March Office of Management and Budget memo to all agency heads, called “Improving Financial Systems Through Shared Services,” signals further movement to shared services for common financial systems and operations and an emerging acceptance that one size can fit all.
We’ve heard this before, but it hasn’t come to fruition. What will be different today? Key developments are changing the landscape. First, technological advances allow us to more easily leverage the benefits of shared services. Second, facing difficult budget limits and an administration committed to changing a culture of expensive, customized systems, agencies have little choice but to embrace shared services. Third, high-performing finance organizations recognize they can add greater value by supporting program and enterprise management through more analytic roles, and by reducing costs by moving to shared service providers (SSPs) for routine transaction processing.
A concerted move to SSPs will require truly transformative change. It won’t happen overnight, and people, processes and procedures will need to be re-examined and adapted to a more efficient and productive way of doing business. We suggest 10 actions to help pave the way:
■ Benchmark current performance: Develop baseline performance and cost information to match your needs with SSPs’ capabilities.
■ Target pain points: What causes you to lose sleep? What business processes, controls and systems are outdated and represent nagging problems?
■ Assess standardization and Common Government Accounting Code adherence: Identify areas ripe for agency standardization, such as one-off business processes and nonstandard data.
■ Streamline and re-engineer before moving to SSPs: Don’t shift work to someone else without first eliminating processes that are no longer useful.
■ Develop business cases: Systematically consider benefits, risks and costs of SSPs to select the best alternative, and document your rationale.
■ Establish a governance framework: Expectations and lines of authority must be clear, with service-level agreements specifying SSP responsibilities and performance goals.
■ Incorporate change management techniques: Large-scale change can turn the status quo upside down, so realign organization components and train staff for new roles.
■ Develop relationships: Understand the SSP’s services and customer satisfaction track record and how they align with your business needs.
■ Clean up the data — and keep it cleaned up: What you send the SSP is what you are going to get back, so avoid “garbage in, garbage out.”
■ Leadership, leadership and more leadership: This will be the deciding factor in whether you successfully transition to SSPs. Setting a strong tone at the top and providing clarity of purpose will go a long way to creating success.
SSPs also face increased pressure to cut costs and support moving to shared services. Here are six ways SSPs can do that:
■ Re-evaluate and strategically market your services: Continually demonstrate value and market services like any business. Fulfill agency needs today while anticipating future needs. Treat agencies like valued customers, providing reliable, high-quality services at competitive prices.
■ Continually evaluate the quality of your customer service: Monitor how customers regard your services, through qualitative and quantitative metrics, including customer satisfaction surveys. Expect performance-based contracts, including performance incentives and penalties.
■ Focus on costs and pricing: Price will be the top reason agencies migrate (or don’t) to SSPs. Thoroughly understand all elements of your costs, with special focus on reducing overhead.
■ Ensure IT scalability and computer security: You must be able to support the demands of small, medium-sized and large agencies alike and protect data from growing attacks on our nation’s information systems.
■ Differentiate your service from other SSPs: If you do not enjoy clear market differentiation, consider alternative product lines, new services, reorganization and streamlining, revised pricing, and consolidations with other SSPs.
■ Manage growth: Plan for demand fluctuations. When adding new customers and expanding services, avoid becoming overextended to the detriment of customer service.
Why are we bullish on shared services today? Because it’s technically feasible and makes economic sense. Chief financial officers can begin to get out of the business of routine transaction processing and operations. They can elevate their roles to that of trusted business advisers, adding greater value to the accomplishment of their agency’s mission.
Jeffrey Steinhoff is executive director of the KPMG Government Institute and former assistant comptroller general of the United States for accounting and information management. David Fitz is a partner in KPMG’s Federal Advisory Practice. This article does not necessarily represent the views or professional advice of KPMG LLP.