August 2, 2010Doug Hadden
We’ve discussed the current state-of-the-art in government shared services. There’s some discontent among government users for technology shared services. Despite a rather obvious set of benefits from standardization and consolidation of similar GRP functions such as budget, financial and human capital management. Gartner Group concluding that “shared services” is on the descent to the trough of disillusionment.
Process standardization is a key benefit experienced in the private sector. Standardization reduces cost for training, support and upgrading software. Private sector companies can benefit from best practices. They adjust their processes to achieve greater efficiency. Government doesn’t work that way. Adjusting processes to achieve greater efficiency or standardization often requires changes to the law. Privacy,agency independence, de-centralization and other problems can make standardization exercises difficult. Shared services initiatives begin with analysis of the current situation. There can be significant commonality among government organizations.
The pattern of dissimilar processes expands based on the number of organizations compared. Even small government agencies can have significant differences in mandate. Problems encountered with standardization include:
- Disjointed processeswhere only parts of shared processes are standardized. The comprehensive “line of business” cannot be fully automated leaving government ministries, departments and agencies with the option of manual processes or creating special purpose tools. This has been a general problem in government IT that standardization can worsen rather than aleve.
- Diminishing returns where adapting organizational processes to the standard reduces efficiency or service delivery.
- Legal and processbarriers where standardization cannot be implemented by some organizations. This can dramatically reduce the return on investment for setting up an expensive shared services infrastructure if it cannot be leveraged by all government organizations.
The primary difficulty in achieving government shared services for “lines of business” isn’t standardization – it’s the technology tools used. Many shared services initiative use Enterprise Resource Planning (ERP) software developed for the private sector. This software has some unfortunate characteristics:
- Customization: the use of code customization to achieve government needs that increases the Total Cost of Ownership (TCO). This makes it difficult to transition sets of customized code to standard processes.
- Single instance: the design of private sector software expects a single entity operating standard processes. Many government shared services initiatives requires hosting multiple different instances, which defeats the purpose of shared services in the first place.
- Reliance of industry practices: this use of so-called “best practices” makes it difficult to standardize a complete process across multiple organizations. And, very difficult to support legal reform and modernization of financial processes.
We have been very adamant that software technology can be designed specifically for government. We’ve developed an innovative shared services technology approach. This approach is based on three important “non functional requirements” for the design of Version 7 of the FreeBalance Accountability Suite:
- Configuration where the broad spectrum of government processes can be easily configured and requires no customization.
- Multiple configurations where a single hosted system can support different configurations.
- Reliance of government good practices proven around the world to support change and modernization.
The FreeBalance approach to shared services supports a different deployment model:
- Standardization of many processes facilitated through the configuration approach. These processes will be standard and identical.
- Semi-standardization through a configuration range where government organizations can select processes within a narrow approved range. Once again, this approach is supported through parameters in the FreeBalance Accountability Suite. Semi-standardization enables governments to achieve the benefits of consolidation by broadening the shared services footprint without significantly increasing costs.
- Local or central hosting of functions unique to the government organization. These functions may need to be separate from shared services because of legal requirements. Or, the processes are so unique as to make central hosting cost ineffective. The FreeBalance Accountability Suite supports this approach through hybrid deployment where processes can be hosted in more than one location.
- Phased migration of configurations where government organizations can move to compliant and mandated standard processes over time. This reduces the training costs and lack of productivity associated with switching solutions abruptly.