Posted by: mikepearsonnz | October 6, 2009

The Sisyphean Challenge of Shared Services in Government*

The New Zealand  Treasury  is exploring opportunities with vendors,  to improve efficiencies in the administration and support services of the state sector.  The forums have been widely reported in the media.

The evidence from the private sector and from other jurisdictions indicates that it is possible to improve the quality, and reduce the cost, of administrative and support services through common processes and systems and by leveraging knowledge and service volumes through such things as shared services centres and centres of expertise.

In real life, we can see proof of this with our mail.   In effect, there is a standardised outsourced mail process for delivering mail from point-to-point.  We don’t have IRD-Mail, MSD-Mail – we have NZ Post.   Yes there are other mail providers, but they are also commodity services and everyone’s processes are based on that assumption.

The challenges in changing  non-standardised non-outsourced back-office services in the State Sector  should not be underestimated.    Based on what I have seen over the last 9 years, here are some of the paradoxes that will need to be resolved:

Paradox

Return on Investment Paradox

In my opinion, agencies don’t drop a perfectly good service they understand for a new service offering, unless there are significant advantages.    I also made this point in “Why Open Office is So Yesterday“.  Agencies will typically consider a new service as part of their “refresh” cycle, or when they are making a budget bid for a new system.   Opportunities to refresh larger systems may occur only every 10-15 years.

Provider: The shared service I build will only have gradual uptake because users already have their own service.
Agency:
I will not use a shared service immediately, because I have already invested in my own service.

Timing Paradox

The Return on Investment paradox creates the Timing paradox.

Provider: There’s little point in offering a shared service because everyone already has their own service.
Agency:
I have to build my own service, because there is no shared service available.

Urgency Paradox

Closely related to the Timing Paradox.

Provider: I should make my service shareable but it is a low priority for me.
Agency:
I really need the service soon, if it doesn’t exist then I’ll have to build it.

Accountability Paradox

Sharing a centre of excellence in another government agency is difficult because of this paradox.  Getting the service cost right is important too.  If the service agency overcharges for the service, they are using their customers to subsidise operations; undercharge and the service agency is subsidising its customers.

Provider: I’m an agency not a service provider, you can share my service on an “all care, no responsibility” basis.
Agency:
I have to build my own service, because I am ultimately accountable.

Service Maturity Paradox

To understand the advantages of a service being offered, you need to understand your own agency services and be able to benchmark them against best practice.  This is a key feature of productivity improvement, that is outlined in the Treasury briefing.

Provider: I have a good service that I can offer you.

Agency: I don’t understand my service, so don’t know if yours is any better; I don’t understand your concept of “good”.

Uniqueness Paradox

Depending on the service maturity of an agency, they may consider that everything they do is “special”.

Provider: I will build a service and share it.
Agency:
I have to build my own service, because I do things differently.

Slow Movers Paradox

Government agencies are risk-adverse – there are little incentives in going first.  The Government Shared Network experience has probably made early-adopters reluctant to go first again; and made those who hung back, feel justified in hanging back further.

Provider: I need customers immediately otherwise I can’t cover the costs of building a shared service.
Agency:
I will wait until someone else uses it, and see what happens.

Ignorance Paradox

Provider: “Build it and they will come”
Agency:
I have to build my own service because no one else has what I need.

Efficiency Paradox

Provider: Become efficient and effective
Agency:
I am efficient and effective (in my silo/sector); or, I don’t measure my service.

As the title of my blog suggests, implementing shared services in government is likely to be a Sisyphean Challenge.   What other paradoxes have you encountered?

*Acknowledgement to Laurence Millar’s GOVIS presentation “The Sisyphean Challenge of Transforming Government” for the title of this blog 🙂

Slide 5

I have to build my own service, because there is no shared service available
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