Transforming the Business of Government through Shared Services Lines of Business Initiative John Sindelar Acting Associate Administrator GSA. . . United States North American Day 2006

Lines of Business (LoB) Initiative From March 2004 through today, LOBs underway: - Financial Management (FM) Human Resources Management (HR) Grants Management (GM) Case Management Federal Health Architecture (FHA) Information Systems Security (ISS) Budget Formulation and Evaluation (BFE) Geospatial IT Infrastructure Optimization The US Government is achieving consolidation and streamlining through the use of shared services across identified business lines. I will focus on the 2 that are most mature, Human Resources and Financial Management. Interagency taskforces examined business and information technology data and best practices for each line of business to identify opportunities to reduce the cost of government and improve services to citizens through business performance improvements. Cross-agency teams analyzed opportunities for integration and consolidation. They recommended the establishment of government-wide service providers in the areas of Financial Management and Human Resources Management. The Grants Management team is developing plans for the consolidation of Grants Management activities across the government. The scope of a LoB initiative is to: • Define the processes and business rules associated with a government wide business function; • Shape existing or inform future policy by making recommendations to the appropriate policy authority associated with the business function; and • Provide implementation guidance to agency enterprise architectures, IT projects, or systems for alignment with the LoB initiative and the Federal Transition Framework In general, the goals of a LoB initiative include: • Improved agency mission performance; • Reduced costs government-wide through consolidation and standardization; and • Simplified service delivery for both customer-facing and back-office services.

The LOB Value Proposition Improving performance and saving taxpayer $ Significant increase in expertise due to specialization Freeing agencies and resources to focus on core mission Accelerating enhancements and value-added services Leveraging the Government’s ability for more effective partnership with industry

Current Snapshot: Financial Management LoB Initiative Work Streams Project Description Performance Measures Develop a series of measures (i.e. cost, quality, timeliness) to assess the major service areas offered by a financial services organization (e.g. Shared Service Center). Develop guidance for shared services centers and agencies migrating to a shared service center. Guidance will include SSC menu of services, rules of engagement, public vs. private solution comparison, SLA templates, migration risk areas. Migration Planning Guidance Text box for each of the 4 FMLOB Work Streams and a project description for each. Business Processes Develop a standard set of business processes for core financial management functions (e.g., funds management, payment management, receipt management, reporting) to be adopted by Federal agencies. Common Accounting Code Develop a common accounting code structure, including an applicable set of definitions, which all federal agencies’ new financial management systems must adhere.

Benefits: Financial Management Line of Business Provide timely and accurate data for decision-making Over $2 billion anticipated savings - 10 year period Facilitate stronger internal controls that ensure integrity in accounting and other stewardship activities Standardize systems, business processes, metrics, and data elements Provide seamless data exchange between and among Federal agencies by implementing a common language and structure for financial information and system interfaces. There are currently four recognized federal FMLoB SSPs. They are: Department of Treasury - Bureau of Public Debt (Administrative Resource Center) (http://arc.publicdebt.treas.gov/); Department of Interior (National Business Center) (http://www.nbc.gov/); Department of Transportation (Enterprise Services Center). (http://www.esc.gov/); General Services Administration (Financial Information Services Center) (http://fmcoe.gsa.gov/); In addition, private sector shared services providers have been encouraged to participate in the procurement process for these services. Several agencies have contracted with private SSCs to support their financial systems operations. Standard expectations have been provided in the following areas: Procurement guidance Change-management guidance. Implementation guidance. Menu of services from Federal and commercial shared-service providers Service-level agreements (e.g., Performance measures, data standards and system standards)

Current Snapshot: Human Resources LoB Initiative Core Functional Areas Project Description Personnel Action Processing Personnel Action is “the process necessary to appoint, separate or make other personnel changes.” Compensation Management is “the adoption of nondiscretionary (government-wide), agency discretionary and alternative compensation programs that are fair, equitable and promote employee retention. Award and bonus payout strategies are devised and administered. Work schedules including leave are established and time worked is recorded and approved. Payroll is processed and reconciled and employee pay and other third party disbursements are generated. Labor costs are distributed, as appropriate, to the appropriate cost accounts.” Compensation Management Benefits Management Benefits Management “designs, develops and implements benefit programs that attract, retain and support current and former agency employees. This sub-function includes: establishing and communicating benefits programs; processing benefits actions; and interacting as necessary with third party benefits providers.”

Benefits: Human Resources Line of Business Improved strategic management of human capital Nearly $3 billion saved over 10 years Increase focus on substantive issues not process Operational efficiencies in the acquisition, development, implementation and operation of human resources management and supporting systems Improved Customer Service Governmentwide, modern, cost effective, standardized, and interoperable Human Resource (HR) solutions providing common core functionality to support the strategic management of Human Capital. Five agencies, the Departments of Agriculture (through its National Finance Center), Defense, Health and Human Services, Interior (through its National Business Center), and Treasury will be Shared Service Providers. • Improved Management -- Improve the government-wide strategic management of human capital through: Faster decision making More informed policy making More effective workforce management Knowledge sharing and exchange Better alignment of resources to agency missions •Operational Efficiencies -- Achieve or increase operational efficiencies in the operation of human resources services through: Reduced cycle times Improved access to information Improved servicing ratio and response times Cost Savings / Avoidance -- Achieve or increase cost savings / avoidance for HR activities through: Increased competition Reduced duplication of labor and IT resources • Improved Customer Service -- Improve customer services and increase customer satisfaction through: Increased focus on client and on client value Improved communication and responsiveness Enhanced quality Enhanced timeliness Enhanced accuracy Enhanced consistency Goals Improved Management Improve the Governmentwide strategic management of human capital (faster decision making, more informed policy making, more effective workforce management, improved resource alignment with agency missions.) Operational Efficiencies Achieve or increase operational efficiencies in the acquisition, development, implementation and operation of human resources management and supporting systems (improved servicing ratio / response times, reduced cycle times, improved automated reporting.) Cost Savings/Avoidance Achieve or increase cost savings/avoidance from HR solution activities (reduced duplicative software / hardware / operations / labor resources, increased competitive environment.) Improved Customer Service Improve customer service (increased accessibility to client and value, improved communication and responsiveness, enhanced quality, timeliness, accuracy and consistency.) Status Initial governance structure established Baseline target architecture developed HR Line of Business (LOB) White Paper and Transition Approach documents developed FY06 HR LOB Business Case developed and submitted HR LOB Target Business Processes verified and validated Achieve or increase cost savings/avoidance from HR solution activities Improve customer service

New Line of Business - IT Infrastructure Optimization 16% - 27% Annual Reduction Standards Consolidation SmartBUYs IT Help Desks Data Networks Focus on 5 areas of optimization and consolidation: IT Help Desks Data Centers Data Networks Voice Networks Desktop/Seat Management Operations The taskforce will: Identify and refine opportunities for IT infrastructure consolidation and optimization Develop Government-wide common solutions Define performance measures for service levels and costs Issue request for information (RFI) and identify best practices Develop IT infrastructure LoB target architecture Provide guidance for agency transition plans The Administration continues to leverage Government buying power while reducing redundant purchases through the SmartBUY program. Launched in June 2003, the SmartBuy program continues to provide increased cost avoidance savings to federal agencies through new and existing agreements with commercial software providers. In FY 2005, the Federal Government signed a Smartbuy agreement with Oracle Inc. which provides a mandatory contract vehicle for all agencies purchasing Oracle database and database with security software products. The Federal Government has achieved avoidance of $174.8 million in the first six months of the contract alone. The Smartbuy Office continues to manage five agreements (WinZip, ProSight, Novelle, Manugistics, ERSI). The Administration anticipates the establishment of a new agreement in Spring 2006 with Antivirus software developers and will continue to identify and develop new agreements throughout the year. Data Centers Voice Networks Desktop/Seat Management $18B - $29B Savings Over 10 years

E-Gov Transforms Government FY 2007 - Beyond Focus Cost-savings Improved mission performance FY 2006 - 2007 Focus LoB Migrations Utilization and Adoption of E-Gov Initiatives Development of Self-Sustaining Business Models (e.g., Fee For Service) FY 2005 and Prior LoB Framework Established E-Gov Initiatives Federal Enterprise Architecture President’s Management Agenda Not Started In progress Complete

Next Steps Capture savings, performance improvements Ensure a level, competitive environment Integrate shared services as the “routine” way of doing business Complete current consolidations and expand effort as appropriate Governance – funding flows, ownership issues, upgrades as needed, service delivery standards Government versus Private Shared Service Providers – no unfair advantages given to either. Next Steps Design and establish permanent Governance structure Continue planning activities for implementation Potential savings of FM and HR LOB effort is more than $5 billion over ten years The HR and FM LOB service delivery model is guided by the concept of “shared services”. Shared services generally are defined as the consolidation of administrative non-mission critical processes into a stand-alone business enterprise that provides those services to other business units in an organization. The shared services delivery model for the U.S. Federal government will involve taking common FM and HR information systems and some processes out of agencies and moving them into separate shared services organizations – shared service centers (SSCs). This approach will allow agencies to focus on their core missions, while the core mission of the shared service centers will be to deliver administrative services efficiently in a cost effective manner with a focus on the customer and service quality.

Acting Associate Administrator, Office of Governmentwide Policy, GSA For more information… John Sindelar Acting Associate Administrator, Office of Governmentwide Policy, GSA 202-501-8880 John.Sindelar@gsa.gov