The move to shared services stands to get a major boost in early December when the President is expected to sign the Modernizing Government Technology Act (MGT), now part of the National Defense Authorization Act, into law. The long-awaited legislation will give agencies the power to establish working capital funds for modernizing technology, citing shared services as a potential modernization initiative. More importantly, it offers tremendous flexibility to reprogram and transfer funds for up to three years to modernize or retire legacy systems.
Agencies are incented to seek the most effective and cost-efficient IT strategies to allow them to free important funds needed for other mission-critical modernization services. Migrating as quickly as possible to shared services for administrative/support services can be a significant part of the strategy, helping agencies provide maximum public value from their constrained or shrinking budgets and activating a mechanism for freeing up budget for working capital funds.
The MGT incentive comes on the heels of the Presidential Cyber Executive Order, which states that agency heads shall “show preference in their procurement for shared IT services, to the extent permitted by law, including email, cloud, and cybersecurity services.” It also follows an April 2017 Office of Management and Budget (OMB) Memorandum that directs agencies to use shared services to implement “crosscutting reforms...where market or technology changes allow a service to be delivered more efficiently, such as by a shared service provider....”
The confluence of mandates, incentives, and technology innovation make the move to shared services more inviting and advantageous than ever. Adopting a shared services strategy now, even if implemented in phases, allows agencies to take advantage of best practices and new technology that would not be otherwise realized. The transition, however, must be thoughtfully planned and carefully executed.
Getting the House in Order
Addressing four major challenges will expedite the migration and application of shared service models:
- Rethinking Funding Mechanisms: Shared services are usually funded through “chargebacks” or reimbursements to the provider agency’s working capital fund or franchise fund. Customers can be charged only after service delivery, and only for the direct cost of the services received. Without advance funding and/or authority to retain and reinvest sufficient reserves, shared service providers cannot start or expand rapidly, nor invest in new technology to drive innovation and further efficiencies. The MGT will help to ease this difficulty, but it should be viewed as a first step and not a complete solution to this challenge.
- Addressing Institutional Bias: Parent departments have a low-risk appetite and few incentives to extend their centers to external agency customers. Concerns about another OPM-level security breach remain high. However, to realize the full value of shared services to the Federal government, agency centers need greater autonomy to support both internal and external agency customers. This boost in up-front funding could allow external providers flexibility to begin taking new customers.
- Creating a Foundation for Trust and Collaboration: Among the greatest sources of resistance to the shared services model are lingering perceptions that providers do not really understand the customer agency or its culture, are not adequately responsive to its concerns, and are not sufficiently accountable for non-performance. If not consciously addressed, such mistrust leads to the creation of “shadow” services and processes that duplicate the provider’s responsibilities and reduce (or negate) the benefits realized. Providers must recognize and incorporate specific features and language for each customer agency while keeping most standardization in place to achieve economies of scale. Customers’ price negotiations must not drive out the provider’s time and processes needed to build effective relationships and deliver customer satisfaction. NASA, which operates one of the most respected shared service centers in the country, works closely with its customers to understand their mission and align its goals with them.
- Prioritizing Change Management: The implementation of a new operating model and business process is inevitably disruptive to the people affected. From our experience supporting a transition to shared services, such as the successful implementation of the Department of Commerce Enterprise Services, CSRA has learned that thoughtful and proactive organizational change management (including communication, training, and stakeholder engagement) is necessary to speed adoption, reduce fear, and minimize resistance to change.
By addressing these key structural and funding issues, government leaders can accelerate and broaden the transition to shared services. The specific scope, scale, and modes that will evolve long-term are unknown, but the time has never been more opportune for agencies to engage, adapt, and apply the current models to help shape them for the future of the government.
CSRA has the breadth and depth to address all key organizational and technical components needed to move to and sustain a successful shared services model. Learn more today at csra.com/shared-services.