1. Shared Services Achieving success in GGovernment Date : May 12th 2010

2. Agenda1 The challenges of government into the future2 Establishing who is the customer3 Purchasing for the Shared Service Operation4 Staffing and skilling the Shared Ser ice Operation Service5 Strategies for overcoming the obstacles along the way6 The role of governance to ensuring successCommercial in Confidence 3. Shared ServicesAt its most simplistic is to consolidate business processes and functions to achieve More outputs for less inputs In reality is far more complex than that In Government complexity increases due to...............................Commercial in Confidence 4. Shared Services in Government is it real?Locally NSW announces Super Ministries WA implementing a cluster based approach Vic implementing by functions SA implementing a cluster based approach ACT implemented single shared services function QLD implemented by clusters Internationally UK Department of Works and Pensions implements clusters Scotland implements by functions NLDS implements by functions US implements Federally by Department and function Commercial in Confidence 5. Agenda1 The challenges of government into the future Commercial in Confidence 6. Challenges for government Many governments operate usingAll expenditure and service legacy, bespoke systems thatdelivery is open to public require intimate historical scrutiny knowledge to retain and operate Interdepartmental and Senior executives with that Mix of Serviceinterjurisdictional working andLegacy is a real Delivery history are in many cases close service delivery models are to retirement ageconstraint Modelsmore complex Changes in old systems requireCitizens expect that services intense effort and investment tocan be obtained easily from implement even the simplest ofone place and that they will policy changesmodernise in line with their Translating this to politicians isaccess to new tec o og ese technologies challenging Leadership is consultative p Financial management act and Fi i l t t d Mandates from one leader areother instruments obstruct inter often distilled through departmental service delivery consultation prior to The crown is always indivisible implementation so with the best will in the world The public sector struggles togovernment struggles to fund change management or commercially service itself establish change agent leadersLeadershipLegislation Many simple processes arise who can perform short term from legislation resulting in roles, stimulate change and complex systems changes move onCommercial in Confidence 7. Government Department of the Future Commercial in Confidence 8. Key PrinciplesFocused onSmallerCitizen centricoutcomesProvidescapacityA self-improvingto j it join up system t government Set up to take aFlexible aboutCloser tosystem wide who deliversthe CitizenviewCommercial in Confidence 9. Agenda 2 Who is the customer in the future and how do they want to be served? Commercial in Confidence 10. Customers expect government to deliver: - independent of how they are structuredCustomers demand a new way Government Departments deliver this wayCommercial in Confidence 11. Servicing the customer requires........Requires crossagency workingRequiresmanagement ofinformationacross multiplechannelsRequiresGovernment tointegrateexistingsystemsCommercial in Confidence 12. Consolidating the back end in a Shared Servicerequires customer focus Models of relationshipManagement culture has to adapt A relationship oriented philosophy will focus on creatingsustainable value through partnership across the Agencies relationship establish maintain optimise oriented relationshiprelationship relationship An ability to understand that relationships need to changefrom functional responsibility to customer relationshipbased and this requires a change of mentality in theformer back-office functions.Philosophy customer fulfil satisfy anticipatecustomer customercustomer It requires the development of identity, the education of all orienteddemand expectationsneedsemployees with customer contact and the tracking ofvalue generated for the customer.As theA th scope of shared services extends f f h di t d from market processgeneratecreate regional/functional, the reporting line becomes more oriented orders follow up identity critical as there are regional/functional lines of control andaccountability are blurred. The right governance modelshould evolve as the business services model and offers Sustainability transactionsuccess valuemature.mature oriented orientedoriented Governance must drive customer focus Commercial in Confidence 13. Government Shared Services Models Commercial in Confidence 14. Business drivers and benefits determine the modelProduct Focus FCustomer FocusEach model provides an emphasisServiceServiceAggregator on a different business driver and Life CycleManagerIndustryCustomer delivers a different mix of benefits ServiceService Network Network Increasing Evolution from one model to anotherDegree of end to end value chainService occurs as the nature of the businessNetwork integrationand the shared service maturesFunctional Shared ServiceEfficiency ServiceConsolidatorFocus Increasing Degree of cross function integrationService Model Benefits FunctionalServiceServiceIndustryCustomerService SharedConsolidator NetworkService Service Aggregator Service Network Network EfficiencyService Consolidator and Service Aggregation are the most commonEffectiveness Compliance models that are evolving across Speed to market Adaptability governmentCustomer/CitizenManagementPeople ManagementCommercial in Confidence 15. Agenda 3 Purchasing for the Shared Service Operation Commercial in Confidence 16. Procurement for Shared Services Procurement skills pre Shared Services drive single purchases for delivery ofsingle servicesProcurement processes are soundScale and complexity of requirements, not all parties can have a sayNot all parties will be satisfied with the resultThe process must encourage industry participation align stakeholder participation,expectations and deliver outcomes quickly Commercial in Confidence 17. Supplier value management models must focus on the nature of services and the criticality to service provisionSupplier Value Management comprises four keySegmentation informs the appropriate supplier value considerations:management modelsSegmentation Segmentation of the services and functions according to the business risk and supply market opportunity mentOrgaRela Relationship and organisation integration withinDevelopm ationship / supplier and Sh d S i organisation lid Shared Servicei ti anisationSupplier Systems Bottleneck Strategic Performance management frameworks and Bottleneck Strategic governance for the services Treasury Tax & Reporting convergenceConvergys Supplier development initiatives to ensure continuousPerformanceimprovementCaptive FinanceManagement Compliance These four components are underpinned by systemssk Business RiskFacilities Mgt and efficiency initiatives Business Ris TEC OH&S TimekeeperLegalRoutine RoutineLeverageLeverage Supplier Value Management ContinuumNon StockProcurement Strategic SourcingEquity Alliances Non Stock TACTICALBUYER/STRATEGICJOINT EQUITYJOINTCONTRACTS SOURCING PARTNERSHIP INVESTMENTS VENTURE ACQUISITION SUPPLIER Supplier Management OpportunitySupplier Management Opportunity LowLevel of Integration and Mutual Value CreationHighSupplier Value Management will be applied to all trading partners whether suppliers or internalgovernment agenciesCommercial in Confidence 18. Agenda 4 Staffing and skilling the Shared Ser ice OperationServiceCommercial in Confidence 19. Shared Service work is often project based Strategy &Service DeliveryPlanning Project Delivery(Ongoing operations & (Strategy Planning & (Project focussed activity)Support capabilities)Business Development) Activity A TimeThe life of a project as it passes within the Shared Services environmentCommercial in Confidence 20. Core skills of Shared Services Stakeholder Management Strategy and Planning Programme Office Project Implementation Risk Management Strategic S St t i Sourcing i Procurement Category Management Technology implementationCommercial in Confidence 21. 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The right performance measures lead to improved outcomes Baseline BaselineSSC Business MeasuresModel of ControlModel of Control normalisation of error and rework rates overall efficiency and overall efficiency and normalisation of error and rework ratesvision and strategiesvision and strategies EffectivenesseffectivenessEffectiveness portfolio of services portfolio of services SLA SLACRM processCRM process dimensions of value creation dimensions of value creationobjectives and servicesobjectives and services performance briefingperformance briefingKey Process Measures critical success factors critical success factorsdeliverablesd libldeliverables customer surveyt customer survey6- 8 for each process6 8 ffor each process6-hanalytical dimensionsanalytical dimensionsroles and responsibilitiesroles and responsibilitiesimprovement opportunities improvement opportunities simple, relevant, simple, relevant,costing methodologycosting methodologyproceduresprocedures SLA refinements SLA refinementsavailable, reliableavailable, reliable Tracking Tracking Benchmarking BenchmarkingContinuous improvement and solution orientation are promoted, Pricing / Charging Pricing / Charging BillingBillingDiscounts / Incentives Discounts / Incentivestherefore sustaining achievementsncreased transparencyImproved control Comply with budgetrestrictions Measurability of performance e.g. by Clear and agreed definition of service defined key performance indicators (KPIs) quality levels to deliver Achieve cost saving targets Detect cost-intensive services and Responsibilities of process clearly defined Achieve defined efficiency potential improvements targets (e.g. processt t (Differentiated performance measurements Comparability of delivered services for different service suppliersefficiency) Early exposure of optimisation potentialsEnhanced planning reliability Higher customer orientation ofbusiness unitFaster reaction to identified to-be / as-is discrepancies p General internal and externalacceptanceCommercial in Confidence 24. Invest time in strategic conversations 1 CONVERSATION 1: Singular Goal What is the unifying message for staff, partners and customers?2 CONVERSATION 2: Tangible OutcomesHow will we know we have transformed and measure success?3 CONVERSATION 3: Current Reality What is the baseline and the strengths upon which y can build? g p you 4CONVERSATION 4: Imperatives to Act Drivers for Transformation: Cost, customer experience, culture5 CONVERSATION 5: The VisionThe characteristics and things you want people to remember 6CONVERSATION 6:7 CONVERSATION 7:8CONVERSATION 8:STRATEGIC THEMESROADMAPGOVERNANCE/OP MODEL What is the logical l t i Wh t i th l i l clustering What are theprojects/programs that will How will you govern and of ambitions shaping thedeliver the Vision? oversee the Program? program?Commercial in Confidence 25. Agenda6 The role of governance to ensuring success Commercial in Confidence 26. The case for Shared Services in Government is real Governance is challenging therefore one of the key considerations is Which governance structure allows for true customer supplier relationships to be developed? Which governance structure will satisfy the over arching legislative requirements?Service design requires considerable time and extensive stakeholderinvolvement and consultationCommercial in Confidence 27. Establishing the business drivers drives thegovernance structureConsolidated DepartmentC Independent GovernanceCorporate GovernanceGovernance Reporting Structure Reporting Structure Reporting StructureOversightCommitteeCorporateDirector Operations Corporate SD1 SD2SDn Shared SharedConsolidated Corporate Services ServicesDept 1 Dept 2 Dept n Shared Services CentreDepartment centre centre+Minimises silos/ functional barriers+ Customer proximity + Easier, if corporate contains most +Business unit and corporate p+ Streamlined corporate p services todayindependent + Less business unit resistance+ Business unit independent +Increased customer focus+ Easier, if business units contain most + May be only acceptable structure in +High visibility services today some companies+ Maybe only acceptable structure in + Services provided to whole business Additional oversight committee gsome companiesp Corporate silos/ pp potential barriersrequired Business unit leadership still distracted Major corporate customer service Elements of business unit and from core responsibilities culture shift requiredcorporate redesign required Business unit and corporate services Low customer proximity Culture change required separate Greater business unit resistance Additional senior executive position Senior executives distant fromownership The governance structure follows the service model, and may be a hybrid structure Commercial in Confidence