An Introduction to Shared Services

Background

In preparing to govern and lead their agencies, new political appointees will be exposed to the term Shared Service Provider (SSP). They will hear about the Office of Management and Budget (OMB) push toward an increased used SSPs.  Regarding SSPs, new appointees will need to make decisions that will have a lasting impact on their agency, their employees and their business functions. In this commentary, we provide an overview of shared services in the federal government, the guidance behind it, and suggested actions that new political leaders can consider taking to implement a shared service strategy.

What is a Shared Service?

Shared service refers to any administrative function around people, process and technology that is performed by one business unit for a fee for the benefit of another business unit. The goals of shared services are to gain efficiencies, leverage best practices, and standardize processes. Opportunities for utilizing shared services exist for many administrative functions such a human resources (HR), payroll, information technology (IT), finance, and acquisition. Moving these administrative functions to shared services allows the business unit to focus more of its efforts on its core mission.  

What Are Shared Services in the Federal Government?

Following the lead of commercial organizations, OMB has been encouraging federal agencies to adopt shared services for commodity administrative functions so that the federal government can gain economies of scale and skill. In a tight fiscal environment with shrinking budgets and increasing pressure to do more with less, agencies must focus on improving the efficiency and effectiveness with which they carry out their missions. The key drivers for implementing an SSP within the federal government are:

1. Resource efficiencies
2. Improved mission performance

Freed from the need to perform their own non-strategic functions, government agencies will be able to focus more on their core activities, improve their performance, and focus their resources on high impact areas targeted towards delivering results to their stakeholders. 

Currently within the federal government there are four SSPs that perform many of these commodity administrative functions through a fee for service model to other federal agencies: 

• Department of Agriculture’s National Finance Center
• Department of the Interior’s Interior Business Center
• Department of Transportation’s Enterprise Services Center
• Department of the Treasury’s Administrative Resource Center

Guidance Behind the Services

The shared services initiative first gained momentum with the President Management Agenda (PMA) in August 2001, with OMB rating federal agencies in five government-wide areas:

• Strategic Management of Human Capital
• Competitive Sourcing
• Improved Financial Performance
• Expanded Electronic Government
• Budget and Performance Integration

The push towards shared services continued with President Obama releasing the Federal IT Shared Services Strategy in 2012, which required agencies to consider shared services before investing in new IT software, and strategic expansion of financial systems, HR and acquisition. Expansion of shared services was stated as a cross-agency priority goal in the fiscal 2015 federal budget. OMB, through Memorandum M-13-08 (Improving Financial Systems through Shared Services), requires agencies to evaluate a move to an SSP when they modernize financial systems. The Department of the Treasury Office of Financial Innovation and Transformation (FIT) leads the effort government-wide. FIT developed the Federal Agency Migration Evaluation (FAME) Model to provide an assessment roadmap for agencies. This roadmap provides guidance to agencies interested in migrating to one of the four financial management SSPs.

As agencies increased their adoption of shared services by selecting SSPs for financial management, human resources, and other IT services, it became apparent that a government wide shared services management structure was needed to address cross agency organizational changes and to share best practices and lessons learned from previous implementations.

To help facilitate organizational change and deliver and manage shared services consistently and efficiently across the government, OMB and Treasury created the Unified Shared Services Management (USSM) Team hosted by the General Services Agency (GSA) in October 2015. The objective of this Team is to manage as one enterprise the changes needed across many government agencies and create a governance board to help accelerate the migration of commodity functions to shared services. The USSM Governance Board will establish the strategy and vision and develop a roadmap. As budget constraints continue to limit federal government spending, the USSM Governance Board will influence budget decision making and driving efficiency and standardization across the federal government. This organization will be critical over the new few years and is the first step to managing SSPs and their service offerings at an enterprise level. 

What Do New Political Appointees Need To Do?

• In agencies which do not yet participate in SSPs: Political appointees can play an important role in facilitating their agencies adoption of shared services by understanding, communicating, and championing the desired end-state for the functions that will be migrated to an SSP. In several cases, we have seen that an overall HR strategy was not addressed prior to an implementation that resulted in poor execution by agency employees who were not prepared to transition and operate in the new shared services operating model.  A successful transformation depends on the preparation of employees, as well as an extensive effort at internal communication.  
• In agencies which are SSPs (Agriculture, Interior, Transportation, Treasury): Political appointees in these agencies can help smooth their customers’ transition to the SSP by focusing on customer service and outreach. This is an important factor that is often overlooked and can lead to a poor customer experience. Frequent and meaningful feedback from customers is essential to gain an understanding of the customers’ readiness for the SSP’s service.  Likewise outreach to potential customers will help political appointees understand the changes required to enable the SSP to service larger scale customers.

Political appointees play an important role in helping the federal government leverage shared services to minimize the tax dollars spent on commodity functions and maximize agencies’ efforts performing their intended mission.

Nadine Cipriani is a Senior Manager in Ernst & Young’s Advisory Services practice. Nadine has over 19 years of experience collaborating with Chief Financial Officers (CFOs), Deputy CFOs, and Assistant Commissioners (ACs) on a variety of issues in order to accomplish high level goals of the various Administrations; Roberta Mourao is a Principal with Ernst & Young. Roberta has 25 years of experience with the federal government consulting and commercial industry. Roberta has a passion for performance improvement and works with government agencies to help them efficiently and effectively achieve the delivery of their missions to citizens.