Shared Services A solution for government efficiency Richard Gregg Fiscal Assistant Secretary U.S. Treasury Department May 7, 2012
Shared Services Purpose of Presentation 1. Why are we emphasizing Shared Services now? 2. What have we learned about Shared Services so far? 3. What is the vision for Shared Services in the future? Shared Services 2
Why Now? Shared Services is a Best Practice in American industry Most Common Services 22% Finance 84% IT 75% Human Resources 68% Procurement 50% 78% Over 75% of Fortune 500 companies use some form of Shared Services Representative Results Cost reductions of 50% Customer Satisfaction over 80% Shared Services 3
Why Now? Federal Government has well-established Shared Service Providers Info Technology Accounting Human Resources Procurement Other Services Founded 1995 1982 1980 1995 2006 1991 Organizations Served 69 30+ 150+ 28 11 All DoD + Shared Services 4
Why Now? Shared Services is part of the broader effort to improve government performance. If we believe that government can make a difference in people s lives, we have the obligation to prove that it works by making government smarter and leaner and more efficient. -- President Barack Obama, April 2011 The CFOs at all agencies shall be responsible for achieving...each agency s share of the $2.1 billion in administrative cost savings -- Executive Order 13576, June 2011 The primary focus of this strategy is on consolidating intra-agency commodity IT services -- Federal IT Shared Services Strategy, December 2011 Shared Services 5
Why Now? Budget pressures on agency administrative operations 1400 Total Outlays for Discretionary Programs (President s Budget) Specific Reductions in Administrative Expenditures 1350 $ Billions 1300 1250 1200 1150 Administrative Cost Savings cited in President s Budget 1100 FY2011 FY2012 FY2013 FY2014 FY2011 - $241 Million FY2012 - $2.0 Billion FY2013 - $8.0 Billion Overall Reductions in Agency Budgets Shared Services 6
Lessons Learned 1. High Levels of Quality and Customer Satisfaction Customer Satisfaction 7% 93% At one SSP, 93% of customers were very satisfied or satisfied. At another, services were rated in Top Quartile among similar private providers. Customer Feedback I have never experienced better support in 22 years of government service! In one survey, an SSP found that over 90% of their customers would recommend shared services to another agency Monthly Service quality measured with actual timeliness data is consistently over 97%. The level of effort during the end of year rush has been nothing short of heroic a total commitment to customer service. Shared Services 7
Lessons Learned 2. Assured Compliance with Administrative Mandates SSPs provide audit-ready financial processes 23 out of our 24 customers now receive unqualified audit opinions. All of our independent agency customers obtained an unqualified audit opinion on their first year audits. We assisted nine of our customers to become compliant with the Accountability for Tax Dollars Act of 2002. Shared Services 8
Lessons Learned 3. Everyone benefits from Economies-of-Scale Agency Cost ($M) 4 3 2 1 0 Agency costs drop as $3M fixed cost is spread across multiple participants. Actual Example: ERP Hosting Services One Ten Thirty Fifty Participating Agencies Agency Cost Government Savings 200 150 100 50 0 Government Savings ($M) Governmentwide savings grow with each additional participant. Shared Services 9
Lessons Learned 4. Incorporating Shared Services is Challenging Common Obstacles to Shared Services 1. Trusting that an outside entity can deliver the service you require. 2. Obtaining accurate cost data on which to base a decision. 3. Overcoming the resistance that accompanies organizational change. 4. Modifying agency work processes to accommodate an SSP s standard processes. Shared Services 10
Vision for the Future For the Treasury Department Every Treasury bureau and office will rely on the Administrative Resource Center for basic administrative processes unless their inhouse operation is more efficient. Shared Services 11
Vision for the Future For the Federal Government in Ten Years Reduce by 50% the number of agencies that operate their own: - Accounting Systems - Accounts Receivable and Transaction Processing - Procurement Operations - Payroll Services - Grants Management - Vendor Payments In this spirit, Treasury has begun consolidating these services by merging the Bureau of Public Debt and Financial Management Service into a single US Fiscal Service. Shared Services 12
Closing Thoughts Recognize that the environment has changed Public expectations for government performance Multiple-year reductions in administrative budgets Well-established shared service solutions Consider the opportunity to re-think your agency s operations Assess all administrative operations in light of your agency s mission Separate routine transaction processing from high-value program management Understand the full cost of providing administrative services internally Shared Services 13