Streamlining payroll and other HR systems reaps financial dividends

OPM's latest cost-benefit analysis for the Human Resources Line of Business program found that as more agencies move their payroll operations, information systems and other HR activities to shared service centers, savings snowball. The initiative will continue to generate about $200 million in cost savings annually after 2015, the agency found. OPM will update cost savings estimates biannually as more agencies make the shift.

"While the HR LOB remains in the relatively early stages of agency implementation, these significant cost savings and avoidances are enhanced by other benefits related to the initiative, such as improved management, operational efficiencies and improved customer service," the analysis stated.

OPM said managers should make business cases for migration to shared service centers with these findings. The multiagency service providers also can leverage the analysis by using it as a basis for requesting and justifying funding to upgrade and modernize their systems, according to the report.

Launched by OPM in 2004, the Human Resources Line of Business program sought to achieve "governmentwide, modern, cost-effective, standardized and interoperable HR solutions providing common, core functionality to support the strategic management of human capital and to address duplicative HR systems and processes across the federal government."

OPM made clear its expectations that the initiative would help agencies reach e-government goals and significantly enhance service delivery for federal employees. Shared service centers help agencies achieve these goals by reducing redundant software, hardware, operations and resources.

The cost-benefit analysis was the result of an effort that started in fiscal 2009 to revise the original estimate. To update the figures, OPM reviewed existing agency budget numbers plus additional information collected through a data call and follow-up discussions.