary oversight and governance functions)
would use an assessment model to obtain funding.
The purpose of this move was to reduce the burden
on the general fund.  Currently, the funding sources
that constitute DAS’ assessment are split at
approximately 40 percent general funds and 60
percent all other fund types.

Before the consolidation in 1993, the Executive
Department clearly operated as the administrative
extension of the Governor’s Office, providing
governance and policy direction (e.g., budget,
accounting practices, human resource policies).
Similarly, the Department of General Services was
distinctly a service provider for infrastructure and
business services (e.g. printing, mail, fleet, custodial
services) primarily on a pay‐as‐you‐go fee structure
or some other generally understood funding
mechanisms (such as per square foot rent charges).

Each agency enjoyed a clearly defined and
longstanding role in government. The funding
methodologies – while not perfect – were readily
understandable.  Since the merger, DAS’ identity
has become less certain.  The duality of DAS’ role in
providing both service delivery and policy direction
to agencies creates a dichotomy that is inherent in
its current structure and funding mechanisms.

June 2010

Page 3 of 23
6 Agencies
6%
5 Agencies
6%
4 Agencies
20%
3 Agencies
18%
2 Agencies
28%
1 Agency
22%
Project Approach

The HB5002 Workgroup has endeavored to
examine DAS’ organizational dichotomy.  This
project revolved around the deliverables inherent in
HB5002’s budget note.

Specifically, three key questions have emerged:

• Should DAS divide into two agencies, one that
offers policy and oversight, and the other
infrastructure and business services?

• Are DAS’ rates and assessments fairly and
appropriately recovering costs?

• Are DAS’ functions and
services effective and cost‐
beneficial?

This project leveraged
collaboration and involvement
by customers and stakeholders
to generate outcomes that are
on target and recommendations
that are meaningful.

The HB5002 Workgroup effort
began simultaneously with the
internally created “Wall 2 Wall” (W2W)
transformation.  W2W’s purpose is to visibly and
measurably transform DAS so that it can contribute
to the efficient and cost effective operations of
state government.

Both projects have similar overarching objectives to
improve organizational effectiveness and efficiency.
As to not duplicate efforts or create misaligned
outcomes, it was imperative that the organization’s
W2W transformation and the HB5002 Workgroup
capitalize on the synergy of the two work efforts.
To this end, three critical partnering opportunities
were jointly identified:

• Process base lining work
• Process improvement opportunities
• Strategic planning

While primarily highlighting the HB5002 Workgroup
efforts, this report also provides more information

on the W2W’s on‐going transformation efforts in an
upcoming section.

HB5002 Workgroup Efforts

The Workgroup’s initial interest was in
understanding how other states organized their
administrative functions, wanting to draw on best
practices especially regarding the question of a
policy and service split.  A review of the other 49
states was conducted (please see addendum for
more details.)   Common administrative functions
were identified:
• Accounting
• Budgeting
• Facilities
• Fleet
• Human Resources
• Information Technology
• Mail
• Printing
• Procurement
• Risk Management

Using these 10 common functions, looking across all
50 states in the U.S., the above graph was created
from data collected.  As it depicts, 50 percent of
U.S. state governments accomplish these 10
common functions through either one or two
agencies; while six states utilize as many as 5 or 6
different agencies to provide the 10 services.

From this research, two states surfaced as
administrative models using a service policy split in
their infrastructure, they were Iowa and Minnesota.
The Director of Iowa’s Department of
Administrative Services and the Director of
Minnesota’s Department of Administration were
contacted for more information on their operations.

Both Iowa and Minnesota had used specific process
methodologies to gain greater effectiveness and
garner efficiencies.  Minnesota uses Lean tools to
help carry out their Governor’s government reform
initiative called “Drive to Excellence;” while Iowa
Number of Agencies to Accomplish
10 Common Functions
50 State Review

June 2010

Page 4 of 23
Entrepreneurial Management
is Different

“Traditionally reforms have swung
between centralization and
decentralization.  When the
pendulum is ‘centralized’ users
focus on flaws – lack of customer
responsiveness, one‐size‐fits‐all,
rigidity, and hierarchy – and
advocate for more
decentralization.  Once swung the
other way, observers decry the
flaws of decentralization –
fragmentation, wasted
opportunities for economies of
scale, inconsistency, and ‘have‐
and‐have‐not’ agencies – and
demand re‐centralization.
Back and forth.”

Jim Chrisinger
Public Strategies Group
has adopted the Entrepreneurial Management
model to reform its administrative services.  Lean
methodologies are useful and the Workgroup
recognized that Lean is currently applied in the
W2W transformation efforts at DAS.  Iowa’s use of
the Entrepreneurial Management model emerged
as especially intriguing to the Workgroup as it calls
for far reaching systemic change and provides
alternative funding strategies.

Both the Services and Funding
Subcommittees identified the
model as a comprehensive
business model capable of
answering the key 3 questions
posed in the budget note,
remedying both the service
concerns as well as the funding
and assessment inequities.

At this juncture, it may be helpful
to provide an overview of what is
Entrepreneurial Management.

Overview

Entrepreneurial management
(EM) is a proven strategy for
creating greater value for every
dollar spent on internal services.
Gaining greater value is
accomplished by making internal services more
accountable to their customers.  The new
accountability is achieved via a fundamentally
different organizational design:  different
structures, incentives, and funding.

EM divides all internal support services into one of
three categories.  Each category is funded and
managed toward the interests of those whom the
activity is intended to serve — its customer.

• Leadership services — the customer is the
enterprise as a whole (not individual state
agencies) and is therefore funded by the
general fund.

• Utilities — the customers are individual
agencies who may choose how much to
purchase, but for policy reasons, the choice of
supplier is limited to a single designated source
with oversight provided by an Advisory Council.

• Marketplace services — the customers are
individual agencies who may choose how much
of the service to purchase
and from whom.

Entrepreneurial management is
built on the following principles:

• Define results from the
internal customers’
perspective.
• Make internal service
providers primarily
accountable for customer
results.
• Separate customer service
functions from policy and
compliance functions.
• Create ways for service
providers to “win.”
• Use customer power,
including competition, to get
the most value.
• Lower costs through
marketplace‐like interactions.

Entrepreneurial Management focuses on:

• Gaining clarity on who is the “customer.”  The
customer is not always the person “across the
counter,” but rather the people who are the
“primary intended beneficiaries” of the activity.
• Separating “service” from “regulation” within
the organizational structure.
• Making the customers “powerful” by placing
the money in their hands, providing choice, and
competition.

Please Note: While overview information is
provided on Entrepreneurial Management in this
report, more detailed information is attached as an
addendum as well as the Transforming Iowa report.

June 2010

Page 5 of 23
The Meaning of “Entrepreneurial
Government”

“The phrase entrepreneurial government…
may surprise many readers, who think of
entrepreneurs solely as business men and
women.  But the true meaning of the word
entrepreneur is far broader.  It was coined by
the French economist J.B. Say, around the year
1800.  ‘The entrepreneur,’ he wrote, ‘shifts
economic resources out of an area of lower
and into an area of higher productivity and
greater yield.’  An entrepreneur, in other
words, uses resources in new ways to
maximize productivity and effectiveness.

… When we talk about public entrepreneurs,
we mean people who do precisely this.  When
we talk about the entrepreneurial model, we
mean public sector institutions that habitually
act this way – that constantly use their
resources in new ways to heighten both their
efficiency and their effectiveness.”

David Osborne from his book
Reinventing Government
And cited in his book
Banishing Bureaucracy pg. 15
HB5002 Workgroup Recommendations

The HB5002 Workgroup’s task was formidable;
conduct an organizational review in a brief amount
of time.  DAS’ organizational and funding
conundrums, while challenging and considerable,
are not unique to Oregon state government.
Researching other state government structures was
a natural place to start.

The outgrowth of this research and the ensuing
review of service models, DAS’ survey outcomes,
base line reporting, and strategic planning (the
latter three covered in more detail in subsequent
pages of this report) yielded insightful and thought
provoking discussions, intellectual exchanges, and
outcomes.

After significant review and consideration the
Workgroup makes the following recommendations:

1. Adopt the Entrepreneurial Management
approach offering all DAS services and functions
through one of three business models:
• Leadership
• Utility
• Marketplace

Furthermore, adopt appropriate service
delivery mechanism(s):
• Internal ‐ performed  by DAS staff
• External ‐ performed by 3rd
party
provider (private or other government)
• Shared Service – performed by a
cooperative of state agencies (resource
sharing and governing together)

A central benefit of Entrepreneurial
Management for Oregon state government is
gaining clarity on who is the customer – the
ultimate beneficiary of the service – and who
pays for what service.  Additionally, making the
customer powerful, through placing the money
for utility and marketplace service in their
hands, creates a never‐before‐seen level of
funding transparency in state government.
2. Convene Advisory Council to make decisions,
with considerable input from a broad spectrum
of customers, along with DAS subject matter
experts and leadership, as to which business
model would be most effective for services and
functions.

Advisory Council membership would include:
• Representatives from small, medium
and large agencies, boards, and
commissions (a well balanced “voice”)
• DAS leadership
• Subject matter experts
• Private sector

This Advisory Council provides the ever critical
Voice of the Customer; it negotiates rates and
service level agreements with Utilities as well as
providing quality oversight.

June 2010

Page 6 of 23
“The Five Myths of Public Sector Reform”

1. The Liberal Myth is that government can be
improved by spending more and doing more.
In reality, pouring more money into a
dysfunctional system does not yield
significantly better results.

2. The Conservative Myth is that government
can be improved by spending less and doing
less.  In reality, withdrawing funds from a
dysfunctional system may save the taxpayers
money, but it will not improve government
performance.

3. The Business Myth is that government can be
improved by running it like a business.  In
reality, while business metaphors and
management techniques are often helpful,
there are critical differences between the
public and private sector realties.

4. The Employee Myth is the public employees
could perform just fine if they had enough
money.  (See the Liberal Myth.)  In reality, we
have to change the way resources are used if
we want the results to change.

5. The People Myth is that government can be
improved by hiring better people.  In reality,
the problem is not the people; it is the systems
in which they are trapped.

Babak Armajani
CEO, Public Strategies Group and the Reinventing
Government Network
3. Identify and remove statutory and policy
barriers to implementing Entrepreneurial
Management.  In other governments’
experiences, some deregulation needed to
occur to create a path for success for
entrepreneurial enterprises.

Some examples of deregulation may include:
• Procurement laws and rules
• Budget guidelines
• Human Resource policy

Deregulation would be in the spirit of creating a
more nimble, responsive, and “business‐like”
market agility so that Marketplace enterprises
are afforded the greatest likelihood for success.

4. Phase in new business models.  Create staged
strategy that includes:
• Phasing in each of the three business
models
• Phasing in all major DAS business lines

The Workgroup has created criteria for the
reviewing and slotting of DAS services into business
models and service delivery mechanisms.  In the
following six pages the models and criteria are
discussed in more detail.  These criteria may be
adopted or adapted by the Advisory Council for
their use.

In addition to creating recommended business
model (leadership, utility, and marketplace) criteria,
the Workgroup has created a recommended
methodology by which the service delivery
(internal, external, and shared services)
recommendations would be considered.  This
methodology is not exhaustive; however, it
provides a practical framework by which to develop
the business cases necessary for more thorough
review.

The Workgroup took the liberty of creating a chart
of service and functions slotted into both a business
model and a service delivery mechanism.

This work is from the perspective of what “could”
be considered as opposed to what “should” be
considered.  The Workgroup recognizes that
thorough and thoughtful business cases need to be
created to best inform the Advisory Council so that
prudent solutions may be ultimately chosen.
Please see the Entrepreneurial Management
Analysis Matrix addendum for service and function
slotting.

June 2010

Page 7 of 23
Business Model Criteria

These criteria are to aid an Advisory Council in
thoughtfully analyzing DAS’ services and functions
and slotting them in an appropriate business model:
• Leadership
• Utility
• Marketplace

Once the business model has been framed, then
decisions will be made as to which delivery
mechanism will be used to carry out the work:
(criteria in the following section)
party provider
“In Leadership Services the customers are the public or the enterprise as a whole, not individual employees or
their agencies.  These services include strategic direction, policy, standard‐setting, and regulation.  These
activities include setting the ‘rules’ for Entrepreneurial Management.  Because they are not intended to be
responsive to specific customers, leadership services are typically funded by the general fund.  Unlike the other
two categories, leadership services are services where for policy reasons we do not want to make customers
powerful.  Through the budget and appropriations process the legislative body decides how much of the
service will be provided and who the providers will be.  Leadership services are usually provided by the
jurisdiction itself, but not necessarily in all cases.”  This overview was provided by Public Strategies Group.

Criteria

1. Leadership Services

Customers:

The public, Governor, or entire state enterprise (e.g. executive branch), not
individual employees or agencies.

Service
Characteristics:

Strategic direction, enterprise architecture, policy, standard‐setting, and
regulation.

Distinguishing
Features:

Includes setting the rules and standards for enterprise management.  Not
intended to be responsive to specific customers.  The service or function works
with compliers to ensure that state enterprise is well served by adherence to
laws, rules, and industry standards.  Mitigates risk and exposure for the state,
acts as one employer.

Customer Choice:

None.  A consumer of service is not a customer but rather a complier, as such
they are compelled to use the service or function.  Beneficiary of service is
customer.

Funding:

Long term recommendation is to move to general fund; however, considering
the current economic strains, it is not immediately feasible.  Phasing it in over
time is recommended ‐ as supported by a sound business case.  While unilateral
assessment of all compliers is not ideal; as assessment will continue to be used in
some fashion at this time, compliers need to clearly understand that they are not
purchasing a service but rather contributing to effective enterprise management
of state government.

June 2010

Page 8 of 23
“In Utilities the customers are individual agencies and work units who may choose how much to purchase, but
for strong policy reasons the choice of supplier is limited to a single designated source.  That source may be
within or outside the purchasing government.  It could also change over time.  So that customers still have
power vis‐à‐vis a monopoly provider, a customer board of some kind ‘owns’ the service and negotiates with
the provider for service levels, quality, and rates.  Utility services and costs improve when customers negotiate
clear expectations for service quantity, quality, and price and hold the provider accountable.  Like in
marketplace services, monies that had gone directly to providers are now allocated to the customers and
henceforth the customers include utility service costs in the costs of their activities.   A utility provider also
becomes an ‘enterprise,’ dependant on earned revenue for its budget.  The enterprise operates like a business,
living on its income.  The most common reasons for designating a service ‘utility’ are economies of scale; the
need for one, integrated system; or a strong need for uniformity.”  This overview was provided by Public
Strategies Group.

Criteria

2. Utility Services

Customers:

Individual agencies and work units.
Service
Characteristics:

Economies of scale; the need for one, integrated system; a strong
need for uniformity.
Distinguishing
Features:

Utility services leverage corporate buying power as well as provide
for consistency of use and well understood service expectations.
Utility services and costs improve when customers negotiate clear
expectations for service quantity, quality, and price and hold the
provider accountable.  They may also provide services to other
local public entities.  Utility services are distinguished from
Marketplace services in that they are a monopoly provider.

Customer Choice:

Supplier is limited to a single designated source.  This source is
administered by a centralized unit, and may be delivered by
government or procured through that centralized unit.  Customers
choose how much to purchase but not from whom.

Governance:

Customers have power over the monopoly provider as a customer
board “owns” the service and negotiates with the provider for
service levels, quality, and rates.

Funding:

Money once allocated directly to the centralized service agency
through assessment, is now given directly to the customer.
Customers include utility costs in their cost of doing business and
pay for the utility services through usage.  Utility providers become
“enterprises,” dependant on earned revenue for their budgets.
The enterprise operates like a business, living on its income.

June 2010

Page 9 of 23
“In Marketplace services the customers are individual agencies and work units who may choose how much of
the service to purchase and from whom.  They are free to purchase from government or non‐government
providers.  Marketplace services become more responsive and more efficient when providers have to compete.
Monies that had gone directly to these providers are allocated to the customers and henceforth the customers
include marketplace service costs in the costs of their activities.  The provider becomes an ‘enterprise,’
dependant on sales for its budget.  The enterprise operates like a business, living on its income.  For a service to
be designated ‘marketplace,’ there must be an active and competitive marketplace in these services so
customers have effective choices in quality, quantity, and prices and can switch providers if the current one
proves unsatisfactory.”  This overview was provided by Public Strategies Group.

Criteria

3. Marketplace Services

Customers:

Individual agencies and work units.
Service
Characteristics:

Flexible services or products; often with “just in time” delivery; available in a wider
marketplace with multiple prospective providers; growing, fast changing delivery
markets.

Distinguishing
Features:

Variety of options in a competitive market for services; choices for quality, quantity,
and prices.  Marketplace services become more responsive, more efficient when
providers have to compete.  They may also provide services to other local public
entities.

Customer Choice:

Freedom of choice.  Customers are free to purchase from government or non‐
government providers and to choose how much to purchase.  Customers may switch
providers if the current one proves unsatisfactory.

Governance:

Government marketplace providers operate like businesses, changing rates and
service/production strategies as the market demands.

Funding:

Money once allocated directly to the centralized service agency through assessment,
is now given directly to the customer.  Customers include marketplace services in their
cost of doing business and pay as they go.  Government marketplace providers
become “enterprises,” dependant on earned revenue for their budgets.  The
enterprise operates like a business, living on its income.

“Competition is the keen cutting edge of business,
always shaving away at costs”

Henry Ford

“Competition is not only the basis of protection to the
consumer, but is the incentive to progress.”

Herbert Hoover

Leveraging Competition

June 2010

Page 10 of 23
“There are no rules – we’re trying to
accomplish something.”
Thomas A. Edison
Delivery Mechanism Criteria

The Workgroup created the following Delivery
Mechanism Criteria as an overall filter by which the
service delivery recommendations would be
reviewed and evaluated and, ultimately, slotted into
a specific delivery mechanism (internal, external,
shared services).

The flow chart version of the criteria, entitled
“Delivery Mechanism Decision Chart,” illustrating
decision points and decision outcomes may be
found on the following page.

Once DAS services and functions have been slotted
into a specific business model:
• Leadership
• Utility
• Marketplace

Then decisions need to be made as to which
delivery mechanism:
party provider

1. Legal Framework: Considerations as to why
DAS must or should provide the service.  Do any
of these considerations apply?  Do they indicate
that DAS must delivery the service?

• Is there a Constitutional requirement?

• Is there a Governor’s Executive Order?

• Is there a Legislative mandate or statutory
responsibility?

• Is there a rule or policy outlining the
service?

• If yes to any above, can or should this
framework be changed to provide for
improved service, i.e. efficiency,
effectiveness, quality, or timeliness?

2. Service Improvement Viability: Could the
current service be re‐engineered to provide for
lower costs and or higher value more cheaply
than moving it to an alternative delivery
mechanism?

• For example, if service is currently delivered
internally, could re‐engineering efforts
result in same or better results than moving
to an external provider?

• If so, would the re‐engineering efforts be
extensive, considerable, moderate, or light
to achieve the desired state?

3. External Vendor Viability: does a healthy
market exist for services or products?

• Is there a mature market with reputable
vendors?

• Is there robust competition between
providers?

• If the market changes, how difficult would it
be to move from external service to internal
service provision?

4. Customer Support:  Are customers supportive
of proposed delivery mechanism?

• Has the concept been vetted with
customers?

• Is there disparate impact to large, medium,
or small agencies?

• Are different options available for large,
medium and small agencies?

June 2010

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Delivery Mechanism Decision Chart

June 2010

Page 12 of 23
Delivery Mechanism Methodology

This methodology, while not exhaustive, provides a
practical framework by which to develop the
business case necessary for a more thorough review
by the Advisory Council.

Essentially, the Advisory Council would review
business cases, prepared using this methodology,
and use the analysis presented and the Delivery
Mechanism Criteria to ultimately determine which
service model – internal, external, or shared service
– would be most appropriate for a given service or
function.

The Delivery Mechanism Methodology is as
follows:

1. Define scope of the services proposed and the
specific delivery mechanism recommended.

2. Create business case:
• Analyze all aspects of the proposal:
o costs
o outcomes
o performance (success) metrics
o workplace culture implications

• Discuss if greater effectiveness is achieved
through delivery mechanism:
o Increased value
o Increased timeliness
o Increased accuracy, dependability
o Increased product or service quality

• Discuss if greater efficiency is achieved
through delivery mechanism, such as:
o Reduced costs – short and long term
o Greater value – if cost is not reduced,
does increased quality provide for
greater value?
o Optimized service – results are
maximized for the least cost

Further consider:
• Is there precedence for the new delivery
mechanism (e.g. external 3rd
party?)

• If the delivery mechanism is external:
o Is moving to the external provider
reversible and at what cost?
o Is there expertise and experience to
manage the contracted vendor?

• Consider having a third party prepare the
analysis:
o Typically a consultant with no vested
interest in the outcome.
o This would include base lining existing
costs and service levels so that future
performance can be measured against
the baseline.

• Adhere to requirements of HB 2867.  Key
considerations are:
o Establishing measurable standards to
assess contractor's performance.
o Requiring the contractor to offer
employment to displaced employee(s.)
o Requiring agency to demonstrate that
cost of providing goods or performing
service with agency's own personnel or
resources is greater than the cost of
procuring goods or services from the
contractor.

3. Analyze total cost of DAS providing the service
• Include DAS and Statewide costs.
• Ensure valid comparisons.
• For Marketplace business model proposal,
consider the follow:
o Ensure that all alternatives, which may
include continued internal provision, be
comprehensively and regularly
evaluated.
• This involves considering both the
costs and outcomes or outputs,
including comparative quality.
o Assess all risks and benefits.
• This includes the risk of
dismantling internal capabilities
and possible dependence on a
single supplier.

June 2010

Page 13 of 23
• Conduct thorough costing of the present
activity and use as a comparator for
evaluating use of external vendors.
o This involves identifying all costs related
to the activity that will be procured
through external vendors.
o This includes not only the direct costs of
the activity, but also its share in
overhead costs and such non‐cash costs
as depreciation and cost of capital.
o If the present activity can be
restructured in such a way as to offer
improved performance, then this
should be similarly costed and used as
the benchmark for evaluating use of
external vendors.

• If contracting an activity with an external
vendor will incur a liability for severance
payments, this should be identified as a
separate item recognizing the one‐off
nature of such payments.

• Describe what budget mechanism will be
used.
o Is there a reason for non‐limited
budgeting?
o Does this require a change in budget
policy?
o Will the enterprise service reduce
double accounting in the state budget
and how will this be accomplished?

4. Analyze service redundancy: is it provided by
agencies as well as DAS?

5. Define a complete set of requirements and
service level expectations involving both DAS
and customer agencies.

6. Specify service requirements in terms of
outcomes or outputs; not inputs.
• This means specifying what the activity
produces, not how the activity is to be
performed. Operational flexibility is
essential for the contractor to be innovative
in performing the activity, and thereby
securing efficiency gains. These outcomes
or outputs should be specified as fully as
possible, and include appropriate service
quality measures.

7. Define governance and oversight model
• Demonstrate that governance and
government controls are not jeopardized:
o Accountability and stewardship are
maintained or strengthened – though
they make take a different form.
o Fiduciary responsibility is not at risk
o Audit standards are not compromised
o Reporting obligations are maintained or
strengthened
o Relationships with other government
entities are not at risk
o Funding is not put at risk due to the
delivery mechanism (e.g. outsourcing)

8. For Internal delivery in the Marketplace
business model and Utility business model,
apply the following considerations:
• Working capital or “start up” money will
need to be factored in to proposal so that
the business unit has the financial resources
necessary to transition to an enterprise,
marketplace provider.

• Training and skill development will likely be
needed to support employees in the
business model transition.  Specifically,
training in business management practices;
capital investment; business planning;
accounting, budgeting, and cash flow;
performance metrics; e‐commerce;
customer relations; and research and
development; and more.

• Deregulation of constraints (statutes, rules,
or policy) that inhibit government units
from performing as an effective and
efficient market provider.

o These may include areas such as
Procurement, Budgeting, and Human
Resources.

June 2010

Page 14 of 23
Benefits of Entrepreneurial
Management
• Customer satisfaction
increases due to greater
responsiveness.
• Increased accountability as
service providers are directly
accountable to their
customers.
• Performance improvement is
required to stay competitive
and satisfy customers.
• Improved employee morale
as customer agencies buy
services because they choose
to, not because they’re
required to.
• Cost savings as service
providers must compete with
other suppliers, they quickly
find ways to lower their costs
and improve service so they
can survive and thrive.
How Recommendations Support Budget
Note Deliverables

Now each of the three key questions will be
reviewed to connect the overall recommendations
with the HB5002 budget note deliverables.

• Should DAS be separated into two agencies,
one offering policy and oversight and the other
infrastructure, business
services?
• Are DAS rates and assessments
fairly and appropriately
recovering costs?
• Are DAS functions and services
effective and cost beneficial?

Decision Made Not to Split DAS
into Two Separate Agencies:
Split Service and Policy Internally

The Workgroup’s consensus was
that the internal “splitting” of
service and policy functions
accomplishes the desired focus and
clarity needed.  That splitting the
agency back into two separate
agencies would be too demanding
of an effort, taking time and
resources and diverting them from
the actual task of improving
services.  Staying consolidated and
leveraging the best elements of
“splitting” through DAS’ internal
structure not only provides for the
desired outcomes but is also the
most efficient use of resources.

The proposed solution to the “split” question is
implementing the Entrepreneurial Management
model as it requires the splitting out of service and
policy functions.  The recommendation falls short of
splitting DAS into two separate agencies and
accomplishes the split through internal
organizational structure.

Essentially, what “works” about splitting
governance and service provision manifests itself in
the separating of functions into Leadership, Utility,
and Marketplace.  And similarly, what “works”
about a consolidated model that leverages
economies of scale and provides enterprise
standards and consistency, also manifests itself in
this model.

Fair and Agile Rates and
Assessments

The need to review DAS’ rates
and assessment methodologies
came from multiple sources, not
only the budget note that is
central to this report but also in
the budget development of the
2009‐11 budget in the winter of
2008.  At that time, a budget
stakeholder group was formed
to discuss the agency’s base
budget and policy options
packages.  During the group’s
discussion, there were questions
and concerns raised about some
of DAS’ rates and assessments.
As a result a Rates & Assessment
subcommittee was formed out
of the Administrative and
Business Services Directors’
group – a group of central
service directors from across
state government.

The subcommittee started to work in the Spring of
2009 in order to ensure that recommendations
could be incorporated into the 2011‐2013 budget
development process.  While the subcommittee’s
work preceded the HB5002 Workgroup’s efforts,
the resulting outcomes align and the Funding
Subcommittee for HB5002’s work drew on
members of that original subcommittee to ensure
continuity.

June 2010

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“Standing in the
middle of the road
is very dangerous;
you get knocked
down by the traffic
from both sides.”

Margaret Thatcher
HB5002’s Funding Subcommittee reviewed the
Rates & Assessments Subcommittee’s report and
supported its methods, conclusions, and
recommendations.   These recommendations were
made within the confines of the current system and
its constraints and did not pursue wholesale
change.  They are more immediate and
modest than the more complex and far
sweeping changes of Entrepreneurial
Management.  DAS will be able to act
now on these recommendations and
make incremental improvements.
Please see addendum for full report.

The HB5002’s Funding Subcommittee
further recommends the
implementation of the Entrepreneurial
Management model for long term and
deeper, more far reaching changes.
Entrepreneurial Management will allow for the
greatest funding transparency.  Leadership services
will be treated as a corporate tithing for the greater
good of enterprise governance.  While moving to a
general fund allocation for governance is the long
term recommendation, continuing to use the
assessment model with this clearer and more
delineated definition of corporate governance will
provide agencies with a greater understanding of
what purpose their money serves.

Utility services provide for direct customer
involvement in the setting of rates through an
Advisory Council.  Here again, the funding
mechanisms will be transparent to the customers as
they will be directly involved in rate setting, service
level agreements, and monitoring of quality.  As the
money is placed in the hands of the customers, they
have greater control of how it is spent; albeit, they
must use the Utility service as a monopoly provider,
they control the frequency of their spending as well
as being actively involved in rate setting.

Marketplace services provide for the greatest level
of freedom for the customer.  Again, as with Utility,
the money is placed in the hands of the customer
and they may choose if, when, and with whom to
spend it.  DAS ran services will compete in the open
marketplace and customers will be free to access
services from DAS or any other provider.
The original Rates & Assessment Subcommittee out
of the Administrative & Business Services Director’s
group had 5‐goals for funding mechanisms, that
each was:
• Defensible
• Predictable
• Fair
• Easy to Understand
• Agile

They evaluated each current mechanism
by these standards and gave each an
overall health rating of “Red,” “Yellow,” or
“Green.”  After recommending changes,
they again evaluated and gave a new
rating, watching it improve one to two levels as
warranted.  Using these same goals, the
Entrepreneurial Model’s funding mechanisms would
be rated as “Green” or providing defensible,
predictable, fair, easy to understand, and agile
(respond to customer’s needs) funding models.

Effective and Cost Beneficial Services

In the following section, the partnering efforts with
the Wall 2 Wall transformation that included
process base lining, identifying process
improvement, and strategic planning will be
discussed further.  Drawing now on summary
results from those efforts, it is fair to say that they
brought forward a consistent, collective perspective
on DAS services.  From those efforts, it is evident
that there is widespread dissatisfaction with
procurement, human resources, and information
technology services and functions.

Looking at cost / benefit or value results from the
customer survey, it is interesting to note that of all
services rated as below average on value, 43% fall
into Information Technology, 14% into Human
Resources, 19% into Procurement, and 24% in all
other service fields combined, further supporting
the need to improve these processes, systems, and
services.

June 2010

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“Two roads
diverged in a
wood, and I…
I took the one less
traveled by, and
that has made all
the difference.”

Robert Frost
Moving to an Entrepreneurial Management model
as recommended would provide for greater
satisfaction with these services as either Advisory
Council oversight (Utility service) or the power of
competition (Marketplace service) would
simultaneously drive up efficiencies and value in
these fields.  If any of these services were to fall into
Leadership services, it would be imperative to
incentivize improvement through other methods.

Wall 2 Wall Transformation Efforts:
Partnering with HB5002 Workgroup

As mentioned earlier in the report, both the
HB5002 Workgroup and W2W transformation work
have similar overarching objectives to
improve organizational effectiveness
and efficiency.  As to not duplicate
efforts or create misaligned outcomes,
it was imperative that the
organization’s W2W transformation
and the HB5002 Workgroup capitalize
on the synergy of the two work efforts.
To this end, three critical partnering
opportunities were jointly identified:

• Base lining high level processes
• Identifying process improvement
• Strategic planning

To bring these three work efforts to fruition, two
separate solicitations were conducted to procure
consultant support as well as the execution of an
Inter‐Governmental Agreement with Portland State
University (PSU).

The results of these efforts were used to inform the
greater HB5002 Workgroup and the final
recommendations of this report.  Brief summaries
follow with an executive summary of the base lining
work attached as an addendum

Process Base Lining Work

There were 3 deliverables sought in the process
base lining work performed by Pivotal Resources,
Inc., they were:

• Identify key processes and functions
• Create base line process performance
measures (i.e. cost per unit, cycle time and
quality)
• Create customer maps for each DAS division

The base lining effort was extensive.  There were
110 high‐level processes indentified and mapped
using the SIPOC method – Suppliers, Inputs,
Process, Outputs, and Customers.  The consulting
firm facilitated several working sessions with
subject matter experts from each DAS division,
during which process maps were created and
validated, customer and stakeholder requirements
were identified and authorities were
documented.

In the course of this work, trends emerged
for recommended process improvements.
Two general recommendations were:

• DAS must establish customer‐driven
processes and performance metrics
• DAS must create a culture that fosters
continuous learning and improvement

Specifically, three core principles were
recommended to DAS to use to improve its
customer‐focus, process efficiency, and
organizational performance.  They were:

• Lean Thinking – a philosophy and set of tools
that can be used to identify customer
requirements, measure process efficiency, and
make improvements to increase customer
satisfaction and reduce costs.
• Empowerment and Accountability – involving
employees in the design of how work gets done
and holding people accountable for
measurable results.
• Change Management – build organizational
change readiness and capabilities, help staff
members prepare for transition.

June 2010

Page 17 of 23
Process Improvement Opportunities

Process improvement recommendations can be
garnered tangentially from the base lining work as
well as directly from feedback received from the
customer and employee surveys.

Both DAS employees and customers were surveyed
to solicit their critically important perspectives,
opinions, and insights.  Survey creation was a
partnership between PSU’s Executive Leadership
Institute, Pivotal Resources Inc., and DAS.

Over 15,000 state employees were sent the
customer survey instrument and all 850 DAS
employees were provided the employee survey;
1,656 completed customer surveys were received
and 439 completed employee surveys.

While the Customer survey response rate was low,
the results will aid in identifying process
improvement areas.  Additionally, DAS is interested
in following up with focus groups to delve deeper
into needed process improvements.

Customer Survey

All services and functions were evaluated against 8
Key Performance Measures (KPM’s) on a five point
scale (1 low 5 high).  Below are the KPM’s with the
overall DAS average for each.

KPM DAS Average
Timeliness 3.8
Accuracy 3.8
Helpfulness 3.9
Knowledge & Expertise 3.9
Treatment 4.0
Information Availability 3.6
Service Options 3.5
Overall Quality 3.7

When aggregated across all divisions, “service
options” consistently received lower average scores
than the other KPMs.   One possible explanation is
that, on average, DAS’ service options are not broad
or flexible enough to cover the diverse needs of
agencies.  Many of the verbatim qualitative remarks

support this low rating in statements such as “DAS
needs to get away from one‐size‐fits all service
delivery.”

In addition to the KPM ratings, the customer survey
respondents were asked to choose the “Top 10
Services” that are most important in helping their
agency accomplish its mission.  Services were
ranked according to how often they were selected.

Rank 10 Most Selected Services Value
1 Budget Policy & Analysis 3.22
2 Mail Services / Shuttle 3.59
3 Statewide Training 2.90
4 Facilities Ops & Maintenance 3.03
5 Labor Relations   3.13
6 Classification and Compensation 2.76
7 Statewide Payroll Services 3.36
8 Legislative Coordination 3.30
9 HR Management and Consulting 3.23
10 Fleet Management (overall) 3.34

This “top 10 selection” result set provides us with a
sense of what customers perceive as the key DAS
functions that support them in delivering their
products and services to the people of Oregon.  In
terms of process improvement, compare these
“key” services with their perceived value (1 low 5
high) to determine if there is an improvement gap
between “criticality” of service and “value.”  Areas
with the broadest gap would be most ripe for
improvement to ensure that agencies are getting
what they most need from DAS.

To rate value customers were asked to assess the
value of the individual service considering both the
costs (e.g. financial, human resources, time) and
benefits (e.g. quality service performance in
essential areas).  Customers were also asked to
assess the degree of impact that service
improvements would likely have on helping their
agency accomplish its mission and goals.

From the survey, juxtaposing services rated as “low
value” with those services rated as “high impact” if

June 2010

Page 18 of 23
Responding to Feedback

“We listened to what our customers wanted
and acted on what they said. Good things
happen when you pay attention."
John F Smith
Former CEO and President
General Motors

"True genius resides in the capacity for
evaluation of uncertain, hazardous, and
conflicting information."

Winston Churchill

"The greatest compliment that was ever
paid me was when one asked me what I
thought, and attended to my answer."

Henry David Thoreau

"Listening looks easy, but it's not simple.
Every head is a world."

Cuban Proverb
improved, those services perceived as most in need
of improvement begin to surface.

Below are the top eleven services or functions
evaluated as currently having a “low value” and a
rating of “high impact” if improved:

Low Value and High Impact
1 e‐Government
2 Network Management
3 Computing Infrastructure Management
4 Data / Information Systems Services
Response (24/7)
5 Data Storage
6 Classification & Compensation
7 Statewide Training
8 ORPIN (procurement software system)
9 Statewide Price Agreements
10 IT Security Management
11 Agency Specific Procurement

These ratings would indicate that while these
services are regarded as of high impact if improved,
that their current perceived value is low.  As a
result, these services should be evaluated for
process improvement.  Of these top 11 services, all
fall into 1 of 3 fields Information Technology (6),
Human Resources (2), or Procurement (3).

Please note that the “Customer and Employee
Survey Overview” is attached as an addendum, the
500+ page report is available on‐line.

Employee Survey

The employee survey gathered responses on:
• work culture • leadership
• job satisfaction • process improvement
• policy administration and service delivery
responsibilities
• internal service operations performance
• demographics and open‐ended comments

For the purpose of this report, the “policy
administration and service delivery responsibilities”
and “process improvement” sections are most
germane.

Overall, DAS employees shared similar concerns as
customers about procurement, human resource,
and information technology service quality.  The
survey asked employees to assess the potential
impact of improving services (1 low 5 high.)
Employees ranked Classification and Compensation
(an HR service) (3.86) and State Procurement (3.95)
as the highest of DAS services, indicating that
improvements within these services would provide
for the greatest impact to the agency overall.

June 2010

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Planning

“Good plans shape good decision.
That’s why good planning
helps to make the elusive
dream come true.”

Lester R. Bittell
Author of The Nine Master Keys
of Management

“In preparing for battle I have
always found that plans are
useless, but planning is
indispensable.”

Dwight D. Eisenhower
For the “policy / service” tension and balance
section, employees were asked to what extent (1
low 5 high) policy administrators in their division
are achieving ten specific objectives regarding
policy and service management.  The chart below
reflects the assessed rates and the 10 questions
articulating the objectives follow.

Policy / Service Tension questions

To what extent are policy administrators in your
division…

1. Correctly interpreting and creating or adapting
effective policies for the state?

2. Making better policy decisions
because of what they learn
from being involved in DAS
service delivery?

3. Seeking out ideas and
feedback from others (both
inside and outside of DAS) on
their policies?

4. Making poorer policy
decisions because their
attention is diverted by their
involvement in DAS service
delivery?

5. Communicating their policies
effectively to DAS employees,
customers and stakeholders?

Balance questions

division…

6. Balancing both effective policymaking and
delivering quality services?

7. Balancing the need for having consistent policy
enforcement with being flexible, when the
situation truly warrants it?

Policy / Service Management questions

division…

8. Managing scarce resources with the most
efficiency?

9. Demonstrating accountability for achieving the
mission and foals of your division?

10. Having the access they need to communicate
with senior leaders in the government and
legislature?

Strategic Planning

It was imperative to create
strategic planning outcomes that
aligned with the direction and
overarching recommendations of
the HB5002 Workgroup.  To that
end, DAS leadership met with the
Workgroup on a number of
occasions to cooperatively draft
mission, vision, values, goal, and
strategy statements.

The Public Strategies Group (PSG)
provided our strategic planning
services.  They worked with DAS
leadership, the Workgroup, and
conducted focus groups of
stakeholders and employees to
ensure that the widest possible
net was cast for ideas, input, and
feedback.
Policy/Service
Management
Policy/Service
Tension
Balance
Policy Service Results
1
1.5
2
2.5
3
3.5
4
4.5
5
1 2 3 4 5 6 7 8 9 10

June 2010

Page 20 of 23
The work yielded a comprehensive yet concise
result.  DAS’ new strategic direction follows:

Mission

We serve state government to benefit the people of
Oregon.

• Service means implementing the decisions of
the Governor and policy makers.
• Service means taking the lead on behalf of state
government.
• Service means partnering with our customers to
achieve desired outcomes.
• Service means delivering the best value for
every dollar spent in state government.

Vision

We model value‐driven leadership to provide
services and develop policy.

• By taking an enterprise view of government
operations, we implement cost‐effective,
efficient, and sustainable policies and practices.
• By listening and responding to our employees,
customers and stakeholders we provide the
best possible customer service and policy
guidance.
• By continuously improving, we lead by example.

Values

We embody these values in all our actions

• Communication.  We engage in clear, honest,
respectful exchanges with our employees,
customers and stakeholders.

• Sustainability.  We act today to meet Oregon’s
present and future needs.

• Diversity.  We employ and welcome a highly
qualified workforce from all ethnicities,
cultures, and backgrounds.

• Integrity.  We adhere to the principles of
honesty, stewardship and responsibility for our
actions.

• Partnership.  We seek to understand each
other’s interests and work for our mutual
success.

• Innovation.  We find creative and flexible
solutions to business problems.

Outcome Goals

We achieve the following goals:

• The right service, at the right time, for the right
price.

• Effective, high‐quality governance.

• A knowledgeable, skilled, diverse and engaged
workforce.

• Respect among agencies and with the people of
Oregon.

Strategies

• Continuously improve everything we do
through engaged employees, proven business
methods, data‐driven decision making and
effective technologies.

• Improve our organizational performance
through accountability, continual learning and
entrepreneurial management.

• Advocate effective policies and remove barriers
to success.

• Partner on policy and service‐delivery decisions.
The strategic plan components are reflective of the
same spirit and direction as the Entrepreneurial
Management recommendation coming out of the
HB5002 Workgroup’s efforts.  As work efforts were
intentionally aligned, it is not surprising to see
similarities; however, it is remarkable to see that
DAS’ strategy to deploy entrepreneurial
management and improve performance through
accountability is in lock step with the Workgroup’s
recommended direction.

Please see DAS’ Strategic Plan as an addendum.

June 2010

Page 21 of 23
Change

“Change is the law of life and those
who look only to the past or present
are certain to miss the future.”

John F. Kennedy


“Never doubt that a small group of
thoughtful committed citizens can
change the world; indeed, it’s the
only thing that ever has.”

Margaret Mead

“Every body persists in a state of rest
or of uniform motion in a straight
line, unless it is compelled to
change that state by forces having
impact upon it.”

Sir Isaac Newton
In Conclusion

The HB5002 Workgroup recommends the adoption
of the Entrepreneurial Management business model
that allows for greater customer power, clarity on
the separation of service and governance, and for
more transparent and equitable funding
mechanisms.

The Workgroup recognizes 3 key challenges in the
implementation of this model.  One is the
deregulation of parts of DAS to allow for
marketplace agility.  DAS subject matter experts will
need to identify any needed changes in law, rule,
and policy that will open the way to a more nimble,
business‐like environment to take shape and,
ultimately, to thrive.  This has to be accomplished
while continuing to ensure high standards of
stewardship and overall accountability to the
people of Oregon.

The Workgroup also recognizes that DAS staff will
likely need training, mentoring, and skill
development in more private sector‐like business
operations, such as: business management
practices; capital investment; business planning;
accounting, budgeting, and cash flow; performance
metrics; e‐commerce; customer relations; and
research and development; and more.

Another key challenge is the “start up” and
adequate working capital for service providers to
run as a business under both the “Utility” and
“Marketplace” services models.  The Workgroup
recommends thoroughly researching and
understanding how these enterprise ventures can
be set‐up for the greatest success, including needed
working capital as well as consideration to the
health and viability of their physical assets and
infrastructure demands.

The Workgroup’s work effort, coupled with its
partnership with the Wall 2 Wall transformation
effort at DAS, has created a great deal of synergy
and intellectual capital.  It is evident from the
research, the employee and customer survey work,

the process improvement efforts, and the strategic
planning products that the Department of
Administrative Services is invested in hearing the
voice of the customer, balancing governance with
effective service delivery, and in creating positive
change for government.

The recommendations of this Workgroup are but
the beginning of a greater transformation effort
that will take time and continued investment and
attention.

June 2010

Page 22 of 23
HB5002 Workgroup Members:
David Almond, Administrator
DAS, Office of Transformation

Laurie Byerly, Technical Advisor
Legislative Fiscal Office

Margaret Carter, Deputy Director
Department of Human Services

Vickie Chamberlain, Director
Teachers’ Standards & Practices

Karen Gregory, Deputy Director
Department of Revenue

Scott Harra, Director
Department of Administrative Services

Kris Kautz, Deputy Director

Jennifer Lara, Project Manager & Report Author

Representative Nancy Nathanson
Oregon Legislature

Scott Olmstead, Chief Financial Officer
PACCESS

Dick Pedersen, Director
Department of Environmental Quality

Virgil Renz, Associate Director
Verizon Wireless

Representative Dennis Richardson
Oregon Legislature

Senator Martha Schrader
Oregon Legislature

Chip Terhune, Chief of Staff
Governor’s Office

Senator Jackie Winters
Oregon Legislature

HB5002 Resource Council Members:
Jan Dean, Administrator
State Services Division

Diana Foster, Administrator
Human Resource Services Division
Robin Harpster, Administrator
Facilities

John Koreski (transition to Julie Bozzi),
Administrator, State Data Center

George Naughton, Administrator
Budget & Management Division

Dugan Petty, Administrator
Enterprise Information Strategy & Policy Division

John Radford, Administrator
State Controller’s Division

Pam Stroebel Valencia, Chief Auditor
Internal Audits

Bret West, Administrator
Operations Division

Services Subcommittee Members:

David Almond, Administrator
DAS, Office of Transformation

Jan Dean, Administrator
State Services Division

Karen Gregory, Deputy Director
(Subcommittee Chair)
Department of Revenue

John Koreski (transition to Julie Bozzi),
Administrator, State Data Center


Rates Subcommittee Members:
Laurie Byerly, Technical Advisor
Legislative Fiscal Office

Margaret Carter, Deputy Director
(Subcommittee Chair)
Department of Human Services

Kay Erickson, Chief Financial Officer
Dept. of Consumer & Business Services

Kris Kautz, Deputy Director


June 2010

Page 23 of 23
Supporting Work

Addendum 1: 50 State Administrative Structures
Summaries

Addendum 2: Public Strategies Group’s
Entrepreneurial Management Overview

Addendum 3: Transforming Iowa – the Iowa
Reinvention Partnership

Addendum 4: Entrepreneurial Management
Analysis Matrix

Addendum 5: Rates & Assessment Report

Addendum 6: Pivotal Resources’ Base Lining Report
Summary

Addendum 7: Customer and Employee Survey
Results Overview

Addendum 8: DAS’ Strategic Plan

HB5002 Das Report

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