Need to Free Up Resources To Focus On Mission Critical Activities? Shared Services Might Be Your Answer

August 23, 2017
Blog
By Jeff Kemmerer and Julisa Mandeville

With the trending conversations and policy attention focused on making government agencies more cost-effective and streamlined, shared services seem “top of mind” for pressured agency leaders looking for solutions. Shared services can be a mechanism to find capacity and add value into your current system by offloading what can be done well by others.

A common misperception around shared services is that it requires specialized skills or highly technical solutions. More often than not, this is the antithesis the intention behind shared services. Deciding if a shared services model is a good fit for your agency entails a few moments of introspection:

  1. Can others with little or no training do what we do at a lower cost? (i.e., Does what we do require specialized skills or knowledge?)
  2. Can we parse out pieces of this process?
  3. Can we tolerate giving up control of our process (or key pieces) in order to focus on value-add activities?

Answering affirmatively to these questions means that you might be ready to pursue shared services strategies. Keep in mind that if your processes require specialized skills and tools, then shared services may not be best for your organization. Instead, consider investing in an optimization exercise to make your organization as aligned and efficient as possible.

Before jumping head first into a shared services initiative, you should understand whether the solution is the right fit for your needs.

Customer or Provider? Properly Identify Which Side of the Shared Services Coin You Are On

So, you’ve decided a shared services model is right for you! Now, what role do you want to play in the landscape in order to capture the greatest value for your time, organization, and resources?

Shared services is a model that pools and processes ‘like’ activities at scale. Customers in a shared service system subscribe to a centralized, common management platform. The provider is accountable for agreed-to service levels by maintaining the operational capacity and scale required to sustain demand and is penalized when expectations are not met.

If your organization provides the “best in class” for what you do and who you serve, then scaling and seeking out new customers might be your next move. Taking on this challenge requires you to:

  • Ensure that you do not sacrifice the service levels and support to your current customers
  • Assess what you are willing to take on
  • Package your services at the right price, to the right service level, and with the right value promise
  • Ensure your staff and capabilities are ready to scale and can handle a surge (or line up the resources you need)
  • Choose your next set of customers carefully

Failure to do any one of the above with a strategic plan might disrupt your current success and damage your market reputation.

If you feel that you are well suited to outsource your requirements, then your task is to make the strategic case for change to leadership and your organization. Shedding existing operational work to focus on your mission, requires you to:

  • Articulate: The business reasons for a new operating model
  • Explain: What is at stake if you do not change
  • Enroll: Your customers, your staff, and your authorizing leadership
  • Communicate: With your agency peers to learn from their stories and best practices (i.e., make new mistakes)

When you decide to source a service you currently deliver externally, you are implying that your organization has a higher purpose or strategy to conquer. Activate that noble strategy and vision in your organization as you say goodbye to some of your current operational strengths. (They served you well, but in order to do what you do best, you have to stop doing certain things.)

 

If you decide that your agency would benefit from consuming shared services, the following tips will help.

 

Define Success at the Outset

Shared services and similar cost-savings/efficiency strategies pursue a reduction in X, more output in Y, or increased Z. At the outset, key stakeholders need to establish clear goals and expectations as a result of transitioning a function to shared services. Any sense of vagueness mires the process in conversations about trade-offs or opens up the window for inefficiencies to creep back in.

Build Trust While Managing Your Risk

Parsing out your current processes to participate in a shared services system requires a clear sense of risk tolerance. Ramp up your consumption of shared services to adjust core processes and ensure protect service levels to your key stakeholders.

An agency with lower risk tolerance might begin by employing shared services for the accounts receivables and invoicing processes before entrusting a financial services provider with the accounts payables, as those impact external stakeholders. Invoicing generates a record, or request for payment, but does not yet trigger the disbursement of cash. With accounts payable, your customers’ accounts and accounting gets impacted.

Measures and Metrics Should Prompt Conversations, Not the Conversation

Processes that are run by people inherently have social and technical complexity. The technical side can be depicted with measures and metrics around timeliness, output production, wait times, and error percentages. Leaders will often declare a shared services investment a failure when the numbers do not show up as predicted. Seeking to lay blame rather than to unearth the root cause might lead to missed opportunities. Similarly, meeting the mark might be sufficient, but not fully optimized. Your shared service providers will have aggregate data available to potentially give insights for your organization and may inform how to get more from your investment.

We encourage you to “learn to have conversations” about issues and continuous process improvement in order to get optimal results, not just initial predictions.

Being a Good Customer

Being a customer in a shared service environment is a two-way street. The foundations for a shared services model include predictability, standardization, and system velocity across numerous customer groups.Creating specialized requests – small tweaks, rush orders, and adding services – might create costly ripple effects for your shared service provider’s operations. An exception once or twice to provide outstanding support might be tolerable. Repeated requests and exceptions take a toil on the foundational principles of a shared service and either have to be compensated appropriately or off-loaded from the system.

A shared services provider might need to say “no” to protect the broader array of customers. The secret to being a good customer is to treat the relationship with your shared service provider as a two-way street and pursue an ongoing dialogue focused on value exchange and outcomes.

Shifting to a shared services model can be a great way to focus on an agency’s core mission. To be successful, leaders must determine what activities are core and be willing to shed supporting activities.

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