How M-17-22 Will Impact Shared Services and Potentially Shift Thinking in the Federal Government
By Travis Wright
Recently, The Clearing’s, Travis Wright, spent an afternoon with Jd Walter, the Director of Customer Relationship Management at the Program Support Center (PSC) within the Department of Health and Human Services (HHS). During their discussion, Jd shared his thoughts on how M-17-22 and other recent mandates will impact shared services and potentially shift thinking in the federal government.
PSC is a non-appropriated operating unit within the HHS Division of Administration that partners with federal agencies to collaboratively generate solutions to their most pressing needs. As a shared services provider, PSC works with its partners to reduce redundant back-office activities in order to support improved organizational efficiency, timeliness, and quality of core missions.
The Clearing: Can you tell me about your role at PSC?
Jd Walter: My role is to help guide organizational strategy and development efforts on behalf of the Director of PSC. This includes working hand-in-hand with the executive team to develop a long-term vision, evaluate performance, and analyze partner and market data to position PSC as a leader in shared services across the federal government.
The Clearing: Can you talk about how PSC became a leader in shared services?
Jd Walter: PSC has operated within HHS for more than 20 years. It was set up as a center of excellence to address a number of back-office activities that were redundant within HHS. Over the years, the services that are delivered have expanded and been contracted based on different needs across HHS. Today it includes about 40 discrete areas. Currently, PSC is focusing on maturing a subset of core competencies into collaborative solutions that we feel are most salient in light of the government-wide focus on efficiency.
What is most telling about PSC’s story, and frankly the potential of the shared business model, is the volume of external partners we have today. Currently, about 71 percent of our revenue comes from outside of HHS. This affords PSC the opportunity to be more innovative in our response to partner needs, but also be increasingly proactive in addressing emerging market trends because we are seeing demand across the whole of government.
PSC has really come to embrace the idea of partnership with the agencies we support. The customer/provider dynamic will only take this business model so far, so we are looking at ways to expand the collaborative nature of partnerships and infuse a new energy into building and delivering solutions.
The Clearing: Do you see shared services expanding within the government?
Jd Walter: The opportunities for shared services in the government are seemingly endless. Just scratching the surface has been substantial in terms of cost avoidance. Improving the efficiency and effectiveness of administrative operations will certainly help to improve service quality for the American taxpayer. This is what M-17-22 is about, but it is going to take considerable standardization.
I think the first thing we need is government-wide buy-in regarding the idea of standardization. While missions are indeed unique, the business end of accomplishing them is incredibly similar.
The second thing we need is a commitment to moving faster. The nature of government compliance and oversight means we won’t always be able to move at the speed of the private sector, but we can certainly inject a healthy dose of thrift to the process. Particularly with regard to how we acquire goods and services. This ultimately increases the government’s flexibility and agility. What the private sector does so incredibly well is respond rapidly to market demands. They’re constantly assessing large amounts of data, performing predictive analysis, and then balancing the outputs with a proven business savvy model before they take innovations to market. There is no reason the government can’t operate more like that.
Thirdly, we need to think about how we are collaborating with the private sector, as they are a critical element in our solutions. This has to do with how we are developing our contracts, setting them up to mitigate the risk being placed on the vendors so they can be innovative and creative on behalf of the government. It’s a symbiotic relationship when it’s done right. We’re already doing it in pockets to a smaller degree, we just need to systematize it and build our acumen government-wide to behave this way. There are some implications for the private sector here; the federal government can’t be a cash cow for companies wanting to live off government contracts. The private sector has to afford legitimate business advantages for the government because everything we do trickles down to the American taxpayer.
The Clearing: You mentioned M-17-22. What impact do you see it having on the federal government?
Jd Walter: Everything that is happening right now is getting us moving in the same direction. The government is comprised of many different agencies, but there is only one federal government in the United States of America. We’re all just in different operational units of it. Ultimately, we all need to behave in a common business manner because we are in fact one organism. M-17-22 is a wonderful first step in promoting a new way of thinking about how we operate both top to bottom and left to right.
The Clearing: How will M-17-22 potentially impact shared services and PSC?
Jd Walter: M-17-22 focuses on efficiency and shared services is one way to achieve it. It’s a basic business-efficiency model. There has certainly been an increasing orientation toward efficiency, but M-17-22 is really the first directive I recall being comprehensive in intent. Agencies are now starting to come together to discuss what makes sense for the whole of government. These conversations include standardization of performance metrics, delivery scheduling, and how to go through a requirements-gathering activity, but it’s still very much a learning process. We have to learn a bit more quickly than we have in the past because of the current administration’s focus on this as well as policy guidance like M-17-22. I think this is a good start. We are developing habits like communicating and sharing information, and over the next two years, I think we will see exponential maturation of shared services in the government for a variety of reasons.
From PSC’s perspective, we are rooted in M-17-22. We recognize the challenges agencies are facing and so we have gone to the whiteboard to begin sketching solutions that seem to make sense, including those that will add value to our partners and provide a substantive return for HHS. Next step is to take these partnerships to a new level and really collaborate on the solutions that make the most sense — providing the most advantageous outcomes and demonstrating the greatest returns. It won’t happen overnight, but we expect PSC to see significant increases in business because of this. We are doing everything we can to ‘up our game’ from rethinking our narrative and redefining our partnerships, to ensuring our workforce has the skills, resources, and support to execute solutions.
The Clearing: What role do small- or medium-sized agencies play in facilitating more widespread use of shared services in the federal government?
Jd Walter: I see small- and medium-sized agencies playing a critical role in shared services. I think smaller agencies tend to underestimate the impact they actually have on the aggregate. Because of their size, they should really be leading the charge, both proving and improving the model. Their experiences inform not only what is appropriate for a consolidated approach, but also inform on how to scale up to larger, less agile agencies. This approach makes a lot of sense because fewer people are impacted and fewer resources are needed.
Flexibility is power. Agility is power. It’s what the private sector celebrates. It’s their responsiveness that makes them successful, not the amount of annual net revenue or the operating budget. Look at the top companies today; their competitive advantage is their ability to hit the market faster than anyone else, to be more predictive and faster in response, and to produce a better product than everybody else. That’s what we need to be as a government.
I think M-17-22 will lead to a shift in thinking. This is fundamental to changing the approach on managing the business of government. Instead of focusing on how much appropriation an agency is getting, we could start to focus on our efficiency as a source of power. Real bargaining power is proving there’s a better way to do business. Congress decides how much money they want to commit to programs. It should be the job of the executive branch to implement effective and efficient programs that distribute that money in the best way possible with the least amount of overhead.
The Clearing: What do you think shared services in the government will look like in three to five years?
Jd Walter: We will have a better understanding of what makes sense to centralize government-wide, what makes sense to centralize in-house, what makes sense to leave in-house, and then what should be outsourced. We will have a much more mature evaluation process to measure how well services perform and how the system of sharing performs in aggregate.
PSC is going to be much more nimble than we are right now. We are shifting our own focus to be more mature as an organization. We are building solutions rather than just taking services to market. We are fostering partnerships with federal agencies rather than being driven by the traditional customer-provider relationship and we are getting better at evaluating ourselves. Ultimately, all of this is about agencies making mission-centric decisions and how we support that. Everybody has to be on the same page in understanding the “why” behind what we do.
If you look at the amount of work that’s being done by shared services providers today, it’s huge, but it’s still just a drop in the bucket. When you start thinking about the possibilities, that’s when it gets really exciting.
Imagine if agencies took a percentage of their overhead cost and simply repurposed it to programmatic funding. The increased programmatic spending could be used to meet the growing needs of the people without increasing annual appropriations. That’s revolutionary.
The Clearing: M-17-22 also talks about customer service. I understand that PSC is heavily focused on improving customer satisfaction through a better customer experience. Could you talk a little bit about what PSC is doing to improve the customer experience?
Jd Walter: This all goes back to the ideas of partnerships and solutions — collaborating with agencies to deeply understand their missions, operating environments, constraints and concerns, and what success looks like to them. Delivering services is pretty easy. This is about being a champion of their success and figuring out ways to ensure that the uniqueness of their missions is not lost within the dash toward efficiency. Think about the old 80/20 rule where the 80 percent is standardized. It’s the 20 percent that keeps agencies up at night and, their missions are built on it.
But therein lies the most salient advantage of a shared business model, shared intelligence. Shared intelligence refines the 20 percent with an exactitude that ensures both maximum efficiency and maximum operability. There is a reason the private sector invests heavily in the shared model because it works. But at the end of the day, there has to be an advantage to using a shared business model, and the outcome may not always be a dollar-for-dollar trade off.
Finally, it’s about understanding how our partners see the value proposition of what we are bringing to the table and having an honest dialogue about what works and what doesn’t and then, of course, why. That is really where the experienced rubber meets the partnership road. We have to be able to translate reductions in square footage, increases in buying power, and the benefits of centralized data, for example, to accomplish the mission. If done well, it is an incredibly powerful narrative.