Shared services need a clearer road map

The Obama administration has announced a new governance structure to guide implementation of shared services through the end of the president's term. The plan has received positive reviews from stakeholders for its close alignment with portions of a landmark report issued earlier this year by the Partnership for Public Service's Shared Services Roundtable.

That report has captured the imagination of the industry and the good-government community. It presents a vision of a vibrant, public/private marketplace with an expanded role for commercial providers to spur investment, innovation and scale and thereby attract and accommodate faster customer agency adoption.

The report also advocates strengthening enterprise governance by defining a governmentwide policy leadership role in the Office of Management and Budget and a supporting implementation and oversight role in the General Services Administration, and by aligning Federal Shared Service Providers (FSSPs) with OMB/GSA for policy and budget direction to eliminate inconsistencies in business practices.

The administration's plan, as announced by OMB Acting Deputy Director for Management Dave Mader, creates a shared services policy officer in OMB (check!), a Shared Services Governance Board composed of key federal stakeholders to improve governmentwide coordination (check!) and a Unified Shared Services Management office in GSA to establish and execute improved governance processes to facilitate the expansion of shared services (check!).

It's smart to focus on governance because no single factor is more critical to success in long-term transformation initiatives. Strengthening and harmonizing the processes for standards-setting, acquisition, performance management and compliance across lines of business are crucial for improving governmentwide efficiency and effectiveness.

In the past, shared services have been managed in ad hoc program management structures that changed from one administration to another. Frequent changes have prevented critical governance capabilities from taking root, and implementation efforts have lagged and wandered. Case in point: Payroll shared services -- the only completed government success story to date -- took 26 years and five administrations to fully implement.

Mader characterized the announced changes as the first steps in a long journey, but many stakeholders are wondering where the journey is heading. The administration has not articulated its vision for shared-services transformation, and therefore it's unclear whether the administration embraces the roundtable's vision of a dynamic marketplace that invites greater commercial investment and public/private competition or whether it prefers a more government-driven future state.

The government has a history of inconsistency on the role of commercial providers in shared services. As with management approaches, private-sector opportunities have not been defined consistently across administrations. The current model used by the Treasury Department for financial management shared services uses lots of commercial products and services, but for the most part, vendors are limited to supporting roles behind government storefronts, and customer agencies are limited to choosing from among four federal providers.

However, the model used by the Office of Personnel Management for human resources shared services gives commercial providers a larger role in defining and delivering services, and lets customer agencies select their provider of choice -- government or commercial.

Mader also noted that modernization of the financial model supporting FSSPs is another key step in the journey forward. Existing working capital and franchise funds provide inconsistent and inadequate authorities for today's business needs and have become barriers to progress in a marketplace that demands greater agility, scalability and consistency across providers.

The Shared Services Leadership Coalition believes legislation is necessary to resolve those issues and put shared services on a consistent and sustainable path toward realization of the roundtable's vision. The coalition's proposals would:

• Create a dynamic, competitive marketplace that's permanently open and attractive to commercial investment.
• Institutionalize governance roles and responsibilities at OMB and GSA.
• Replace obsolete FSSP financial models with a modern one that funds expansion organically from the cost savings achieved when agencies migrate to shared services.

Those changes are too important not to be hardwired through legislation. As U.S. Comptroller General Gene Dodaro noted, "Successful management reforms in the federal government need to have legislative underpinnings so they have permanence and consistency over time, no matter who's in the White House or who's leading departments and agencies."

A powerful coalition is working to build support for legislation. The opportunity can be seized if stakeholders pull together and convince Congress and the administration that shared services are good government -- which in turn is good politics and in everyone's best interests.