Ohio Shared Services Uses Enterprise System to Consolidate State Financial Services

Ohio works to process multiple departments and vendors' financial documents and customer service calls.

by , / August 31, 2010
Ohio Shared Services Design Department

Like most state governments, Ohio has seen hard times during the Great Recession. Ohio's tax base dropped 12 percent over the past two years, causing a $3.1 billion reduction in revenue, according to figures from the state's Office of Budget and Management (OBM). There are 4,500 fewer state employees.

State officials saw early indicators of the recession in 2007, just as the state was completing an enterprisewide rollout of PeopleSoft ERP software called the Ohio Administrative Knowledge System (OAKS). Gov. Ted Strickland and his cabinet directors realized they had to transform the way the state handled its back-end business processes in order to fully realize the potential of the new software. At the same time, the state needed a means to significantly reduce costs.

Consequently several Ohio agencies banded together in 2008 to build a first-of-its-kind, state-of-the-art shared services center that would use the new ERP system to answer invoicing and related questions for government agencies and vendors, as well as provide shared back-end financial services for participating agencies.

These efforts resulted in a new division called Ohio Shared Services and a series of other changes designed to maximize the new ERP suite's value. The division is housed in a center -- created from a former Rockwell factory that produced missile parts -- designed to facilitate teamwork and flexibility. The center makes wide use of virtual servers and desktops so that IT resources can be easily deployed where needed. And the division's work force -- all of whom voluntarily joined the new organization from other state agencies -- work under innovative new rules and sophisticated performance measures.

In short, it's a marriage of metrics and technology that could be the wave of the future -- a more efficient and cost-effective way for governments to do business.

Available Services

Ohio Shared Services, a division of the OBM, performs a number of back-end tasks -- accounts payable and invoice processing, fielding invoice inquiries, document imaging, travel expense reimbursement, and vendor maintenance and management -- that before were siloed in the individual agencies. Participation is voluntary, with one exception -- all Ohio state agencies use the center's travel reimbursement and expense reporting capability. Fifteen state agencies participated in the design and launch of Ohio Shared Services, although they pick and choose which shared functions they actually use. For example, only eight were using accounts payable in summer 2010.

Ohio OBM Director Pari Sabety said that sort of flexibility is intentional. "The key on an ERP is how you extract value from the application after you've implemented it," she said. In government, that means helping the agencies focus on their core missions. For example, the Ohio Department of Rehabilitation and Correction should worry about hiring prison guards and improving safety, not spend time and effort on figuring out how to pay bills more quickly, Sabety said.

The shared services include a modernized process for expense reporting and reimbursement. What was once a tedious "receipt and staple" workflow handled in the finance offices of individual agencies has been transformed into a mostly paperless process in which state employees fax or scan their receipts to the center through OAKS -- a more efficient system that allows the state to cut checks in as few as two days. State officials believe that's one example of how the center's economy of scale will reduce cost. "We now basically process and audit travel for the entire state," said Helga Mattingly, a shared services "associate" who works on a finance transaction team at Ohio Shared Services.

Ohio Shared Services is operated by a governance council that includes Sabety; Ronn Kolbash, who leads the new division's change management team; a council of state chief fiscal officers; and multiple process councils that oversee various business lines. Originally an outside advisory council representing Marriott, Nationwide Insurance and Limited Brands was also involved, but the group is no longer used.

The center's start-up costs are being covered by transaction fees paid by each participating agency. The fees pay for the building's rent, so the only appreciable upfront cost, Kolbash said, was roughly $2 million for technology and furniture.

Design and Technology

At first glance, the 45,000-square-foot center looks like a typical office -- with rows and rows of nondescript cubicles. But the workplace is anything but routine, especially in the public sector.

Kolbash and Kumar Rachuri, CIO of the Ohio OBM, had the luxury of a blank slate when designing the center. "We knew what enabling technologies we wanted to use in Shared Services; we knew we wanted to use thin clients, and have a dedicated call center and a dedicated server room," Kolbash said. "With that, we began to shape the facility around not only technology, but also some of the other principles we had in mind for the center."

The center was built to encourage collaboration and interchangeability. It has an open floor plan, low walls and cubicles that have an atypical 120-degree bend that Kolbash said mimics a honeycomb. The cubical shape works well for groups of 10, which officials knew would be the size of teams working the different functions, such as the call center or accounts payable. "Depending on where you sit, you're always looking at least two people beside you and another three people in front of you -- so you're always within your team, within earshot," Kolbash said.

Instead of desktop towers, Wyse thin clients running VMware desktop virtualization software were installed at the desks. They connect to the center's dedicated Dell server room. Employees use VoIP for telephony. The call center technology includes Cisco network-to-desktop computer telephony integration; Ohio Shared Services entered into an agreement with the Ohio Department of Job and Family Services, which had already used this call center setup, to provide the same solution for its center. In all, about 85 percent of the center's IT is virtualized, according to Rachuri. The back-end infrastructure is all located onsite, except for a data center located in Cincinnati that's operated by project consultant Accenture, which syncs with the PeopleSoft ERP.

This virtualized IT stack means that employees can be shifted seamlessly to different workspaces within the room as needed. Employees are differentiated only by skill-based pay, so they can move to other functions and business lines when necessary.

Finally, the office's technological showstoppers are the wall-mounted, flat-screen monitors that track employee performance -- number of calls in the queue, calls taken, call length, service-level measurement and other data.

Unconventional Workplace

Ohio managed to do what some observers thought was impossible by bringing in state employees who were willing to work in a metrics-driven office. In doing so, Ohio Shared Services has managed to dispel the widely held notion that the government worker is reluctant to be held accountable.

Every employee working at Ohio Shared Services is a state employee who came from another agency. Transfer was voluntary. Applicants were interviewed and told upfront that the workplace would be significantly different and that their performance would be measured. "We knew we were going to require metrics," Sabety said, "and employees needed to feel confident enough about their abilities to have metrics about their performance shared with colleagues and supervisors."

For the past decade, the Ohio Civil Service Employees Association had argued in favor of just such a metrics-based workplace, Sabety said. And the state wouldn't have gone forward with the project without the union's support. Sabety said she had no doubt beforehand that state employees would line up to work at Shared Services. "I knew they would sign up in a heartbeat because most people like to be challenged every minute of every hour they spend at work," she said.

Most of the employees who work at Ohio Shared Services are classified as "associates" and work under the leadership of coaches. Both the associates and coaches work under team leads. Kolbash oversees all of them.

Employees see metrics every day. In addition to the real-time data displayed on the flat screens in the Shared Services center, monthly "associate performance scorecards" measure a worker's actual performance against target goals and take into account the employee's opinion, as well as comments from coaches and co-workers. Typical metrics assessed are error rates for financial transactions, number of calls handled, number of cases resolved and call-handling quality. Each team at Ohio Shared Services also is given a group scorecard from the previous day's work.

Coach Heather Tomlinson said coaches usually oversee one or more areas within the division. Her responsibilities include the contact center that fields customer requests and the imaging center that scans documents. "I'm responsible for all incoming calls and e-mails," Tomlinson said about her team, which works with Medicaid providers. "So they could be vendors calling in to find out when they could expect their next payment, or maybe they sent in something to change an address and they want to make sure that paperwork has been processed."

Coaches also are responsible for overseeing the associates' development. "You basically present your scorecard to your coach. 'This is how I'm doing. This is where I want to go, and this is what my peers feel about me,'" said Tiffany Wilson, an associate who works in the contact center.

Being critiqued by peers and bosses can be daunting, but the benefit is that it doesn't leave much room for misplaced blame. "You're accountable for your own actions and your own progress," Wilson said. "You're accountable for the knowledge that you want to learn."

The Future

In the end, the purpose of Ohio Shared Services is to make back-end processes more efficient while saving money. It's doing exactly that, according to officials at the Ohio Department of Administrative Services, which is a Shared Services customer for accounts payable. "From the implementation perspective, we had a very good experience with the staff at Shared Services, and I felt like they bent over backward to help us understand what we were getting into," said Jennifer Leymaster, the budget services manager for Administrative Services.

According to John Yoho, the department's fiscal services manager, having Ohio Shared Services manage accounts payable processing has saved money. "We're having really serious challenges in funding our programs to deliver the services we must deliver, so we're looking in all sorts of places we didn't look before to find cost savings," he said.

Ohio Shared Services will continue to re-examine and add to the services it offers. Some agencies have expressed interest in expanding the center's document imaging capabilities, Kolbash said. The IT staff at the OBM are working on an implementation of optical character recognition technology that translates scanned material into machine-readable text; Ohio Shared Services is using a solution developed in-house by the Ohio Bureau of Workers' Compensation. The project is an example of how Ohio would prefer to rely upon centers of excellence to leverage new technology for the center, Rachuri said, rather than outsourcing the work.

The next big move will be to look at the center's business lines -- vendor management, accounts payable, document imaging and call center -- and begin digging deep into the data that's being generated to improve business processes and intelligence. "What's the data telling and showing us that we can give back to the agencies?" Kolbash explained. "What are the reasons for the most common phone calls and e-mails for assistance? Why are inaccurate invoices coming from one agency more often than the rest?"

With that type of information, agencies and Ohio Shared Services could drive further cost savings for the state government, he said. This intelligence capability will require an additional IT solution that Rachuri said could come from either a middleware system installed between the server room and the ERP, or from an Oracle Business Intelligence Enterprise Edition suite that's being implemented across the state government.

Those improvements would mean that the state isn't just consolidating services to improve efficiency; it also is working across organizational lines to add value back into the partnering agencies. "And that will put us farther down the road to true shared services," Kolbash said.


Hilton Collins

Hilton Collins is a former staff writer for Government Technology and Emergency Management magazines.

Matt Williams Associate Editor