Shared Services: Driving Success using Cost Chargeback Model

Transcription

1 s: Driving Success using Cost Chargeback Shiva Verma, Performance Transformation Lead, Grant Thornton Steve Stevens, Service Management Expert, Grant Thornton NASC Annual Conference March 2015 Agenda State and Local 1

2 Driving Success using Cost Chargeback 2 Government is a Service Provider Today's Reality: Much attention is focused on deciding policy, but the end result is: Government provides services to citizens, itself, and 3 rd parties. : Deliver service that produce the following Outcomes: Service Efficiency (Frugality) Service Excellence (Warranty) Service Alignment (Utility) Service Integration (Agility) Deliver outcomes at the lowest cost. Deliver the promised outcomes. Deliver outcomes we value. Deliver outcomes that optimize value. 3 3

3 Methods of Managing Services: Quantitative Management The financial world measures and manages quantitatively. The traditional data source are general ledger (GL) transactions. Standard reports: Cost Recovery, Balance Sheet, Performance metrics Enterprise Resource Planning (ERP) Tools Have a transaction engine that is typically GL based. Adds analytic capabilities on top of the transaction engine. However analytics are only as good as the data set. Service Management System (SMS) Focus on customer and business outcomes; Service Oriented Architecture (SOA) holistic view; Multiple views (role based) into data and services; Service blocks define capability and cost. 4 Funding Compliance model inefficiencies are caused by Federal reporting requirements (formerly A-87, recently centralized into 2 CFR, Part 225). States comply with Federal OMB P-225 by: Rigid approach using GL and required Federal allocation plans Satisfies Federal compliance, but problematic for shared services organizations: Complex service models; Cost accounting mechanism insufficient for P-225 compliance; customer workarounds often include: Earmarked or siloed resources (dedicated to Federal programs); Duplication of services across agencies or departments; Sub-optimized business models due to the threat of jeopardizing funding; Manual administrative processes to meet P-225 compliance. 5

4 Driving Success using Cost Chargeback 6 s Optimization involves 4 primary components Catalog Cost Integrated Cost Allocation Plan Operating (processes, technology, people) Approach Benefits Provides a service catalog that clearly articulates the central services provided Underpins the catalog of services with a flexible cost model that addresses P-225 needs and local requirements (i.e., budgeting) Develops a shared service operating model that closes immediate gaps and provides a roadmap addressing future improvement opportunities (process, people and technology elements) 7

5 Example (County Client) Cost Chargeback is used to drive transparency, efficiency, and value to greater performance. For this County, the solution was: Assessed their current Service and cost allocation method; Developed a detailed Service Catalog and service architecture showing dependencies; Developed a Cost using the Service Catalog architecture; Developed a rate structure based on the Cost ; Developed a Roadmap to: o bring the Service Catalog, Cost, and rate structure into P-225 conformance; o redesign internal processes that had devolved; o deploy a Service Management System (SMS) to quantitatively manage services. o drive the County s shared services to optimize value 8 Multiple Views of the Catalog Customer View of Services: described in business language bundled into service offerings that add value service levels with periodic performance reporting quantifies customer consumption and cost Technical View of Services: described in technical language supporting services for offerings defines service blocks by capability, cost, & level organized into functional value chains quantifies service provider consumption and cost Catalogs have both the customer view and the technical view because they are both important for service optimization 9 9

6 Example Service Catalog and Cost Diagram IT s Traced to Benefiting Programs Business Application Service Bundle Service Offerings Electronic Document Mgmt. Service (EDMS) Financial System Application HR & TK Application... Core Functions Document Management Application Document Management Support Other Applications or Services Doc Mgt S/W Application Staff A-87 Information: IT Stacks & Blocks Virtual Machines Hosting Storage Network Application support portion of Data Center Staff Overhead costs Capital Depreciation costs Direct A-87 Cost Indirect A-87 Cost A-87 Capital Deprec Example Roadmap to repair devolved processes & Service Current State Prepare the Organization Target State Initial Service Lines Current Capabilities (Service Catalog) Redesign Processes (Silo) Realign Services Re-bundle Service Offers for all s CMDB (Data) Manage Costs Restructure underlying Support Services Cost Chargeback (Quantify) Service Value Update Services to Optimize Value 1. Prepare the Organization Use Kotter 8-step process for organizational change. Addressing the Organization first will accelerate the rest of the Roadmap. 2. Redesign Request & Incident Processes Have a single ordering and repair ticketing system that covers all shared services to have an immediate and positive impact. 3. Implement Configuration and Asset Management A Configuration and Asset Management Database (CMDB) provides a logical model of service delivery and accelerates the rest of the Roadmap. 4. Integrate Cost Chargeback into IT Financial Management Necessary to update the Cost, get better transparency, and allow cost-benefit analysis. Also allows services to be rebundled at Service Block level

7 Government is a Service Provider Drive success using the Cost Chargeback to: solve funding issues, provide transparency, be compliant, and optimize value. Service Efficiency (Frugality) Service Excellence (Warranty) Service Alignment (Utility) Service Integration (Agility) Deliver outcomes at the lowest cost. Deliver the promised outcomes. Deliver outcomes we value. Deliver outcomes that optimize value Driving Success using Cost Chargeback For more information on the topics covered in this publication please contact us: Shiva Verma Performance Transformation Lead T E Shiva.Verma@us.gt.com Steve Stevens Service Management Expert T E Steve.Stevens@us.gt.com 13