Shared Services: Obstacles and Solutions

Moving to shared services is a priority for many governments these days. Sharing services can be a powerful aid in satisfying two big mandates common in the public sector today: lowering costs and improving efficiency. By sharing services across numerous agencies, organizations can achieve economies of scale that weren't possible before.

It works when it's done well. But that's not an easy task. There are numerous obstacles to deal with, and setting up shared services can be a complex process. What are the obstacles? How can they be overcome? The answers range from the simple to the complex, depending on what services are being shared and by whom.

The obstacles come in many forms. They can be political, cultural, financial, business-related, operational, transitional - just to name a few. What's the most common obstacle to setting up shared services? Human beings, particularly their resistance to change.

Even if it's not the most efficient way, people often are attached to the processes they've been using. That can be a problem. "It becomes much more of an emotional dialog, rather than a business dialog," said Doug Robinson, executive director of the National Association of State Chief Information Officers (NASCIO).

Robinson has a unique perspective. He has run shared services units in the past, and in his current role at NASCIO, he still studies the process and interacts with state CIOs who are implementing shared services.

Follow the Leader

Much of the resistance is a fear of losing control. In general, organizations are more comfortable relying on agencies within their own organization to deliver services. The thought of getting services elsewhere can be unappealing.

The best way to push through the resistance is to have a strong leader making a solid business case. "You have to have an evangelist. You definitely have to have strong leadership," said Robinson.

That goes for everything from getting funding - another major obstacle - to seeing the process through to the end. Sometimes a grand vision is communicated, but then the effort gets bogged down in the issues that inevitably come up.

The leader has to get everyone on board. "You've got to convince them and make a strong business case that it makes sense for them to abandon their individual efforts and join a shared services environment," Robinson said.

If it doesn't make sense, people won't buy into it, and it won't happen. So agencies need to choose wisely when deciding what services to share. Whether e-mail, IT infrastructure or HR processes, for example, it must be well suited to economies of scale. It should bring value to customers and make financial sense for all involved.

During the planning process, it helps to include those people who are doing the work today. Often, they are reassigned to new jobs or have new duties after the transition. It makes sense to have them involved in the planning process. Many agencies have found that employees benefit from the change; it frees them up from repetitive tasks, and lets them focus on other valuable work.

Setting up shared services takes good planning, clear objectives and a realistic timeline. Without those, it can get messy and expensive to make the transition to shared services. Some have run into problems by not budgeting enough for IT, for example.

Agreements Are Crucial

It also helps to get everyone on the same page. "We run into varying definitions of how states describe shared services and how they implement it," said Robinson. "That's problematic in itself, because it causes issues related to the governance model, the financial model and the sustainability."

Obstacles also can arise once the shared services are in place. The customer and provider can disagree on whether service is being adequately provided, for example. Sometimes there's a backlash when things don't go as planned. The way to avoid these issues is to make sure a strong service-level agreement (SLA) is in place. Although there are other types of contracts, the SLA is the most common type for shared services. The SLA makes clear what services will be provided and at what cost and when, among other important points.

It can be a real challenge for both sides to agree on an SLA that works for everyone. Some say SLAs tend to be too detailed and strain customer-provider relations, while others say there's not enough detail when it comes to providing recourse for customers who aren't satisfied. Usually the customer can't switch providers, so it has to live with the frustrations when things aren't to its liking. As the process has matured, however, more customers are getting stronger input on prices, performance levels and other points in the SLAs.

Organizational roadblocks also can arise. Should there be one central organization, or regional centers? Should the services be in-house or outsourced? There are various ways to set things up, and everyone must agree on business requirements and numerous other items. Should the services offered be optional, or must all agencies go with the shared service? A lot of questions need to be resolved along the way.

Complexity Abounds

While NASCIO's Robinson believes there are opportunities with shared services - particularly with things like ERP, HR and IT - he cautions that it's not easy, due to the many complexities involved. "It's very difficult to execute it successfully over the long haul," he said. "It takes a number of years to build it up. It's not easy to do." Robinson added that there should be mutual benefit for shared services to succeed, in addition to plenty of cooperation.

There is also another factor at the end of the line - the customer. Many say that with shared services, governments must commit to a customer-focused mindset. Robinson agrees. In fact, his experience in shared services led him to conclude that all shared services should be customer-driven if they're to exist at all.

"State CIO offices that run shared services really need to invest in customer- relationship management, as a business discipline," Robinson said. He believes those states with dedicated customer-relationship managers will do better than those without.

Robinson said more states are paying better attention to customers recently. "That's the difference in the shared services world," he said. "You've got to be able to respond to feedback."