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Shared Services in Government Case Studies for Moving Toward Cost Savings and Efficiency Presented by: Marc Wine, M.H.A. GSA USA Services Intergovernmental.

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Presentation on theme: "Shared Services in Government Case Studies for Moving Toward Cost Savings and Efficiency Presented by: Marc Wine, M.H.A. GSA USA Services Intergovernmental."— Presentation transcript:

1 Shared Services in Government Case Studies for Moving Toward Cost Savings and Efficiency Presented by: Marc Wine, M.H.A. GSA USA Services Intergovernmental Solutions GSA USA Services Intergovernmental Solutions 3 rd SOA for E-Government Conference May 2, 2007

2 Shared Services Throughout the World The objective is to allow an organization to share the systems that perform common functions, with the benefit of providing those services more efficiently and cost-effectively by: The objective is to allow an organization to share the systems that perform common functions, with the benefit of providing those services more efficiently and cost-effectively by: Providing economies of scale Providing economies of scale Standardization of best practices Standardization of best practices Enabling organizations to concentrate on their core functions Enabling organizations to concentrate on their core functions

3 Silos & Stovepipes History - large scale automation of government processes in the 1950s History - large scale automation of government processes in the 1950s Agencies developing their own applications and systems to support common business and administrative functions Agencies developing their own applications and systems to support common business and administrative functions This practice led to extensive duplication and stove-piping, with widely varying levels of quality, reliability, efficiency, and effectiveness in providing common services. This practice led to extensive duplication and stove-piping, with widely varying levels of quality, reliability, efficiency, and effectiveness in providing common services.

4 Re-engineering Business for Customer Needs Government initiatives introduced in the 1990s addressed the inefficiency and duplication of services, leading to the shared services concept as a way to minimize waste. Government initiatives introduced in the 1990s addressed the inefficiency and duplication of services, leading to the shared services concept as a way to minimize waste. Early shared services efforts were focused on consolidation; however Early shared services efforts were focused on consolidation; however The real benefit of shared services lie in reengineering business to enable best practices, and in creating a shared service organization that works in a cooperative environment with its clients, providing services based on customer needs. The real benefit of shared services lie in reengineering business to enable best practices, and in creating a shared service organization that works in a cooperative environment with its clients, providing services based on customer needs.

5 Private Sector Demonstrated Results Since the 1980s, corporations have used shared services to reduce costs and improve internal service delivery. A 2001 study 2001 by PriceWaterhouseCoopers, showed the savings potential from the elimination of redundant work and infrastructure by moving financial services into a shared services center environment. Since the 1980s, corporations have used shared services to reduce costs and improve internal service delivery. A 2001 study 2001 by PriceWaterhouseCoopers, showed the savings potential from the elimination of redundant work and infrastructure by moving financial services into a shared services center environment. Shared Service Center Finance Function Savings Finance Function Savings Realized in SSC Environment SSC Environment Invoicing Customers 40% Invoicing Customers 40% Accounts Payable 40% Accounts Payable 40% Accounts Receivable 50% Accounts Receivable 50% General Accounting 75% General Accounting 75%

6 Likely Prospects for Shared Services Human resources Human resources Finance, information services (e.g., help desk) Finance, information services (e.g., help desk) Logistics and materials management Logistics and materials management Customer support service functions, Customer support service functions, Training and education Training and education Information technology Information technology

7 Overview of Federal Shared Services OMB Direction In 2006, OMB directed agencies to include in their annual budget submission plans for migration to shared services when existing technologies require updates or replacements. In 2006, OMB directed agencies to include in their annual budget submission plans for migration to shared services when existing technologies require updates or replacements. In FY2004 and 2005, OMB identified prospective investments in agency budget submissions totaling over $11 billion for development, enhancement or modernization of such systems. In FY2004 and 2005, OMB identified prospective investments in agency budget submissions totaling over $11 billion for development, enhancement or modernization of such systems. OMB will not support development of new, or upgrading of existing agency-specific systems. OMB will not support development of new, or upgrading of existing agency-specific systems. OMB estimates that there will be cost savings of about $5 billion over the first 10 years from consolidation of common systems and streamlining of business functions that are common across federal agencies. OMB estimates that there will be cost savings of about $5 billion over the first 10 years from consolidation of common systems and streamlining of business functions that are common across federal agencies.

8 Promises for Real Benefits OMBs fiscal year 2008 budget proposal lays out the benefits of its efforts to consolidate back-office information technology systems across government. It will: OMBs fiscal year 2008 budget proposal lays out the benefits of its efforts to consolidate back-office information technology systems across government. It will: Encourage federal agencies to move away from maintaining their own IT systems in areas such as financial management and human resources, and toward using service centers shared with other agencies. Encourage federal agencies to move away from maintaining their own IT systems in areas such as financial management and human resources, and toward using service centers shared with other agencies. Support service centers run by a federal agency or a private sector contractor. Support service centers run by a federal agency or a private sector contractor. Introduce shared service centers hosted by multiple agencies in information systems security – for security training and for meeting the reporting requirements in the Federal Information Security Management Act. Introduce shared service centers hosted by multiple agencies in information systems security – for security training and for meeting the reporting requirements in the Federal Information Security Management Act.

9 FEA Roadmap to Government Transformation

10 The Navy Marine Corps Intranet (NMCI) A wholesale paradigm shift in how the Navy and Marine Corps approach information sharing and communications. To connect more than 500,000 Sailors, Marines and civilians to engage in synchronized military operations, a fully integrated, secure network was needed to handle voice, video and data transmissions. A wholesale paradigm shift in how the Navy and Marine Corps approach information sharing and communications. To connect more than 500,000 Sailors, Marines and civilians to engage in synchronized military operations, a fully integrated, secure network was needed to handle voice, video and data transmissions.

11 (NMCI) Accomplishments NMCI links more than 300 bases in six countries on a single, global secure network. NMCI links more than 300 bases in six countries on a single, global secure network. NMCI reduces expenses and improves productivity by consolidating 1,000 individual information technology contracts and 10 operating systems into one and reducing in half the number of routers, switches, servers and legacy applications. NMCI reduces expenses and improves productivity by consolidating 1,000 individual information technology contracts and 10 operating systems into one and reducing in half the number of routers, switches, servers and legacy applications. NMCI manages four network operating centers, three enterprise help desks, nearly 50 server farms and connectivity for approximately 6,000 BlackBerry® wireless devices. NMCI manages four network operating centers, three enterprise help desks, nearly 50 server farms and connectivity for approximately 6,000 BlackBerry® wireless devices. NMCI improves network security by trapping, quarantining and disinfecting an average of 70,000 viruses per month. NMCI detects more than 5.2 million monthly unauthorized intrusion attempts to penetrate the NMCI external boundaries. Cryptographic Log On authentication was added for higher security. NMCI improves network security by trapping, quarantining and disinfecting an average of 70,000 viruses per month. NMCI detects more than 5.2 million monthly unauthorized intrusion attempts to penetrate the NMCI external boundaries. Cryptographic Log On authentication was added for higher security. The Department of Navy deployed 5,381 NMCI seats in support of Operation Iraqi Freedom. The Department of Navy deployed 5,381 NMCI seats in support of Operation Iraqi Freedom.

12 Department of Housing and Urban Development (HUD) HUD migrated to a shared services provider for Human Resources instead of spending $15 million to $18 million over a six-year period to build their own comprehensive and automated human resources solution agency-wide. HUD migrated to a shared services provider for Human Resources instead of spending $15 million to $18 million over a six-year period to build their own comprehensive and automated human resources solution agency-wide. In compliance with OMBs Human Resources LoB initiative, HUD transferred human resources functions to the Treasury Departments HR Connect, which had a proven track record and a project management team in place, and could be deployed within only six months. In compliance with OMBs Human Resources LoB initiative, HUD transferred human resources functions to the Treasury Departments HR Connect, which had a proven track record and a project management team in place, and could be deployed within only six months. Within six months of implementation, over 64% of HUD employees were on the system and over 28,000 paperless transactions were conducted. Four legacy systems were retired and savings of $10 million were projected over 10 years. Within six months of implementation, over 64% of HUD employees were on the system and over 28,000 paperless transactions were conducted. Four legacy systems were retired and savings of $10 million were projected over 10 years.

13 HUD uses SOA HUD implemented a single enterprise content management solution for correspondence, documents and records management, and its organizations now can share the capability to find and use information across the enterprise. HUD implemented a single enterprise content management solution for correspondence, documents and records management, and its organizations now can share the capability to find and use information across the enterprise. SOA allows governments to think of processes and IT systems in terms of a few generic electronic actions that need coding only once and can then be re-used many times, in dynamic fashion after integration and deployment. SOA allows governments to think of processes and IT systems in terms of a few generic electronic actions that need coding only once and can then be re-used many times, in dynamic fashion after integration and deployment.

14 SOA Enables Strategic Investments Five Beneficial Ways: Facilitating business process reengineering and best practice enterprise; Facilitating business process reengineering and best practice enterprise; Allowing innovation across business sectors; Allowing innovation across business sectors; Supporting information sharing in a consistent, trustworthy, and repeatable fashion; Supporting information sharing in a consistent, trustworthy, and repeatable fashion; Driving the use of common terms, definitions and languages for information sharing; and Driving the use of common terms, definitions and languages for information sharing; and Permitting information-sharing as a web service with consistency, reliability, and security for aligning business policy with automation processes. Permitting information-sharing as a web service with consistency, reliability, and security for aligning business policy with automation processes.

15 U.S. Department of Justice NIEM National Information Electronic Model (NIEM), created by the U.S. Department of Justice, lays the foundation for effective information sharing across multiple domains and disciplines such as the intelligence community and law enforcement. National Information Electronic Model (NIEM), created by the U.S. Department of Justice, lays the foundation for effective information sharing across multiple domains and disciplines such as the intelligence community and law enforcement. NIEM offers shared services for automated protocols allowing disparate systems at the federal, state and local levels to share, accept, exchange and translate information in support of homeland security, public safety and counter-terrorism initiatives. NIEM offers shared services for automated protocols allowing disparate systems at the federal, state and local levels to share, accept, exchange and translate information in support of homeland security, public safety and counter-terrorism initiatives. Agencies that choose to participate in NIEM will be prepared to participate in major national information sharing systems that are or will be based on NIEM standards. Agencies that choose to participate in NIEM will be prepared to participate in major national information sharing systems that are or will be based on NIEM standards.

16 State Shared Services Initiatives Wisconsin Immunization Registry (WIR) To expand the Medicaid Management Information System and to record and track immunization dates for children and adults. The WIR has been adopted by a number of other states, including Minnesota, Arkansas, North Carolina, Virginia, Georgia, New Mexico, Puerto Rico and the Virgin Islands.

17 Oklahoma Behavioral Health Collaborative Single Eligibility, Claims Payment, and Data Sharing system -- Leading to changes across multiple agencies Uniform electronic health records system that provides immediate access to consumers and providers to needed clinical information that supports better treatment and outcomes Uniform electronic health records system that provides immediate access to consumers and providers to needed clinical information that supports better treatment and outcomes Clinical datasets that will lend themselves to comparisons and analysis with national datasets such as NOMS Clinical datasets that will lend themselves to comparisons and analysis with national datasets such as NOMS Data tracking of outcomes measures that will assist our agencies in the national movement towards pay-for- performance standards. Data tracking of outcomes measures that will assist our agencies in the national movement towards pay-for- performance standards.

18 Around the Globe The UK Shared Services Team was created following a government efficiency review and charged with cutting $40.4 billion (21 billion) from government back-office costs to enable greater spending on front-line services. The government estimated that its shared services initiatives should result in a 20% reduction in human resources and financial costs across the government, a savings equivalent to about $2.7 billion (1.4 billion) a year. The UK Shared Services Team was created following a government efficiency review and charged with cutting $40.4 billion (21 billion) from government back-office costs to enable greater spending on front-line services. The government estimated that its shared services initiatives should result in a 20% reduction in human resources and financial costs across the government, a savings equivalent to about $2.7 billion (1.4 billion) a year.

19 The UK Reported Progress Implementing Shared Services in 2005 Transport for London Human Resources Shared Services Center reduced human resources spending by 30% in the first year of operation. Transport for London Human Resources Shared Services Center reduced human resources spending by 30% in the first year of operation. National Health Service Shared Services Finance Business Service has produced finance savings of an average of 34% for 108 Health Trusts with a further 60 Health Trusts due to sign up to the service by March National Health Service Shared Services Finance Business Service has produced finance savings of an average of 34% for 108 Health Trusts with a further 60 Health Trusts due to sign up to the service by March The Ministry of Defenses People Pay and Pensions agency has produced a 40% cost reduction. The Ministry of Defenses People Pay and Pensions agency has produced a 40% cost reduction.

20 The Western Australian State Government Leading the way in adopting a shared services approach to the delivery of government corporate services Setting up Shared Services Centers The State Governments specific objectives for shared services include: greater visibility and transparency of service levels, costs and performance; greater visibility and transparency of service levels, costs and performance; significant financial savings, achieved through aggregation, standardization, simplification and automation of back office corporate service activities, which can be redirected to higher priority operational areas; i.e. Health, Law & Order and Education; significant financial savings, achieved through aggregation, standardization, simplification and automation of back office corporate service activities, which can be redirected to higher priority operational areas; i.e. Health, Law & Order and Education; an increased agency capability and focus on core service delivery; an increased agency capability and focus on core service delivery; greater ability to leverage investment in information systems and ICT infrastructure; greater ability to leverage investment in information systems and ICT infrastructure; facilitation of improved information and knowledge management across Government; facilitation of improved information and knowledge management across Government; increased access for agencies to specialist corporate support skills; and increased access for agencies to specialist corporate support skills; and enhanced career opportunities for staff in a professional corporate services organization; enhanced career opportunities for staff in a professional corporate services organization;

21 Findings and Future Trends Information sharing and collaboration in the development of innovative information technology has increased in the public sector over the past few years and is at the heart of shared services approaches. Information sharing and collaboration in the development of innovative information technology has increased in the public sector over the past few years and is at the heart of shared services approaches.

22 Findings and Future Trends The key challenges to providers of shared services are relatively simple and straightforward: being responsive to the specific needs of each customer, but providing standard, proven best practices. The key challenges to providers of shared services are relatively simple and straightforward: being responsive to the specific needs of each customer, but providing standard, proven best practices.

23 Findings and Future Trends Shared services can provide a common platform for cooperative efforts where they are needed to support a national goal. Shared services can provide a common platform for cooperative efforts where they are needed to support a national goal.

24 Findings and Future Trends Best practices emphasize: Collaborating using common standards Collaborating using common standards Open communications Open communications Innovation Innovation Barriers that can be managed and overcome: Focus on consolidation rather than improving service and cooperation, Focus on consolidation rather than improving service and cooperation, Not fully understanding customer requirements Not fully understanding customer requirements Not aligning shared services with customer goals are Not aligning shared services with customer goals are

25 Findings and Future Trends Successful and use of shared services will depend on: Customer focus Customer focus Transparency and choice Transparency and choice Metrics and accountability Metrics and accountability Ensuring professional development Ensuring professional development

26 Discussion For additional information Contact Marc Wine:


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