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Why Agencies Often Resist Shared Services

Better data on cost-effectiveness and clearer transition guidelines would make arrangement more attractive, report finds.

The 30-year-old movement toward shared services has been bogged down by unclear transition guidelines and poor data on cost-effectiveness, a new study found.

In interviews with the Partnership for Public Service and Deloitte, chief financial officers at 18 agencies and other senior managers identified barriers and possible solutions to more widespread use of the arrangement, which allows agencies to farm out such non-core missions as financial management and information technology purchasing.

“When customers want books, shoes or clothing delivered, retailers typically use the services of the Postal Service, UPS or FedEx to send the goods,” the study said. “The mission of these retailers is to sell products, not maintain a fleet of trucks and planes to deliver them… For too long, federal agencies have tried to do the equivalent of maintaining the trucks and planes while tending to their core missions.”

The report examines the state of shared services in acquisition, human resources, IT and financial management as viewed within agencies, supplementing an earlier report on the industry’s view.

It traces the movement’s history from the early 1980s with the birth of the Agriculture Department’s National Finance Center, to pilot projects in the 1990s, to e-Gov experiments in the early 2000s, to the designation of shared services in 2014 as an Obama administration cross-agency goal.

“Advancing shared services has been a slow process,” it noted, even though some agency officials went so far as to call management functions such as human resources and acquisition “broken.”

Examples of obstacles show up in quotations from CFOs. “We don’t know what it will really cost; if the service isn’t good enough, it poisons the well,” said one. “Unless you are willing to [conduct a reduction in force], there are no cost savings,” said another. “There is no way you have to keep the same amount of people when you outsource your systems.”

For many, past experience attempting the transition left them frustrated, and many hesitate to try such a change in vital functions without clearer cost-benefit and performance metrics.

The solutions the Partnership and Deloitte offered include designating a leader to manage shared services, building relationships with other agencies to share experiences and sign agreements, integrating shared services into strategic workforce planning, and focusing on incremental changes.

The Office of Management and Budget, the report said, should step up support by establishing clear deadlines and holding leaders accountable; develop standard services-level agreements; work with the General Services Administration to establish a team of experts within government; and fund shared services pilots and evaluate their impact.

The Office of Personnel Management, the report added, should publish a strategic guide for agencies, offering options for managing the workforce transition to shared services.

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